The Tocsin Sounds

The President rallied his troops today, while returning from a fund raising trip aboard Air Force One. The message: health care reform must pass this year or the opportunity will be lost. "It's now or never," he is reported as saying.

The exhortatory remarks were made during a scheduled conference call with the President's political organization, "Organizing for America" (sagacious, no?), who are preparing to launch their nationwide health care campaign on June 6th. The President's message, in a nutshell: Make a lot of noise about what I want. People may want to debate and discuss this, but if we paint such interlopers as standing in the way of necessity, we can get just what we want.

It's just like Rahm Emanual, White House Chief of Staff, once said: "Never waste a good crisis."


The above is written a bit satirically, perhaps even a little churlish, but in all truthfulness there is absolutely nothing wrong with a President trying to rally support around his political agenda. My disagreement with the President is revealed a bit later through the call. I do take issue with Rahm Emanual however and his notion of how to approach a crisis.

First, we should be clear: "Organizing for America" is Mr. Obama's pre-reelection committee. In calling them to arms, I highly doubt the President of the United States is advocating a letter-writing campaign, or any backyard bbq's where supporters talk about health care (something the Republicans tried during the 2004 election, which were the epitome of mediocrity, or at least the one I went to was). Rather more likely, the campaign will be a coordinated attack by political professionals against those members of Congress who may want to examine and discuss the issue thoroughly before irreversibly and forcibly changing the health care system for the entire nation.

The hauteur of this approach, too, is not so much where my problem lies (though, to be frank, it does rub me the wrong way). My main problem lies actually with the truthful things that the President had to say:

"Health care costs are out of control, and the largest threat to the nation's economy."

There is nothing wrong in this statement. It is entirely true. However, should the President's policies, such as we can guess they are (details are still a bit sketchy, with Congressional leaders working out most of the details), costs will not be brought under control and the "largest threat to the nation's economy" will not be abated. Instead, we can expect to see costs continue their upward trend, or even accelerate (and that isn't even counting the generously set $1.5 trillion price tag being tossed around). Without significant safeguards for government coffers (i.e. the right to delay/refuse care, a practice that even many of today's "private" doctors are not free to exercise), the perpetuation of inflation is all but inevitable, as once again the fundamental driving forces behind the problem are being ignored.

[**If you are new to this blog, or otherwise unfamiliar with health care policy, the driving forces behind cost inflation were summed up very neatly by Harvard's Dr. Kate Baiker during a recent appearance before the Senate Finance Committee: (1) Health insurance provided by an employer looks less expensive to the employee than it is; (2) The tax code distorts compensation decisions away from wages and towards expensive health insurance; (3)Traditional, low-deductible health insurance encourages over-utilization of medical care, putting upward pressure on costs.**]

One aspect of the plan that the White House has remained firm on however is that it wants "quality care and lower costs for all Americans."

This reminds me a bit of an earlier post I wrote regarding the so-called $2 trillion agreement reached at Mr. Obama's health care summit a few weeks ago. The White House has no real plan to speak of to achieve these savings (which happen to be just the right amount to pay for his proposals), save for numerous platitudes, and some ambiguous details. And yet, supporters applaud and cheer. And, of course, this plan must pass "now or never."

I recall similar arguments for our "stimulus" packages.

Merely saying that you want quality care and lower costs is a bit like saying you want world peace and brotherly love. Of course you do! But this isn't a policy proposal, it is sophistry veiled in shining political rhetoric. Although, to be fair, there are many politicians who have gotten very far on the power of their promises.

As for the supporters who will go out and do their very best to push through a plan that they are not quite sure about, but none-the-less believe in, I offer this analogy, in keeping with the theme of my earlier post (originally borrowed from Keith Hennessey, former Director of the National Economic Council at the White House):

Imagine a group of baseball fans driving all the way to a stadium to watch a good athletic spectacle. Then, before the first pitch is even thrown, the coach comes out on the field and announces that he is sure that the team will win, so the fans can all go home and tell everyone about it.

It's actually not that difficult to imagine, if you try. Close your eyes and just picture it: 50,000 ecstatic supporters jammed into a stadium, all shouting together in unison the same creed, "YES WE CAN! YES WE CAN!"

