It’s the Health Care Costs, Stupid

The faith-based economics of deficit reduction

When It Comes to Scandal, Girls Won’t Be Boys

This is just wrong —

Tucked into Wisconsin Gov. Scott Walker’s (R) much-discussed budget was a little-noticed provision to overhaul the state’s regulation of the beer industry. In a state long associated with beer, the provision will make it much more difficult for the Wisconsin’s burgeoning craft breweries to operate and expand their business by barring them from selling directly to restaurants and liquor stores, and preventing them from selling their own product onsite.

The new provision treats craft brewers — the 60 of whom make up just 5 percent of the beer market in Wisconsin — like corporate mega-brewers, forcing them to use a wholesale distributor to market their product. Under the provision, it would be illegal, for instance, for a small brewer located near a restaurant to walk next door to deliver a case of beer. They’ll have to hire a middle man to do it instead.

But more noteworthy than the provision itself is how it was enacted. The provision was quietly slipped in the massive budget legislation without any consultation from independent craft brewers, who are justifiably outraged by it. One group that clearly did have input, however, is one of the world’s largest beer makers — MillerCoors:

Unreal. I want all the righties who cheered Walker for standing up to “union goons” to explain how this new move fits into a “small government,” “friendly to small business” philosophy.

Elsewhere — even I think the media’s reaction to the release of Sarah Palin’s gubernatorial emails is way over the top. Moosewoman is not only old news; she not really a politician any more. She’s more like an entertainer whose act is politics as performance art.

More on the Newt Implosion — the staffers who resigned felt Newt and Callista were more interested in selling books and films than in running for office. See also Chris Cillizza’s “Fall of the House of Newt.”

Finally, there’s a lot of buzz that Rick Perry will step in to fill the much-needed void left by Newt. Yes, I’m sure America is ready to elect another governor from Texas, especially one with this history. What’s one more clown in the clown car, I say.

There’s an absolutely-must-read column at The Economist that illustrates why health care in the U.S. costs so much. One reason is that the highly touted free enterprise market based yadda yadda part of the system has to pour huge amounts of money into marketing to promote its products.

And the products that sell are not necessarily the best ones, or the most cost-effective ones, or even the ones that are most needed, but the ones that are most smartly marketed. The cost of the marketing is passed on to the consumer. Plus, Americans often are pushed into expensive treatments they don’t need because it will make somebody some money. At the same time, people are doing without health care they really do need because they can’t afford it.

Anyone who doesn’t believe our private health care system is bloated and wasteful needs to carefully look at this Kaiser Family Foundation study comparing health care costs in the U.S. to that of several other industrialized nations. There’s a bar chart that shows health care spending per capita. Wow, we are the biggest bar! USA! USA!

Not only that, our costs are going up faster than everyone else’s. The line graph at right shows increases in spending as a percentage of GDP since 1970. Yep, that top line is us.

The second-highest line represents Switzerland, which is interesting because Switzerland still relies mostly on private health insurance to pay for health care. It’s not as free-wheeling as it is here, however. About five years ago, the Swiss mandated insurance companies to offer a basic package of coverage at no profit, and Swiss citizens are required to purchase the coverage. Yep, an individual mandate. The insurance companies make money from supplemental insurance policies.

But the point is that after a lot of fighting and arguing, the Swiss realized that health care costs were draining their economy, and increasing numbers of people were losing coverage. And they figured out that the only ways to get their costs under control while insuring most citizens were to either go with a primarily single-payer system, or mandate that everyone purchase private insurance that is regulated to keep costs down. The Swiss are stubbornly conservative, I understand, so they went with the latter.

The Netherlands also mandates that everyone buy a basic, risk-equalized insurance policy offered by private companies at no profit, plus some medical care is directly paid for by taxpayers. I believe some other countries may combine no-profit private insurance (again, the private companies can sell supplemental insurance) with government-paid health care, and the rest are mostly single payer.

On top of that, most other countries have cost controls on pharmaceuticals, and generally some bunch of government bureaucrats make purchasing decisions based on cost and effectiveness. Here, of course, stuff costs whatever some people are willing to pay for it. No limits.

One other Fun Fact that came out of the Kaiser study — in spite of all our chest thumping about keeping government out of health care, the U.S. governments spends more on health care as a percentage of GDP than a lot of countries with single payer systems.

