Archive for July, 2013

Alternatives to Obamacare

Friday, July 26th, 2013

As Obamacare looks more and more as though it will collapse, there are some alternatives beginning to appear. Several years ago, I suggested using the French system as a model. At the time, the French system was funded by payroll deduction, a source affected by high unemployment, and used a national negotiated fee schedule which was optional for doctors and patients. The charges had to be disclosed prior to treatment and the patient had the option of paying more for his/her choice of physician. Privately owned hospitals competed with government hospitals and patient satisfaction was the highest in Europe.

Recently the French system has run into trouble.

French taxpayers fund a state health insurer, “Assurance Maladie,” proportionally to their income, and patients get treatment even if they can’t pay for it. France spends 11% of national output on health services, compared with 17% in the U.S., and routinely outranks the U.S. in infant mortality and some other health measures.

The problem is that Assurance Maladie has been in the red since 1989. This year the annual shortfall is expected to reach €9.4 billion ($13.5 billion), and €15 billion in 2010, or roughly 10% of its budget.

This may be due to several factors. The French economy is in terrible shape with high unemployment. More of the funding for the health plan is coming from general revenues. This was not how it was supposed to work. It was payroll funded, much as the German system is, with a wider source than individual employers. This allows mobility for employees and allows employers to distribute risk among a larger pool. Germany allows other funding sources such as towns and states. I think it is still a good model for us but, with the passage of Obamacare, it will take a generation before another large reform would be viable. Obamacare must stand or fall first and I think it will fall but, as in most government programs, it takes years before the sponsors will admit defeat.

Another proposal has been made by a serious study group.

1. The government should offer every individual the same, uniform, fixed-dollar subsidy, whether used for employer-provided or individual insurance. For everyone with private health insurance, the subsidy would be realized in the form of lower taxes by way of a tax credit. The credit would be refundable, so that it would be available to individuals with no tax liability.

2. Where would the federal government get the money to fund this proposal?

We could begin with the $300 billion in tax subsidies the government already “spends” to subsidize private insurance. Add to that the money federal, state and local governments are spending on indigent care. For the remainder, the federal government could make certain tax benefits conditional on proof of insurance. For example, the $1,000 child tax credit could be made conditional on proof of insurance for a child.10 For middle-income families, a portion of the standard deduction could be made conditional on proof of insurance for adults. For lower-income families, part of the Earned Income Tax Credit could be conditioned on obtaining health coverage.

3. If the individual chose to be uninsured, the unclaimed tax relief would be sent to a safety net agency providing health care to the indigent in the community where the person lives, so that it would be available there in case he generates medical bills he cannot pay from his own resources. The result would be a system under which the uninsured as a group effectively pay for their own care, without any individual or employer mandate. By the very act of turning down the tax credit for health insurance in choosing not to insure, uninsured individuals would pay extra taxes equal to the average amount of the free care given annually to the uninsured. The subsidies for the insurance purchased by the insured would then effectively be funded by the reduction in expected free care the insured would have consumed if uninsured. [See Figures II and III.]

The paper goes on to explain the proposal The trouble is that this is another major reform and I see no chance for it in the foreseeable future.

What then is the most likely development ?

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Why Obamacare is collapsing.

Tuesday, July 9th, 2013

Government is not very good at constructing software or IT systems. The FBI spent a decade with a troubled software project, then abandoned it.

Some FBI officials began raising doubts about the bureau’s attempts to create a computerized case management system as early as 2003, two years before the $170 million project was abandoned altogether, according to a confidential report to the House Appropriations Committee.

By 2004, the report found, the FBI had identified 400 problems with early versions of the troubled software — but never told the contractor. The bureau also went ahead with a $17 million testing program last December, even though it was clear by then that the software would have to be scrapped, according to the review.

The 32-page report — prepared by the House committee’s Surveys and Investigations staff and obtained by The Washington Post — indicates that the FBI passed up numerous chances to cut its losses with the doomed Virtual Case File (VCF), instead forging ahead with a system that ultimately cost taxpayers more than $100 million in wasted expenditures.

This is the history of complex government projects like this. They will not hire private companies and let them design these projects. Banks use ATM software that is far more complex and which works reliably.

Now Obamacare is the latest failure. I have been predicting this for a year. The electronic medical record software is another boondoggle. It increases workload and is not secure. Now the exchange IT systems are not ready and will not be for a decade, if ever.

“It’s the joyous, simultaneous, nonlinear equation from hell,” said Kip Piper, a former top official at HHS and OMB who is now a consultant in close contact with IT vendors. Piper said it’s no surprise that the administration has given up on certain functions given the technological complexity needed and the short time-frame.

But the long-term nature of the bad news could be good news for those who hope that the new marketplaces will launch in some form on time.

The struggles with technology and administrative complexity have not come as a recent surprise to administration officials; they’ve been negotiating them for months already. By eliminating non-essential tasks, they may be violating the letter of the health reform law, with its rigorous timetables and multiple requirements, but they may be more likely to get the core functions right.

