What you can do for your country

Obama Says "CBO not Telling the Truth on HealthCare" - Elliot Richardson where are you

Well, in an effort to push health care, it seems the only Truth is what comes out of the mouth of Senator Reid or the President, everyone else is not telling the truth or is a partisan.  Reported in todays Washington Post, President Obama "Urged Congress to push past growing doubts......"

As you likely know, the Congressional Budget office, an organization intended to review and assess the impact of legislation, stated something to the effect that the current health care bill moving though congress would likely increase the cost of health care and increase the deficit.  The CBO issued a 17 page report making several important observations:

.....Among other things, the legislation would establish a mandate for legal residents to obtain health insurance; set up insurance “exchanges” through which some individuals and families could receive subsidies to substantially reduce the cost of purchasing insurance; significantly expand eligibility for Medicaid; make modifications to the Medicare and Medicaid programs; and impose an income-tax surcharge on high-income individuals....

....CBO’s and JCT’s preliminary assessment of the impact on the federal deficit for the bill as introduced is summarized in the following table. The enclosures with this letter provide estimates of the changes in the nonelderly U.S. population with health insurance coverage, the primary budgetary components of the bill’s major provisions related to insurance coverage, and a detailed table of the other provisions’ impact on federal direct spending. The estimated impact of the provisions related to health insurance coverage is based on specifications provided by the committee staff, rather than on a detailed analysis of the legislative language....

Even with a bunch of other revenue increases and savings from other government programs CBO concluded...

...According to CBO’s and JCT’s assessment, enacting H.R. 3200 would result in a net increase in the federal budget deficit of $239 billion over the 2010-2019 period. That estimate reflects a projected 10-year cost of the bill’s insurance coverage provisions of $1,042 billion, partly offset by net spending changes that CBO estimates would save $219 billion over the same period, and by revenue provisions that JCT estimates would increase federal revenues by about $583 billion over those 10 years.....

This report from the CBO was signed by Douglas Elmendorf, a former Clinton administration economist who was appointed to lead the CBO by the current Democrats in Congress.  So, the democrats appointed the guy bearing bad news.

As written on the CBO website....

CBO's mandate is to provide the Congress with:

Objective, nonpartisan, and timely analyses to aid in economic and budgetary decisions on the wide array of programs covered by the federal budget and

The information and estimates required for the Congressional budget process. So, what

As Reported by MSNBC....

"The New York Times writes that the Congressional Budget Office’s Douglas Elmendorf “told Congress that the health legislation proposed so far would not curb the federal government’s runaway spending on medical care and that lawmakers would need to take more forceful action to meet Mr. Obama’s goal of controlling costs. The testimony by Mr. Elmendorf before the Senate Budget Committee drew criticism from Democratic leaders, highlighting their rising frustration over the difficulty of paying for an overhaul. Asked about the testimony by Mr. Elmendorf, a highly regarded economist, the Senate majority leader, Harry Reid of Nevada, snapped derisively, ‘Maybe what he (Elmendorf) should do is run for Congress.’”

And as reported in the Washington Post and other outlets President Obama said "That's Simply Not true" in regard to the CBO's assessment and its forecast of deficits.

So apparently the President and Senate Majority leader, believe the Democrat's appointed head of the CBO should either run for congress or stop lying.  I know its not the CIA lying to congress but can we stop attacking the messenger.  Apparently the President and Reid, both partisans, know more about economics than an Economist (Elmendorf).

One would have hoped that maybe Reid and the President could have said "The conclusions by the independent assessment arm of the Congress, the CBO, has raised some concerns about the affordability of health care.  The Bill is still evolving.  We look forward to their future assessments and will work hard to successfully address the CBO's concerns".  I mean, isn't that a bit nicer way to say you disagree with someone. 

This is not Pelosi saying the CIA lied, but at some point we need an Elliot Richardson moment where someone stands up and calls out congress and the president on the sham they are shoving down our throat, called healthcare reform. 

Obama orders review of alleged slayings of Taliban in Bush era vs. Horse Soliders

If you have read Horse Soldiers: The Extraordinary Story of a Band of US Soldiers Who Rode to Victory in Afghanistan you will be outraged by the statement that the President intends to investigate the actions of General Dostum in the death of 1,000 Taliban prisoners, while also investigating the Bush administrations unwillingness to press charges of some sort at the time.

You may not know, but Dostum is a colorful General in the Northern Alliance, working on various sides of various issues and often for himself, as warlords do.  This event is with respect to the prison riot that erupted after the Taliban started to collapse in the fall of 2001.  That is the prison riot where an American CIA agent was killed by the Taliban prisoners.

