Medical Costs

Ever wonder why medical costs keep going up? There are several reasons.

First, there is a lot more medicine available than there used to be. I remember an ad running in the early 1970s where a boy says that he is dying of leukemia and asks people to donate to find a cure so that it will no longer be a death sentence. That day is here. Leukemia now has a high survival rate. While this is great news for people stricken with it, the treatments take 2-3 years depending on gender and age and involve lots of hospital visits. This is true for other cancers, also.

A lot of medicine is like this. Many conditions that used to be untreatable are now easily managed with pills or shots. This has increased our life expectancy by decades but there are costs.

Drug companies are constantly coming up with new drugs. Some are so specialized that they have to invent new problems for the drugs to solve (Restless Leg Syndrome). New drugs are expensive so the drug companies need to convince millions of people to use their products.

Then there is the cost of new equipment and the incentives to use it. A lot of the new equipment costs millions of dollars. Hospitals want to recover that cost by spreading it across as many patients as possible. If enough patients use it then new equipment can go from a cost to a profit center. Accordingly, there is pressure on doctors to have as many patients scanned as possible.

There are other pressures. Malpractice suits often start by looking at all possible tests that could have been performed. A doctor who didn't prescribe a test, no matter how unlikely, looks bad in court. This puts extra pressure on doctors to over-prescribe tests.

Then there is the malpractice insurance. This has been a problem for decades and it is getting worse. Doctors are retiring early because they cannot make a profit because of malpractice insurance and suits.

So far, Obamacare has not addressed these problems. It is focused on getting more people insured. In a speech yesterday, Obama said that malpractice reform is off the table.

Health care cost reform can be tricky. Right now hospitals charge for scanners on a per-use rate. This could be changed but the equipment still costs the same and the costs of purchasing it have to be recovered somehow. Other countries have addressed this by simply spending less money. This creates shortages and waiting lists.

The only real solution to reducing medical costs is to reduce coverage. Americans have come to expect high-quality health care but, between expanding coverage and expanding costs, the future will probably mean reduced care.

The Letterman/Palin flap

A few days ago Sarah Palin and her daughter came to New York City and attended a baseball game. This prompted David Letterman to make the remark

There was one awkward moment during the seventh inning stretch. Her daughter was knocked up by Alex Rodriguez.

It turns out that Letterman hadn't bothered to find out which daughter was with the Governor. It was her 14 year old daughter who was in New York. The 18 year old daughter and recent mother was back in Alaska. The Palin's, both Sarah and her husband demanded an apology. Letterman sort of responded, admitting that it was a cheap shot, trying to clarify that he didn't mean the daughter who was actually at the game, and taking an additional cheap shot at the Governor's clothing.

Even if we take Letterman at his word that he was too clueless to find out which daughter he was holding up to national ridicule, this is still part of a troubling double standard.

During the Clinton years and again under Obama it is clearly understood that jokes about the presidential daughters are off-limits. Even a year ago it was considered out of bounds to ask a 28-year-old Chelsea Clinton about her father's affair.

In contrast, before they turned 21 the Bush twins were regularly ridiculed (granted they, like most college students, were engaging in under-age drinking). Now Letterman is justifying jokes that imply that an 18 year old girl will have sex with strangers because she became a mother at the age of 17. Letterman would never have made this joke about the daughter of a liberal.

To their credit, the NOW has condemned Letterman, both for his joke about Palin's daughter and for his joke about Sarah's wardrobe.

Right Wing?

Yesterday a white supremacist named James Wenneker von Brunn entered the Holocaust Museum and started shooting. The museum was prepared for such an action and the guards responded quickly although one of them died while stopping von Brunn.

Coming on the heals of the shooting of a doctor who specialized in 3rd trimester abortions, many people are seeing a pattern of violence by right-wing extremists. Some go so far as to blame conservative pundits for these actions. How valid are these complaints?

First, we should recognize that at least four violent actions have happened or nearly happened in the last few weeks. In one of these, a Muslim-convert shot someone at an army recruiting station. In a second near-incident, the FBI arrested a group of Muslims that planned to attack Jews. Clearly, these were not right-wing attacks inspired by conservatives. If anything, they were inspired by people on the left such as Michael Moore who compared the Iraqi insurgents to the American Minutemen.