Or wrong as the case may be.

The FBI experience is revealing:

The system was part of Trilogy, a $581 million FBI program that includes a new computer network and thousands of new high-speed personal computers for agents and analysts. VCF would have been the final major step in the upgrade, providing a modern database for storing case information and allowing agents to share and search files electronically.

Numerous outside experts and panels have criticized the FBI’s paper-based records system as outmoded and inefficient, and the commission that investigated the Sept. 11, 2001, attacks concluded that the shortcomings may have contributed to the failure to detect the al Qaeda plot. The Justice Department’s inspector general warned in February that the FBI’s continuing technology problems had “national security implications” and that agents were “significantly hampered” in their efforts to prevent terrorism and combat other serious crimes.

The new report, which is not scheduled for public release, reveals that “some officials involved in VCF’s development began to see problems” in early 2003, about a year after the FBI and its contractor, Science Applications International Corp., began focusing on creating the case management software.

That report is from 2005. My daughter is an FBI agent. They finally abandoned the whole thing last year and have begun from scratch.

Obamacare will not be functional by 2020. They will lie about it and fake it but the thing will be a complete mess.

Magan McArdle has more on the changes. All that is happening is that all cost control is stripped out. All that is left is the spending.

Coping with Obamacare

Sunday, July 7th, 2013

The implementation of Obamacare is running into predictable problems, especially with data collection and processing. Some states, including Arizona, have agreed to participate chiefly for the Medicaid subsidy.

Brewer has said her decision was dictated by math, not ideology. The federal dollars gained through Obamacare will cover more than 300,000 Arizonans, including many elderly in nursing homes.The result of Brewer’s victory is not just more federal money for Arizona;

The Daily Beast, of course, is in favor of Republicans “learning reality” as they see it. In fact, the Medicaid subsidy stops in a few years and will leave the state at risk for all the new spending. Brewer, however, will have moved on. Many states, 24 in all, have decided not to participate. Why ? Well, It will cost a fortune.

“The National Association of State Budget Officers says Medicaid now comprises nearly one quarter of states’ entire budgets. Each one of us has served as governor in our state and knows that increased costs in one area means less money in another. America’s families know this as well since they can’t just print and borrow money when their spending goes up like the federal government does. Yet, astonishingly, more than half of ObamaCare’s newly promised health-insurance coverage was accomplished by assigning nearly 26 million more people to an already broken Medicaid program and telling governors, “Now, you find a way to help pay for it.” This will leave states with two choices, or a combination of both: either cut funding in areas such as K-12 education, public universities and colleges, veterans affairs programs, and other much-needed services; or raise sales, income or property taxes. “

For a Democrat’s opinion : Tennessee’s previous governor, Democrat Gov. Phil Bredesen, has called ObamaCare “the mother of all unfunded mandates,” estimating that it would cost Tennessee an additional $1.1 billion from 2014 to 2019, even with the federal government covering the Medicaid expansion for the first three years.

So, Arizona will get three years’ subsidy and then will have to cut benefits or raise taxes. Well done, Governor Brewer.

What are the alternatives ?

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Teaching in a majority black high school.

Saturday, July 6th, 2013

This essay has been around for a while but I saw it for the first time today. It is powerful but depressing. I wonder how applicable it is to the Chicago school system? I have a nephew who has a step daughter in a public school that is about half black. Her mother has to go to the school about once a week to complain about bullying. Catholic schools’ tuition is far higher than it was when I lived there.

Here it is.

A few excerpts: Until recently I taught at a predominantly black high school in a southeastern state.

The mainstream press gives a hint of what conditions are like in black schools, but only a hint. Expressions journalists use like “chaotic” or “poor learning environment” or “lack of discipline” do not capture what really happens. There is nothing like the day-to-day experience of teaching black children and that is what I will try to convey.

Most whites simply do not know what black people are like in large numbers, and the first encounter can be a shock.

One of the most immediately striking things about my students was that they were loud. They had little conception of ordinary decorum. It was not unusual for five blacks to be screaming at me at once. Instead of calming down and waiting for a lull in the din to make their point — something that occurs to even the dimmest white students — blacks just tried to yell over each other.

This must be an impossible place to try to teach. Are there any kids who want to learn?

Black women love to dance — in a way white people might call gyrating. So many black girls dance in the hall, in the classroom, on the chairs, next to the chairs, under the chairs, everywhere. Once I took a call on my cell phone and had to step outside of class. I was away about two minutes but when I got back the black girls had lined up at the front of the classroom and were convulsing to the delight of the boys.

Many black people, especially black women, are enormously fat. Some are so fat I had to arrange special seating to accommodate their bulk. I am not saying there are no fat white students — there are — but it is a matter of numbers and attitudes. Many black girls simply do not care that they are fat. There are plenty of white anorexics, but I have never met or heard of a black anorexic.

