Senate Procedural Redux

An interesting matter here that comes from The Hill, stating that some of the liberal Democrats are getting antsy about the current situation in the Senate. I quote below:

In an apparent warning to Senate Finance Committee Chairman Max Baucus
(D-Mont.), some liberal Democrats have suggested a secret-ballot vote every two
years on whether or not to strip committee chairmen of their gavels.

Baucus, who is more conservative than most of the Democratic
Conference, has frustrated many of his liberal colleagues by negotiating for
weeks with Republicans over healthcare reform without producing a bill or even
much detail about the policies he is considering.
“Every two years the caucus
could have a secret ballot on whether a chairman should continue, yes or no,”
said Sen. Tom Harkin (D-Iowa), the chairman of the Senate Agriculture Committee.
“If the ‘no’s win, [the chairman’s] out.

“I’ve heard it talked about before,” he added.

This procedural reform actually does not seem so radical. In fact, the House has this, and ocassionally exercises that even within the Democratic Caucus. This is how Rep. Henry Waxamn (D-CA-30) became Chair of the all powerful Committee of Energy and Commerce. I personally wanted old chair John Dingell to win (D-MI-15), but Waxman's performanc has more than pleased me.

Furthermore, at least on the House side, for now, the Democrats have kept in place the term limits on Committee Chairs which the Republicans instituted in 1994. I think again that such a move works well.

The Senate of course is a much weirder beast, and part of it too may arise from the old story of it serving as a cooling saucer. First, the Senate represents not people but the states. Looking back on the history of the insitution itself, the idea was that it is anti-democratic. State Legislatures used to elect Senators. We run treaties I think through the Senate because: a) the framers did not want the people to deal with foreign policy and b) we wanted a consensus of these sovereign entities called states to assent to something. I do not think this is a good idea, but it really underlies why the Senate operates to this day as a peculiar institution.

However, the Senate should make such reforms because Senators just serve longer, because they live longer. Also, it starts to centralize an institution that works in a highly decentralized manner. As pointed out earlier, leadership in the Senate is much weaker than in the House. However, 100 people or even a 40 member caucus can act in highly disparate ways. You then have a total coordination problem, which is something I think we see, at least on the Democratic side. Giving leadership and the caucus some check on Chairmanships would defintiely help in this regard. One should note that Republicans have not shied away from doing this. The former Republican Senior Senator from Pennsylvania, Arlen Specter, almost lost his gavel on the Judiciary Committee, because of his views on abortion.

The larger looming issue that could make a major change is the weird cloture procedures. I have essentially outlined that in a previous post. Prior to Robert Byrd's majority leadership, the Senate acted even slower than now. It required a 2/3 vote for cloture. With the growing realignment of parties, that made things difficult. So cloture changed to 3/5. However, you still have some of these matters that complicate everything.

Of course, cloture seems anti-Democratic, becuase it is. However, I want to restructure some aspects of it since cloture does seem like a weird Kabuki dance. One of the ideas behind cloture is to give more time for debate. I think that perhaps clotures should revise itself as follows. Perhaps a full cloture should act like a previous question motion in the House. Full cloture could end debate right then and there after it ripens and goes for a vote. However, should that fail, but the Senate in a majority choose to end debate, you could let that drag on for some long period of time that is finite with underlying amendments all requiring germaneness. Finally, if cloture utterly fails (less than 50) then you have the old fashioned filibuster, but that means the bill would have failed.

Also, perhaps ideas for certain motions, like the motion to proceed to consideration should not be debatable, and amendments have a more specified amount of time, like the 5 minute rule in the House. It could act as a 3 legislative day rule in the Senate.

I do not know. However, I think these things are worth thinking about in both an abstract but perhaps workable manner.

And I leave with Floyd Riddick's statement again, "the rules of the Senate are perfect, and if they change every one of them, the rules of the Senate will be perfect."

Happy Birthday, Medicare

Medicare turns 44 today. The program provided health care to America's elderly, and represented a major change in health care. Oddly, these are the people opponents of health reform prey on, because they say that the government will take things away from them.

Nate Silver at 538.com discusses how Republican opponents are so out of touch on health care. The tension has gotten me annoyed too over the past few days.

They say Medicare has destroyed medicine. It pays too little and costs the government too much and leads to rationing. Almost all of these matters are false. Medicare rates, while not generous can and do effectively handle reimbursements if one is willing to handle a lower margin, but institutions have done okay on that, and still continue to take a hefty load of Medicare patients. Rationing just does not happen. In fact, one of the problems is that it is a fee-for-service with a set rate of coinsurance for anything. It does not matter if the expensive is as effective, worse, or only marginally better than the much cheaper alternative, it tends to reimburse at the same rate. The point of cost is a problem, but if you are against a rational rationing system then you have the current irrational system I just described, and these lead to poorer outcomes.

Yet, Medicare is also wildly popular as Silver points out. It works well for consumers. Doctors and providers grumble often, but it is also not worse than not having any patients at all above the age of 65.

So what is going on here? I think it's a bit of double speak. Then again, if you look at the last quote of this Washington Post story on Jim DeMint, you see that many people just forget how valuable and important the government is. As the man says in the end "keep your government hands off my Medicare." Sadly, such disinformation like the Republicans discussion on Medicare, can work when the populace has such views.

Insurance matters

Felix Salmon links to a bunch of other analyses of how health insurance and a lot of other insurance has high counter-party risk, and thus leads to rescissions. Essentially, the insurance company looks for pre-existing conditions and see if you lied about that on your application. Thus at the moment that you actually do need an expensive service, it takes it all away and refuses to pay.

These matters of insurance do not strike me as rare, and while horrific, make some level of business sense. However, when looking too at the contracting process of insurance, no one can adjust terms of the contract to avoid this, unless that person is not a person, but rather a large entity like an employer that can spread out risk. Employer-based policies then help to reduce this risk. However, that means someone like me, with chronic conditions, must stay in employer sponsored health care.

This then only strengthens Ezra Klein's obsession with exchanges. That creates a new risk pool and a regulated market. Instead of creating a situation where the insurance company produces a standard form (and these rescissions do fall under adhesive form contracts that any first-year student can tell you about and clearly does not make sense because you expect health insurance to help cover these catastrophes), you create a market that does not allow companies to do this. However, to allow them to have a profit, you pool the risk nationally in this large market. The Massachusetts Connector, in fact, meets this criteria and this goal.

I think a move like this would give people more choice, and likely meet closer to what their intentions when entering into a health insurance contract. That is probably a good thing.

The Self-Referral Horror, or How my Profession Screwed up Health Care

I study the law, as evinced by some of my other posts that do not have anything to do with health care. However, an interesting Slate piece caught my eye. In it, it stated that doctors at one time did not do self-referrals, but as a result of the case Goldfarb v. Virginia State Bar, 421 U.S. 733 (1975) that changed. The case held that lawyers who charged the State Bar Association's suggested rate of 1% of the home price for deed matters with home purchase were involved in price fixing, since no one could get a price below that 1%.

This came to apply to health care in the following way. Doctors had professional ethics that prevented them from getting any income except through seeing patients and treating them. However, as the case showed, any sort of thing that a court could interpret as price fixing fell suspect. Here then, the concern was that cordoning physicians off from other sources in such a strict manner could lead to price fixing, which it kind of does, and as a result that, plus some of the market deregulation of the Reagan era helped create a greater incentive for self-referral. The article captures this much better than I do.

