Who will regulate the regulators?

From the Washington Post.

Rep. Jane Harman (D-Calif.), for instance, served as chairman of a subcommittee responsible for overseeing technology-oriented efforts to improve homeland security, intelligence, information sharing and risk assessment in 2008. At the time, she disclosed more than $1 million in holdings in companies involved in intelligence and homeland security contracting, including Lockheed Martin and BAE Systems.

Sen. Frank Lautenberg (D-N.J.), who chaired a subcommittee that oversees water quality, owned a stake valued at more than $1 million in Linn Energy, a company that has been cited by federal authorities for alleged water pollution. It is unclear whether specific issues concerning Linn ever came before the subcommittee.

Sen. Thomas R. Carper (D-Del.), whose subcommittee keeps watch on clean air and nuclear safety, reported up to $65,000 in holdings in Duke Energy, which uses nuclear plants to generate electricity. Duke is 46th on the list of top 100 “corporate air polluters in the United States,” according to researchers at the University of Massachusetts. Duke spokesman Tom Williams said that the company provides power for 11 million people in five states and that some air pollution “kind of goes with what we do.”

The membership of some committees had disproportionately large holdings in companies or industries they oversee, The Post analysis shows.

On the House Agriculture Committee, which holds sway over farm policies and subsidies, members had farming and agribusiness investments worth five times on average the amount held by other colleagues in the House. Many of the committee members’ holdings were in family farms. Nothing prevents those members from also receiving farm subsidies, and in the past, some have.

Likewise, House Energy and Commerce Committee members, who routinely hold hearings about telecommunications and computer issues, had heavier than average investments in companies such as Oracle, Nokia, AT&T and Verizon.

House Homeland Security Committee members also had more communications and electronics holdings as a group than the House as a whole, and House Transportation and Infrastructure Committee members as a group owned almost six times more holdings in transportation firms.

In the Senate, the Banking, Housing and Urban Affairs Committee had on average almost twice the value of holdings in finance, insurance and real estate as that chamber as a whole. The Senate Environment and Public Works Committee members had almost three times the value of agribusiness holdings as their colleagues on other committees.

The thing that is sad about this is that it isn’t shocking. We want good regulators, so they are subject to congressional oversight. But who oversees Congress? I guess the answer is “the voters” but that’s doesn’t seem to be working. Right now, conflicts of interest abound and all we get is pledges that “My investments don’t interfere with my oversight work. I am an ethical person.” Does anyone really believe that? Do you trust congressment more or less than CEOs? Because the rules for CEOs are much, much stricter. Why? Because without them, fewer investors would invest in the company – they’re not suckers.

This is why I will favor markets over government more often than not – and especially in things like Education* and Health Care. There are natural checks on abuses by CEOs: investors stop investing; consumers stop buying their products. It is virtually impossible to unseat a member of congress for questionable ethical behavior, and as long as that is true it will continue and will get worse.

*In a recent podcast with Diane Ravitch, one of the architects of No Child Left Behind, noted that once the bill passed, educational testing companies with close ties to congressmen (both D and R) somehow got massive contracts to do all of the testing. Surprised? Me neither. I’m also now less surprised that NCLB didn’t work. It sounds to me like the primary people it helped were businesses who knew the right people in Congress.

How health care might evolve beneficially (in my opinion)

1. Business mandates are not strong enough so more and more business drop health care coverage and more people are put on the exchanges. This weakens the employer-provided healthcare problem.

2. Individual mandates are not strong enough either, which means the young and healthy pay a fine instead of joining up.

3. This creates a large market of individuals who are potentially profitable customers. Insurance companies innovate by creating new types of less expensive plans to get them to join. This likely will happen first at the state level if a few states change insurance regulations such that minimal insurance is pretty minimal and individuals can choose their coverage. Currently, most states mandate large, expensive and comprehensive coverage. If those states allow that innovation and see prices drop with more customer satisfaction, we’re in business.

4. I imagine this innovation only works if people voluntarily submit to health screening which means those who don’t get screened are assumed to be sick and pay higher prices.

5. Guaranteed Issue (where insurance companies cannot deny coverage) starts to be more expensive, perhaps the answer is more subsidies or a government backstop for the sickest (i.e. those who refuse to be evaluated). If it is subsidies, they are likely never enough and this group continues to pay a lot for health care. If a government plan, it is less expensive/free but not very good, along the lines of public education.

6. Those currently healthy don’t want to get stuck paying huge claims when they are sick (or in a government program) so they opt for something like health-status insurance which pays the difference in premium for comparable coverage in the event of a major health status change (i.e. you get cancer).

The key step is 3. If insurance companies lobby government for higher fines or more subsidies instead of innovating and creating new insurance products to win customers, then we head toward socialized medicine. This is also true if the government continues to mandate thorough, comprehensive coverage as a baseline, which is common now.

And I’m not sure there is a good outcome here for people who are currently low income and quite sick. I think they get a baseline of affordable coverage but again, the metaphor would be the type of education low income kids get at public schools – and this to me will be the case regardless of whether the larger market becomes more private or more public.

How the Health Care Overhaul Could Affect You

How the Health Care Overhaul Could Affect You – Graphic – NYTimes.com.

Health Care – Political Implications

Travis’ question, primarily, is a political one, so I’ll address that one first with some thoughts.

1. I don’t, in general, buy the argument that just because the Dems started healthcare, they have to do something. If it is generally unpopular with the American public, they should probably stop.