Yep. The U.S. government spends 7.4 percent of GDP on health care (the private sector kicks in 8.5 percent). The government of Canada spends 7.3 percent of GDP on health care. The British government spends 7.2 percent of GDP on health care.

So when people start screaming about how we could pay for a single-payer system — if we can get rid of the marketing overhead, price gouging, unnecessary treatments, and other by-products of the Free Market (blessed be It) out of our system, we ought to be able to provide a basic single payer system for about the same amount of money the bleeping U.S. government is spending now.

Granted, we might have to spend a bit more to bring our system up to the level of France, the Cadillac, so to speak, of health care systems. The French health care system overall costs 11.2 percent of GDP, compared to 16 percent of GDP in the U.S., but a higher proportion of that is government spending. Still, it’s less money out of French citizens’ pockets, because they aren’t shelling out tons of money to pay for marketing and profits and private sector overhead. And it will take a while before we can rebuild some of our neglected medical care infrastructure, such as emergency rooms.

But the fact is that only the United States is trying to get along with for-profit health care paid for by private, for-profit insurance, and it ain’t workin’. Keep in mind that big chunk o’ change the U.S. government spends on health care is mostly to take care of folks the private system has dumped. Anywhere else but here, our mostly private system would be considered a Massive Fail.

Now, let’s go back to the Economist column. The writer brilliantly skewers a recent David brooks column — I love this —

DAVID BROOKS had an op-ed in the New York Times yesterday that proclaimed the near impossibility of restraining costs in health care through centralised government efficiency evaluations, which is being justly ridiculed by people (Jon Chait, Jonathan Cohn, Ezra Klein) who note that every single one of the world’s centralised government-regulated health-care systems is far cheaper than America’s relatively decentralised private-sector one. Mr Brooks has surely had this explained to him a thousand times by now, and his failure to process the fact or incorporate it into his worldview seems to me most likely to reflect an absence of the ideological furniture on which the fact could sit. Mr Brooks doesn’t seem to have an instinctive understanding of how it can be possible for unregulated free-market health-care systems to cost more and deliver inferior care than strongly regulated systems with heavy government involvement, and that’s why, while he occasionally must have to acknowledge the existence of the French health-care system, he can’t seem to retain it.

Oh, first rate snark, Economist writer. I salute you. But it points up that we’re debating the relative efficiency of a Free Market (genuflect here) system versus a system with some central control in management and purchasing. And Americans are told over and over again that the Free Market (hallowed be Its name) is better, but it isn’t.

The Affordable Care Act passed last year is a step in the direction of sanity, although what it provides still amounts to the least regulated and most privatized health care system in the industrialized world. However, if the individual mandate is canceled, you might as well flush all of it. The rest of the provisions that limit health insurance profit-taking and mandating insurers take all customers regardless of pre-existing conditions will have to be flushed as well. And then we’re right back where we are now.

Here’s the real choice. If we want to see to it that most Americans have access to decent, 21st century health care, we can go in one of two ways. Either the purchase of private insurance policies is mandated — although we need to move toward mandating that insurance companies offer basic coverage at cost — or we go with single payer. Or, like the Netherlands, we try a little of both. That’s the choice. And we aren’t even talking about the real choice.

I’ve been working on another blog post that should be published later this evening, But I just learned that Newt’s entire senior campaign staff resigned today, along with his entire paid Iowa staff and senior staff in New Hampshire and South Carolina.

For what it’s worth, Fred Barnes blames Calista. Yeah, it’s Fred Barnes. Take that with a grain of salt.

Update: Hey, thanks to Newt, maybe cable news will stop being All Weiner, All the Time. Thanks, Calista!

Wisconsin Republicans fear they will lose the state Senate in recall elections next month. So, they’ve decided to muddy the waters by running fake Democratic candidates against the six Republican senators being recalled.

I’ve yet to find a clear explanation of exactly how the recall elections will work, but I take it the Republican move is meant to delay the recalls by another month by forcing Democrats to hold a primary election, at a cost to the state of tens of thousands of dollars.