A weird area of regulatory law then arose. Rep. Pete Stark, who has fought against such self-referral, has helped pass legislation that limits physician ownership of certain thing like labs. However, the so-called Stark 1 and Stark 2 laws created a complex regulatory scheme, and it has gaping holes that do not just arise out of complexity. It prevents self-referral for the $200 lab test. It does not prevent self-referral though to a hospital that you own a stake in that specializes in orthopedic surgery, which costs $20,000, and on which the margin is greater (I made up these numbers, but the sense of the wide difference in magnitude is the key).

When we talk about capitation and all these other matters, I do not think that just imposing some sort of here's some cash this month is necessarily the only way to go, and indeed, it could act as a blunt tool. We also need to look at some of these practices of self-referral. Indeed, the now famous Atul Gawande piece mentions such practices regarding hospitals in McAllen, Texas.

Yet, the hopes for a Stark 3 that pushes for a regulatory framework that ends the most egregious of these matters (or even amends the Sherman Anti-Trust Act in this regard) is not something that will go forward. Doctors have earned huge profits here through self-referral and do not want to see it end. Unfortunately if we do not address this matter, something that really is an egregious cost-driver, how can you even push for larger more complex action?

More Compact Fun

According to a News Report that I have managed to lose a link to, the migrants under the Compact of Free Association have now lost a lot of their state funded Medicaid benefits.

Like every other state, Hawaii is facing a budget shortfall. Many services will have cuts, and state workers face furloughs or layoffs. However, the Compact Migrants' situation is unique.

First, unlike others, Hawaii leaves no money on the table dropping them. These migrants are treated like any other immigrant group. They do not qualify for a federal match (called FMAP) in Medicaid. As a result QUEST (the Medicaid Managed Care Program in Hawaii) must pay for all expenses.

While there is some weird political trouble with any "immigration" issue, as I have stated before, the compact migrants are unique. Essentially they are like legal permanent residents (LPRs), and can freely enter the country, work, and avail themselves of social services. They pay taxes too.

However, unlike any other group, including LPRs, which they are most analogous too, the federal government does not pay for compact migrants' services. Under welfare reform, and part of the conservative loves of block grants that are too small, they give states a block grant, which fails to cover these services.

Oddly enough, these same people who refuse to pay for the migrants also demanded the treaty in the first place, to use these Pacific Islands as Pacific forward basing locations. These hawks also tend to act as deficit hawks of the worst kind, not looking for solutions to balance the budget, but cutting it in a haphazard way. Essentially they said, you give us something valuable and we will let you come here, but you really get nothing if you come to the U.S. except to escape your island sinking into the ocean because of climate change.

So that's that. It's kind of sad watching this happen. Sadly too, I do not think anyone talks about them in this healthcare debate.

The Beginnings of Redemption?

So today started off grim. I woke up thinking that nothing would happen, and was in a foul mood because the Jewish Calendar had the 9th of Av, which commemorates the destruction of the Temple, and of course, there's a long fast (the only other long fast is Yom Kippur). Ruth Marcus's column this morning made me pine for someone reasonable, and it seemed as the news made it seem like the U.S. would exist in a health care galus (exile, pronounced Ashekenazic, because galut just does not sound right).

Then word this afternoon came out that a deal appeared. Apparently, the Blue Dogs and the Chairman Waxman came to a deal with some minor concessions. One was pushing the vote back until after August. Another served to get negotiating power for the public plan from year one. Finally, they also had some cuts in subsidies and other matters. Ezra Klein nicely summarizes it.

Word also came out too in the same Klein posting of Finance getting closer to a deal. Of course, one staffer reported that they are nowhere near a deal yet, however, I also think part of that is managing pressure and expectations. However, the Senate should start to feel the heat of the House sort of moving along. The Senate's touting of the CBO score and whatnot may have actually helped the House negotiators too. Essentially, something broke the loggerjam.

I still do not know if we will truly see a "beginning of redemption" (it is stated in a Midrash that the Messiah will be born in T'sha B'Av/the 9th of Av), but I am hoping that the seeds of redemption (which would not be complete if we passed the House bill, but rather requires a multi-year retooling) could sprout.

Jon Cohn has another analysis.

Hawaii, Employer Mandates, and Taxing ESI through Premium Excise Taxes

The other day I mentioned about Hawaii's employer mandate. Now I offer a study from the Federal Reserve Bank of San Francisco that states that it probably does not affect employer choices.

Next, there is an article in the Washington Post warning people not to make too much of the taxation of employer sponsored insurance. There are the classic arguments in there that how can something we hate, like going to the doctor, actually lead to runaway costs? The real matter is that it is subsidized, and instead of going in and desiring something just as effective, we want something with all the bells and whistles. Rather than caring about the cost differential, we instead push for the most expensive things or look toward places that are perceived to have higher quality, but just cost more. Boston serves as a great case where community hospitals that are lower cost have just as much quality as the name-brand academic medical centers, but things go there, and since the insurance covers it the same, then too bad.

That said, cost-sharing under a rich comparative effectiveness scheme could help sort of pierce this disconnect. That is, if you want the more expensive service, you have to pay a larger share or some sort of a differential, unless you can meet some burden of necessity. This is just a rambling idea.

Perhaps a better rebuttal to the reporting article is a column by David Leonhardt in the NY Times, stating that ESI is the core of the problem, and is the only real revenue source that grows as health care costs grow.

The fact of the matter is, that at the end of the day, the ESI exclusion of I.R.C. § 105 is just not good. It creates weird distortions.

Now as for ending it, politically the sell is difficult. One route to fixing it is instead of taxing the actual insurance itself is to institute a premium excise tax. Some of the liberal community like this idea, because it targets the hated insurance companies, and stands a chance at passing. Needless to say, one should never discount political arguments.

However, ever the tax person, I worry first that it does get passed onto people, just indirectly. First off, it is regressive. Even if you have a large exclusion, as the reports indicate, everything is at a flat rate above it. This is a two-bracket system rather than the I.R.C.'s structure of 4 brackets. There is nothing to say then that the costs could not just pass through to consumers evenly throughout the insurance group, leading to something regressive.

Of course, this could act as the old Pete Stark statement about a regressive tax for progressive ends, which health reform would serve. However, I have another concern about the administrability of such a proposal. Has anyone thought again about the valuation matters here? How do you determine which plans are worth that much? Since it is an excise tax, perhaps valuation is less of an issue, however, you have to ask how the IRS would collect such data as to how much tax to charge a company in this regard. Again, you have the IRS implementing something that could have administrability challenges, but unlike caps on ESI straight-forward are actually regressive.

A great analysis of the equity portion of this proposal comes from Len Burman at the Tax Policy Center.

Michael Steinberg's Passing

I got word reading Alex Ross's blog that Michael Steinberg passed away over the weekend.

Steinberg's program notes continued to appear in the programs of the Boston Symphony Orchestra (BSO) for many years after he left this venerable town. He had the skills that I envied: the ability to write for a generalist audience at a very high level about music. He remained connected to the musical world throughout his life, always seeking to educate people about the joy of listening. I purchased his program notes on Symphonies, Concerti, and Choral Masterworks in book form, and have always found them handy when I listen.

The L.A. Times has a great remembrance of a truly remarkable writer and music world inhabitant.

Blue Dog Problem

The real question on some of the blogs is how much of a problem are the Blue Dogs. Jon Cohn seems to think that while they pose some complexity, they are not a problem. Should Pelosi decide to move forward she can do so easily.

Joanne Kenan subscribes to the advice of Al Hunt, saying what previous posts here and other bloggers like Nate Silver, Ezra Klein, Cohn himself, and Yglesias have all said, in some sense the Blue Dogs are running against the prevailing wind.

What is most interesting is that Kenan does seem to think too that this could lead to a better bill. Undoubtedly so. The Blue Dog "resistance" while annoying to me, has led toward including something regarding an independent commission with binding recommendations on Medicare payment policy. Such ideas that they put forward in this regard may actually help us bend the curve, and may actually give the President what he wants.

