Peter Orszag on health care and the budget (Charlie Rose video)

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On 24 February 2010 (the evening before the health care summit), Charlie Rose interviewed the always articulate and intelligent Chairman of the OMB, Peter Orszag, on health care reform and the budget. The video runs about 30 minutes and I think it is well worth your consideration. [After going to the above link, click on Orszag's face to start the video.]

-RichardH

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Krugman–Afflicting the Afflicted (On the Republican-Democratic health care summit)

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In his 26 February 2006 NY Times column, Afflicting the Afflicted, Krugman comments on yesterday’s Republican-Democratic health care summit. Here is an excerpt:

It was obvious how things would go as soon as the first Republican speaker, Senator Lamar Alexander, delivered his remarks. He was presumably chosen because he’s folksy and likable and could make his party’s position sound reasonable. But right off the bat he delivered a whopper, asserting that under the Democratic plan, “for millions of Americans, premiums will go up.”

Wow. I guess you could say that he wasn’t technically lying, since the Congressional Budget Office analysis of the Senate Democrats’ plan does say that average payments for insurance would go up. But it also makes it clear that this would happen only because people would buy more and better coverage. The “price of a given amount of insurance coverage” would fall, not rise — and the actual cost to many Americans would fall sharply thanks to federal aid.

His fib on premiums was quickly followed by a fib on process. Democrats, having already passed a health bill with 60 votes in the Senate, now plan to use a simple majority vote to modify some of the numbers, a process known as reconciliation. Mr. Alexander declared that reconciliation has “never been used for something like this.” Well, I don’t know what “like this” means, but reconciliation has, in fact, been used for previous health reforms — and was used to push through both of the Bush tax cuts at a budget cost of $1.8 trillion, twice the bill for health reform.

What really struck me about the meeting, however, was the inability of Republicans to explain how they propose dealing with the issue that, rightly, is at the emotional center of much health care debate: the plight of Americans who suffer from pre-existing medical conditions. In other advanced countries, everyone gets essential care whatever their medical history. But in America, a bout of cancer, an inherited genetic disorder, or even, in some states, having been a victim of domestic violence can make you uninsurable, and thus make adequate health care unaffordable.

Read the whole article. I’ll just add Krugman’s final remarks:

So what did we learn from the summit? What I took away was the arrogance that the success of things like the death-panel smear has obviously engendered in Republican politicians. At this point they obviously believe that they can blandly make utterly misleading assertions, saying things that can be easily refuted, and pay no price. And they may well be right.

But Democrats can have the last laugh. All they have to do — and they have the power to do it — is finish the job, and enact health reform.

-RichardH

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The Krugman Blues-Loudin Wainwright III

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For your amusement: On 22 February 2010, The New Yorker posted Loudin Wainwright III’s song/video, The Krugman Blues. [See lyrics in Comment 1]

You might also be interested in Larissa MacFarquhar’s (long) profile The Deflationist-How Paul Krugman found politics in the 1 March 2010 issue of The New Yorker.

-RichardH

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144 Beautiful Faces – Long Version (YouTube)

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In case you need a soothing nine-minute break from politics and economics …

144 Beautiful Faces – Long Version via YouTube. Turn on your sound; it enhances the mood.

This video brings a much-needed smile to my face. I hope it affects you the same way.

-RichardH

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Krugman–California Death Spiral (and health insurance myths)

Filed Under RichardH's Posts

Paul Krugman in his 19 February 2010 New York Times column, California Death Spiral, uses insurer Wellpoint’s arguments for dramatically increasing California health insurance premiums in order to analyze some health insurance myths.

[H]ere’s the thing: suppose that we posit, provisionally, that the insurers aren’t the main villains in this story. Even so, California’s death spiral makes nonsense of all the main arguments against comprehensive health reform.

For example, some claim that health costs would fall dramatically if only insurance companies were allowed to sell policies across state lines. But California is already a huge market, with much more insurance competition than in other states; unfortunately, insurers compete mainly by trying to excel in the art of denying coverage to those who need it most. And competition hasn’t averted a death spiral. So why would creating a national market make things better?

