The bill...

So, it's been a busy week but I'd be remiss not to post some thoughts about The Bill, as we've taken to calling it - especially given that I am preparing for a class debate about Medicare and have spent an inordinate amount of time learning about the system. (Incidentally, while I'm not crazy about single-payer, reading about Medicare makes it seem much, much more attractive.)

Das Binky has a great post about why mandated insurance is such an important part of the bill. Jacob Hacker - quoted on these pages before - agrees that, while not perfect, the bill is a good first step.

And despite concerns about the constitutionality of all this "mandating" - there seem to be some pretty capable minds who say, yes, this is all fair. I tend to agree with them because to take the other side literally would make, say, a progressive tax scale unconstitutional, and we all know that courts have repeatedly asserted that a progressive tax scale falls within the constitutional provision to tax and does not run afoul of any equal protection provisions.

On a side note, it was particularly rewarding to see my prof - an alum of the Clinton health reform wars - so excited in class this past Wednesday. "We've been teaching this class for years, and this is the first time we've had an expansion of entitlements of this magnitude in the history of the class!" she crowed. Later, she interrupted herself mid-sentence to gush about how excited she was to be finally moving in this direction.

Which is very germane because, going back to Hacker, government programs are especially subject to path-dependence. Half of the genius of Hacker's book/dissertation is chronicling how little steps can significantly restrict the range of choices going forward. Given Hacker's involvement in the writing of the public option and his support for even this neutered bill, he evidently believes that this version will ultimately put us on a path toward a public option which is, of course, fine by me.

It'd be nice if the plan did a bit more. Cost containment is of course the biggest issue, and to the extent that Medicare is successful in containing costs, this is largely a result of Medicare's stinginess. When you pay 81% of the rate that private insurers pay, and you cover fewer services, of course your expenses per enrollee will be lower. But Medicare provides a useful baseline for private insurers to measure their own fees against for a good that is notoriously difficult to properly value. However, the arguments against the bill, near as I can tell from Paul Ryan's roadmap - are basically just variants of the same old "market market market" argument, and I really dare anyone to argue credibly that health care is a normal good, and that health care consumers behave like consumers of other products and services. Not to mention the fact that the Paul Ryan plan is just phooey, from a budgetary standpoint.

I'm not sure where the cost containment will come from until we are able, as a society, to tolerate care that's just good but not ideal. In reality, we always demand the best, the most up-to-date, the most sensitive - and all of that costs more. Unless we are willing to have an honest debate about marginal gains in efficiency compared to marginal increases in cost without someone yelling out "death panel!", I'm not sure how we'll be able to ultimately contain costs. Tort reform is, sure, a part of it (because tort reform also eliminates incentives to always offer the most up-to-date-and-super-expensive care, and lest it sound like I'm arguing for crappy care, I'll just say that if we demand the best and always the best, we should be willing to pay for it. If we are happy to get good enough, we should be ok with the mild loss of quality too. And ideally, we'd be able to put a price on that trade-off, though this is also, of course, notoriously hard to do in the confusing patchwork of American social spending.

Jacob S. Hacker is a bad-ass.

Jacob S. Hacker has a not-for-the-layperson book about the public/private nature of the American welfare state. His main issues are illustrating the path-dependent nature of the evolution of these programs, and he highlights the importance of applying the same type of government/institutional analytical framework to non-governmental actors in the game. He shows how organized labor played a vital role in securing pension benefits for all Americans but acquiescent on the health front; he shows the ruthless AMA lobby fighting against national health care in the 1930’s – and perhaps most importantly, how private insurance flourished in the absence of a governmental program between 1935 and 1950. After this point, every subsequent debate about national health care has really been a debate about expanding “private” (heavily subsidized) health insurance.

Hacker more recently authored the public option that was left out of the Senate bill.

This quote is from that turning point - where the future of the American health system had been decided by means of subterranean politics and the tax code. Not all at once, of course, but this is the point at which we know where the path is leading...

There was, in short, every sign that private health insurance had won out for employed Americans, just as there was every sign that Social Security would remain the core provider of retirement income.

No votes on this outcome had been taken. No grand alternatives had been put to citizens for a test. Indeed, judging by the debates that did transpire after 1950, there were no real choices to be made. Private insurance received ever more costly subsidies. Yet defenders of the voluntary way denied that government was implicated at all. Some Americans were well served and others were left out, but discussion of winners and losers was lost in the celebration of private progress and the complexities of tax tables. Americans had found themselves caught up in a fierce battle over national health insurance, but the increasingly privileged place of private insurance in the American social welfare regime prompted little debate at all.

And I love this quote, which perfectly sums up the role of the American government in health care in the 20th century:

The federal government had first built up the technological prowess of the medical complex, then become a generous subsidizer of private health insurance, and then finally stepped in as a largely passive financier of private medical care itself.

Cheery thoughts for a cold Friday afternoon.

First "holy shit" moment in public policy

So, the scuttlebutt about social welfare spending in the US is that the American welfare state is small – somewhere around 15% of GDP whereas for European and in particular Scandinavian countries, it accounts for about 30% of GDP.

Well, some people have long argued that the way in which OECD used to compile this info (measuring direct government spending) doesn't capture the American reality. Check put page #28 in this document
(it’s actually page 29 in the .pdf, but because of the cover page it’s numbered 28.)

You see that the US leads all countries in what is called private social spending. This takes up a couple of different forms, but mostly it means tax revenue that the federal government is foregoing. What does this include? Well, tax deductions, for one.

While spending on section 8 housing is a small percentage of government entitlement programs, the revenue the government gives up on mortgage interest deductions is huge. (And who does that benefit? The little guy or the medium guy?)