2. All the polls I saw seemed to say that general statements like “Do you want to give healthcare to millions of uninsured” and “Do you want to reform health care” polled really well. As soon as things became more specific like “Do you support subsidies for health care” and ” do you support the current Senate bill” health care polled very badly. Thus, there is a tension. If, as a politician, if you think this is the sign of an irrational public who really will be better off with the new healthcare bill, you pass it. If you think you are likely to be punished at the ballot box, you shy away. Sounds like we have the former.

3. The Dems really have set a legislative precedent here. They have argued that the Republicans have “done this before” – i.e. avoiding another vote in the Senate by having the House pass a ‘similar’ bill which can then be reconciled without a full senate vode – but it had only been done for budget bills which needed to be passed or the government would shut down. It has never been used to enact major changes to existing legislation. Thus, if the Democrats do “ok” in the midterm elections (not sure how to define ‘ok’ which is why it is in quotes) – i.e. they don’t get punished for taking this action – then I expect to see more of this majority rule, ignore the minority type of governance from both sides. This means watch out next time the Republicans get into power for major changes. On the whole, I don’t think this is good, and I’m tempted to call this the final nail in the coffin of any hope of bipartisanship.

4. What to watch for: Midterm elections. Does this work for the Democrats? Or do they do even worse than was originally project. Thus, I find this interesting.

Healthcare bill nears…something

Timothy Noah and Chris Wilson at Slate put the healthcare bill at 80% likelihood of passing. 

I think, merits of the bill aside, it would be better politically for the Democrats to have done something major, even if unpopular among certain folks, than to have piddled away almost an entire election cycle and have nothing to show for it. If they want job security, they should do something else.

What do you think?

Baby denied insurance for being “obese”

This is a couple weeks old, but worth keeping in mind. I know the horror stories abound on all sides of any issue, but still.

Alex Lange is a chubby, dimpled, healthy and happy 4-month-old. But in the cold, calculating numbered charts of insurance companies, he is fat. That’s why he is being turned down for health insurance. And that’s why he is a weighty symbol of a problem in the health care reform debate.

Insurance companies can turn down people with pre-existing conditions who aren’t covered in a group health care plan. Alex’s pre-existing condition — “obesity” — makes him a financial risk. Health insurance reform measures are trying to do away with such denials that come from a process called “underwriting.”

“If health care reform occurs, underwriting will go away. We do it because everybody else in the industry does it,” said Dr. Doug Speedie, medical director at Rocky Mountain Health Plans, the company that turned down Alex.

The good news is the insurance company in question did amend their policies after this story got national attention.

Blue Cross/Blue Shield steps in it

In a bit of local news, BCBS sent out notices of rate hikes and flyers against the “unfair competition” of a public option (complete with postcards to mail to Senator Hagan expressing our putative opinion). Many people at my workplace (which is pretty lefty; I am almost certainly the most conservative person here) were pretty pissed off, and were among those who responded in this creative way:

Indignant Blue Cross customers have rebelled against the insurer’s message, complaining that their premium dollars have funded such a campaign.

They’ve hit the Internet in a flurry of e-mails to friends and neighbors throughout the state. They’ve called Hagan’s office to voice support for a public option. They’ve marked through the Blue Cross message on their postcards to instead vouch support, then dropped them in the mail — in at least one case taped to a brick — to be paid on Blue Cross’ dime. Or dimes.

 

required listening for the health care debate

NPR’s This American Life – a two part series.

1. More is less. The first 55 minutes are depressing, but there is hope at the end. This is an excellent exposition of why our health care system is so dysfunctional. They systemically look at Doctors, Patients, and Insurers to find out why things work the way they do.

2. Someone Else’s Money. The second of two parts. A look at pharma and how competition can drive drug costs (and premiums) up instead of down, a brief historical lesson on how we got here, and pet insurance – why it works, but also why it’s not likely to work for humans. (spoiler: we have a maximum we’re willing to spend on pet health care, not for our loved ones).

On the whole, after listening to this, I am more in favor of radical solutions, tried at the state level first. We either need to radically open things up to the free market or nationalize the whole thing with a single payer (much like public schools). I’m not sure any of the solutions in between will do much.

Do Americans believe in the common good?

This article by Daniel Callahan in Commonweal explores how our cultural character makes it difficult for us to articulate or appreciate concepts like solidarity or the common good. It is a good read, and a good example of the way Catholic social thinking tends to avoid our political polarities.

The thought that we might have to ration health care in the name of the common good—even to ensure that others get a fair share—is objectionable to most Americans, and our politicians have not dared to talk about it. It is the medical equivalent of not-in-my-backyard. Americans understand that in a flu pandemic a shortage of vaccines might require rationing and priority-setting. In such a case, where our backs are against the wall, the good of the community self-evidently comes first. Not so with the health-care system overall. Rationing is tolerable only in an emergency. We are a rich country, even during a recession; we can afford expensive wars abroad and McMansions. So why should we have to limit health care?

Liberals mostly ignore the question. They like to say that the real problem with health-care costs is waste and inefficiency, curable with better management and better incentives. No one needs to give up anything. Conservatives say that the market by itself can do the job by leading people to make more careful health-care choices. If insurers were forced to compete, everyone would have a wide range of options, and the net result would be lower costs. Again, no one needs to give up anything. Both the Right and the Left have their fairy tales; both refuse to face reality.

The Senate plan

The proposed Senate plan is now available here. It is sans public option.