In the end, the Blue Dogs, while not someone you want to get too angry, may be more bark than bite. What may need to happen again is to see some signs of life out of the Senate. Should they have a complete inability to do things, Pelosi may decide not to anger them further and force them into a tough vote. Then again the results of not pushing forward could have disastrous outcomes for the party, and those Blue Dogs in particular.

Morality Play

Religion seems to get involved with health care, and I do not mean abortion. New America Foundation's New Health Dialogue reports that faith-based groups are going out to make the moral case for health reform.

Ezra Klein also points to how the opponents of health reform had in the past avoided morality, but now proponents too seem to avoid the moral issue. We talk instead of the need to cover people and prevent them from getting sick or dying in the terms of cost-benefit analysis, bending the curve, and quality adjusted life years (QALY).

This is not to say that QALY and other matters are not important. However, when it comes to health care we particularly have some problems addressing our moral problems. Perhaps it is a sense of system justification. We avoid talking about the moral failure of people who are uninsured or driven to bankruptcy because of underinsurance because we would rather think that they "deserved" it when they clearly do not. We feel uncomfortable with such immoral structures that we thus ignore and avoid speaking about it.

In many ways too, our lack of any moral element leads to a strangely stilted discussion, where our budgets become stand ins for morality and the politics that advance that. It is like one famous legal paper said about the death penalty. Once the Court made it a constitutional matter, it left the realm of the moral and became a legal standard. To this day the debate on the death penalty is shrouded in the words of deterrence, effectiveness, constitutionality, and budgets.

Our economic and budgetary outlook often does obscure those matters we do not like to discuss like morality. And, as the American Prospect blog states, cost-benefit analysis (CBA) and CBO scores shroud our political judgments in the cloak of scientific/wonkish objectiveness, when such a matter does not exist. Where are the legal realists when you need them?

What to make of this

So, yesterday as I read the Washington Post website, I noticed this AP Story praising Hawaii, which under the Pre-Paid Health Care act has an exemption from the Employee Retirement Income Security Act (ERISA) of 1974, Pub. L. 93-406. Overall, I have always been happy that Hawaii has sought to expand access.

However, I would like to point out some other issues. First, the employer mandate has strict as Hawaii's likely would not work nationally. Businesses often complain about the various situations regarding this expense, but in some other way there is a cultural desire to hold the center. Furthermore, there are other more problematic issues with ESI, which I and others have pointed out.

Secondly, Hawaii has some interesting risk pools. Their BCBS does have a huge amount of the market share, however, it does differ from other BCBS systems, because of how it operates. HMSA is a weird duck in the normal insurance market. The other large group is Kaiser Permanente, which many have cited for high quality care.

So Hawaii has some other factors that make it unique. I wish we could just export these ideas wholesale, but it's far more complicated and nuanced.

One other weird Hawaii fact is that even if you did start including ESI in income, Hawaii residents actually will see smaller tax increases than comparable individuals in other states. Again, this points to lower costs in the system.

How much Change in Health Care?

Obama came to Washington promising change. The notion of change however is always abstract. Now the question arises, how much change do you want in health care?

The Washington Post today has two opinions from two worthwhile writers. The first is Dan Balz, the dean of the press corps. In his article, Balz balances a notion that Obama overstepped his bounds, but also makes note that even if he chose a more modest route, that would not mean success. Delay can kill proposals, and even delaying health reform until after 2010 or until a second term could mean nothing would happen there too. Balz points to the delicate balance of having an ambitious agenda, but also understanding the limits.

Those limits are what come into focus in Ezra Klein's piece in the Outlook section. Here he argues that what Obama is seeking to do is far more limited than a remake of the system. It lies in the tension in the polls. People want health reform, but they want to keep their coverage. In some sense, there is a weird status quo bias that we seem to have. However, as a result, the change that people want, which is more choice, actually does not come. Most people still keep their employer sponsored insurance (ESI), and they cannot change it if they are in a large employer. They are stuck. Such is the schizophrenia of trying to walk the line that Balz points to, which is utterly necessary.

Finally, there is the New York Times "Week in Review" piece by David Leonhardt. Here the crux of his point is that the very people we tend to trust, doctors, are also split on this matter. Here again, radical change would lead toward a panel that would look at comparative effectiveness data and look also at costs when making reimbursement decisions. The so-called IMAC proposal would lead to a better sense of cost control. However, many people are wary of the government entering into the doctor-patient relationship, even if doctors may order procedures, because they may be good for the patient, but these procedures also happen to pay very well. Here too we see something odd going on, doctors are fighting doctors, with the procedure heavy specialties like surgeons or radiology going against the more primary care type doctors like family practitioners or OB-GYNs.

So, where does this leave us. I think what each of these articles reveals is the total schizophrenia in our public opinion when it comes to health reform. We want things to stay the same in some sense but have expansions of coverage. We want to lower the costs, but we also want the way our doctors work to remain in place. It is as if we the public do not have a clear crystalized view of what we want.

It is scary. Indeed, change unlike what Mr. Obama said is something we feel ambivalent about or even dislike. We are creatures of habit. Our minds have evolved to handle certain circumstances and radical change of complex systems that involve many moving parts and long-term probabilistic thinking, which is what is health care (and for that matter a lot of our problems are about). On some hand, I think people logically know that we cannot continue in our system as it is. Yet, never underestimate fear of the unknown.

So, thus lies our schizophrenia. It is in some sense situational. We do not act like rational dispositional actors. Instead the situation around us, and our own internal situations, dictate what is going on.

This is not to say that I am pessimistic about reform. I still think it will come, and I think we will have important but modest change. Unfortunately, if we do not do this, we will have disaster down the road.

Religion and Women

This past week, Jimmy Carter lost his religion. In an Op-Ed placed in an Australian paper, Carter states that he is leaving the Southern Baptist Convention because of how it treats women. NPR also had a story on the fallout that examines the issue within the convention.

Let me just respond. I am Jewish, and while I have discussed in the past about my weird take on mitzvot, I often tend to hang around people who are practice-wise more religious than me. However, many of the people in my communities are either committed egalitarians or if they inhabit a more traditional halachick (spelling?) space, are involved in some level of feminism through groups like the Jewish Orthodox Feminist Alliance (JOFA).

In each of these groups they try to make women count. Traditionally, in the halacha women are mentioned in the same legal category as slaves and minors. A few of my teachers at Pardes have said that they personally feel that the legal category of women in that sense no longer exists. Civilly women can own property and provide for themselves. Women are not lorded over by husband. Yet, even if they think this, they understand that development comes slowly in practice, and careful calibrations are often necessary.

However, Carter does have a point. Too often we have used our scriptures, regardless of our faiths, to oppress women. Why does this sexism persist and exist? Again, I do not know. In many ways, I think such sexism sometimes grows stronger because of modernity. The chipping away of male power that the modern age has created leads to greater fears of women taking control and entering the sphere of men.

Yet, as Carter mentions, it is not good. Women have a lot to offer. They add their perspectives as human beings to these conversations. They are about half the population. Educated women lead to children who are better off. In so many ways they just enrich our lives if they are actually able to pursue things (this is not to say that they could not choose to stay at home, and perhaps a man like me may also consider the same).

This post is rambling, but I think what is necessary for us to see is the interpretation of texts leading to sexism, and how reinterpreting them could also lead to freedom.

Larry Summers and the Crisis at Harvard

I am stealing liberally from Felix Salmon's recent post on his blog. Here we hear greater details of what Larry did, and what happens next.