We may spend little per capita on welfare programs, but not once you consider that there’s a child tax credit in the tax code too. Similarly, we have two big sources of income that are not taxed: health benefits (which are considered part of your income in European countries and are taxed – so every dollar you get in health, the Swedish government gets, say, 25 cents of the money back that it’s giving you. It’s just a book-keeping thing that OECD statistics don’t capture very well.) The other is your pension plan – your employer is giving you a ton of money that, as long as you wait till you’re a certain age to use, will not be taxed as income.

So, the issue isn’t that the US spends little, it’s that the US spends weirdly, disjointedly – if you buy the argument that foregone revenue to the fed = federal spending. (Most people do, and I include myself in that category if you limit the rationale to this area of discussion. The problem here is the presumption that the lack of revenue is a form of spending. Then isn't not spending also a form of revenue? Didn't the U.S. then make billions of dollars by not heeding Lieberman's call to bomb Yemen? Also, the Ron Paul-types will object to the presumption that government has any right to my income in the first place – how dare they count money they’re not taking from me, which is rightfully mine, as foregone revenue? In any case, next time you look at your pension plan statement, thank the federal government for not taking a chunk out of it, and thank yourself and all the other taxpayers for allowing you to do that.)

Now, there’s a good argument for enacting social policy through the tax code. For one, you can encourage things you’d like to see – people buying homes and having kids – without setting up a whole separate office or program to administer it. It’s cost-effective in that sense – it’s just one more line on the tax form, and the IRS is already set up to look at that form anyway.

Now, the big problem with spending federal dollars this way is that administering benefits through the tax code is inherently regressive. This is the lightbulb moment for me:

If you’re taxed at the 36% marginal tax rate, each additional dollar of “income” via pension plans or health benefits that does not get taxed is worth 36 cents to you, right? If they taxed you on those dollars as income, you’d be losing 36 cents on the dollar. Yay for you and the high wage earners! But what if you are at the 22% rate? You’re already making less, and you’re “saving” less – only 22 cents – from not having those dollars taxed as your income would be. Inherently, administering benefits through the tax code means that those who are well-off will benefit the most, those who are so-so off will only benefit so-so, and those who don’t itemize to begin with or who can't wait a whole fiscal year to get a government entitlement are up a creek.

Now, think about the fact that many of these programs, as currently set up, date back many many decades. Think about the babyboomers, about the greatest generation, about the expansion of the middle class, and about how those interests have developed over time. Government spending is path-dependent – once you’ve carved out a trail of spending, it becomes easier to justify that path as the way to spend money.

First-movers, in economics-speak, have tremendous advantages: they stake out a claim to that benefit, and once they’ve benefitted from it, financially, they are better armed to fight for the preservation of that benefit. When you start to think about US social spending in that light, you begin to see that our strata of the middle class has a lot to gain from this system, and that we would lose a lot from a more progressive way of spending (ie, direct government spending.)

And while this may all be painfully obvious to some people, I didn't put it all together until just over a week ago. Which goes to show just how grad school can make you smarter, I guess.

Is it precocity or precociousness?

Either way, after many years of always being among the youngest to do ______, it's somewhat of a relief to be among the oldest people in my class now. I did find one person, so far, who is older than me. On hearing us discuss our ages, a much younger guy across the table from us rolled his eyes and said, "Christ. Why don't you guys go watch The Breakfast Club or something?"

And maybe it's just because I'm wearing a backpack now, but I keep getting carded! Ok, maybe it's because we were at (ugh) The Tombs, but still - I'll take it.

The likelihood of getting head.

Good thing I’m taking a couple of classes at the USDA grad school to prep for real grad school in the fall. I have no idea why the USDA even has a grad school, but the nice thing about it is you can take classes for about $400 a pop, which – in DC – is a great deal because it is about as good as Montgomery College in terms of price, and you don't have to go all the way out to the end of the red line for it.

So, I'm taking statistics. The professor means well, though he keeps making transcription errors in his problems – transposing values, getting his columns mixed up, going back and checking his notes, realizing he can’t read his own handwriting, apologizing, erasing everything on the board, starting over, making the same mistake a second time, etc. If it’s a technique to get the class involved, it works wonders, because we all routinely chime in now to keep him from going too far down the wrong path.

His English is good but not great. Yesterday, in particular, we got some unexpected comedy when discussing probabilities. He was talking about flipping coins, except he would forget to pluralize “head.” So, this led to lots of statements like:

“Ok, now you’ve gotten head twice. What else can happen?”

“How many more times can we get head in this example?”

“What is the likelihood that you will get no head?”

And so forth. Comedy gold for the ten-year-old in me.

Public policy reading lists, courtesy of our google overlords

Is this what I'm getting myself into?

Tomorrow evening's trip to the MLK library (right before the Wiz get senselessly beaten up by the Jazz!) should be informative.

I love Zambrano shirt guy

He was previously discussed here. For some reason, his best moments happen when we're talking about analogies. Tonight's involved a nice, clean-shaven fellow - we'll call him Mr. Clean.)

Teacher: So, here we have FUSELAGE:AIRPLANE. What's a good bridge there?
Mr. Clean: That the fuselage is a part of the airplane?

Teacher: Ok, let's try it.

[They run down the answers and find that every answer is something that's a part of something else.]

Teacher: So we need a more specific bridge, right?

Mr. Clean: Yeah, but...I don't know what a fuselage is.

Zambrano Guy: Oh, I've got it. The fuselage is the outer shell of an airplane.

Teacher: Excellent!

Zambrano Guy: Well, I watch Lost, so that was easy.

Teacher: And which answer fits?

Zambrano Guy: HULL:SHIP.

Mr. Clean: Wait...so a fuselage has, like, something to do with the fuel?

Teacher: Not quite...

Mr. Clean:...see, I don't know, because, uh, I don't watch Lost.