Would Medicare for All Make Health Care Less Expensive?

There is a discussion by Charles Blahous at E21 of whether “Medicare For All” (M4a) would reduce administrative costs per patient or administrative costs as a percentage of health care spending that strikes me as being pretty fair. His tentative conclusion is that it would reduce administrative costs either per person or as a percentage of expenditures but possibly not total health care costs:

To the extent that M4A achieves its intended goal of universal health coverage, this would increase total national health expenditures. The primary effect of insurance is to reduce out-of-pocket costs facing consumers of health services. This increases health service demand and puts upward pressure on costs and prices. Any credible model for forecasting national health expenditure growth will treat wider insurance coverage as a cost driver rather than a cost reducer. The Medicare trustees’ projection model, for example, anticipates more rapid health expenditure growth to the extent individuals carry comprehensive insurance.

This is not merely a theoretical proposition, especially with specific respect to Medicare itself. The academic literature is clear that the enactment of Medicare in 1965 was a prime driver of subsequent increases in national per capita health spending, notwithstanding Medicare’s relatively low administrative costs. Thus, even if the administrative costs of M4A were impressively low it would still be expected, other things being equal, to add significantly to national health care cost growth. Furthermore, there is no particular reason to believe that single-payer would add significantly to the quality of health care spending – that is, the health value Americans receive per dollar spent. The most M4A is likely to accomplish from a cost perspective to shift costs to providers via legislated Medicare fee schedules, constraining the supply and quality of health services. The bottom line is that lower administrative costs do not necessarily imply a less expensive system. (Final ruling on point #4: point for M4A opponents).

In sum, supporters of M4A are on fairly solid ground when they credit Medicare with having commendably low administrative costs. But in the aggregate, Medicare for All should be expected to drive total costs up, not down.

which I think is optimistic if anything. I think the greatest likelihood is that any savings realized as a consequence of M4A will be disappointing.


The Commanding Heights

Imagine for a moment that the U. S. had no copyright or patent laws and that there were no restrictions on providing health care of any sort, from licensing to restrictions on telemedicine to buying pharmaceuticals across national borders. I know there would be all sorts of abuses but that’s fruit for another post. What would happen is that compensation for copyright holders, whether authors, publishing companies, software developers working for large companies, television studios, motion picture distributors, and health care providers would fall because they were open to competition.

Now onward to David Brooks’s New York Times column:

Progress is real, but of course it doesn’t happen in a straight line. Often it happens in what Ruth DeFries calls the ratchet, hatchet, pivot, ratchet manner.

First there’s some innovative breakthrough that benefits society over all. But the innovation disrupts some lives. Down comes the hatchet as people want change. That leads to a pivot as society looks for new innovations to address newly created problems. Thanks to human ingenuity the innovation comes and progress ratchets up another notch.

This clearly happens with technological progress but also, less linearly, with cultural progress. Every era develops the culture it needs to solve its problems.

During the mid-20th century the West developed a group-oriented culture to deal with the Great Depression and the World Wars. Its motto could have been “We’re in this together.” That became too conformist and stultifying. A new individualistic culture emerged (pivot) whose motto could have been “I’m free to be myself.” That was great for a time, but excessive individualism has left society too fragmented, isolated and divided (hatchet). Something new is needed.

Politics during the hatchet phase gets nasty. It tends to devolve into a fight between upswingers and downswingers. (I’m adapting the words from a deceased Iranian-American futurist who called himself FM-2030.) Upswingers believe in progress and feel that society is still fitfully moving upward. Downswingers have lost faith in progress and feel everything is broken.

Mr. Brooks is confused. Technological development has nothing to do with “upswingers and downswingers” while policy has everything to do with them.

Let’s engage in a second thought experiment. Imagine that steel, automobiles, and clothing were all as restricted as providing health care, selling pharmaceuticals, banking, or practicing law are. What would happen is that all of those manufactured goods would rise in price and wages would rise for those who produce them, again due to competition, in this case less of it. U. S. auto unions would have much more bargaining power because the more restrictive laws would free them from the fear of U. S. “manufacturers” just buying what they build in Japan and South Korea and slapping “Made in the U. S. A.” labels on them.

My point is not that we should abandon copyrights and patents or professional licensing or that we return to the system of restrictive tariffs that dominated most of our history. It’s that what is happening now is not just some airy Whig history notion of progress but the direct consequences of policy, the picking of winners and losers.

The winners should not merely show magnanimity, the thrust of Mr. Brooks’s column. They should recognize the source of their victory and just how tenuous it is.

