Archive for October, 2009

MFN for Patients

Gregg Easterbrook asks about community rating and then goes on a very intelligent tangent: what would happen if medical service providers were required to offer their services to everyone at the same cost?

health care proposals now in the Senate are so utterly fixated on handouts and giveaways that they don’t even address a core problem — the inability of individuals to buy at insurer’s prices. This is the PPO problem, and is serious. Most health insurance now operates through some variation on the Preferred Provider Organization. Physicians and clinics sign up with some insurers but not others; they agree to discount their list prices; if the patient goes to someone within the PPO, the provider gets business while the patient and insurer pay less…The distinction between list prices and “adjusted” prices prevents health care services from functioning as a rational marketplace.

Would this simple change make a difference in bringing down health care costs? (more…)

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I doubt Joe Lieberman needed any outside encouragement to demonstrate his particular brand of weasel on health care reform.

However, Harry Reid might need some help seeing the golden opportunity staring him in the face, so here is some free advice for Harry: slap Lieberman in the face.  Publicly.

I think most people can understand that some political negotiation is best carried out behind closed doors.  There is a necessary element of accommodating vanities and concerns in any coalition-building, and so long as humans value a foolish consistency over the ability to compromise, leaders who compromise will want some cover.  I get it.

That said, it is a blessing to have incompetent adversaries, and right now Harry has one.  All he has to do is let Joe keep running his mouth and then go on TV and announce “Joe will vote to end debate or he will no longer vote as Chairman of the Homeland Security Committee; your guess is as good as mine which he will choose.”

By making a public threat, Reid backs himself into a corner – now he has to go through with it if Lieberman calls him on it.  But it’s an easy threat to deliver.  A Lieberman who will not vote with the Democrats on health care – and who has already defected on war – is useless.  There is no other bill that will come close to a filibuster; carbon and immigration have much bigger problems than one guy, a Senator from Connecticut will always endorse finance companies in any financial services regulation review, and nothing else is of much excitement between now and 2010.

By announcing that Lieberman is useless, Reid gives Lieberman two choices:

  • Admit the hollowness of his position and back down to preserve a chairmanship.  If this happens, Reid looks strong to the voters back in Nevada and can claim that his profile allows him to do things in DC.
  • Join in a filibuster and get stripped of his chairmanship.  This is the hidden gem of the big threat.  If Lieberman calls, Reid gets the muscle-flexing opportunity to pull the chairmanship in the middle of the term.  Hard to demonstrate more raw power than this.  Not only does it look cool for the voters back home, it scares the hell out of Nelson and Landrieu and Lincoln and Pryor; all of a sudden they will be quite a bit more circumspect about going against the leadership.

There is no third option.  Once Reid goes public, Lieberman does not have the muscle to pull himself out.  In fact, as an independent, he is at risk of losing all his committee seats, since there are no seats that are not allocated to one of the two parties.  He could join the Republicans and try to get one of their seats, but that means both begging for scarce seats from people trying to cling to what they have and forced retirement in 2012.  In a vote of the Democratic caucus as a whole, Lieberman would be easy to push aside, if for no other reason than that Carl Levin would like the Homeland Security gig.

Last summer, not dissuaded by the dismal record of invaders of Russia, the Georgian military decided to take a crack and pushing Russian troops who were supporting Georgian separatists off of Georgian soil.  The Russians could scarcely believe their luck.

Joe has gone to battle from equally poor strategic position.  Slap him, not only because he has a face to slap but also to keep the rest of the fractious troops in line.  It’s rarely this easy, Harry – enjoy it.


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Currency Thoughts

David Einhorn made an excellent speech to the Value Investors Conference:

On the anniversary of Lehman’s failure, President Obama gave a terrific speech. He said, “Those on Wall Street cannot resume taking risks without regard for the consequences, and expect that next time, American taxpayers will be there to break the fall.” Later he advocated an end of “too big to fail.” Then he added, “For a market to function, those who invest and lend in that market must believe that their money is actually at risk.” These are good points that he should run by his policy team, because Secretary Geithner’s reform proposal does exactly the opposite.

The full taunting can be found by reading the speech; I am just happy to note the substantial overlap between his themes and the arguments I have been making over here.  Does that mean there is something to Einhorn’s support of gold? (more…)

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Traffic. The ultimate local issue. Mayoral campaigns are supposed to hinge on it. We spend hundreds of billions of dollars building roads to deal with it. The stimulus bill is predicated on the idea that there is a near-infinite need for construction at ever-increasing prices, despite environmental and neighborhood concerns that make it more difficult than ever to get things done.

Are we sure we are using our existing roads wisely? (more…)

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Not many people like the idea of breaking up financial institutions, but if I have to be part of a tiny minority, I’ll take this one:

“People say I’m old-fashioned and banks can no longer be separated from nonbank activity,” Mr. Volcker said, acknowledging criticism that he is nostalgic for an earlier era. “That argument,” he added ruefully, “brought us to where we are today.”

He may not be alone in his proposal, but he is nearly so…

Still, a handful side with Mr. Volcker, among them Joseph E. Stiglitz…“We would have a cleaner, safer banking system”

Is separating Boring from Exciting finance really that difficult? (more…)

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Apparently I’m a bit late to the latest academic kerfluffle: Superfreakanomics‘ curious decision to wade into the global warming debate on the Neanderthal side.

Well, not exactly Neanderthal.  More incoherent. (more…)

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Two Russians, Ivan and Peter, struggle to survive in farm country. Eventually Ivan gets a goat. His life improves; he has milk and help with the grasses. A genie comes to Peter and says “I can grant you your deepest wish.” Peter is shocked. “You’re going to kill Ivan’s goat?”

That was always the gallows humor about Russia: the country was made for communism because the population was so consumed with envy that it preferred the company of mutual poverty.

I wonder if we couldn’t use a bit of that pessimism. At least some acceptance of finite resources that was not used as a blind support of the status quo. (more…)

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