Sensible Healthcare Reform

I've resisted posting on healthcare reform here for 2 reasons:

1. No one wants to read a 10,000 word rant complete with charts and analogies.
2. I can't find the time to write said 10,000 word rant.

So, I leave it to others with greater powers of brevity. Charles Krauthammer has two suggestions that should be tried before any radical restructuring of the current healthcare system. They will genuinely reduce costs and lessen the influence of government in our lives.

(1) Tort reform: As I wrote recently, our crazy system of casino malpractice suits results in massive and random settlements that raise everyone's insurance premiums and creates an epidemic of defensive medicine that does no medical good, yet costs a fortune.

I'm a lawyer, and even I agree with that. The inability of malpractice insurance companies to predict what crazy awards juries will give leads to astronomical premiums. In addition, it causes doctors to order unnecessary procedures "just to make sure:"

An authoritative Massachusetts Medical Society study found that five out of six doctors admitted they order tests, procedures and referrals -- amounting to about 25 percent of the total -- solely as protection from lawsuits. Defensive medicine, estimates the libertarian/conservative Pacific Research Institute, wastes more than $200 billion a year.

Krauthammer envisions something like the workers' compensation plan to handle malpractice incidents.

Abolish the entire medical-malpractice system. Create a new social pool from which people injured in medical errors or accidents can draw. The adjudication would be done by medical experts, not lay juries giving away lottery prizes at the behest of the liquid-tongued John Edwardses who pocket a third of the proceeds.

The pool would be funded by a relatively small tax on all health-insurance premiums. Socialize the risk; cut out the trial lawyers. Would that immunize doctors from carelessness or negligence? No. The penalty would be losing your medical license. There is no more serious deterrent than forfeiting a decade of intensive medical training and the livelihood that comes with it.

Second, uncouple health insurance from employment and from geography:

(2) Real health-insurance reform: Tax employer-provided health care benefits and return the money to the employee with a government check to buy his own medical insurance, just as he buys his own car or home insurance.

There is no logical reason to get health insurance through your employer. This entire system is an accident of World War II wage and price controls. It's economically senseless. It makes people stay in jobs they hate, decreasing labor mobility and therefore overall productivity. And it needlessly increases the anxiety of losing your job by raising the additional specter of going bankrupt through illness. . . . If we additionally eliminated the prohibition on buying personal health insurance across state lines, that would inject new and powerful competition that would lower costs for everyone.

Good common-sense things to try which will lower the cost of medical care and reduce both the need for, and the cost of, health insurance.

Apparently I Don't Understand Economics

We all know inflation is bad. Rising prices devalue our money and make it harder to buy things. Apparently the opposite is also bad. Deflation - falling prices - is also bad for the economy, at least according to economists quoted by MSNBC.

“A benign decline in prices amidst a sluggish but recovering economy would be unwelcome but tolerable,” Merrill Lynch economist David Rosenberg wrote in a note to clients this week.

Unwelcome to whom, Mr. Rosenberg? I know plenty of people who like to pay less for goods of all types. I've heard of weirdos who like to pay more, but they're much more rare.

“But the price slashing now under way as the consumer beats a hasty retreat could allow that corrosive deflationary spiral to take hold — something the Fed wants to avoid at all costs.”

The Fed wants to avoid falling prices "at all costs?" boy, with friends like that, who needs enemies?

As I said, I'm not an economist, but perhaps someone who is could answer this question for me:

If inflation is bad and deflation is bad, then what, precisely, do you expect prices to do?

Should a pound of cheese always have the same price? If so, then the USSR had this economics thing all figured out. They just printed the price right on the label. Year after year a jar of tomato sauce was 40 kopeks. Your parents paid 40 kopeks and, by darn, your children would pay 40 kopeks. Is that the answer?

The problem I have with this idea is that (as I have learned both in life, and in school), in a market, there needs to be a mechanism to balance supply and demand. That mechanism is price. If I want 40 dollars for a widget, and you don't think it is worth 40 dollars, guess what? No sale. Deflation has to occur to meet your demand.

At this point any "real economist" is probably either rolling on the floor laughing, pulling out his hair in frustration, or muttering incoherently about Econ 110 having no relationship to "real economics."

Well, maybe not - but the economists in the MSNBC story seem to have nothing but contempt for consumers. They give the distinct impression that they believe the average of consumers' judgments about the worth of goods (otherwise known as the 'market price') is wrong, and that they, the "elite" know what things are worth.

Pardon my skepticism, but are these the same "elite" who have guided our economy to it's current prosperous state? The ones who never saw the housing bubble coming? Who watched house prices rise 10% per year as wages rose 2% and saw nothing to worry about? Who thought sub-prime mortgages were a terrific idea? Or, a little farther back, thought stratospheric stock prices for unprofitable .com businesses were just the "new economy?" Or thought that Pres. Bush's tax cuts would unacceptably reduce govt. revenue? or that Reagan's tax cuts would do nothing the stimulate the economy? Or thought that Sweden was a model of a well-run economy?

Now who should be laughing?

I'll say it again. Economics is not a science. It is a pseudoscience. Any claims to truth or predictive ability that it makes are a fraud.

Economics is a descriptive art - like psychology. Also like psychology, it has no power to predict future behavior because every person in the system is an agent unto herself, and not an automaton. This is why no one saw this crisis coming. Economists admit that this is unprecedented and was almost completely unforeseen - and they are right - they just don't see it as a failure of their 'science.'

Economics is (at best) a social science, a descriptive study of human behavior. It is individual psychology mis-applied to huge groups of people, and it goes through fads just like any other field of study. It also has its quacks like any other field. Keep this in mind next time an economist claims to know something.

Unintentional Insight

Every now and then someone says something which unintentionally offers insight into a deeper issue. This time it was Ashley Dupre (Former NY gov. Eliot Spitzer's former callgirl (does that make sense)).

Anyway, she gave an interview to People magazine in which she (of course) asserts "I'm just a normal girl" yada, yada, yada. Then this unintentional insight:

In the interview, Dupré also opens up about her troubled past — running away at age 17 into a non-stop life of drinking and partying and how a girl from the suburbs could fathom becoming a prostitute: "This wasn't any different than going on a date with someone you barely knew and hooking up with them," she reasoned. "The only difference is I can pay my rent."

Hmmm . . . profound. Any promiscuous people care to explain the difference? When a culture cheapens sex, as ours has, to a harmless recreational activity, what is the harm in getting paid for it? Cruise directors get paid. Personal trainers get paid. Vacation planners get paid. Recreation is big businesss.

Yet people still seem to draw a line between 'sleeping with someone you'll never see again' and 'sleeping with someone you'll never see again . . . who gives you $100' and they declare the former normal and natural, and the latter contemptable.

Not seeing the difference myself . . . except, as Ashley said - one can pay the rent.