The fake candidate scheme is explained in newspapers all over Wisconsin, and no doubt in radio and television news as well. Seems to me it just makes the Republicans look more pathetic. If I had a lot of money, I would be buying full page ads in all Wisconsin newspapers saying, “Wisconsin Voters: Republicans Must Think You Are Stupid. Let’s Show ‘Em You’re Not.”

The state Government Accountability Board has now certified the recall petitions against three Democratic senators as well. Thousands of signatures were tossed, but not enough to invalidate the petitions.

Also:

Tent City “Walkerville” Grows in Madison

What Republicans Are Saying About the Recall

More Fraud from the Republican Party of Walker

Act Blue page for Wisconsin Democrats

Submitted for your reading pleasure — the New York Times today has side-by-side feature articles looking at two states, Wisconsin and Massachusetts Connecticut.

In Wisconsin, the Republican governor and legislature are cranking out right-wing legislation at lighting speed, in case the upcoming recall elections gives the Senate to a Democratic majority. Of course, as a safety measure, they have also enacted laws that may stop a lot of people from voting.

In just the last few weeks, Gov. Scott Walker, a Republican, has signed legislation to require voters to show photo identification cards at the polls and to deregulate elements of the telecommunications industry. And the Republican-dominated Legislature is now in the midst of advancing provisions to expand school vouchers, to allow people to carry concealed weapons, to cut financing for Planned Parenthood and to bar illegal immigrants from paying in-state tuition at Wisconsin’s universities.

In Connecticut, Democrats control the state government and have gotten more progressive —

Lawmakers over the last several weeks have enacted the largest tax increase in Connecticut history and approved the nation’s first law to mandate paid sick leave for some workers. They voted to extend protections for transgender people, to charge in-state college tuition rates to illegal immigrants, to extend an early-release program for prisoners and to decriminalize possession of small amounts of marijuana.

Connecticut didn’t just raise taxes; it also cut spending and got some concessions from public employee unions that have yet to be approved. Apparently they are trying to balance the budget without cutting education and other needed services. I just hope the people of Connecticut don’t have a meltdown over tax increases.

Tim Pawlenty gave an economic speech in which he laid out his bold! serious! plans for growing the economy.

I’ll bet you’ll never guess .. OK, you guessed. Cut taxes.

Then, once we get the taxes cut he wants a constitutional amendment that not only requires a balanced budget but which caps federal spending at some percentage of GDP. And he wants the Environmental Protection Agency to be privatized and some other stuff. And then the Free Market Fairy will come and put a 5 percent annual growth rate under our pillows.

As Ezra Klein says, it’s a joke.

Update: From Think Progress:

These proposals, taken together would bestow a massive tax cut on the wealthiest people in the country. They would also reduce overall federal revenues to a such a low level that even if Pawlenty’s draconian, radical spending targets were achieved, deficits and debt would still soar out of control.

All together, Pawlenty’s tax proposal would generate an average revenue level of just 13.6 percent of GDP from 2013-2021. That translates to a tax cut of $7.8 trillion, and that’s on top of $2.5 trillion cost of extending all of the Bush tax cuts (see below for details on how this estimate was calculated).

Pawlenty also says that he will balance the budget, and cap spending at 18 percent of GDP. Unfortunately for Pawlenty, his tax plan leaves him about $8.4 trillion short.

Update: Even WaPo‘s Glenn Kessler calls bullshit on Pawlenty’s speech and gives it two Pinocchios.

To every complex problem there is a simple answer: neat, plausible, and wrong.
-H.L. Mencken

A Nobel Prize-winning economist who is not Paul Krugman writes in today’s New York Times about how his nomination to the board of the Federal Reserved was torpedoed by Republicans on the Senate banking committee. Led by Sen. Richard Shelby (R-AL), it appears that either these guys either have no grasp of how an economy works, or else they were just determined to stop an Obama nominee because the guy was an Obama nominee. Or both.

The economist, Peter Diamond, seems relieved to be giving up the position to remain in academia. He also notes that the people in charge of congressional monetary oversight obviously haven’t a clue about how monetary policy impacts every other part of the economy. He concludes,

Analytical expertise is needed to accomplish this, to make government more effective and efficient. Skilled analytical thinking should not be drowned out by mistaken, ideologically driven views that more is always better or less is always better. I had hoped to bring some of my own expertise and experience to the Fed. Now I hope someone else can.

