If you aren't familiar with the term, Rescission, which I've finally figured out how to spell, is a practice by health insurance companies to remove costly patients from their rolls.  Basically what happens is that once you get seriously sick, it triggers an audit.  They go back over every piece of paper they have on you and try to find evidence that you might have deceived them.  If you have, then they cancel your policy, and you're SOL. A good example of this practice was a woman who was being treated for breast cancer.  Her insurance dumped her because she got treatment for Acne.  They described the Acne as "pre-cancerous lesions" and dropped her claiming she didn't let them know that she'd had that condition.  No, she didn't mention her Acne. So one of the big positives of this new health care bill is that it bans rescission:

So if we went forward and passed the Senate health care reform bill as it exists today, what would happen?  Well, the best evidence we have is Massachusetts where they passed a similar piece of legislation in 2006.  There, as with the Senate plan, everybody is focused on access to coverage and not cost controls.  From DailyKos: There's a number of reasons why just simply getting people "covered" doesn't fix the problem. Supply and Demand Anybody who's taken a basic economics course learns about supply and demand.  If you have a supply that's constrained (doctors, nurses, hospitals, etc) then the price will rise until sufficient demand is destroyed to balance out the market.  If you add 40 million people to the insured roles, then that means more people putting demand for health care on a system with the same actual resources.  That means you either have shortages or prices go up. Monopoly Pricing Power In most health insurance markets there are a limited number of competitors for health insurance.  The reason for this is simple, the bigger your pool of insured, the more leverage you have to negotiate prices with health care providers.  If you can manage to be the only game in town, then you have substantial control over both cost of care and the price of premiums.  So any reform that simply adds more people to a monopoly's rolls isn't going to have any affect on pricing.  Quality of Coverage There's a difference between being covered and being "covered".  There's lots of regulations in the bill, but it doesn't really prevent insurers from limiting your coverage.  For example, they can limit the number of specialists in their network forcing you to spend more money to see the doctors you need for your care.  They can also deny claims as they do today and force you into a legal battle to get the care to save your life.  None of that egregious behavior is changed under this bill.

There's a clip of a back and forth between Mary Landrieu and Howard Dean on Hard Ball.  In that discussion, Landrieu said the following about the health care bill:

Over the last couple of days I've been working through my frustration over what's happening with health care reform in Congress. If you hadn't heard, the latest is that, thanks to filibuster threats by Joe Lieberman, no form of public option is set to be included in the Senate bill. So what we're left with is a Senate bill that has no public option, a house bill that has a weak public option AND restrictions on abortion. So overall a rather ugly situation.

I grant that we do not know what the end result will be, but the question I'm wrestling with at the moment is whether the health care bill should be passed, lacking a public option. At this point, I have to say no. There are two core reasons for this, one practical, the other political.

The Practical Reason

The practical reason is that though there are a number of good things in the bill as it now stands, it largely leaves the health care system to operate as it has been doing for the last several decades. There are some rules about a few egregious industry practices like rescission, but it's not clear if these rules would actually do anything to really change the practice as it happens today. So what we're ultimately left with is the same system plus a huge government subsidy to help the uninsured buy into it.

Now, if that was the only thing in the bill, I'd consider it passable. The problem is that we've added on a mandate. Now, there are subsidies to help people afford insurance, but with a mandate, this becomes a regressive form of taxation. It's not like wealthy people need to worry about a mandate, as they already have insurance. But people who can't afford to get insurance today will be forced to buy it. Now that subsidy will help them, but it still means they are forced to pay money out of their pocket that they aren't today. How is that not a tax?

Having a public option would at least create some competition against private insurers and help to control costs. The version that was in the bill was pretty weak sauce but at least it was a start and I could accept that being in there. Without a public option we have a bill that is:

1. Minor reforms to industry that ultimately will be worked around or ignored
2. A regressive tax on low income individuals - yes they will get health insurance, but there's no regulation of the quality of that coverage

So I'm against it.

The Political Reason

The political reason is that if progressives allow this bill through then we will set the precedent that the concerns of progressives can be written off. What happened in this case is that we started with a strong bill that was already a compromise and then allowed it to get more and more watered down. The whole time threats were made by progressives, but it looks like at the end, these are empty threats. That progressives are more afraid of passing nothing than of passing bad legislation.

