Jonathan Cohn, who besides being a deliriously happy Red Sox fan is a health care journalist and a senior editor at the moderately liberal New Republic, has been corresponding with me a while. (Does it bug anyone else having to keep The National Review, The New Republic and The Nation straight? Couldn’t the conservatives, the liberals and the real lefties have chosen titles with slightly different alliteration or words beginning with letters not N or R?). Jonathan’s on the book grind himself (and doubtless scared of my review!) and writes regarding my post yesterday as to why things might change in the longer term regarding reform:

Good post today about the politics of health care reform. I’ve been thinking a lot about this myself lately, as part of my book, and am starting to question the conventional wisdom that moderation plays better politically — at least in the context of a presidential campaign. Look at the election we just had. Policy wonks could (and did) make a very good case for incremental reforms like the ones Kerry proposed, and Kerry did fine on the health care issue because voters tend to trust Democrats more than Republicans on the issue if they don’t know any other information. But it’s not like Kerry’s health care plan was a major draw, and part of the reason is that it was so damn complicated it didn’t break through the policy fog.

Now consider single-payer. Put aside the debate over whether it’s really the best policy. I’m starting to wonder if — strictly in political terms — bolder isn’t better. You can explain single-payer three simple words "Medicare for all." And while that
instantly ignites a very hostile opposition, it also arms you with (a) the aura of a popular program, namely "Medicare" (b) the virtue of simplicity (c) the virtue of seeming bold.

Admittedly, selling single-payer gets much harder if you actually get elected and have to start dealing with the legislative process. Maybe you compromise at that point. But I don’t think we’re going to see *any* substantial health reforms until
somebody puts a big, bold idea — and that probably can’t happen outside the context of a presidential campaign.

Meanwhile The Prospect blog had another wild idea–let everyone join the Democratic party and let it start its own health plan. Pity they’d never heard of adverse selection. (Thanks to Jones the Policy Wonk for the tip).

I just got back from a rather frustrating talk by veteran liberal investigative journalists Barlett and Steele, on their new book Critical Condition. These geezers have just discovered that the health care system is in a bit of a mess, for-profit players in the health system are bad, and a single payer system with a few wrinkles (in that it’ll be run like the Fed not the Medicare program) will fix it. While these two veterans have done great work looking at the transformation of the American economy and its impact on the lower end of our society in the 1980s and 1990s, their health care speech was a hackneyed re-tilling of ground gone over by many others before. I have much sympathy with their cause, but they didn’t generate one new idea in their talk, and they made several basic mistakes — such as not being able to explain why non-profit hospitals make more money from doing more procedures. Neither for that matter could either of them explain to the moderator, (the silky-voiced but ignorant of the health care system Scott Shafer), why Kaiser was different to a typical non-profit hospital chain. They many times confused the problems of over-use, under-use, system quality, and uninsurance, and basically added to the fog that surrounds this whole issue. The short discussion group which I joined afterwards was full of health care professionals even more confused than when they arrived.

Finally Barlett and Steele gave no reason as to how, in a nation which for better or worse — OK, OK for worse — just re-elected a President and a Congress with no interest in either cost-control or covering the uninsured, we are gong to get serious health reform. They suggested it would take a a collapse of employment-based health insurance and an increase in the uninsured up to 90 million. Well no matter how rough it is, things are not getting that bad in the next decade barring a massive 1930s style depression

Realistically we are not getting reform in the next 4 years and probably not in the next 8. But there are seeds of the environment for wider-scale reform if you care to look for them. Here are two culled from the business pages.

The first is from that commie rag The Wall Street Journal which reports that health insurers often reject the ‘Near Elderly’:

Though health insurance is an issue that affects young and old alike, it is a particularly tough problem for people aged 50 to 64 who are too young for Medicare, the government’s health program that covers those aged 65 and over. As a group, they are often vulnerable to layoffs or pushed into early retirement at a point in their careers when it is difficult to get another job with benefits. Those who retire early thinking they are covered may see their benefits scaled back, as employers have tried to cut these costs in recent years. Still others lose coverage when an older spouse switches to Medicare from a plan that had formerly covered both members of the couple.