Mea Culpa - Explicatus

This is just a quick follow up for some of you who may have been a bit confused by the portrait adorning the new Reductio Ad Absurdum post.


The man above is not Don Boudreaux. That man is Claude Frédéric Bastiat, a 19th century French theorist and political economist. He is a master at illustrating economic points by taking their premises to their extreme and ultimate end. In short, revealing the absurd through absurdity.

If you are looking for a general crash-course in Classical Liberal economics that will almost certainly make you laugh, I would advise anyone to pick up a copy of his Economic Sophisms. Keep an eye out for the "Candlemakers' Petition," one of my favorite admonitions against the dangers of protectionism.

Now, back to healthcare...

Reductio Ad Absurdum - Your Semi-Annual Compendium of Intriguing Insights and Comical Calculations

This one comes from George Mason University's own Don Boudreaux; economist, author, professor and blogger par excellence:

"I'm on the road today. As I checked out of my hotel room -- rolling my suitcase behind me -- I wondered how many bellmen jobs were destroyed by the innovation that put wheels on luggage."

I hereby move that all luggage be stripped of their wheels and returned to their natural state: bulky, square, inefficient and heavy. I'm in the business of saving American jobs, people.

The Power of Promises

Before I begin: Am I the only one who is put off by this picture? I bear no ill-will towards the President, at least not in a personal sense, but there is something about this that just doesn't sit right with me. I feel like I should be looking at it from a dingy bridge underpass in a George Orwell novel. Maybe it's just me.

In any case, the mantra "Yes We Can!" remains in full force. However, I believe the administration is finding out that it is a lot easier to talk about change than it is to actually accomplish it in any positive sense. At least when it comes to health care.

To be fair, the President has put forward certain ideas that would slow the growth of Medicare and Medicaid, but they fall far short of what will be ultimately necessary if these programs are to maintain some semblance of solvency. These proposals, however, have been coupled with calls for increased spending on such things as preventative care, a politically popular item yet one which, time and again, has been shown to possess no real long-term savings potential. Even in the face of data pointing to the contrary, and the reticence of Congress' own Congressional Budget Office to back the claim, proponents maintain that if you spend the money now to keep people healthy you will save more down the road by not having to pay for expensive chronic illnesses.

Sounds good, right? The problem, besides the fact that prevention itself costs a great deal of money (take universal screening, for example: most tests will be carried out on individuals who are entirely healthy, representing a welfare loss to the whole community), is that old age and dying are expensive propositions, and is where we exercise more than three-quarters of our health care spending as a nation. What's more, they are unavoidable byproducts of the human condition. In fact, a recent New England Journal of Medicine article even demonstrated that, over the course of a lifetime, healthy individuals who live to a ripe old age incur greater costs than unhealthy individuals. No amount of prevention can stop Father Time and the ravages he brings. Simply put: if you spend more money on health care, you spend more money on health care, no matter how good it may sound politically.

Then there was the "plan" unveiled last week by the President, flanked by industry representatives, to reduce $2 trillion in health spending over the next ten years. I place "plan" in quotation marks here because I heard no plan. I did hear half-hearted promises, which these days seem to be just as good.

Irrespective of the great fanfare surrounding the meeting of lobbyists, hospital, insurance, physician and patient associations, I did not hear anything even resembling a plan that might somehow accomplish the feat set out by the President. The "plan" appeared to be more of a lukewarm agreement that, yes, it would be nice to lower health care costs. Once the discussion turns to who will bear the brunt of that $2 trillion cut, I foresee a lot less handshaking and photo-ops and a lot more fist shaking and jockeying for favor. Still, to hear some members of the press describe the event, it was an occasion of great moment, a historic milestone. This may be so, as the groups involved do not, traditionally, see eye to eye on what any kind of health reform should look like, but apparently it was Mr. Obama who finally brought the foes together.

Keith Hennessey, former Director of the White House's National Economic Council, provides a superb analogy of the reality of this situation at his MUST READ BLOG. I shall paraphrase:

Imagine Mayor Bloomberg of New York City were to hold a press conference with the General Manager of the Yankees, announcing that, working with the players and coaches, he will develop plans to win 40 more games this season than they otherwise would have won (Lord knows we need it). Those plans will improve the team's hitting, pitching, and fielding. Fans will then applaud and go home happy.