So going forward with any legislation what we'll see is progressives being largely ignored by the Congressional leadership and the White House because they know that we'll cave in the end. Instead conservatives will threaten filibusters and get whatever they want. The White House, more concerned with passing something than passing something good will be all too happy to cave to those demands.

Conclusion

Simple put, the bill, as constructed today, cannot be passed. It is a regressive tax on low-income individuals, and the reforms it contains are likely to be largely ineffective. Yes some people would get health insurance that don't have it today, but there's nothing in this bill to assure that the insurance they'd get would be decent quality. Having a government run option would at least provide a competitive environment that could dissuade private insurers from engaging in the worst practices and driving up prices. Lacking that, this is a bad bill.

So in a move that should surprise nobody, Joe Liberman decided to derail health care reform once again. This is the second time he's given Harry Reid the signal that he was on board, but then claimed that once he knew the details, he couldn't let the bill go forward. The first time it was on the inclusion of a Public Option and this time it's the inclusion of a Medicare expansion. I grant it's intellectually consistent, but the question is, why is he doing this?

There's been some theories that Lieberman is just pissed off at progressives who tried to unseat him and derailing health care reform is his bitter revenge. While that may be a factor, I would posit that he's actually got a deeper strategy. Notice that in all of his objections he says that his big concern is the deficit. None of the plans put forward so far add to the deficit. In fact all of them reduce the deficit, leading one to wonder why he's making that concern up.

The reason is that by the time we get to his 2012 reelection campaign, with the Great Recession hopefully long since in the rear view mirror, there will be a big push for deficit control. We just spent a huge amount of money to resuscitate an economy that nearly collapsed. We have enormous commitments to fund Medicare and Social Security. So the deficit will be a mainstream and reasonable concern that Lieberman can play to in 2012.

When Lieberman runs for reelection, he'll claim prescience on this. How he tried so desperately to stop us from running up the debt even though he's objecting to bills that would decrease the debt. He'll have the clips to play that make him seem so wise by 2012 standards. He can't run as a full throated progressive because the Democratic candidate will easily steal away that vote. But if he runs as a center-right politician and the Republicans don't field a strong candidate, he'll have a decent shot as the wise centrist, getting all the Republican vote, and peeling off just enough Democrats to pull it off like he did in 2006.

With Representatives they can't play the long game because they are up for reelection every two years. They have to talk about what makes sense right now. For Senators like Lieberman though they have to play the long game. Being right in 2009 is irrelevant if you look wrong in 2012.

In Lieberman's case it's not so much a matter of right/wrong, but distinguishing himself from the Democrat he'll eventually face. Health care will pass with or without Lieberman's support. He can even claim he was on board with it if he thinks it will work claiming that his deficit concerns were addressed. But he will point to his efforts to derail health care as evidence of his strong deficit hawk credentials, and try to ride that to victory.

It's about the only shot he has frankly. Even if it ultimately fails he's making great friends with the private insurance industry who will hand him a fat lobbying gig if he loses. So it's a win-win for Joementum.

I saw this on MacRumors and thought it worth mentioning:


This definitely changes things a bit in terms of the viability of an Apple tablet device. If they can offer a device that provides e-book capabilities with readability like the Kindle, plus video... well they definitely have something. I thought the Kindle was pretty cool, but I don't read books enough to justify it. But if you have that plus the ability to watch movies and play games, then I think you're getting into something rather interesting.

Figure right now the Kindle and Nook are $300. So if Apple can bring out something that also does video for around $500... well that gets mighty interesting. It's all about the display technology. If they can bring out something that takes the Kindle concept to the next level, then I think they've got a winner. If it's just a big iPhone then not so much...

I think I'm developing a pre-existing condition in my efforts to follow what the hell is going on with the health care reform bill, but I figured I'd share the latest and my thoughts on it. There was a new compromise struck that involved several elements but the critical piece is dropping the public option in favor of permitting people to buy into medicare after age 55. I wasn't sure what to think of that but it seems like the private insurance industry is okay with this, so I was immediately wary.

To understand why they like this, we need to think about how health care insurance works. What you do in health insurance, as with other kinds of insurance, is charge everybody for their coverage but ultimately only pay out for care to a few of those people. Some people are more expensive than others, but with many people paying in you can balance out all the money getting spent to provide everybody sufficient coverage. Having said that, the majority of the expensive care is going to be for older people.