While the President of Harvard is traditionally a very weak position. The only great power is that she can turn down people up for tenure, even if Departments and Faculties approve of such an individual. However, Larry Summers sought to indirectly increase the power of the President. Such was his involvement in the Allston campaign, as well as other matters. What appears here is Summers intervening in the financial matters.

Drew Faust in some sense has returned to a more modest role of President and central administration. She is a rather colorless figure who writes great books on the Civil War, and supports the arts, something Summers failed to do. However, the University is in crisis and needs strong leadership.

The largest problem arises in the Faculty of Arts and Sciences (FAS). Already the infighting has started. Science Faculty are annoyed that they do not have their labs in Allston. Humanities faculty members, sort of the largest group against Summers who in many ways showed disdain for them, want to have greater say over the direction of the University. The students have lost hot breakfast and will likely see more cutbacks in the fabled House system that creates smaller communities.

What really needs to happen is that the faculty itself must change with the changing situation. Their life of relative comfort will not stay the same. They may have to see freezes in their incomes as well. Faust and FAS Dean Smith should help facilitate and solve a collective action problem. And perhaps, the University might need to undergo a more radical corporate change.

Personally I am not in the administration. I am just a person who has had ties to the venerable institution (too many) and would not want to see it fail. For all the hatred that the University inspired, it has done good as well. This institution is probably one of the few in the U.S. that is admired around the world. Its collapse would likely weaken soft power.

CBO and IMAC

So, I just got the news, and clearly this kind of news does not break through the normal media channels, because it is kind of wonk-tastic. The tip goes to Ezra Klein, who has a great analysis.

The CBO has released a report discussing IMAC. OMB responded and there seems to be a fight brewing.

I love CBO, and I almost always defend them. However, in this instance, it has gotten weird, because CBO admits that it cannot plug in numbers, and yet seeks to do that. In some sense too it may be driven by a Congress trying to balance numbers.

Oddly too, the Administration's heartburn over the proposal, which I still think is good even if one must better examine the details of how you implement it, may also arise from the fact that now it might have to do the unthinkable, tax ESI. CBO itself has stated that they can more concretely calculate these numbers and has hinted that it would be favorable.

However, the Obama attacked this idea on the trail, although one should realize that McCain's plan did not have all the other safety features that the current bills or any other proposals have in place, which makes a great deal of difference. Unions would blow up at the idea (wrongly so, in my opinion). The administration would have to raise taxes on a group that it promised not to raise taxes on. So the politics gets more dicey.

I think in the end Orszag comes out right in this matter, but Congress must take the CBO's estimates. But, in a perverse way, this could lead to some inclusion of ESI in income.

Update: Jon Cohn has an excellent viewpoint too on this matter.

Where do we go?

Again, I want to remain positive. The fallout on Friday of the Energy and Commerce Committee creates some concern as to where we will go in health reform.

There are problems. It does create a prisoner's dilemma between the House and Senate. The problem is collective action. Even if they can talk, no one wants to take the first step and put herself out their for attack.

Perhaps it is time for the Blue Dogs to show their cards too (according to Steven Pearlstein) and outline specific proposals in greater detail and in public. Chairman Waxman should also avoid getting angry at them, which is something he rarely does but may feel more likely to do because of the great pressure.

Yes, it seems depressing, but again, I still remain guardedly optimistic that something will result. It is likely not to reach anything near what the liberals want, but it is also will start us down the path, incrementally, of restructuring our system.

The MedPAC/IMAC Proposal

Many have written about the IMAC proposal. Overall, I support the idea. One of the key reasons is that Congress itself has never shown itself willing to make hard choices. Ezra Klein's piece highlights this matter, as did the Ruth Marcus column posted a while back.

The reason why Congress has pushed back stems from the fact that they do get the ability to micromanage these things in a political manner. In some ways it is like defense earmarks on steroids, because instead of targeting a project, you have to fundamentally affect the payment structure of the entire Medicare (and thus all other health insurance) programs. That leads to a system that creates problematic incentives.

However, like so much of what I talk about, the devil is in the details. The question is how do you design the institution. Right now, the Medicare Payment Advisory Comm ) ission (MedPAC, which is the body that the Independent Medicare Advisory Commission (IMAC) is based on, falls under the auspices of Congress. It does not create binding policy but just makes recommendations that are rarely followed, as the example in Klein's post shows you.

Senator Jay Rockefeller wants to create an IMAC that is closest to the Federal Reserve. Essentially the Congress would completely delegate to an entity that is completely independent of any branch, much like the Federal Reserve is. This of course though may overly insulate it from the political process, and could lead to future gutting by Congress itself.

The President and Peter Orszag have a more refined proposal. This idea follows from the highly successful Base Realignment and Closure Commission (BRAC). BRAC worked by having a panel create a base closure recommendation. The President approved of it. Congress could pass a joint resolution of disapproval, but it could not fundamentally change the recommendation.

The big concern, and one that I personally have with my administrative law hat is the idea of executive power. Under INS v. Chadah, after all, a joint resolution passed by both chambers is like a regular bill. It has presentment requirements, meaning, the President must sign it. However, note the problem here. Even if the Congress by a majority rejects the recommendations, the President, who remember supported the recommendation, would likely veto it. That requires an override vote, and that takes 2/3.

Now perhaps it is likely good to further limit the politics of Congress in this manner, but one should always beware about a new institution, as some liberal Democrats are. The structure does matter. The view of the White House actually represents a major increase in executive power. Furthermore, IMAC would be much smaller than MedPAC, consist only of physicians, and have Commissioners likely appointed by the President (with Senate confirmation). This gives the President greater control over the policy than anyone else.

As someone who deeply loves the legislature itself, while bemoaning some of its inability to do certain activities, I support IMAC, but I think it is important to change the structure. IMAC should remain as an independent agency with delegated authority. Congress should have greater say in appointing commissioners, and five is probably too small. IMAC should draw on other health care sectors too. And something should arise to create a level of procedural consensus at the IMAC level before anything reaches the President or the Congress.

I have also thought of an interesting matter of how to structure the procedure beyond IMAC itself. Instead of having the President make the first say, give the proposals to Congress to vote on as a bill. Require that it have fast track procedures, and limit its amendments to completely budget neutral matters as determined by IMAC and CBO jointly. This would likely limit amendments. If Congress does fail to act, then and only then do you trigger the BRAC type process where the President either approves or disapproves. That way, you give Congress a first crack.

I understand Congress's concern, but David Broder does state that we are actually used to a lot of institutions that limit political power and are highly anti-democratic beyond even the structure of the Senate that progressives love to attack. Agencies themselves are not so democratic, and neither are the Federal Courts.

Of course, I am not really an Administrative Law expert. But, ideas like this are important, and these details are probably sadly lost in the discussion of this issue.

Financial Products Safety and choice

We have safety for our homes. We know our toaster will not burn down our house. Yes, likely we may have to pay more, but we at least know these things within a reasonable range. If we want, we can access some information about these things.

But, what about financial instruments?

Many people have raised the specter that if we regulate, if we try to ensure that your mortgage does not "burn down your house" or your credit cards do not utterly destroy you, we will stifle financial innovation.

However, Elizabeth Warren, who started this idea, tends to disagree.

If we do what she says though, credit card companies could not longer create great deals. If we do what she says, people would not be able to own a home with subprime mortgages.

To that she offers something about how innovative products can still occur. Essentially with the FDA regulating drugs, more actual companies wanted to invest. The idea too of creating an agency with the focus on consumer safety solely and granting power there also makes a great deal of sense and prevents the weird stovepiping (separating things out) we see now.

But, one thing I want to get to is the matter of choice. Right now you get a credit card. Warren wants information that you can read and understand. The industry says it is bad for innovation and bad for your choice. However, how does one choose when information is in very small font and very complex. I consider myself of somewhat average intelligence, and I struggle too.