For background, a small team of US special forces and CIA agents went into Afghanistan in the fall of 2001, right after 9-11 and teamed with what was left of the northern alliance (Dostum and others) to take down the Taliban.  They fought against the Taliban in some of the most unconventional ways - taking on Taliban Tanks while Dostum's guys and CIA were on horse back, calling in JDAM GPS guided weapons from B52s built in the 60's, using a satellite hand held radio.  Special Forces, CIA, and the Northern Alliance did what the Russians had failed to do, take over Afghanistan.  And they did it in months.

Franks and others had wanted to delay 6 months and deploy 50k-100k troops to do what these guys accomplished in a short time before winter came.  Under the Franks plan thousands more would have died, on both sides.

The Horse Soldiers, as they were called, exhibited the best traits, true American spirit, working closely and respectfully with local leaders like Dostum to adapt to the regional realities.  The book contrasts the success in Afghanistan to the difficulties in Iraq, where our policies were less integrated with regional politics and realities.  Afghanistan and taught us that working with marginal characters like Dostum is a lesson in respecting others.  Isn't it Obama that keeps telling us to think about other people and their cultures?  I suspect the Bush team understood that, and that's why Bush did not investigate the deaths related to the prison riot in greater detail.

So the prison story goes a bit like this...

There are two types of Taliban, Afghan and non Afghan.  When an Afghan Taliban gives up he pledges allegiance to the Northern Alliance, and won't switch sides unless there is some other lost battle.  The non Afghan Taliban will never surrender.  So, Dostum beat the hell out of a key Taliban leader on the battle field.  The Taliban surrendered.  So Dostum had to take the radicalized non-Afghan Taliban and stick them in a prison (Because its easy to find a prision for 1,000 people in the middle of a bombed out country).  The Afghan Taliban were all let go after pledging allegiance to Dostum.  Well it appears, this surrender was actually a ploy of sorts.  The non-afghan Taliban prisioners all kept their weapons (long story, read the book).  And after some time staged an uprising to take over the prision.  Dostum was not fully prepared.  His troops shot their machine guns from the prison turrets and killed hundreds of prisioners, but they kept coming.  The Taliban had no intention of surrendeirng.   The fight lasted several days.  Ultimately they had the last of the Taliban cornered in a lower level, pooring kerosene in to burn them out.  When that did not work they redirected an irrigation system to flood them out.  Something like 35, of more than 1,000 killed, were still alive and surrendered.  One of those was that jerk John Walker Lynn.

This was a war.  Dostum is a questionable character, but in a Jack Bauer kind of way.  Hell Jack was probably there.

More importantly, if you listen to the guys who were in the book, you get a much better insight into what wars of the future might be like and how we need to work with local factions to achieve victory without putting 100k troops at risk.  This is a dumb investigation.  It works against the the lessons from the battle.  Some things should just never be investigated.  There is no way to judge the actions of someone in the battlefield 8 years after the fact.  And for those that talk about civil rights, what about the rights of the 10,000 troops that would have died through a conventional American invasion?

I suspect there are other reasons for the investigation, as a matter of fact all the new investigations (Dostum, CIA, unwarranted this or that).  If your poll numbers start going down, take on the the other guy (Bush) and start blaming him.  Economy not doing well, can't blame Bush its the Obama plan.  But you can go after Bush about war Crimes.  He is supposed to be the President of the United States not a tourist in Ghana.  Does he really have time to dedicate to fixing Ghana?

Do you know your cost of Health Care? A reality test for congress

I have often thought that a basic problem with health care is insurance.  That insurance, promising full coverage for those with the right employer, motivates bad behavior from customers and doctors.  Why be a savvy shopper when all health care is free?  This is often referred to as moral hazard, one abuses a resource if there are no repercussions.  Conversely, the need to mitigate health care cost (counter moral hazard) has been regulating price, not paying more than $X for a given procedure.

In most other markets this combination of moral hazard and cost constraint, slows innovation.  Why innovate if I can't sell more product and make more money?  If the customer can't decided on procedure, why offer any options?  If there are no options, there is not concept of early adopters willing to pay a bit more for a more innovative product, that might not be perfect but none the less appealing to savvy shoppers (like the folks that bought an iPhone before it was a cool idea, in my case it was testing for CRP before it became a routine blood test).

I am a student of innovation.   A true believer in the concepts of Creative Destruction (Schumpeter et. al.)  What that all means is that if a buyer and seller can negotiate different options of what might be bought, then over a period of time better products will emerge and people will learn what is the best product, in terms of the needs of the customer (not some actuary in a tower).  And, as early adopters consume products, costs will come down and quality will go up.  For example, a $1,000 Dell computer today can do more than a $1M cray computer could do in 1980.