More broadly, conservatives would have you believe that health insurance suffers from too much government interference. In fact, the real point of the push to allow interstate sales is that it would set off a race to the bottom, effectively eliminating state regulation. But California’s individual insurance market is already notable for its lack of regulation, certainly as compared with states like New York — yet the market is collapsing anyway.

Finally, there have been calls for minimalist health reform that would ban discrimination on the basis of pre-existing conditions and stop there. It’s a popular idea, but as every health economist knows, it’s also nonsense. For a ban on medical discrimination would lead to higher premiums for the healthy, and would, therefore, cause more and bigger death spirals.

So California’s woes show that conservative prescriptions for health reform just won’t work.

What would work? By all means, let’s ban discrimination on the basis of medical history — but we also have to keep healthy people in the risk pool, which means requiring that people purchase insurance. This, in turn, requires substantial aid to lower-income Americans so that they can afford coverage.

And if you put all of that together, you end up with something very much like the health reform bills that have already passed both the House and the Senate.

What about claims that these bills would force Americans into the clutches of greedy insurance companies? Well, the main answer is stronger regulation; but it would also be a very good idea, politically as well as substantively, for the Senate to use reconciliation to put the public option back into its bill.

-RichardH

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Sarah Palin can do us a favor by running for president

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Leonard Pitts Jr.’s column, Sarah Palin can do us a favor by running for president, appeared in the 14 February 2010 edition of The Seattle Times.

-RichardH

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David Rogers on Passing Major Social Legislation and Compromise

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David Warsh (Economic Principals, 14 February 2010) points to two articles by David Rogers (POLITICO) related to passing major social legislation such as a health care bill. The key is to compromise to get “a” bill passed, which can provide a beach head for future modifications and enhancements.

The first Rogers article, Dems want to seize historical moment (POLITICO, 5 November 2009), comments on the passage of Social Security, the Civil Rights Act, and the non-passage of Bill Clinton’s health care program.

On Social Security in the ’30’s:

House Appropriations Committee Chairman Dave Obey (D-Wis.) resurrects the saga of a long-forgotten, four-term Wisconsin [Republican] progressive [Gerald Boileau] who backed Social Security in 1935, only to be undercut by angry seniors stirred up by the promise of getting the same benefits free. …

[Y]ears after [Boileau] lost in the 1938 elections, … [he told Obey why he had lost the '38 election]. Social Security proved a major factor, and Boileau ran afoul of an activist California physician, Francis Townsend, who wanted to give all seniors $200 a month outright. President Franklin D. Roosevelt insisted that the elderly contribute to Social Security to make it more sustainable. And the fight — which spawned Townsend Clubs to organize seniors — dovetailed with a larger struggle between New Dealers and critics like Huey Long or that forerunner of modern bloggers and talk shows, “radio priest” Rev. Charles Coughlin.

For Obey, the great lesson is that so much is now forgotten, while Social Security endures and is embraced by the elderly.

“It just goes to show you that the little differences that we think are so important at the time, little shortcomings … don’t seem important. What’s important is, you have a terrific social insurance program,” Obey said. “So my point is whether we have the strongest public [insurance] option or the second-strongest public option [in the current health care bill], we’re still going to have a damned good product in comparison to what we have now.”

On the Civil Rights Act in the ’60’s:

[House Majority Whip Jim] Clyburn (D, SC), who came out of the civil rights struggles of the ’50s and ’60s, has reminded his caucus that nothing so big was ever done in a single bill.

“The civil rights community, Whitney Young, Roy Wilkins, Martin Luther King Jr. — all these people were for a big, comprehensive Civil Rights Act,” Clyburn told the caucus. “Johnson realized he couldn’t get in one fell swoop all that they were asking for and made it very clear to them in the negotiations: ‘If you want me to put this bill on the floor, I’ll put the bill on the floor, but it’s not going to pass. If you want to pass something, then we have to go into this bill to see what will pass.’”