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Good Dog

There are many stories of heroism emerging from the terrible disasters of the fires engulfing Northern California. This one stood out for me:

This is Odin.
He is a hero.
Despite the fire, he never left the goats he was in charge of.

Here’s what Roland Tembo Hendel wrote about his dog:

As many of you know, Ariel, Scott, Stephen, and I lost everything we had in the Tubbs fire that devastated our forest home in Sonoma County earlier this week.

We had minutes to load up the animals and run from the advancing firestorm.

Despite the sounds of exploding propane tanks, twisting metal, and the hot swirling winds, Odin refused to leave our family of 8 bottle-fed rescue goats.

Hours later when we had found relative safety we cried for Odin and our goats.

I was sure I had sentenced them to a horrific and agonizing death.

Days later, when we were able to make it back to the property, we found a burned, battered, and weakened Odin, surrounded by his 8 goats, and several small deer who had come to him for protection and safety.

Odin was weak, and limping, his once thick and beautiful coat singed orange, his whiskers melted.

Read the whole thing and follow-up for more information and pictures.


The Scandal Is What’s Legal

To get some idea of what we’re up against here in Chicago, cruise on over to Charles Lipson’s site for a story of a Chicago alderman at work:

The headline: “Chicago Alderman Who Told Businessman to ‘Come Back To Me On Your Knees’ Sued for Abuse of Power“ (Reason’s Hit and Run blog)

Chicago Alderman Proco Joe Moreno wanted to help a business [Double Door Music Hall] that had contributed to his campaign coffers. So he told Brian Strauss, a firefighter and property owner, to rent his building to the business or suffer the consequences. When Strauss refused to comply, Moreno made good on his threats, downzoning Strauss’s building and scuttling multiple attempts to sell the property.

Strauss is now suing, arguing that Moreno’s abuses of his aldermanic powers violate Strauss’ rights under the Fifth and Fourteenth Amendments. –Reason blog

Charles concludes by wondering why it’s only a civil suit:

My question: Why is this only a civil case? The actions alleged ought to be investigated as possible felonies by federal attorneys. (Expecting state attorneys to do such investigations of fellow pols is crazy talk.)

As he notes, the case had to go to the federal courts to get any traction whatever and in all likelihood no federal criminal laws have been broken. IMO this is a case in which the real scandal is what’s legal.

This case is obviously abuse of power and corrupt but proving a criminal abuse of power case is something else entirely.

So, what to do? Vote for the Republican candidate? Notionally, Chicago aldermanic elections are nonpartisan but in practice many are single party. In the 2015 aldermanic elections, for example, the ward from which Alderman Moreno was elected, all of the candidates are Democrats and materially in agreement on the issues. The biggest differences among the candidates are racial/ethnic identity. In the latest Chicago mayoral election, no Republicans ran for mayor.

There aren’t even any reform Democrats running in the 1st Ward.


The Way We Were

At the American Interest Larry Diamond is alarmed at Russian and Chinese threats to liberal democracy:

The most profound shock to democracy, however, occurred not in Europe but in the United States, with the Russian hacking of the 2016 American presidential election. For the first time, a hostile foreign power not only deeply intervened in the American electoral process but tipped it toward its preferred candidate. Russia’s authoritarian regime hacked into the emails of the Democratic Party and some of its key campaign leaders. It then “weaponized” this information, leaking it with exquisite timing and tweeting and posting it with surgical precision, socially and geographically, to inflict the maximum damage on the party and its presidential candidate. The effort employed a vast social media army of machines (“bots”) and paid agents (“trolls”) to pretend to be real Americans venting their political cynicism, disgust, and provocative extreme views.

None of this would have worked if the American public had not already become deeply polarized and distrustful. But Vladimir Putin found a deep vulnerability in his adversary, and—as with all forms of asymmetrical warfare—used a limited expenditure of resources to deal a devastating blow. We still don’t know what the Russians did or learned when they hacked into the voter registration databases of more than twenty American states. What we do know about the overall attack, as former FBI Director James Comey testified in June, is: “They did it with purpose, they did it with sophistication, they did it with overwhelming technical efforts.” And: “They will be back…. They’re coming after America.”