So what this expansion of Medicare would do is provide "competition" to private industry for people they don't want on their insurance rolls to begin with. What they want is young healthy people who don't ever get sick but pay for insurance. With this bill there will be new laws that force those young people to buy their insurance from those companies. So this is a borderline perfect "compromise" for them.

Here's what the private insurers get:

1. A new pool of younger healthy people who will now be forced to buy insurance
2. Subsidies from the government to help pay for the cost of those who can't afford the insurance
3. "Competition" from medicare that helps take the most expensive patients off private insurance plans
4. The impression that government run health care is more expensive because the premiums being paid will be only from the oldest and most expensive patients. This buy-in won't have young healthy people to offset those costs.
5. The impression that private insurance is caving to the demands of liberals by having this medicare buy-in

The clue that we're getting screwed here is that the public option and a medicare buy-in are effectively identical concepts with similar amounts of people being able to participate. So if that's true, why would they be okay with one but not the other? The critical difference, of course, is that the public-option would allow competition across the entire pool of the insured, not just the older and likely sicker people. They'd love for the government to take on those people.

This may sound like I have some beef with private insurers and I'm just wanting to make sure they get shafted. That's not it at all. The problem is that this plan will do nothing to help address the costs involved in health care. It makes private insurers more profitable, dumps huge amounts of government money into the system, and in the end we don't really get any better health care out of it. Yes, there are new rules in the bill forcing insurers to take on people, etc, but they'll find loop holes and ultimately carry on in much the same way they do now because it's the most profitable route for them.

We're about to get screwed...

There's a simple diagram that TPM posted that has been created by the Defense Department to outline how our Afghanistan counter insurgency plan is supposed to work (click to embiggen):



I find myself wondering what the computer code to represent this logic would look like... Then I wake up screaming in terror...

Rant with foul language in bound...

Over the course of the health care reform fight that's going on in Congress I have been receiving repeated e-mails from the likes of Madeline Albright, James Carville, and, most recently, Obama. These e-mails generally go something like this:

From Talking Points Memo:

The Senate just voted to table Sen. Ben Nelson's abortion amendment to the health care bill, effectively killing it and forcing Nelson's hand on his threat to filibuster the bill if the restrictions on abortion coverage were not included.

Technically speaking Nelson doesn't hold all the cards but the leadership of the Senate seems unwilling to play hard ball with hold outs like him. Unless they start getting tough with these people very soon we will not get health care reform. Yes, there will be a bill passed that will be called "health care reform" but it will not really change anything.

Simply put there are not 60 Senators who want reform that involves some degree of public competition against private insurers. Without a government run option, we will have no leverage to compete against private insurers to contain costs. So unless the Senate leadership decides to look at other approaches (reconciliation, the nuclear option to change the filibuster, etc) then the resulting bill will be a failure.

From Slashdot:


So what happened was this:

1. He accidentally downloaded child pornography (though granted the accidental part may be a lie)
2. He deleted the child pornography
3. He gets arrested and brought up on charges for child pornography when he actually didn't have access to it, just the residual evidence on his computer that it had been there

I find particularly spooky the notion that you're supposed to call the authorities if you accidentally download something. I mean, think about that. You're downloading porn one day, accidentally get the wrong thing, and then you call the FBI and they come and impound your computer? What's to keep them from prosecuting you right then and there? They happily prosecuted a guy who did apparently delete the accidentally downloaded file, so why wouldn't they go after you?

I mean sure, maybe if you got to court, you could use your calling them as a defense. Of course you'd have to spend a lot of money on attorney's fees, but hey, maybe you'd be found innocent, right? Of course once you get into the court, the jury is going to see you as a dirty perv, no matter how solid your defense is. Do you really want to chance them finding you "innocent"?

This all seems to be drifting into the realm of thought crime. I mean, you're taking somebody who accidentally downloaded an illegal image and throwing them in jail for a few years? The rational behind the severe illegality of these images makes some sense, but is the world really a better place with this guy serving time in jail? Is that really helping protect some child somewhere? No.