The Republicans have their simple answers to all economic problems. In the words of Steve Benen,

The agenda is the agenda: tax cuts for the wealthy, deregulation, cut public investments. Good times and bad, deficit or surplus, war or peace, it just doesn’t matter.

It’s as if someone bought an iPod, uploaded one song, and hit “shuffle.”

Analytical expertise? A nefarious liberal trick, obviously.

Even when an Obama Administration policy succeeds, they can’t bring themselves to admit it — see John Boehner’s reaction to the success of the auto industry rescue: Maybe it succeeded, but it still failed. Because.

Update: Steve Benen again —

Diamond is among the most accomplished economists of his generation, and last year, was awarded a Nobel Prize in economics. And yet, there was Richard Shelby & Co., insisting that Diamond lacked the qualifications to join the board of governors of the Federal Reserve.

Makes you want to pound your head against a wall and scream for a while, don’t it?

Shelby’s argument is that Professor Diamond’s background is in labor market theory, not monetary policy. But as Professor Diamond explained clearly and eloquently in his op ed, understanding the labor market is critical to designing effective monetary policy.

There are people sitting on the Federal Reserve Board now who had no prior experience with monetary policy. And Steve Benen points out, “One of Bush’s appointees has no advanced degree in economics at all and has never done any academic research in the field.” Yet Shelby had no problem at all approving that nominee.

Update: Creating their own reality — Our old buddy the Confederate Yankee writes,

The reason you were blocked Mr. Diamond, is that you are a Keynsian hack, with no understanding of real markets. The idiocy you espouse has led us into the largest recession on this side of the Second World War.

Keynesian economics caused the Great Recession? Isn’t that a bit like blaming bad weather on the Tooth Fairy? If the Bushies were Keynesian, I’m Brad Pitt. Just running up a government budget deficit by itself isn’t Keynesian, dude. There’s a lot more to it (here’s a primer).

But, y’know, this all goes along with the Dumbing Down of America. I assume the CY thinks that all it takes to make an economy Keynesian is spending a lot of money — otherwise, I’m utterly baffled as to what he’s talking about. And I assume he thinks the budget deficit is the cause of the Recession. Therefore, Keynesian Economics caused the recession. See above about simple answers being wrong, although that one isn’t even plausible.

Which is not to say that there is unanimous agreement among the experts about what caused the Recession, but from what I see no one educated enough to correctly spell “Keynesian” thinks Keynesian policies had anything to do with it.

Update: Don’t miss “None Dare Call It Treason” at Balloon Juice. Do read the whole thing, but here’s the part that righties will howl about —

We face real, enormous problems. Yet the Republican party has decided that its return to power by any means is more important than the interests of the United States. Why else block an obviously overqualified person to help set monetary policy, except for the fear that his policy ideas might work? How else to describe—other than the pursuit of party advantage over Country First—the increasingly vocal murmurings that the GOP should push the US into default in order to so damage the American (and world!) economy that even as weak a candidate as any in the current GOP pool could defeat President Obama in 2012? …

… I suppose there are some out there (a quotidian gossip, perhaps) who might find the use of words like “treason” to be, well, uncivil in this context.

But how else do you describe actions that harm Americans now and are likely to weaken the US relative to competitors and potential adversaries over the years and decades? And when those deeds are in the service not only of trying to defeat a sitting President, but to deny that President the levers of government within the term for which he was duly elected? I don’t know words strong enough to excoriate such Benedict Arnolds.

In their minds it isn’t treason; they are right because they are right. Their ideas are the only legitimate ideas, whether they work in the real world or not. Their candidates are the only legitimate candidates, and if someone else actually gets more votes, it can only be because of voter fraud. You know they think that way. Thus, nothing they could possibly do could be wrong, because they are the ones doing it.

Sorta kinda related — righties are still twisting themselves into pretzels trying to argue that Sarah Palin was correct when she said Paul Revere’s mission on his midnight ride was to warn the enemy of what our side planned, as if that made sense. No, dears, the mission was for Revere to ride from Boston to Lexington to warn Sam Adams and John Hancock about British troops movements. The fact that Revere was inadvertently captured by the British after he had fulfilled the mission and was riding away from Lexington does not prove otherwise, so give it up, dimwits. See also Ta-Nehisi Coates.