China’s ruling Communist Party has been taking a very different, more incremental and subtle approach. Analysts are only now beginning to piece together the full scope of this strategy, but it involves:

  • The relentless global expansion of Chinese state media enterprises, such as Xinhua News Agency, the People’s Daily, and CGTV, which—unlike the BBC, CNN, or Deutsche Welle—offer a uniformly rosy view of China, its government, and its intentions.
  • The aggressive expansion of Confucius Institutes and other initiatives to promote the study of Chinese language and culture while conveying the Chinese state’s political line.
  • Growing efforts to penetrate U.S. movie, media and information companies, as with the recent purchase of the second largest chain of movie theaters in the U.S., AMC.
  • The rapid expansion of Chinese ownership of vast tracts of farmland and critical industries and infrastructure worldwide.
  • Opaque flows of support to American institutions and individuals to fund sympathetic studies of China.

but I think he has the wrong end of the stick. Nothing in the balance of my comments should be construed as a defense of Russian hacking or Chinese mercantilism or expansionism.

Quite to the contrary I don’t think that either of these efforts are any sort of threat to liberal democracy. They are a blow to the vitals of our system as it is right now but that has little or nothing to do with liberal democracy.

Our present economic system has correctly in my view been characterized as a blend of cronyism, neo-mercantilism, and free markets, those generally arranged to benefit a few while hurting far more. Our present political system is a mixture of tribalism, phony technocracy, hereditary aristocracy, and bureaucracy. You really need to squint to see liberal democracy in that melange.

That system is highly dependent on lies. It’s easier to put a finger on the Republicans’ lies because they’re so obvious. Regardless of what they say at election time Republicans do not believe in small government. Name an agency Republican administrations have closed. Quite to the contrary Republicans have enlarged government at every turn, cf. the Department of Homeland Security.

Their other lie is that tax cut produce economic growth. I believe that’s completely dependent on other circumstances—where we are on the Laffer Curve, who gets the tax cuts, and what they do with them. To see why we might think that is the case let’s just consider one hypothetical example. Each year Bill Gates pays about $10 million in federal taxes. What would happen if he were exempted from paying federal tax?

I think the answer is obvious. His consumption patterns wouldn’t change at all. His domestic investments wouldn’t change at all. He’d probably spend the $10 mil on his mostly overseas charities. In other words the effect on the domestic economy would be negligible, negative if anything.

My point is not that Bill Gates’s being rich is good or bad, that Bill Gates is good or bad, or that the rich should be taxed more highly. My point is that it depends.

What are the Democrats’ lies? I think their biggest lie is the benignity of government. IMO some government workers are doing the best job that anyone could do, some are doing the best job that they can do, some are just biding their times until retirement, and most are somewhere in between. Is that benign? I don’t think so. At best it’s neutral but because of the irresistible forces on bureaucracies over time any benignity will vanish. That’s just how they work. Every agency’s notional mission is abandoned in favor of organizational expansion and survival.

Another lie is the lie of competence.

The threat posed by the hacking of the Democratic National Committee regardless of who was responsible for it is that it revealed the lies. When you’re incensed about the truth, it reveals the bankruptcy of the system.

Quite to the contrary I don’t think liberal democracy can be threatened by the truth. It also can’t be injured by Chinese mercantilism or expansionism. Our problem is that we need more liberal democracy not more of what we’ve got.


Verdi’s Rigoletto at Lyric Opera, 2017

Over the years I’ve probably seen seven different productions of Giuseppe Verdi’s 1850 opera, Rigoletto including five at Lyric Opera and my wife has seen at least five. We agreed that Lyric Opera’s new production which we had the pleasure of seeing last night was the best we have ever seen. The reason was clear: the voices. Young Italian soprano Rosa Feola’s Gilda was spectacular. Her combination of the beauty of the instrument, discipline, and interpretation exceeds my ability to come up with superlatives. Her Cara nome was absolutely lovely.

Rigoletto, too, was wonderfully good. We’ve heard baritone Quinn Kelsey many times over the years at Lyric and I must say he’s really grown into these Verdi father roles. His many duets with Rosa Feola were gorgeous.

Matthew Polenzani’s Duke was excellent, too. This uniting of three powerful vocal actors made for the best performance of Rigoletto I’ve ever heard.

The balance of my remarks are in response to a short piece in the program notes in which the author characterized Rigoletto as an overbearing father. In my opinion only a child could take such a position. Rigoletto’s world is one in which the rich and powerful do as they wish while the poor do what they must. It is a world of injustice and cruelty. In other words it’s a world much like our own. Rigoletto’s life is a split one. In his public life he is a fool, constantly subjected to shame, ridicule, and degradation, while his private life is secret and dominated by his daughter who is pure, simple, and virtuous. It is no accident that Rigoletto’s costume is half one color, half another. It is an epitome of Rigoletto himself. His dearest wish is to keep those two worlds separate.

He fails, with tragic consequences. What would have happened had Rigoletto been less protective of his daughter? The tragedy would have occurred sooner. It would not have been avoided.

