Debate Thoughts

Normally I do not like presidential campaign debates very much.  I think they’re designed for talking points and very little substantive discussion of ideas.  Because of this structure we pay way more attention to the theater of the debate and the overall campaign than I think is healthy and we end up awarding a victor based on feeling, look, body language.  All of these things matter, but not nearly as much as the ideas the candidates who carry these characteristics bring to the table.

That said, I loved the debate on Wednesday.  Jim Lehrer (God rest is soul for all of the crap he is getting for letting these men discuss ideas) actually let President Obama and Governor Romney discuss, argue, debate for crying out loud.  There was a very healthy back and forth allowing each candidate to attack their opponent’s ideas and defend himself from the same.  It was fantastic.  What is unfortunate is that this “style” was terrible for President Obama.  It has always been clear the President prefers to discuss things in a prepared statement, with carefully considered wording and a teleprompter to boot, and Democratic consultants and operatives spent much of the week before the debate trying to lower expectations for the President.  And they were right:  the President looked awful.  Theories abound about why the President performed so poorly (Al Gore’s is still my favorite), and you can see some of them here.

My own theories is this:  President Obama is a speaker, and in his vaunted speeches creates straw men and ruthlessly attacks them.  Without someone to defend his opponents position, the President can get away saying anything he wants.  Enter Mitt Romney, whose command of facts and figures (e.g., $90 billion hires 2 million teachers comment) and the President’s inability to defend himself gave the Governor a considerable advantage.

Why this aggressive Romney?  I think there are two reasons.  First, Romney, by his nature, is a “wonk”, more interested in facts and figures than in high rhetoric.  By the nature of his preparation, he was going to come ready to debate.  Secondly, and maybe more importantly, Romney  and his campaign finally figured out he needed to rock President Obama to gain some momentum after his lukewarm convention performance.  Fuller thoughts on this topic can be found here courtesy of Michael Gerson.

Debate Prep

If you are stumbling across this blog (a miracle, I can assure you) before the first 2012 Presidential Debate between Mitt Romney and President Barack Obama starts this evening, I encourage you to read this.  It is a fantastic piece of prep work.

An Alternative Approach – Health Care Vouchers

I cannot say I hate the idea entirely.

An Alternative Approach To Health Reform: Vouchers For All

Ban Corporate Profits!

This is precious.  Absolutely precious.

Start a Fire

I’m chuckling to myself this morning just a bit thinking about the summer of 2008, a long four years ago, when Nathan Tilly and I sat down and decided we should start a blog.  In hindsight I think I was motivated by two things:  1) to join the conversation of ideas, and 2) allow our own thoughts to be tested by the fires that allowing others to read entails.

With yet another presidential election just a few short months away I do think it is time to return to some irregular blogging.  Important events, be they electoral contests or political debates, require thought (and therefore writing) to carefully consider each side.  It is time I began, once again, and refine my thought.

I look forward to your viewership.

A Health Care Debacle…

Coming to an insurance office near you.  Massachusetts is having some serious issues with its insurance system and extensive government regulation.  The Massachusetts system has been praised as having provided the structure of the Obama Health Care Reform.  Therefore it is only logical that we find ourselves looking at the Massachusetts system and its problems as a precursor of things to come as we move towards full insurance coverage.

What has happened is that Governor Patrick has imposed price controls on insurance premiums in the small group market.  In Massachusetts any increases in premiums must be approved by state regulators and Governor Patrick kicked off his reelection campaign by summarily rejecting 90% of insurance company requests for premium increases.

The despicable aspect of this move is that it is a political stunt, pure and simple.  Governor Patrick’s opponent in the November election will most likely be Charlie Baker, a former Executive at Harvard Pilgrim, a health care provider.  The political logic is simple:  tell insurance companies no price increases, they stop selling insurance, turn to the people and say “Look, Charlie Baker ran insurance companies that are now refusing to sell you insurance as the law requires!  Do not vote corporate greed into office!”