So that's two our of four eliminated straight off. That's not much of a pattern.

The shooting of the abortion doctor hits closer to home since many conservatives share the killer's belief that abortion is murder. Regardless, the accused killer, Scott Roeder, has a long history of violent anti-abortion activity. It is silly to say that conservatives motivated him since he held his beliefs before they came on the air and has always been considerably more reactionary than any on-air personality.

Then there is von Brunn. He is being labeled as right-wing in major news stories. The Washington Post made a point of identifying a fellow white supremacist who knew von Brunn as a former Reagan official. Then there is the Nazi connection. Von Brunn is on record as saying that we supported the wrong side in WWII. So does that make him a member of the right?

Michael Rowe of the Huffington Post doesn't even have to think about it.

Obama's citizenship was reportedly also something of an obsession for von Brunn, and likely very much on his mind when he walked into the museum and opened fire to make a statement about what "his" America ought to look like. I have no trouble imagining which radio stations he listened to, or which pundits best represented his baseline political ideology. And why.

If Rowe bothered to do any research into von Brunn's beliefs he would be disappointed. Yes, von Brunn worried about Obama's ancestry. He worried about a lot of things. He was so worried about the Federal Reserve system that he tried to kidnap it's head in 1981. He was sure that Christianity and capitalism were both Jewish plots designed to corrupt Aryan values. He was also a socialist and a 9-11 Truther. These are views that are far closer to Rosie O'Donnell than Ann Coulter.

Over the last couple of decades, anti-semitism, especially anti-Zionism, has become a staple of the left, not the right. But it is unfair to attribute any of von Brunn's views to on-air personalities. He was far more extreme than any of them and he has held his views for decades.

For an honest assessment of von Brunn's beliefs, see this article which quotes extensively from von Brunn's own writings. It is clear from this that he stands so far outside the mainstream American views that he is in a class by himself.

Michael Rowe worries that the right no longer has any shame but he shows a disturbing lack of it himself by attacks like this one.

Government Motors

Quick economics quiz, GM made a lot of big SUVs because:

A) They hate the environment
B) They don't know how to make small cars
C) SUVs were easiest to sell
D) SUVs have a higher profit margin
E) Both C and D

The answer is E. GM preferred selling SUVs because those were the only vehicles that GM actually made any money on but they were also a popular choice among car buyers. Even in today's economic downturn, SUVs continue to outsell other segments of the market. The big exception to this was the demand for hybrids last Summer when gas topped $4/gallon. GM's upcoming super-hybrid Volt will not make any money, at best they will break even on it.

The reasons that GM only made money on SUVs are complex involving outmoded plants and high labor costs. It is unclear how many of these factors will be addressed by the bankruptcy. It is unlikely that GMs costs per vehicle will be reduced enough to make smaller cars profitable.

President Obama knows this. He is a smart guy and has smart economists advising him. So why did he announce that GM would be making smaller, more fuel efficient cars in the future? There are a couple of possibilities:

A) He doesn't care if GM fails.
B) He plans on doing something to change demand.

This goes beyond economics and into politics so either is possible. Obama is a believer in global warming as are most of his supporters. Many of them ignore what has been selling and are convinced that small cars will sell. Obama might be placating these people, knowing full well that GM will continue to need government bailouts but not caring.

The other possibility is that the Obama administration is planning a set of policies that will change consumer demand. Last Summer's spike in gas prices caused a temporary demand for hybrids and scooters. In the near future either Congress or the EPA will be taking action to reduce CO2 emissions. This is likely to include some form of gas tax which could make SUVs too expensive to drive. Obama has been open to this. Last Summer he said that the problem with the gas prices was not how high they were, it was that they had risen so fast that people had not had time to adapt (by buying smaller cars?).

Other questions arise. GM and the other two Detroit car makers have already asked for more money to retool to meet new CAFE standards. How much aid will the government continue to give GM and is this fair to other car-makers? Will a government stake in GM mean that they will do whatever they are told or will that give them priority when lobbying?

When the government has an interest in an open market things get messy.

Dinner, a Play, and a side-order of Hypocrisy

Last Saturday the First Couple jetted off to New York for dinner and a play. Normally this would be no big deal. Presidents travel. They are humans and need an occasional break. There is no way for them to do this without costing the taxpayers something. Also, they took a Gulfstream instead of Air Force One which saved the taxpayers some money.