Whatever the reason, many in this pre-Medicare age group find themselves in the individual insurance market at the very time they are developing health problems that scare insurers. A recent study by the Urban Institute found an 18% uninsured rate for "near elderly" (aged 55 to 64) middle-income consumers who reported being in "good" health. That is double the uninsured rate for those who said they were in "excellent" or "very good" health. The contrast suggests that the near elderly with some health issues may have difficulty getting affordable insurance at a time in life when — unlike healthy young people who can risk going without — they need it, says John Holahan, the study’s author.

Meanwhile another bastion of sociaism, General Motors Corp., recently reported reduced earnings, due in large part to its out of control health care expenditures.

Putting these two factors together we can see the makings of a coalition. The Bush-voting Nascar dads living in the red states will increasingly find that as they age into near-Medicare, they are getting laid off from their full-time jobs, scrambling around in the temporary or contract labor force, and having a terrible time getting health insurance. And if you want to check how bad, even the WSJ couldn’t come up with one

decent strategy for buying health insurance. Although they didn’t mention the obvious choice of moving to Canada, they did mention that you’d do better if you didn’t get sick or use any health services. No shit, Sherlock.

So if you have a grumpy bunch of red-state Republican voters who might be persuaded to vote for someone who can fix their uninsurance problem in a non-threatening way (extending Medicare to all perhaps?), and you have big business sector that not only says that it cant go on that way, but also starts to agitate politically to gets its liabilities onto the governments’ shoulder, then you have at least the recipe for another run at reform.

This may be the route back to the White House for the Democrats and it may be where we’ll see the real consensus emerge after the next four years of increased chaos. But even if that happens we’re a long, long way from getting real reform done.

Dear Sir

Please consider me for the position outlined in your ad of 11/4/04. I believe I am eminently qualified for the position outlined in the job description. I have over 30 years experience the elimination of human rights, promote torture, plunge their children into monstrous debt, and aid in the elimination of civil liberties at home and international law abroad. Coincidently, I am of faith based on an obscure interpretation of vague texts written 1900 years ago, selected several centuries later by a brutal dictator who wanted his subjects to worship him as God; although my adherence is only when convenient. I am strongly opposed to the principles of the Enlightenment and rational thought.

I hope you will consider me for the position, as I am currently between careers. I would need an advance for moving expenses as my assets have been frozen. This link is to my CV.

(Ed’s note: While unlike Republican Joe Crea who forwarded me this application I didn’t know that this guy was a Bush fan, I knew that his “friend” was).

OK. That’s the last word on the non-HC parts of the election, apart from the minor celebration that we in the reality-based world must have at the fact that theocratic fascist AG John Ashcroft has quit. Even Bush will struggle to replace him with someone worse, assuming David Duke doesn’t want the job.

I wrote most of this yesterday, but Blogger was giving a lot of trouble, hence I only got to publish my cynical “help wanted” ad.

But given that we have Bush in for four more years and at least two of a very strongly Republican house and Senate, what does this mean for the health care system? We will obviously not be discussing how an obstructionist Congress shot down Kerry’s health care plan. I don’t think that we are going to see any serious expansion of Medicaid to cover the working poor, and the defeat of Prop 72 in California augurs poorly for any expansion of employment based insurance. Overall this means that uninsurance will continue to rise–although public programs will continue to grow somewhat (as they have over the past three years). So we can expect a continued growth in uninsurance and presumably a continued (but probably moderating) rise in costs. There might be some consensus around Frist’s proposal to aid in reinsurance for companies and create AHPs, but these both strike me as tinkering around the edges.

Meanwhile there are some big winners from this election. The gamble taken by big pharma to carry out a scorched earth policy towards the Democrats has paid off–although I suspect the midday exit polls had some in the executive suites choking on their three martini lunches. Plan B–the need to deal with price controls and re-working of the Medicare Modernization Act–will not be needed, although reimportation still has some supporters on the Republican side of the aisle. As my, politically poles-apart but pharma-savvy, contributors The Veteran and Atlas have agreed, the pharma companies need to use some of this breathing room to cut back on their marketing spend, and make their sales machines more cost-effective. But the lack of a strong pipeline for many companies in the industry, and the not-so-minor-for-some issue of lawsuits over drug safety, are still the most important challenges for this industry.