Secondly, even if you do make it clear, without some other regulatory standards, things can fail. We often have a problem cognitively with discount rates. Again, I have the same problems myself. Things in the future that are probabilistic we do not have a great grasp on. After all, I hunt mammoths.

Finally, choice is always discussed of as an unbridled good. However, many of us would not choose a super risk product (well unless you are Larry Summers investing the Harvard endowment). Also, as many who know the Jam Study can respond, more choice actually paralyzes people. It is now considered a well-documented psychological phenomena.

What this boils down to is that a regulatory agency like this, as weird and for all the problems agencies can have, is likely necessary. Indeed too, limiting choice, may have a paradoxical effect of allowing us to actually choose.

Last Night's Press Conference

Matt Yglesias hates the Washington Post, sort of. I love it. I find it far more interesting to read than the NY Times, because often I feel the political coverage is better, and indeed some of the editorials are ridiculous. It's nice to know what the other side is thinking.

But, when it comes to covering the health care debate, they are doing a great job. With wonderful opinion columnists and a great team of reporters, they are doing things fairly right.

With that in mind, let me tell you about a Press Conference that I only read about.

First, Dan Balz has an excellent take on the optics, from someone whom I consider less in my quasi-liberal echo chamber. He writes

The president will need a sustained public campaign of rhetoric and persuasion to prevent public opinion from sliding farther in the coming weeks and perhaps months of this battle. He will continue to make the public case for health care reform Thursday when he travels to the Cleveland Clinic. As he's done on most days the past two weeks, he will be looking for ways to use the bully pulpit to counteract the growing assertiveness of his Republican critics that no reform is better than what Congress may be brewing.

But he will need to do more as well to push the process forward in Congress. Right now, it's not clear where he is placing his real bets. Is it with the Senate Finance Committee bill that is not yet fully formed but that holds out the possibility of some semblance of bipartisanship? Or will it be with a Democrats-only strategy that forces a bill through with a bare majority, using in the Senate the reconciliation process that would amount to a declaration of war with the Republicans?

Obama wants success above everything else. But he has now begun to put down some more explicit markers about what constitutes success. The question is whether, through public advocacy and legislative diplomacy, he can now pull off a victory that has eluded so many other presidents.

Balz does a good job laying out how difficult this process is. The President can only do so much, but now he has started and must continue to lay down markers, while balancing carefully some tricky political waters in Congress.

That said, it was not the press conference that was exciting, but rather an interview with Fred Hiatt of the Washington Post earlier in the day. First, you should read the whole interview. Anyone who wants to understand where Obama is coming from would actually find this more illuminating than the presser last night.

That said, as Jon Cohn states, some things are still on the table, and not dead. First, the President thinks some sort of independent body with some ability to enact Medicare change is still on the table. Second, the President is open to the inclusion of employer sponsored insurance (ESI) under I.R.C. § 61 (and eliminating parts of I.R.C. § 105) also known as the exclusion from income. I have talked about this matter before, and will bring it up again in a separate post.

Another good analysis comes from Merideth Hughes at New America. She shows how much is already in the House bill that could help improve our value, and how the last two major CBO changes could help.

The post also has two excellent stories from yesterday and this morning. The first is about the individual mandate. More and more people support it. Such mandates are necessary for creating a broad risk pool that make health insurance exchanges work. These mandates also have a lovely tinge of personal responsibility attached to it.

The second is how business is divided. While the Chamber of Commerce rails against the employer mandates, large companies have started to support them, and even local chambers are split on the matter.

With a sense of caution, with the AMA behind such legislation, with businesses divided what remains to be done on health care? Well, now comes selling it to the people. Last night's press conference, as Joanne Kenan points out, was one of those moments. But, Obama did not get those ideas from himself. He got them from David Leonhardt of the New York Times, and Steven Perlstein at The Washington Post. I have linked to these columns too and they are worth a read.

Yes, there may be some softening of opinion as a Kaiser Health Tracking poll shows, but overall it is still seen as popular. Overall the public is behind it, and Obama must just reassure the people and help Congress feel safer on the matter (such large reform is NEVER safe). Indeed, the safer route may be to just vote for it if you are a threatened Democrat. As Nate Silver shows, you are screwed if the President's platform fails, because you have now shown yourself and your party to be ineffective. If it works out though, and you passed it, you have something at least to hang your hat on.

Finally too there is always the concern about the timeout announced by Harry Reid. I agree with Nate Silver's other posting too, that there really are too many positive factors going forward. I may be overly confident and positive, but I really think that this is the case with all these other signs I cited/linked to in my own piece here.

The question is that if the public cannot support something like this now, I wonder if we can ever achieve something worthwhile on the issue.

A new Siddur

I gave in and recently got the new Koren-Sacks siddur. I will willingly admit that this was an impulse buy.

Many have written about the siddur. However, really davening with it is incredible. The font is great. It is clear. The translation is nice (I am not a Hebrew scholar, but have some functional ability with the language). The commentary is great by a scholar that I find thoughtful, Rabbi Jonathan Sacks, Chief Rabbi of the United Hebrew Congregations of Great Britain and the Commonwealth.

So, what does this mean for the hated Artscroll? Well, Artscroll will still continue. It is established and a well-known, if offensive product. It has a wide range of products too, beyond that, some of which are useful (if you know their bent and can dig a bit deeper).

However, what this does is add competition into the market of Orthodox/Traditional Siddurim. It offers the buyer choices. While I often state that choice is something that we do not often have, here we have a market of fairly well defined goods, a set liturgical book with instructions, translation, and commentary in English. The advent of choice, actually could only help this market.

While I do not want the traditional siddurim market to turn into a veritable cola aisle (with so many choices that it becomes paralyzing), I do think a limited set of wortwhile options is good. And so, I welcome this siddur not only because it is aesthetically appealing, less offensive to me, and wonderfully put together, but because it really does offer a choice.

And note, I am not even that traditional.

ACOs and Capitation: the devil is in the details

I am actually thrilled at the announcement last week that Massachusetts will move toward a capitated system, meaning that it would pay patients on a per patient basis if they meet certain quality goals instead of on a fee for service (FFS) model. The center of this is what is called an accountable care organization (ACO). These are integrated centers that would guide patients to reaching these quality goals and reap efficiency savings if they come under budget.

Joanne Kenan at New America has a great explanation of ACOs and why they are great. In fact, ACOs may be something that stops the Cost Connundrum that Atul Gawande mentioned.

However, I say that these are frightening. These are products that have never been done before. That does not mean we should not go ahead and do them. But, it requires a realization that even if they "fail" you cannot just throw it out and return to FFS, but look to tweak the system.

Also, there is a significant question as to exactly how capitation will work. For example, in Massachusetts, where most of the action exists, you have academic medical centers (AMCs). AMCs have higher costs associated with medical education. You have to adjust for risk too. A riskier patient should lead to a larger budget.

Ideally, you would risk adjust, and put in some sort of cost for an AMC on the medical education, but nothing that would affect their margins. Ideally you would do this to encourage people to get care at the Community Hospitals, which for many procedures are just fine, if not better than the big AMCs (MGH, Brigham and Women's, Beth Israel Deaconess, Tufts Medical Center) that dominate the city. And, if people choose to go there, perhaps you should institute more cost-sharing.

But, there is a concern that that will not happen. Clearly something is wrong with the Massachusetts market, as the Boston Globe showed last year. The question is whether these gorillas will use market power to skew captiation in their favor to increase their margins at the expense of everyone else? Could we actually reduce competition in the provider marketplace with this? Also, how do you deal with the risk of say catastrophic events like a swine flu?