The thing is, this is the same president who scolded a bank that had accepted TARP funds for holding an annual convention in Los Vegas. He implied that in the future, the government would be watching all companies to see if they were spending too much or spending it on something that gave the wrong appearance. By some estimates, this scolding cost the State of Nevada $100 million in convention business. The Governor of Nevada has asked for an apology (is still waiting).

So, by criticizing other people's travel, Obama put himself in a different category. He could just as easily have stayed in DC and taken in a performance at the Kennedy Center. He set the bar himself by saying that banks that received government funds had to avoid even the appearance of wasting taxpayer's money. He didn't follow his own directives.

There is also a matter of timing. 36 hours after his trip GM announced plant closings, something that the Obama administration is part of. The image of the First Couple going on a date night as thousands of workers are waiting to hear if they will keep their jobs is unusually tone-deaf for this administration.

The Future of the Republicans

It is not news that the future direction of the Republican Party is being hotly debated. On one hand we have Republican loyalists such as Vice-President Cheney and Rush Limbaugh. On the other hand are people such as Arlin Specter and Colon Powell who preach moderation.

This could be viewed as the people who got the Republicans into their current mess versus people who already abandoned the party (Specter changed parties and Powell endorsed Obama).

Here is one major view:

In political terms, it's easier to see what a viable Republican Party should ditch than what it should add. It's past time for the GOP to abandon its Gingrich-era, pseudo-libertarian anti-government rhetoric and to accept the broad social consensus behind progressive taxation, retirement security, action to forestall climate change, and a government role in health care. It might want to quit defending torture. It needs to move to a neutral or big-tent approach on major social issues—gay marriage, abortion, and stem cells—the way Democrats have done with gun control and the death penalty. A Sister Souljah moment would help. Some respected party leader needs to give a swift, symbolic kick to a fringe figure who epitomizes the intolerance of the religious right—perhaps Jerry Falwell Jr., whose "Liberty" University recently rusticated its beyond-the-pale campus Democratic Club.

Obama's open-ended expansion of government creates an opportunity for the GOP to propose a leaner, meaner alternative with more space for private enterprise, individual initiative, and dynamic growth. Efficiency-promoting tax reform, of the kind Reagan backed in 1986, would be a big improvement on unfunded tax cuts. After Obama, Republicans need to try for minority votes, both through the kind of immigration reform Bush favored and the kind of empowerment policies associated with the recently deceased Jack Kemp. Their strongest card may be one no Bush ever dared play: education vouchers for the poor. On health care, they might get behind a subsidized, individual-mandate framework as an alternative to Democratic plans that will have a tendency to morph into single-payer over time.

Is this really the only future for the Republicans or is this just wishful thinking by progressives who insist that the last election changed everything? I don't think so for several reasons.

First, a lot of this description would put the Republicans to the left of Bill Clinton (post-1994). There is little evidence that the country has moved to far to the left to quickly. The number of people describing themselves as Republicans has dropped but the number of conservatives has stayed the same.

Obama remains fairly popular but his policies are much less popular. A strong case can be made that the Democrats' rise has more to do with Bush fatigue than anything else. Historically, the party in the White House has big losses in Congress in its 6th year and looses the net presidential election. Even the sainted Reagan lost the Senate in his 6th year. Historic trends show that the Republicans can expect gains in 2010 and 2014. These gains may or may not be enough to retake Congress.

One big problem with the "moderate" approach - the Republicans already tried it. Bush rejected the Libertarian wing of the party. He increased spending on everything, far exceeding inflation but he never got any credit for it.

This is the big problem with trying to be Democrats light. Democrats already own the issue. Whatever the Republicans do, the Democrats will propose more. The Republicans need a different approach.

The platform of fiscal responsibility and honest in government was a Republican staple until reckless spending under Bush and a series of scandals gave the Democrats an opening in 2006. It worked for the Democrats then and in 2008 but they abandoned it before Obama was even inaugurated.

One change that the Republicans should make is their stance on gays in general if not gay marriage. The country accepts gays and is accepting gay marriage. This isn't winning the Republicans any votes and is not compatible with limited government.