The stock market reacted correctly to the election for the health plans and PBMs, which will continue to consolidate on the gains they have in the built-in increases they’ll see in payments to get them to recruit seniors into managed care plans and the new drug benefit respectively. Pacificare’s stock rally is being matched by Caremark.

Again in the longer term, these gains cannot last forever. The underwriting cycle will eventually come back to bite health insurers, and at some point the government/taxpayer will be unwilling to continue to expend scarce resources on the somwhat dubious ideology of paying more to make Medicare private. But for now the direction is clear and the sailing bright.

And although in my mind I got there first, that bunch of impersonators at the New York Times also reports on the topic in this article called Insurers and Drug Makers See Gain in Bush Victory.

Hospitals and doctors will keep the gains they made in the MMA, but it’s hard to see many more extraordinary gains. The only arena in which there may be a substantive change is in the reintroduction of malpractice legislation. However, given that the White House has to get funding for Iraq, an energy bill and some type of Social Security reform, not to mention the odd Supreme Court justice nomination, through the Senate, it doesn’t seem likely that malpractice is an issue that they’ll go to the mat on if the Democrats object.

And a peripheral issue to most health care players, but an important national one is that the Supreme Court will likely take a severe slant rightwards in the next few years. Sandra Day O’Connor is the swing voter keeping Roe v Wade on the books, and she’s likely to retire, as is Rehnquist. So the abortion situation is likely to change, and if one of the two most liberal justices (82 year old Stevens or 69 year old Ginsburg) were to die in the next few years, then we might be looking at a 6-3 conservative majority for years to come. Perhaps abortion clinics on the Canadian border are the new business opportunity.

I’m reminded of the scene in Citizen Kane, when Kane loses the election at the last minute and his editors pick between the two headlines. One reads “Victory” and the other says “Fraud at Polls!”. The lefty blogs got very excited about some early exit polling data, and the stock market did too. Now the market will be roaring up, while there’s as much conspiracy theory as you like on the left about what happened between the exit polls and the poll results, and how exactly Florida boosted its turnout by over 29%, had more registrations in poorer and African-American precincts and still went further into the Bush camp. And Ohio, still run by Diebold? I must admit to being pretty baffled. Apparently tons of new voters got riled up about the evils of the Administration, registered to vote and then went in and voted in record numbers….for Bush.

But given that the outcome is set, and that the Senate got much more conservative (with at least two real wingnuts added), the die is more or less cast for the next four years.

For the health care system, this prods us towards the “no change leading to big disaster/crisis/reform” scenario that I’ve hinted at in the past. All indicators are starting to flash orange, and no legislative solutions will come out in the next four years, although they may take another run at malpractice. I think that the 2008-2012 health care crisis election is now a likelihood, depending on the timing of the next recession.

In the meanwhile, there’ll be plenty to write about; just not how Kerry’s plan was shot down in flames by a do-nothing Congress.

I’m off to a corner to cry quietly….

The rumors I hear are that no-one will concede tonight and that the whole thing will go to appeal in Ohio, Florida and who knows where else. Four years ago a done-nothing Governor, who’s only promise was to govern from the middle and not get a blow-job in the Oval Office, “won” election by getting fewer votes than the other guy. Love him or hate him, it’s hard to imagine that after governing the way he has, with the contention that his Administration has created at home and abroad that the numbers for Bush in advance of the next election look exactly the same as they did on election night 2002.

But that apparently is the way it is. God Bless America.

If anyone tells you they know who’s going to win the election, they’re lying. I reported that Harris said it was a dead heat a few weeks back, and not much has happened to change that view. You all know who you want to win. I know who I want, and I’ll report back on Wednesday on what we know, if we know the final answer then.

UPDATE: Apparently, this is not true and there is a certain outome. ESPN reports that for the last 16 elections since they moved from Boston in 1933 when the Washington Redskins win their last home game before the election, the incumbent’s party wins. When they lose, the incumbent’s party loses. Well on Sunday, the ‘Skins lost. Sorry, Bush!