The voting rights provisions came out and didn’t pass until 1965, after the presidential election. And while the 1964 law outlawed discrimination in the private sector, it wasn’t until 1972 — when Clyburn was on the staff of a South Carolina governor — that the same requirement was imposed on state and local governments, which had resisted the federal mandates.

“I didn’t want anyone to think that if you don’t get everything you want in this health care bill right now, that’s the end of the game,” Clyburn said. “What we need to do is lay a foundation. Get passed what we can pass that will have a meaningful impact on people’s lives — not put too many of our people in jeopardy — and then build upon it later. It’s a long road.”

The second Rogers article, Can Judd Gregg help White House save health bill? (POLITICO, 11 February 2010), discusses the motivations of retiring Senator Judd (R, NH) and Rogers’s hopes that Judd will play a constructive role before and during the Obama “televised sit-down with Republicans on Feb. 25 on how to break the current stalemate [on the health care bill].

-RichardH

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Management Secrets of the Grateful Dead – Joshua Green

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In the March 2010 issue of The Atlantic, Joshua Green wrote Management Secrets of the Grateful Dead.

The Grateful Dead Archive, scheduled to open soon at the University of California at Santa Cruz, will be a mecca for academics of all stripes: from ethnomusicologists to philosophers, sociologists to historians. But the biggest beneficiaries may prove to be business scholars and management theorists, who are discovering that the Dead were visionary geniuses in the way they created “customer value,” promoted social networking, and did strategic business planning.

I confess that, unlike many of my friends, I was never a fan of The Dead, preferring instead Janis Joplin and The Rolling Stones. Their music was just okay, their singing was not. Theirs was a cheerful, white-bread band whose concerts were the embodiment of Peace, Love, and Pot. Their songs were interminable but for their stoned, ecstatically-twirling audience, it was Nirvana.

They were a phenom. Their fans (‘Deadheads’) were absolutely devoted to them. The colorful and fanciful promotional art for them (and for all the San Francisco bands) was gorgeous.

And yet, Green reports that The Dead were great businessmen. “Without intending to—while intending, in fact, to do just the opposite—the band pioneered ideas and practices that were subsequently embraced by corporate America.” They treated their most loyal fans royally. Telephone hotlines announced pre-publicity schedules, ticket prices were capped, the most loyal could secure great seats, they didn’t discourage individuals from taping concerts which would increase the band’s familiarity and fame. The Dead were early “social networkers” and built a large and loyal community. Coupling the community loyalty with closely controlling their merchandise and franchise, The Dead could capitalize on their growing audience and generous personae. Business Professor Barry Barnes said, “The Dead were masters of creating and delivering superior customer value.” The Dead was one of the most profitable bands ever, which Barnes attributes to their “strategic improvisation.”

Green also links to a 1994 Wired article The Economy of Ideas: A framework for patents and copyrights in the Digital Age. (Everything you know about intellectual property is wrong.) by John Perry Barlow, internet guru and former lyricist for the Grateful Dead. Green couples The Dead’s generosity (or lack of greediness) with Barlow’s earlier insight [Barlow's words below],

Familiarity has more value than scarcity. With physical goods, there is a direct correlation between scarcity and value. Gold is more valuable than wheat, even though you can’t eat it. While this is not always the case, the situation with information is often precisely the reverse. Most soft goods increase in value as they become more common. Familiarity is an important asset in the world of information. It may often be true that the best way to raise demand for your product is to give it away.

The Grateful Dead has made its extensive archives available to and through The Grateful Dead Archives at the University of California at Santa Cruz. “Go Slugs!”

The Grateful Slug

And you might be interested in Dead Central, a blog for the UCSC Grateful Dead Archive and the source of the above image of the Deadhead Banana Slug (talk about “mellow yellow”!).

Enjoy.

-RichardH

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