The result of these price controls is that the entire small business and individual health insurance market has been shut down as companies wait out the result of a pending court hearing.  They have argued that an arbitrary cap will result in more than $100 million in losses and threaten their solvency.  3 of the 4 largest insurance companies in Massachusetts are nonprofits and run the risk of collapsing if they are unable to meet the cost of claims.

Since the Massachusetts insurance system was put in place health care costs have skyrocketed.  Interestingly enough the requirement to allow everyone who applies the opportunity to receive health insurance has resulted in gaming of the system.  Blue Cross Blue Shield has reported they are tracking short-term customers who get on the system, immediately rack up costs on average 600% higher than normal, and three months later drop insurance all together.  Harvard Pilgrim has reported that 40% of new enrollees stay for fewer than 5 months and rack up costs north of 600% above average.

The Massachusetts problem is a microcosm of what America is in for if Obamacare is allowed to come completely online.  Massive health care regulation is not going to result in decreased premiums and health care costs.  Allowing the markets to work with less government regulation will.

Doctor Shortage

Yup, you heard it here that it may be a problem and now we see that it already is.  As the ranks of insured expand we will see an approximate shortage of 150,000 doctors, mainly primary care doctors, in the next 15 years, according to medical experts.

Part of the problem is that medical money is wrapped up in testing due to how our insurance system is currently set up (more on this to come), leading many doctors to go into very specialized fields.  Between 2002 and 2007 the number of medical school applicants entering family medicine fell by more than a quarter.  This drop will more than likely mean longer lines to visit your primary care physician, especially when the millions of uninsured are finally insured under Obamacare.

Do not take this as a critique of doctors because they are behaving rationally.  This is a critique of the system currently in place.  This is the way the system is currently set up:

Employer-Provided Family Benefit

(Husband and Wife, no Children)

Annual Expenditure Employee Pays Employer Pays
1st $800 $800 $0
Next $8800 $1600 (20%) $6400
Above $8800 $0 ALL

This is what this means:  For all medical expenditures, you, the employee, pay the first $800.  This is more commonly known as the deductible.  For the next $8000, the employee pays 20%, or $1600, and the employer pays 80%, or $6400.  Everything above that $8800 mark, the employer pays for all.  To use an illustration Dr. Newell used in class, image this product which your employer provides for is food.  What would you be tempted to do?  Overindulge is correct.  You would as quickly as possible get to the $800 mark so that your employer picked up the slack and then everything after that would be mostly paid for by someone else.  If this was me, Megan and I would be eating Outback Steakhouse, Olive Garden, and Texas de Brazil all the time.  Why?  “Because I am not paying for it baby!”

The same concept applies to your health insurance.  Once you reach a certain level, as long as you (or more commonly, your employer) are paying for your insurance you can have as much testing, as many name brand prescription drugs, and as many doctors visits as you want and all you will have to pay in the course of a year is $2400, no matter how much you use it.  The incentive is to overindulge, resulting in higher health care costs.

The problem Obamacare is (at least overtly) seeking to combat is the rising cost of health care.  The reality is that his “reform” does not reform anything, it only regulates.  If we really want to reform we must change the system itself.  One way to do this is through Health Savings Accounts, which have been used with some success by Indiana state employees.  Mitch Daniels, the current governor of Indiana, was the leader of the state when they moved to these Health Savings Accounts as an option for all employees.  What Indiana does is deposit $2750/year in an account that is completely controlled by the employee.  So when they need a prescription, they can ask for a generic (and save a bundle) and make cost conscious decisions about testing.  The savings this is generating for the state in health care costs is truly startling considering where health care costs have been going.  Even more encouraging is that a whopping 70% of Indiana state employees opted into the system!  Why?  Because when the year ends, they get to keep everything left in their health savings account.  There are numerous tax advantages to a Health Savings Account, which you can read about here.

If we truly want lower costs then we need to change the system, in particular by giving individuals more power over it.  Further regulation will not drive down costs.