All of these kinds of things are not reasons to go against capitation, and they are not reasons not to move forward. But, they are causes for concern that policy-makers must consider. They are areas that will need tweaking. Like any other game changer, you can make a big first step, but that is all it is a first step. There are no such things as big bangs in such a complicated area of policy like health care.

Precommittal and Health Care

So usually we associate pork with defense spending and bridges to nowhere. But the worst is the sort of pork arises from the inability for Congress to stand up and make important policy decisions on something very expensive, and that is health care.

Yet, pork lost today in the United States Senate. The Senate voted down the F-22, a fighter that really is not so helpful. I am a very pro-defense person. But, I would rather spend money and political capital on making it easier to do intelligence work (including fixing our wiretapping statutes to clarify and make it easier to view, but that's for another day) than on a fighter jet that is useful only against the Chinese, and that we have a lot of already.

The F-22, like so many weapons systems, is built in almost every state in the union, making it very hard to strip out. Yet, stripped out it was, because who knows.

Ruth Marcus says that the same though has to happen in Medicare. Congress must make decisions that are tough that essentially harms jobs and wealth in their states and districts. But, there is a way to do this, and that is the idea of an independent agency (and really it must be independent of the branches but get some sort of consent from the other branches). This is the IMAC idea.

Marcus is positive that perhaps, in light of this, Congress may see the light. I hope she is right.

Health Care in trouble?

Look, I would be lying if I did not say that I was not concerned about the prospects of health reform. I would generally call myself a deficit hawk too. I actually opposed the Bush tax cuts, because of deficit reasons. I have talked many a time about controlling health care costs.

Am I annoyed that the bill does not do more to control costs? Yes, to some extent. However, I also think that unless we get more involved as a society in health care, until everyone realizes the consequence of doing nothing, we will not get any effective cost containment.

The lack of coverage in this country is pitiful. The fact that we have a completely fragmented system means that it is sort of harder to control the effectiveness. It also is hard to collect the data we need, because those claims data are "proprietary." We fly in a zone of no information.

What reform poses to do is decrease this fragmentation greatly. It gives us all more skin in the game. Now we can sort of sit pretty as everything else falls around us not knowing that we will soon fall into the abyss ourselves. Now, we move into the same boat and we have to care about the other. We sink or swim together.

The bill does not do enough to bend the curve. But, even more unconscionable, people want to slow it down to kill it (because given today's Washington Post we see the polls starting to turn the other way, and political capital waning). That's at least what Peter Orszag said on the TV shows this weekend.

The delay and kill is a classic strategy. You wait and merely attack and delay until the President's numbers soften, or you are able to gin up enough opposition to a bill. Ezra Klein points out that the operatives on the other side encouraged this, and speak in vague terms what they want. We want cost control, but we want higher reimbursement rates. We do not want a public plan, because it allows the government to negotiate. But, we want cost control. We do not want though anything on the table that would take these powers out of Congress where we can steer reimbursements in weird way, and continue the dysfunctional system.

The Republicans have decided to turn this into the Administration's Waterloo. Yet, the question must be asked, what the hell are the Republicans' plans? Health Savings Accounts and high deductible plans? The RAND study shows that people forgo cost-effective care as well as expensive care equally, leading to overall worse outcomes. Dana Millbank has a more amusing take on this.

Democrats too though have some blame. They are going to have to take tough votes, as Jon Cohn points out. Some of what will arise will not be politically popular. But, if you can get the aggregate together in a big bill, you would do well. And one is well advised to look at Nate Silver's blog posting, which states that there is a survival motivation. He also points out there is a lot more out there to work through.

Yet, as Silver points out, there are still glimmers of hope. Over the weekend, I heard Rep. Mike Ross at least start something constructive, supporting the Independent Medicare Advisory Committee (IMAC) Proposal (you will have to listen to the story). IMAC would essentially shield the Congress from the power to make decisions. The goal would be to send it out to an agency that would make Medicare decisions outside of Congress and the President. The President would sign off, and if the Congress did not like it, it would vote against the proposal in a joint resolution (this is a complex idea that deserves a post in its own right later). Or perhaps Orszag does it better.

In other good news too, today, Olympia Snowe pointed out that she may support a public option, and she signed that letter asking to slow down last week. Grant it, the words are not thrilling. However, Snowe probably does not want to slow down to kill. She likely wants to get further into the details (as does Ron Wyden).

Finally, it is worth taking a look at where we stand. As New America pointed out last week after CBO's reports, it looks good. Klein shows us that these are expected problems in the legislative process, and people on the Hill who work on this still remain optimistic.

And finally, it is important to remember the cost of this bill. Yes, it is expensive, but let us put things in context. My good friend and excellent reporter Joanne Kenen talks about it in the context of the overall economy, and links to some great sources. We also have to look at the costs, both economically and otherwise, of an uninsured population that swells to 50 million.

Random Rants about Bonuses

So when I started this blog, I wanted to raise discourse. I promised not to be angry.

Now I break that promise, and I deeply apologize.

The ceremonious event is the Goldman Sachs bonus fiasco. Last week, Goldman reported record profits. They also then paid their employees bonuses of $700,000 a piece. Now, I understand that the top marginal rates that these people have reduce it, let's overshoot to 50%. That still is $350,000 a piece take home.

Both Ezra Klein and Matt Taibbi point to what is going on, with Taibbi, closer to the anger. They essentially point out that Goldman Sachs returned to profitability only on through taxpayer dollars. They helped to create the mess we are in, and now they are being rewarded.

It is worth noting that according to IRS data average and median income (indeed adjusted gross income, or AGI) for a family of four hovers around $45,000 a year. So this is a fair amount of money that they are taking from us. It may be the largest upward transfer of wealth I know of.

Klein also points to the counterfactuals. I agree with him too, that the counterfactual scenario is difficult.

For me though, my anger comes from betrayal in many ways. I supported the stimulus and the bailouts, because I realized that these were institutions that were too big to fail. I knew that we needed liquidity.

However, they never came through on that. They hoarded. They managed to further concentrate, so they are now even bigger and more indispensable. They never restored liquidity. And now they pay the bonuses.

The betrayal comes because I once attacked my more progressive friends who screamed against bailing out the banks and the "rich." I supported this, because I saw the intervention of the government as necessary. I responded with horror that Members of Congress I knew initially voted against the bailout to my friends who all supported it in the financial world.

And what do I get? Nothing. I, and our policy-makers, whom I do think were acting in good faith, instead get this betrayal. The anger is yes based on class matters. But, it is even more the broken trust.

Too Many Patents?

First, I decided to take a bit of a break over the weekend.

What follows is a posting from a friend of mine, named PatentPanda, about some issues in patent law and policy.

I try to keep a good collection of friends with various expertise, and I am thrilled to have PatentPanda writing.

I'm thrilled to be the first guest post on Not for Polite Company. I'm a patent attorney in D.C., where I lead the emerging business practice of a small firm, and am excited to be writing about the mess with software patents (the opinions are my own). Basically, they are too many of them.

There are a lot of folks who really don't like software patents. Some, like google and microsoft, come to their opinions from a financial perspective. Quite simply, their defensive efforts (litigation, damages, due diligence) cost more than they earn by offensively, e.g. licensing out their patents or the competitive advantage that they receive from employing patented technology. This is as it is supposed to be. A bold statement, I know.

To appreciate the problem with too many patents, it's worth first taking a moment to look at what the patent system is supposed to accomplish. The constitution talks about securing rights to inventors to promote science. Securing the rights against who? Presumably competitors. Without patents, a technical person would need to invent something and then sell it. With patents, the technical person need only invent something, and can be paid once someone else has sold it. Just as the advent of the corporation lets people specialize in things like "human resources," patents remove the need to be good at both inventing and business.