What SHOULD be done is an effort to clamp down on distribution and to investigate people who actually generate this stuff because they are the ones harming kids. In this case, it's pretty clear that the FBI was monitoring a file on limewire that they knew to be child pornography. So rather than make an effort to shut down it's distribution, they allowed it to happen while quietly finding out who was grabbing copies of it. I understand that in P2P networks, you don't know who the source is, but if you get the guy's computer and find out that it was one file and he'd deleted it, does it really make sense to prosecute?

I mean don't these guys have terrorist to investigate or something?

So there's the rumors of Apple coming out with some kind of media tablet device. Apparently various magazine/newspaper publishers are all hot on this concept and we've seen a few prototype ideas for how this might work in practice. Here's an example from Sports Illustrated:


Okay... looks pretty. But can anybody tell me what the unique value add is here? Why would I spend a few hundred dollars on a tablet so that my magazines can look like souped up web pages? The value provided by the iPhone is that it gives a tremendous amount of functionality in a very portable form. Unless I'm totally missing something, I don't see how this tablet device offers something better.

Yes, I get the size is bigger, and thus it'll be easier to see. But under what circumstances do you use this device? I mean hauling it around with me would be a bit of a hassle. If I'm going to sit at home and look at Sports Illustrated wouldn't it be easier to look at the actual magazine or browse their website?

This is increasingly seeming like the merger of the desperation of Apple and the desperation of publishers. While Apple has had tons of success, where exactly do they go from here? They can keep improving on what they have, but there's not a lot ways for them to really revolutionize the industry as they have in the past. The publishers are seeing declining circulation and lower ad revenues. So both Apple and the publishing industry want something to change the game. But if that's going to happen for real, what they offer can't just be a jazzed up web page on a big iPhone.

As we get more details on what this tablet will actually be, we should be able to get a better sense of what the real value is, but so far I'm pretty doubtful.

You must see spinal tap...

So Obama has committed to sending an additional 30K troops to Afghanistan. His plan is to have these troops in the field by the summer of 2010 and begin withdrawing those troops in 2011. I can't say I'm thrilled by this because of recent developments in Afghanistan (fraudulent election, etc), but I'm resigned to it. I have a few thoughts on it though:

1. On it's face what Obama is doing looks little different than what Bush did in Iraq. Sending more troops, talking about withdrawal, but refusing to lock down specific milestones, time lines, etc. Obama does give the impression of being far more engaged in what's going on and seems to have given far more serious thought to how we get out of there eventually.
2. His commitment to begin withdrawing troops in 2011 demonstrates his seriousness about this effort. From a political perspective, setting the date to begin pulling out troops in 2011 means that, come the 2012 election, we'll be able to judge the success of his policy. Are we actually withdrawing? How fast? What's the current state of Afghanistan, Al Qaeda, and the Taliban? Might even be time enough to launch a primary opponent against him if it's truly disastrous.
3. The scale of the increase is pretty huge. We're going to have substantially more forces than we've ever had in Afghanistan since 9/11. Since Obama took office we've seen troop levels go from about 30K to what will be 100K. Compare this to the Iraq surge where we had something like 130K and went to 160K. That was a marginal increase, this is an enormous escalation.

For now I will trust that Obama is doing the right thing because, frankly, there's not much that can be done to stop it even if I thought that was the way to go. Come 2011, we'll be able to judge this on it's merits, and see if he made the right call. The reality is Obama was handed the hugest shit sandwich when he got elected. A recession comparable to the Great Depression, two wars, massive debt, a health care system in crisis, and on and on. I think he's made some pretty huge mistakes, but so early on in his Presidency, it's hard to be sure.

I think it can be safely said that by the end of 2011 and into 2012, we'll know what to make of all of this. Until then I'll just try to be patient.

If you hadn't heard, there's been a big meltdown of the Dubai World conglomerate that had the implied but not actual backing of the UAE government. Specifically:

Imagine this for a moment. You decide to set up a new business, creating a storefront in a local mall somewhere. At this store front, you would allow people to place bets on stocks. If they bet that a stock would go up and it did, you'd pay them. If they bet that it went up and it didn't, you'd keep their money. You never actually own any stock, you're simply running a side betting pool on the performance of the stocks.

Imagine a second scenario for a moment. You decide to set up a new business, opening up on the floor of some office building near wall street. At this business you would allow large institutional investors to place bets on stocks. If they bet that a stock would go up and it did, you'd pay them. If they bet that it went up and it didn't, you'd keep their money. You never actually own any stock, you're simply running a side betting pool on the performance of the stocks.