So I tried to not say any more about Prop 72 and the analysis from the Harvard economist Anna Sinaiko that poo-poohed my theory about labor costs versus profits. But as I never heard back from her, I might as well print what I wrote here after she said this in reply to my earlier letter:

Let me begin with Matthew Holt’s letter, in which he questions: Can we finance health insurance by tapping into (“all-time high”) corporate profits? It has long been recognized in labor and health economics that firms regard the cost to employ a worker as the sum of cash wages and fringe benefits, and offset higher costs of health insurance with lower wages. While in the short term this may be difficult, over the long term, wage reductions are likely to be a consequence of an employer mandate such as SB 2.

Here’s what I wrote to her in reply, as yet not hearing back from her.

By claiming that economics tells us something — in this case “firms regard the cost to employ a worker as the sum of cash wages and fringe benefits, and offset higher costs of health insurance with lower wages” — you appear to mean “economic theory” tells us something. You appear to be saying that the theory says that overall gross labor costs are necessarily static and any change in one part of labor costs will be compensated within those labor costs, either by lower wages or lower employment. Those of us who think of economics as a pretty imperfect science would be interested to know how you reconcile the UK experience with the introduction of a minimum wage with your economic theory? Wages/labor costs there went up and unemployment stayed the same (in fact dipped).

Assuming that no miracles occurred, and that the total amount of revenue in those firms stayed constant, something else MUST have gone down. Unless Adam Smith has changed his text since I went to college “Economic theory” says that there are only four elements in the cost of production: Land, labor, capital, and “enterprise”. You have effectively said that a change in the cost of one of these is self-regulating and that the others cannot change. That is patent rubbish, as the “cost” (or share of revenue) of all 4 elements changes constantly in any market. Or maybe you have created a new “economic theory”. If that’s not what you are saying you need to restate your argument, and answer my criticism properly.

And you never answered my final question. If this all washes out within labor costs and they stay constant, why are corporations (who care only about the “enterprise” or profit part of the equation) so dead set against SB1? I’ll answer it for you. They are not economists and they–like labor unions–live in the real world where these types of battles over distribution of revenue happen all the time because there actually IS something at stake.

And so after that non-reply here comes the real proof. Today’s NY Times has an article about WalMart and how it basically offers fewer health benefits than its competitors and as an aside many more of its employees wind up on public assistance of various sorts for their health care needs. Walmart is more profitable than its nearest competitor Costco because of that, and Wall Street notices:

Wal-Mart says that 23 percent of its employees are not eligible for coverage, but that it covers 58 percent of those who are. That compares with an insured rate of 96 percent of eligible full-time or part-time employees of Costco Wholesale, the discount retailer that is Wal-Mart’s closest competitor nationwide. Costco employees – most of whom are not represented by a union – become eligible for health insurance after three months working full time, or six months part time. At Wal-Mart, which has no union employees, many who work full time must wait six months to become eligible. Part-time workers are not eligible for at least two years. Because of turnover, some employees never work long enough to become eligible.

If there is any place where Wal-Mart’s labor costs find support, it is Wall Street, where Costco has taken a drubbing from analysts who say its labor costs are too high. Costco’s pretax profit margin is only 2.7 percent of revenue, less than half Wal-Mart’s margin of 5.5 percent.

But I guess Sinaiko’s economic theory doesn’t cover Bentonville AK and Wall Street or Sacramento and Athens medicaid payments, so she must be right, and labor costs have no impact on profit margins.

I’m much more disgusted with both sides on the prop 72 debate than I was before this past week. I went to a “debate” on it at the Commonweatlh Club on Monday and then heard (and phoned into) an NPR show on it this morning. (The show wasn’t my finest hour, but then I matched the general level of debate and I’m on about 10 mins before the end of the show).