Before we go further, I should note that the patent world exists in two halves: electrical and life sciences. "Electrical" encompasses not only electronics, but software, business methods, and even general mechanical stuff. Life sciences is the kind of thing where having a Ph.D. is really helpful: chemistry, biology, DNA, etc. The following stuff is applicable for electrical stuff, but is often completely wrong for life sciences.

Patents are an important barrier to entry. For a large software company, their value is relatively low. Say you want to write a competitor to Windows. You, not google. The sheer scale of such a project, much less launching it, is so huge that only very large players can hope to compete. More importantly, a small company can't take down Microsoft without doing something entirely new and better. So Microsoft gets relatively little protection from patents.
If you are a small company, it's not that hard for a big company (e.g. Microsoft or Google) to put you out of business by moving into your space. Whatever resources you command, they can muster. There are a few exceptions, and patent protection is often way up on that list. For a small company, patent protection can be vital.

Each of these approaches is driving the huge number of software patents. IBM began the picket fence approach, and Microsoft copied (shock, I know) by hiring away Marshall Phelps, who set up the program at IBM. When a small company would tell IBM that IBM was infringing a patent, IBM's response was often something to the effect of "here's 2000 claims, we're sure that you're infringing something."

This evolved, as capitalistic things tend to do. The patent portfolios of big companies continue to swell, and continue to cover lots of little things in an effort to make sure that they have some protection everywhere; they always have something to trade. The small companies have learned not to bother big companies until the small companies are not doing anything (and thus don't care how many patents the big company has). Not doing anything generally takes one of two forms: either the company tried doing something, failed and now has only the patents left, or never did anything but license the patents in the first place.

Patent portfolios have grown because patents are so powerful. There are significant damages, and even more fear inducing, injunctions. There are very few things that could shut down Windows, and a patent is on that list. This leverage is a key driver in the growth of patents, and the reason why there are more software patents than other types. Unlike mechanical inventions, digital ideas can be replicated nearly effortlessly, leading to the possibility of fabulous riches within several years of starting the company.

So now there are a lot of small companies generating software patents, and the big companies are generating lots of software patents, and both are working on scale far larger than either mechanical or pharmaceutical outfits. This raises everyone's transaction costs.
More patents makes it harder to tell if a new product that you are launching infringes a patent. If patents were rare, you could go poke around, and have your attorney review the half dozen important ones in your field. Due diligences for software often scope out thousands of patents to be considered before doing a deal. Now patent lawsuits against large software products are almost an inevitability.

The fear is that folks will have to spend more time dealing with patents than code, which would be bad.

The AMA Endorses, Some Cold Water, but other signs of Movement

My good friend, Joanne Kenan at the New America Foundation writes about the AMA's endorsement. You should read the letter and her analysis. It is quite amazing.

Why does this matter? While the AMA represents a dwindling number of physicians, it is still the largest group. But, what is even more important, they have been opposed to health reform proposals like the House bill. This is the group the created the specter of socialized medicine. The AMA has lost members because it has grown conservative.

Now it did an about face. What caused it? Well, the bill gets rid of a payment method called the Sustainable Growth Rate (SGR). The SGR essentially required an across the board reimbursement cut when health care spending growth outpaced GDP growth. This has happened, and Congress has intervened to stop it. As Jon Cohn points out though, when you are sowing the seeds for future payment reform, keeping it in place just does not make sense.

The cold water comes from the CBO scores and testimony. I completely agree that the bill does not help to bend the curve. It does provide access and coverage. However, bending the curve is the ultimate goal. By investing in new ways to reimburse in Medicare and promoting more comparative effectiveness research (and thereby building on the stimulus act).

However, as Ezra Klein points out, hypocrisy is ripe. The basic tenant of the opposition to the bill is that it is too expensive. But when you try to ask them to control costs by actually using comparative effectiveness that includes things like cost effectiveness research as well, they flip out, saying you ration. Rural areas freak out if you try to save money by structuring things on a Medicare plus a certain percent basis, because they think Medicare reimburses them too low comparatively (sort of true). Every interest group comes in and has its needs, and it turns into a feeding frenzy.

Add in the idea floated by the Administration of precommittal, which is requiring Congress to accept a recommendation on an up or down vote, is something that is an anathema as well. Many of these very people criticizing these costs hate the idea.

Klein has the right idea when he says those who criticize should:

a) Support, as the CBO says you should, the eradication of the tax exclusion that protects employer-based health-care insurance;

b) Support, as Lewin and Commonwealth say you should, a public insurance option that can bargain at Medicare's rates;

c) Support, as the Office of Management and Budget and every health-care wonk in town says you should, one of the various policies floating around to give MedPAC authority to continually reform and modernize Medicare;

d) Support some form of aggressive cost-sharing that would make people extremely angry because it will save money by reducing their access to health-care services;

e) Support comparative effectiveness review that can judge not only the effectiveness but also the cost-effectiveness of various treatments, and give the federal government authority to use that data when deciding reimbursement rates.

A problem of course comes with the tax matter, which I have discussed at length. So I will just point to the Opinionator, which did a better job of aggregating than me!

Finally, there are other signs of hope. Remember Harry and Louise? They were the ads that torpedoed Clinton's bill (or at least are considered partly responsible). Now they have returned. But, now they are pro-reform. They are sponsored by PhRMA and Families USA, a strange mix, but clearly showing a level of consensus.

Another last sign of hope? Jon Cohn reports that the Politico has a scoop that the Senate Finance Committee is coming out with their bill. I hope it is strong (and I hope it has better tax policy than the House).

There are obstacles. The road is not easy, but if we get something, it is looking more positive that it will be only a first step. But, what a step it would be!

A few final thoughts on all the Health Reform things

First, I want to harken back to one of my previous posts. The bills I do not think address a key matter, and that is migrants under the Compact of Free Association (COFA). The Compact allows us to use certain Pacific islands for military purposes (many of which were U.S. trust territories, and which we used for military bases and nuclear tests back in the day). As a result, citizens of these countries can migrate freely into the U.S. It is as if they are granted automatic permanent residency status.

However, as part of welfare reform in the 1990s, they cannot receive federal aid. Instead, to cover things up, there is a block grant that is woefully insufficient. These are often sick individuals, and those from bombed out areas often can have radiation related disorders. However, states often bear the brunt of this, and yes, my old state, Hawaii, has a disproportionate amount of these individuals.


I am hopeful that as markup occurs on this bill that pushes towards including Compact Migrants in the more federalized Medicaid program, and includes them in the exchanges and subsidies.


Second, I wanted to show off some graphics/flowcharts. Thanks to Ezra Klein.


(NB: You will probably need to open the post to really see the graphics in their full glory).


Shockingly the Republicans have had some scare tactics. Here's the chart of the House Democrats plans:

It does look a bit scary.


However, Jon Cohn and company made a lovely graph as well. It represents our current system.

It is even more messed up and scary.


But more frightening is House Republican's graph:







What the hell do they want? Consumer directed health care? The RAND Insurance Experiment discredited that, saying people stopped using the cheaper services, and saw detrimental effects to their health.


All told, these charts represent some fundamental truth. Health care is big and scary. And it will always be messy. The question is does all the messiness produce outcomes we want.

And the Senate moves too

Meanwhile, in a foreign land known as the North Side of the Capitol, the United States Senate, wracked with obsessive ideas of a "wise Latina" showed it may be doing something far more important. Crafting a bill.