Later that night, while fans are watching Johnny Damon miss a play at third that a fielder with a stronger arm would have made, some questions might arise. Among them:

How will you improve hitting, pitching, and fielding? How will you make Damon a better fielder?

What did he mean when he said he "will develop plans"? Doesn't he have any already? Why didn't he talk about those?

How are we supposed to verify that the team won 40 more games than they otherwise would have, since we will never know how many games they would have won?

Other than having picked the number 40, what is Bloomberg even doing at this press conference?

If this is such a good idea, what has changed to make it happen now? Is the Mayor claiming that his persuasive powers alone are worth 40 more wins?

These questions are fundamental to our efforts to reform the health care system. How can we make treatment more efficient and accessible? How can we align incentives so that providers are encouraged to accomplish those things we deem systemically desirable yet have somehow not materialized? In the end, it is private industry that must take the steps to improve performance and quality, and somehow remain financially viable while doing it. The government can help by creating an environment conducive to investment and reform, but a President cannot "persuade" an industry to undertake actions that it otherwise would never have taken. Presidents are not clairvoyants who can see the inefficiencies in management that lifelong medical professionals have somehow missed.

In Mr. Hennessey's words:

The President is attempting to claim credit for savings that (a) do not yet exist, (b) are not backed up by any specific changes in industry practices or government policies, and (c) are related to him only in that the groups announced they were adopting his quantitative goal. For all of these reasons, the President's claim that these savings will materialize is wildly unrealistic ... This is like the Mayor claiming credit for the 40 additional wins now, and telling fans that he will be responsible for the team winning the pennant.

I only wish it were that easy. The Yanks need a pennant.

*I believe I should close with this - Please do not take this as a partisan jab, nothing would disappoint me more than if my analysis came across as mere demagoguery. Take it for what it is: an assessment of an individual who's political raison d'etre is cemented in his ambitious drive towards "change," which has still never been clearly identified. I merely wish to point out how promises have somehow replaced policies when it comes to the behavior of our elected officials. Inconsequential on the surface, this new course can spell serious peril, as one candidate can always out-promise another. Let us not find ourselve mired in the prophetic words of the 18th century Scottish historian Alexander Tytler:

A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largesse from the public treasury. From that moment on, the majority always votes for the candidates promising the most benefits from the public treasury with the result that a democracy always collapses over loose fiscal policy, always followed by a dictatorship. The average age of the world's greatest civilizations has been 200 years.

Great nations rise and fall. The people go from bondage to spiritual truth, to great courage, from courage to liberty, from liberty to abundance, from abundance to selfishness, from selfishness to complacency, from complacency to apathy, from apathy to dependence, from dependence back again to bondage.

Happy Birthday Hayek!

Today is the 110th anniversary of the birth of F.A. Hayek. This quotation is from his 1944 book The Road to Serfdom; it's from the opening paragraph of Chapter XIII, entitled "The Totalitarians In Our Midst":

Probably it is true that the very magnitude of the outrages committed by the totalitarian governments, instead of increasing the fear that such a system might one day arise in more enlightened countries, has rather strengthened the assurance that it cannot happen here.... But let us not forget that fifteen years ago the possibility of such a thing happening in Germany would have appeared just as fantastic, not only to nine-tenths of the Germans themselves, but also to the most hostile foreign observers (however wise they may now pretend to have been).

You have got to love Hayek.

First, Do No Harm - Sign the petition!

SIGN THE PETITION

The Hippocratic Oath Taken by All Doctors: "First, do no harm"

Politicians, policymakers and public officials should take the same oath:
DO NO HARM TO AMERICA'S HEALTH CARE SYSTEM.

Please join me in signing a petition to let elected officials know we want health reform that puts patients and families first. I am concerned that many of the proposals being offered by Congress and the Obama administration would make America's health care system worse, not better. Our freedom to make basic decisions about life, liberty, and health care are at stake.

I have joined more than one thousand other citizens in signing a petition that warns Washington to Do No Harm to America's health care system and to tell them we want American families, not politicians, to control our health care decisions.

Please read the Do No Harm petition (www.DoNoHarmPetition.org) and add your name to show your support for a health system that puts patients first!