“Black women be big Mr. Jackson,” my students would explain.

“Is it okay in the black community to be a little overweight?” I ask. Two obese black girls in front of my desk begin to dance, “You know dem boys lak juicy fruit, Mr. Jackson.” “Juicy” is a colorful black expression for the buttocks.

The attitude toward learning is totally negative. That is “Acting white.”

“Once I needed to send a student to the office to deliver a message. I asked for volunteers, and suddenly you would think my classroom was a bastion of civic engagement. Thirty dark hands shot into the air. My students loved to leave the classroom and slack off, even if just for a few minutes, away from the eye of white authority. I picked a light-skinned boy to deliver the message. One very black student was indignant: “You pick da half-breed.” And immediately other blacks take up the cry, and half a dozen mouths are screaming, “He half-breed.”

I have been teaching medical students for about twelve years. About 1/3 to 1/2 are black, most of them are foreign born, either Africa or the West Indies. Most are more dark than the average American born black but some, as those from Ethiopia, may be quite light skinned. The foreign born blacks have a totally different attitude than the American blacks. Of course, with medical students, I am seeing the highest achievers.

Even so, I have met college students who are from Africa. One, I remember quite well, was attending Dartmouth in the mid-ninties. He worked the night shift in the dining hall, which was open 24 hours at the time. He could not understand white students who would come to the dining hall at 3 AM drunk. What were they doing at such a prestigious and rigorous college ?

I also examine recruits for the military in Los Angeles. I talk to these kids and about 1/4 are black. Hispanics seem to be about twice their share in recruits but both groups are highly motivated. Some of the blacks are foreign born and I have spent some time talking to them. They show none of the social pathology I see in this article but, of course, it would be hopeless for such kids to try to join the military even if they wanted to. One young man I talked to last month is 25 and has 17 half-siblings. He said he never wanted to see any of them again. He is drug free and trying to improve his life. He was raised mostly in foster care and, I suspect, was luckier than most in his situation to had that upbringing.

Most of the blacks I taught simply had no interest in academic subjects. I taught history, and students would often say they didn’t want to do an assignment or they didn’t like history because it was all about white people. Of course, this was “diversity” history, in which every cowboy’s black cook got a special page on how he contributed to winning the West, but black children still found it inadequate. So I would throw up my hands and assign them a project on a real, historical black person. My favorite was Marcus Garvey. They had never heard of him, and I would tell them to research him, but they never did. They didn’t care and they didn’t want to do any work.

Anyone who teaches blacks soon learns that they have a completely different view of government from whites. Once I decided to fill 25 minutes by having students write about one thing the government should do to improve America. I gave this question to three classes totaling about 100 students, approximately 80 of whom were black. My few white students came back with generally “conservative” ideas. “We need to cut off people who don’t work,” was the most common suggestion. Nearly every black gave a variation on the theme of “We need more government services.”

My students had only the vaguest notion of who pays for government services. For them, it was like a magical piggy bank that never goes empty. One black girl was exhorting the class on the need for more social services and I kept trying to explain that people, real live people, are taxed for the money to pay for those services. “Yeah, it come from whites,” she finally said. “They stingy anyway.”

Is there any hope for these people ?

My department head once asked all the teachers to get a response from all students to the following question: “Do you think it is okay to break the law if it will benefit you greatly?” By then, I had been teaching for a while and was not surprised by answers that left a young, liberal, white woman colleague aghast. “Yeah” was the favorite answer. As one student explained, “Get dat green.”

There is a level of conformity among blacks that whites would find hard to believe. They like one kind of music: rap. They will vote for one political party: Democrat. They dance one way, speak one way, are loud the same way, and fail their exams in the same way. Of course, there are exceptions but they are rare.

Whites are different. Some like country music, others heavy metal, some prefer pop, and still others, God forbid, enjoy rap music. They have different associations, groups, almost ideologies. There are jocks, nerds, preppies, and hunters. Blacks are all — well — black, and they are quick to let other blacks know when they deviate from the norm.

Reading this essay, and I recommend it, has made me a little more comfortable with the concept of amnesty for illegal aliens.

My black students had nothing but contempt for Hispanic immigrants. They would vent their feelings so crudely that our department strongly advised us never to talk about immigration in class in case the principal or some outsider might overhear.

Whites were “racis’,” of course, but they thought of us at least as Americans. Not the Mexicans. Blacks have a certain, not necessarily hostile understanding of white people. They know how whites act, and it is clear they believe whites are smart and are good at organizing things. At the same time, they probably suspect whites are just putting on an act when they talk about equality, as if it is all a sham that makes it easier for whites to control blacks. Blacks want a bigger piece of the American pie. I’m convinced that if it were up to them they would give whites a considerably smaller piece than whites get now, but they would give us something. They wouldn’t give Mexicans anything.

We live in interesting times.