The Critics

The Tribune’s John Von Rhein concurs with my opinion of this production of Rigoletto:

Operatic Cassandras are forever lamenting that the age of great Verdi vocalism is dead, that there just aren’t enough first-rate voices around to take on the big Verdi works that are the bread and butter of opera companies and that the public is always clamoring to hear.

That may be true in some quarters but not at the Lyric Opera House, where on Saturday night Lyric opened a new-to-Chicago production of Verdi’s “Rigoletto” that carried enough full-throttle vocal incandescence to bring down the house several times and guarantee a crackling good time in the Ardis Krainik Theatre.

Much of the excitement came from a superb performance by the luminous Italian soprano Rosa Feola, making her Lyric debut as Gilda, the virginal daughter of the title character, a bitterly angry jester in the court of the libertine Duke of Mantua. Feola sang ravishingly and acted touchingly as a trusting young naif who casts her lot with her seducer, knowing full well that it will cost her her life. Feola earned herself a thunderous reception, and rightly so.

But the Verdian vocal starpower did not stop there. The elegant, Evanston-born tenor Matthew Polenzani, a longtime Lyric favorite, added to his lengthy list of hometown credits an ardent portrayal of the dashing smooth-talker to whom poor Gilda gives her heart.

Another star alumnus of Lyric’s Ryan Opera Center, baritone Quinn Kelsey, brought his powerfully sung Rigoletto to town for the first time.

So did the Sun-Times’s Hedy Weiss:

Giuseppe Verdi is the Shakespeare of Italian opera. And while “Rigoletto” — unquestionably one of his greatest works — has a libretto by Francesco Maria Piave that is based on a play by Victor Hugo, it was Shakespeare’s “The Merchant of Venice,” with its themes of a man who is both taunted and taunting, whose fierce desire to protect his daughter is his undoing, and whose quest for revenge ends in tragedy, that came to mind most often Saturday as Lyric Opera of Chicago raised the curtain on its altogether dazzling production of “Rigoletto.”

Driven by a perfect storm of glorious singing, superb acting and stunning design, the performance was met by the sort of extended ovation not often heard these days. And it deserved every bravo that echoed through the audience.


What’s With Puerto Rico?

These days I’m seeing bushels of editorialization about Puerto Rico and thimbles of news. What’s actually happening? My guess is not much, the problem being much more one of logistics within Puerto Rico than of getting aid to Puerto Rico.

And what should be done about Puerto Rico? It isn’t just a question for Puerto Ricans, it’s a question for us, too. Speaking only for myself, I think that the best solution is for Puerto Rico to become independent, accompanied by some assumption of its debt by the United States and some mechanism for dealing with the very sticky issue of U. S. citizenship.

I would oppose statehood for Puerto Rico vehemently other than in the context of English becoming the official national language of the United States, somewhat analogous to the terms under which Utah was admitted to the Union.


Reforming the “American Idea”

I strongly recommend that you read Yoni Appelbaum’s article at Atlantic, “Is the American Idea Doomed?”. Dr. Appelbaum opens the piece with the founding of the magazine of which he is an editor:

On may 5, 1857, eight men sat down to dinner at Boston’s Parker House hotel. They had gathered to plan a magazine, but by the time they stood up five hours later, they had laid the intellectual groundwork for a second American revolution.

These men were among the leading literary lights of their day, but they had more in mind that night than literary pursuits. The magazine they envisioned would, its prospectus later promised, “honestly endeavor to be the exponent of what its conductors believe to be the American idea.”

He goes on to explain what those founding editors thought of as the “American idea”:

Across Europe, the 19th century had dawned as a democratic age, but darkened as it progressed. The revolutions of 1848 failed. Prussia busily cemented its dominance over the German states. In 1852, France’s Second Republic gave way to its Second Empire. Spain’s Progressive Biennium ended in 1856 as it began, with a coup d’état. Democracy was in full retreat. Even where it endured, the right to vote or hold office was generally restricted to a small, propertied elite.

On the surface, things appeared different in Boston, where The Atlantic’s eight founders—Emerson, Lowell, Moses Dresser Phillips, Henry Wadsworth Longfellow, John Lothrop Motley, James Elliot Cabot, Francis H. Underwood, and Oliver Wendell Holmes Sr.—dined in May 1857. Almost all adult males in Massachusetts, black and white alike, could vote, and almost all did. Almost all were literate. And they stood equal before the law. The previous Friday, the state had ratified a new constitutional amendment stripping out the last significant property qualifications for running for state Senate.