So, I have been testing the health care industry.  I have my own insurance and use a Health Savings Account.  Essentially this lets me put $2,500 into an account pretax and increases my deductible to $2,500.  My overall insurance cost is much lower, but I am at risk in a sense for the first $2,500.  So, I am now a consumer.  I want to know how much everything costs, what its value will be, and wish to know more about my options. 

So, here is my story.  I go to a specialist today.  He looks at my problem and says "I can do either A or B.  A may work.  B definitely will work.  What do you want to do?"

So, I say "Choice B, but what does it cost?".  The doctor says "What does it cost?  Hmm.... I don't know?  Maybe my Administrator knows". 

I go to the administrator, "What does it cost?".  The administrator says "Well, the doctors cost or the other costs for the procedure?  I am not sure?  You need to call the place the procedure will be done?".  I am thinking, "My cost.  Why do I care what the doctor gets paid.  And why do I need to call the surgery center where the doctor plans to do the procedure."

Would you buy a car without knowing what it costs?  A house?  A cell phone?  When doctors don't even know what the cost is, how can some remote bureaucrat figure it out accurately?   And by cost I mean A vs. B.  I am making the A vs. B decision.  The Insurance company might set a rate for A or B, but they really have a hard time forcing my hand if the difference is marginal.  They are just not that good at understanding my "Reservation Price" and other related costs.

The way you control cost and quality is to establish a relationship between buyer and seller.  Period!  Some will say "But this is not a normal transaction, if you get ripped off its your health and you die".  Well maybe you do, but you also die by having piss poor doctors that are not motivated to make more money, do better for themselves and the patients.  I want people who work for me to make money, because then they work harder for me.  People judge their self worth and learn to do better by the interaction they have with those around them.  If you are a smart person thinking about a great profession, do you want to get a job where your hard work pays off or where you just follow a routine and have a defined revenue stream (Defined by Congress).

I personally think we would all be better with an HSA.  The $2,500 deductible can be managed in almost all cases, low income can have their payment subsized by tax payers and the rich can self fund.  We would each become more aggressive about our health care, limit our use to when we really need care, and in so doing become a more active participants in the health process.  The ensuing competition would continue to motivate good people to enter the profession.  And, most importantly of all, through innovation, what amounts to $1M Cray computer in health care (i.e. liver transplant or such) will over time come down in price (quickly with innovation) because smart doctors will figure out better tricks and tools for driving better care, because their patients reward them for it monetarily and through the customer/supplier relationship of commerce.

So, your homework assignment - when ever you go to the doctor (if you are paying or not), ask what it costs.  See what you find out.

The Man that brought us Supply Side Economics (Great Book)

With the recent passing of Jack Kemp, I was reminded of his exceptional effort in leading the charge to supply side economics in the early 80's. The man behind the thinking was Arthur Laffer, a truly gifted economist.

Laffer's newest Book, The End of Prosperity: How Higher Taxes Will Doom the Economy--If We Let It Happen chronicles the power of less government and less taxes.  Many argued that the deficits of the 80's was a function of supply side economics - that low taxes drove debt.  But the reality is, as well told in the book, revenues increased under Laffer plan.  Congress however did not spend less.  Part of the spending issue was good, investing in defense to weaken Russia.  Other parts were bad.  Is was not until the Republican congress in the late 90's that spending was brought under control and in conjunction with lower taxes, much of the reason for the boom in that time frame.

Some parts of the Laffer story are well, laughable.  In the simplest form, the Laffer curve says as taxes reach 100%, revenue drops off to zero - meaning, why would someone work if they were paying 75%, 85%, or 100% of their wages to the government?  They wouldn't.  But when Laffer and team asked the congressional budget office for revenue estimates for various increased taxes, the CBO increased total revenue forecast, a mathmatically correct but economically improbable outcome.

Right and Left, people don't understand economics.  Much of the fight in the 80's was Kemp trying to persuade Republicans to lower taxes.  But Laffer points out, the reality is, when things like capital gains taxes are reduced, people invest more, generate more wealth, and net revenues increase at a faster rate than taxing people to death.  California, New York and New Jersey represent the folks that don't get this.  Emerging economies are the ones that do get it.

If you are seriously concerned about our economy and want to understand how to make the economy work, this is a great book to read, and you don't need to be an economist to get it.

PS: Please follow 4yourcountry on Twitter