The opposition was the Allan Zaremberg from the American Chamber (at the debate) and a school board member Gabriella Holt (on the radio) representing public sector employers. The chamber of commerce’s major objection — and I am not making this up — was that the 20% of premium that Prop 72 would force the employee to pay (capped at 5% of income) would take away their choice to buy other things with that money! In other words the poor little poor minimum wage employee doesn’t want health insurance, otherwise he’d be buying it himself already! Obviously the Chamber hasn’t noticed how bitterly hotel and grocery workers in this state are fighting to maintain their health benefits, nor have they noticed how much employees in polls always favor health benefits over cash, nor have they noticed how shitty the individual insurance market is. This argument really reminded me of a southern lady I once sat next to on my first trip to the USA. I asked her about being in the south during the Civil Rights movement. The first thing she said to me was, “well I’ll tell ya one thing–the blacks didn’t want it!”.

My namesake from the public employer representative didn’t seem to realize that she was being a shill for the fast food companies and Walmart, which exposed its true colors by dumping $500,000 into the No on 72 campaign today. (I have a sneaking feeling that she’s a single payer advocate). She kept on claiming that the demands of 72 would increase labor costs for school districts, and therefore lead to lay-offs. I think she meant that there are some employees who do not get health benefits from school districts (my guess is that they are the lowest paid employees like the janitors), and that by covering them they’d run out of cash. However, even if that is right for a school district it certainly isn’t the case for other employers — especially the fast food chains and the Walmarts who cannot move their stores out of state, but would be forced to pay more in labor costs and TA-DA reduce their profits in consequence. That’s why they are opposing 72, and it doesn’t take a rocket scientist to figure out that they’d rather have the taxpayer take care of their employees than do it themselves. Worse, particularly in Walmart’s case, it’s forcing its competitors here (Albertsons, Safeway, etc) into the same behavior, which will force even more costs onto the taxpayer in the future in the absence of 72. This is a straight fight between allocation of revenue to labor versus corporate profit for immobile service businesses, whatever a certain Harvard PhD student might think.

The advocate of Prop 72 was the ex-head of the CMA and the AMA, Richard Corlin, and he wasn’t exactly a whole lot better. He delighted in consistently saying that he didn’t want government regulation, and that this was a tiny incremental solution that only worked for a few people (1 in 6 of the uninsured). He’s right but that’s not a good thing! As per usual you can expect organized medicine to protect its own arse first, and to only move very modestly in the direction of helping the people it serves.

So why am I for Prop 72?

1) It levels the playing field between big firms that can’t move (notably Walmart and the other grocery stores) preventing an ugly race to the bottom

2) The additional cost will start motivating large and medium sized business to finally get on the right side of this issue, pushing them to look for a universal solution that includes real cost containment and real universal coverage.

3) At the margin, as a value judgment, 1 million poor working people getting coverage is better than Walmart and McDonald’s shareholders getting slightly bigger dividends.

Meanwhile, polls have this Prop dominated by the undecideds.

Postscript: I have replied privately to the non-reply to my point by the Anna Sinaiko, the author of the Health Affairs article, and as she’s just a doctoral student I’ll give her a little while to respond to my attack on her dismal science. Of course if I don’t hear from her soon, there may just be one more little article on this topic before Tuesday. And it wont be pretty.

So I’m in Vegas, which is in Nevada, and I’m getting a flavor of what a “swing state” means and where all the billion dollars (mostly raised from California & New York) has gone. Every single commercial is about the election. In California it wasn’t a quarter this bad when Arnie was running 2 per commercial break during the recall election. Not only does Kerry flip-flop on the war and Bush suck on the deficit, but lawyers and doctors are fighting on 3 separate malpractice propositions. And all this for the votes of 2 million people? About time something was done about the electoral college for the health of the populations of the swing states and the relative financial state of TV stations in Vegas and Los Angeles. Los Angeles is basically 9 times the size of Nevada, but tell that to the Founding Fathers.Meanwhile, congrats to health care wonks Ross at the PublicHealthPress and Jonathan Cohn on the Red Sox victory. Jonathan told me that it was the greatest day of his life, and given that mine was this day in 1997, I understand. Of course, these things come in threes, the Patriots, the Red Sox and maybe another late finisher from Boston?

Meanwhile, it does look like the docs might win one of those malpractice suit propositions in Nevada.

Note: due to a problem when Blogger had a malfunction this post dissapeared yesterday, so I’ve put it back in. I hope that Google (which owns Blogger) spends some more of their massive amounts of cash upgrading the whole thing soon!