But even in Boston, democracy was embattled. The state’s government was in the grip of the nativist Know-Nothings, who resented recent waves of immigrants. That same Friday, voters had ratified an amendment imposing a literacy test for voting, a mostly symbolic effort at exclusion. But slavery, the diners believed, posed an even greater threat to democracy. Most of them had been radicalized three years before by the Anthony Burns case, when federal troops marched into their commonwealth to return Burns, an escaped slave then living and working in Boston, to bondage in Virginia—inspiring protests and lethal violence on his behalf. To the west, Kansas was bloodied by fighting between pro- and antislavery elements; to the south, politicians had begun defending slavery not as a necessary evil but as a positive ideal.

As an historian Dr. Appelbaum certainly knows better than I that Emerson, Longfellow, and the other founders of the Atlantic considered slavery the greatest moral challenge faced by the still-young United States. They had opposed the Mexican War and Manifest Destiny. Emerson had compared the annexation of Mexico’s possessions north of the Rio Grande to taking arsenic. They favored independence and self-reliance over the amassing of riches. They believed in women’s suffrage and distinctive contributions to society made by men and women based on biology.

Leaping forward 150 years what would those founders think about the issues of today? I think they would have found the pervasive state and, particularly, the welfare state with its assumption of permanent clienthood horrifying. I believe they would have opposed our wars of foreign adventurism from the Gulf War through the present war in Afghanistan and drone wars. I think that they would believe that we had lost our way.

What would be the “American idea” today? Is there such a thing? Can there by? I find the notion that it is to be found in the party platform of either of our political platforms incredible.

We’re ignoring the genuinely big issues—the role of the individual in society, the role of corporations, the role of the state, the role of the United States in the world—lost in the weeds.


Understanding the Problems

You see it in every new administration. A group of newcomers arrive, most knowing nothing about government or even much about the past, they see the reality of government, and they’re terribly disillusioned. That’s how I read this piece by Diane Sroka Rickert, reprinted at the Foundation for Economic Education:

I walked into the Thompson Center on my first day, not knowing what to expect. In many ways, my new workplace was like any other large organization: big building, thousands of people and plenty of broken computers.

Except this building is dilapidated, many of the employees are political hires and the computers will never be repaired, ever.

And it’s all paid for by you, Illinois taxpayers.

Read the whole thing but let’s stop right there. Let me explain what she saw. On several of the floors of the Thompson Center, nearly every available inch of floor is covered by old computers. Where did they come from, who paid for them, what are they doing there, and what will happen to them?

The answers are that

  • American taxpayers paid for them. They were bought using money from specific federal grants.
  • The projects for which they were used are over or the computers are no longer functioning and by law they can’t be used for anything else.
  • Most of them are incapable of running today’s operating systems.
  • No one knows what will happen to them. They can’t just be scrapped because they still appear on federal inventories and the state needs to retain them in case of federal audit. There’s nowhere to which to return them. They can’t be used for any purpose other than the projects for which they were originally purchased. They’ll sit there until the Thompson Center is sold at which point they’ll be moved somewhere else.

So, yes, there’s an abuse here but it’s not the one the author thinks there is. The problem is that if you write the rules with as much flexibility as she seems to think there should be it would be a license to steal.

The key problem is that good government is hard. Not enough flexibility is wasteful. Too much flexibility leads to abuse. Preserving good government requires constant vigilance and, frankly, more management acumen than we’re ever likely to see in government.

Do you know how I know that? I saw it and I asked. Then I asked someone else who corroborated what I had been told. Apparently, the author didn’t ask the right people.

There are a number of largely empty government buildings in Springfield. Why are they largely empty? Because they once had many more state employees in them than they do now. Is the reduction in the state’s payroll a victory or a defeat? It depends on how you look at it and what problem you’re trying to solve.


The Way We Live Now

I liked Samuel Gregg’s piece at Public Discourse for several reasons but most of all for this succinct description of the American economy in the 21st century:

In short, it’s an error to argue that the capitalism of much of the contemporary West—a blend of cronyism, neo-mercantilism, and markets—is effectively capitalism. There are many manifestations of capitalism, and their specific forms are more influenced by different ideas and cultural dispositions than we sometimes realize.

The emphasis is mine. What I find so astonishing about the modern day is the almost complete absence of public virtue. You see that everywhere, not just in the government but in businesses, religious institutions, entertainment, do I need to go on?

Capitalism in the absence of virtue has little to recommend it over socialism in the absence of virtue. It does have a little: socialism in the absence of virtue has killed more people than all wars put together.

The essential question is if the absence of virtue is a permanent feature of the way we live now, what sort of society would best preserve us? I’ve answered that question dozens of times.