The first scenario is referred to as a bucket shop and was generally made illegal under state gambling laws in the early 20th century. The second scenario is trading in naked derivatives and is completely legal.

A video that illustrates the problem I've been concerned about in China:


So they built an entire city, with houses, infrastructure and everything where nobody lives. The construction of such a city contributes to GDP growth in the short term, but this is just pointless spending if nobody lives there. So either they'll have to somehow convince people to live there through some kind of subsidies or some such, or the place will just slowly fall apart.

This gets back to my beef with how the press have generally treated China's economic story. They've heralded the way the Chinese government has been pushing the country forward, but they ignore what the ultimate costs are of that progress. They ignore the corruption and the inefficiency of the Chinese system. They ignore billions spent on worthless infrastructure. These all give the impression of strong economic growth, but they are really evidence of waste.

Remember back when we were talking about the initial stimulus bill in the US about "shovel ready" projects. That was about finding projects that need money right now to develop useful infrastructure. The benefit in such projects is you spend the money in the short run on projects that address actual needs. So this has a the initial positive stimulus effect, but added long term benefit from the use of the improved infrastructure.

In China, they are basically just dumping money out the door on anything. They don't have all of these elaborate rules about environmental impact studies, and cost benefit analysis. Instead, they are building whole cities from the ground up just to spend the money. It's taking the real estate bubble that we had in the US and pumping it up with government spending. Does that seem like a recipe for disaster to anybody else?

The problem is that China has become so desperately dependent on this unsustainable growth that they'll be compelled to keep doubling down on what's an already failing policy. Build yet more empty buildings with yet more empty roads going to them. Push out more subsidies to consumers to get them to buy more TV's, etc. But eventually, they'll blow through their vast reserves and find themselves at the limit of what they can possibly do.

So HHS secretary, Katheleen Sebelius has released a state by state break down of the benefits of the currently debated Senate health care reform bill. It nice illustrates what's right and what's wrong with the bill. So here's a few critical points as pulled from the Nebraska report:

• 220,000 residents who do not currently have insurance and 127,000 residents who have nongroup insurance could get affordable coverage through the health insurance exchange.
• 139,000 residents could qualify for premium tax credits to help them purchase health coverage.
• 270,000 seniors would receive free preventive services.
• 48,000 seniors would have their brand-name drug costs in the Medicare Part D “doughnut hole” halved.
• 33,100 small businesses could be helped by a small business tax credit to make premiums more affordable.

Okay, a two points to make:

1. What is the definition of "affordable coverage?"
2. The exchange that is referred to here isn't going to be in place until 2013

Then it goes on to outline what happens in the shorter time frame:

• Ensures consumer protections in the insurance market.
  
• Creates immediate options for people who can’t get insurance today.
  
• Ensures free preventive services.
  
• Supports health coverage for early retirees.

This all sounds good, however, nothing in this list does anything to address the cost of health care. The government spends a bunch of money to pay for subsidies, but ultimately private health insurers are still doing what they've been doing. Private insurers, now facing greater regulation are going to charge more money. If they have to keep people in that have expensive conditions, then they are going to have to charge everybody more money. So yes, people who don't have any options today may get some, but everybody is going to be paying more for their health care.

• 33,100 small businesses in Nebraska could be helped by a small businesses tax credit proposal that makes premiums more affordable. And these small businesses would be exempt from any employer responsibility provisions.

So we'll exempt them from being made to provide employees insurance but we'll provide a tax credit that might help them afford the premiums. Did I mention that premiums are going to go up due to the reforms about preexisting conditions, etc?

Look, don't get me wrong, there is a lot of good stuff in that health care bill. The problem is that while we're doing a lot to address coverage problems, largely by spending a lot of money, we are doing little to address cost containment. Yes, having more insured people will help contain costs by reducing the use of emergency care, etc. However, without a public option, the government will have no leverage to further reduce costs. Instead we're just subsidizing the existing broken system.

From TPM a staffer on the problems with getting health care passed in the Senate:

There is a lot of misplaced anger coming from many of our fellow progressives about Senate Democrats (which often is just shortened to "The Democrats") inability to pass a robust healthcare reform bill, climate change, etc.