Today, on a party line vote, the Senate Committee on Health, Education, Labor, and Pensions (HELP) approved their version of health reform. Jon Cohn writes his summary of what happened, as does Ezra Klein. Klein helpfully points out that while the vote is party line, it did incorporate some Republican ideas (does anyone remember the individual mandate as a conservative idea as I do). Furthermore, they even accepted an amendment requiring Members of Congress and their staffs to join onto the public option. I would have been fine with that, and enjoyed having a weird stake in my own insurance back when I worked on the Hill.

As New American points out, the momentum builds. All eyes turn to the Senate Committee on Finance, where the tax provisions and the Medicare and Medicaid matters all arise. Indeed, if the bill even had one sentence on tax, under Senate rules it would go there. HELP produced an incomplete bill.

But, with the House pushing its bill over the next week in markups, Senate Finance has pressure now. I have not had something so hopeful in a while.

While I decided to watch the All-Star Game, the House moved

So last night I had a party for the All-Star Game that sadly did not draw people. I can understand. However, as a result, I did not blog. Hence, I missed a lot of action.

Yesterday, the House Tri-Committee released their bill. The group is called such, because of the Committees shepparding the bill. They are the House Committee on Energy and Commerce, the Committee on Education and Labor, and the Committee on Ways and Means. Ways and Means is there, because there are revenue measures, and Medicare is part of their jurisdiction as well. Education and Labor also gets involved because of the Employment Income Retirement Security Act (ERISA) changes. Energy and Commerce is the main point committee on health care matters.

The amazing thing is the coordination of what is involved. These are three committees that in the past have jealously guarded their jurisdiction. Perhaps Chairman Waxman has been helpful. One of the things actually about the Clinton reform is the fractuousness of the committees. If these committees can hold on their markups, then we will be very well off.

Here, is what the House Bill does (from the New America Foundation's Blog):

• A National Health Insurance exchange that would allow individuals and small businesses to shop around for quality, affordable coverage in a transparent, convenient way.
• A public health insurance plan that would be available to all Americans. The plan's payments to medical providers would be based on Medicare rates, but the bill also promises to expand Medicaid and "modernize and improve" Medicare. (Sidebar, Ezra Klein mentions the Medicaid movement as a step in the right direction)
• Insurance companies could no longer deny coverage because of pre-existing conditions. Everyone would be required to have health insurance, but those who could not afford it would be able to access a sliding scale of "affordability credits" to help cover the cost.
• Financing would come from a federal surtax on the upper income -- up to 5.4 percent on the income of taxpayers making more than $1 million a year -- as well as hundreds of billions of dollars in cuts in projected Medicare and Medicaid spending.
• A focus on prevention and wellness, including the expansion of community health centers and the implementation of community-based wellness programs.
• Employers who do not offer coverage would be required to pay 8 percent of each uninsured worker's salary, with exemptions for smaller firms built into the legislation.

It seems quite good, and has most of what I want. I really like the exchange provisions. The credits and rationalization of Medicaid is great.

On the tax side, I am incredibly wary. It's politically the right move. However, it may not work out as well as people think. Howard Gleckman at the Urban-Brookings Tax Policy Center has blogged about some of the problems. There are two major problems that he points to, both of which are valid from an administrability stand point.

• Pushing marginal rates back up to the 50% level, really does weird things and encourages bad behavior. We return to the late 1970s and early 1980s mess.
• This is a very small slice of the population with a special tax added onto it. Instead of it being broader based, which is much better, and instead of closing loopholes, it adds them.

You can read the two Gleckman pieces here and here.

For more on the House bill, I would recommend the following posts. Ezra Klein discusses the bill well, as does Jon Cohn.

I am spending the next few days enjoying myself with these pieces of information.

The full bill text (do not try to read in one sitting)

A summary by the Tri-Committees.

What often does get read by people, the Section-by-Section analysis.

And finally a link to all the materials. I have chosen Ways and Means, because of my love affair with that committee.

Health Reform News

Oh yes. There is something else on Congress's agenda besides a Supreme Court nominee. Health reform. Remember that?

So why do we need to do this reform? Well, I think my friend Joanne Kennan, has a great post on today's New America Foundation Blog, which links to someone else. She notes that not only is Congress divided, so are physicians themselves (and the AMA really does not speak for them much any more). The link is to Bob Doherty's Blog post.

And train wreck we are already seeing. Once again people are losing jobs, and losing their main source of insurance. New America also talks about the rise in emergency room care. This is a fundamentally dangerous situation. Why? Well, take a look. It reflects part of the problem with employer care. First off, it is a problem because when you need insurance, because you cannot pay for things, because you lost your job, it's not there. Second, it is absurd to think about health care as an employee benefit, as Ezra Klein points out.

Emergency room care too as the New America posting shows it is expensive. It creates weird subsidization in hospitals raising the costs for everyone else. It provides care that does not actually help improve overall health.

And what happens if you have emergency only care and cannot pay for things? Well, Matt Ygelsias, in his much more inflamatory style lays it out nicely:

Now in the current American status quo you might be able to sign up for Medicaid (socialism!) or else go to the ER and get some unpaid-for health care once your condition deteriorates enough. But it is worth being clear that the free market solution to someone being poor and sick is for them to die. If you’re too poor for HBO, you go without watchingTrue Blood. If you’re too poor for a MacBook Pro, you make due without one. And if you’re too poor for statins you get a heart attack. And if you’re too poor to get your heart attack treated you die. Whether or not anyone in the United States actually wants to implement such a system isn’t clear to me, but that would be what a free market health care system looked like—like free markets in other things.

So, we have a broken system.

But, there is hope. Some initiatives are showing us a way forward. In my last cite to them tonight, New America points out the Keystone Project, which involved creating a checklist, is showing more and more great results. And it is saving money too.

We need reform to cover people. We need it to funnel them into care. And we need it to really help promote things like the Keystone Project. Coverage is tough, but it has to happen, and it probably should go first, because it is the only way for us all to have a stake in the game.

Sotomayor Day 1

So I do not have much to say. I think the Senators have drawn their lines along ideological grounds. It is completely what I expected, but it's a media frenzy that we all "enjoy."

The fact of the matter is, that in the age of borking, these hearings often become full of sound and fury and signifying nothing. Everyone is careful. No one chooses someone out of the mainstream. And the only people who really care are the most polarized groups of individuals. Of course that creates horrific distortions.

I actually do not think that we will see another Ginsburg like confirmation, with votes for confirmation in the 90s. Yes. Sotomayor will get confirmed. However, the divisive vote will show how, even in the age of Obama, our divisions remain.

Weirdness in Japan

Today I saw something shocking. It appears that 民衆等 or better known as the Liberal Democratic Party (LDP) of Japan is in deep trouble. The party appeared in the post-war period, and is like the Holy Roman Empire (it's neither Liberal nor Democratic, and it is barely a party too because there is a lack of coherence).

However, now as the NY Times reports, Prime Minister Taro Aso is facing calls for him to step down. The LDP lost control of the Tokyo Municipal Government. So the Prime Minister called for new elections, which they will likely lose.

Of course the replacement is not much better. Or rather it does not really have the institutional capacities in place to really run a government. It seems as though Japanese politics right now is in a state of disarray.

We should not gloat. Our own political system in California has reached such a crisis, and California presages the nation. In Washington too, we have processes intentionally designed to move slowly. We have politics more polarized than ever. Who knows what is next.

So that's the name of the game. Oh, and the robots are now being laid off in Japan too.

Quality Reports and a fun map

The New America Foundation's Health Blog recently talked about Baylor, and a new Center for Medicare and Medicaid Services (CMS) report shows how good it is. You can read the blog post here.

But even more fun is USA Today's map of quality based on the CMS numbers. You can see that here. It is so much fun to play around with, and to look at what are the best places to end up if you have congestive heart failure or a heart attack.