Minor Thoughts from me to you

John Cochrane recently wrote about healthcare reform. This is the direction we need to go in, not Obamacare.

First, he talked about the insurance side of health care.

To summarize briefly, health insurance should and can be individual, portable, life-long, guaranteed-renewable, transferrable, competitive, and lightly regulated, mostly to ensure that companies keep their contractual promises. “Guaranteed renewable” means that your premiums do not increase and you can’t be dropped if you get sick. “Transferable” gives you the right to change insurance companies, increasing competition.

Insurance should be insurance, not a payment plan for routine expenses. It should protect overall wealth from large shocks, leaving as many marginal decisions unaltered as possible.

Preexisting conditions, lack of insurance by the young and healthy, and spiraling insurance costs– the main problems motivating the ACA -- are neatly addressed by this alternative. Why do we not have a system? Because law and regulation prevent it from emerging. Before ACA, the elephant in the room was the tax deduction and regulatory pressure for employer-based group plans. This distortion killed the long-term individual market and thus directly caused the pre-existing conditions mess. Anyone who might get a job in the future will not buy long-term insurance. Mandated coverage, tax deductibility of regular expenses if cloaked as “insurance,” prohibition of full rating, barriers to insurance across state lines – why buy long term insurance if you might move? – and a string of other regulations did the rest. Now, the ACA is the whale in the room: The kind of private health insurance I described is simply and explicitly illegal.

He finished by writing about the supply of health care and why we have expensive, low quality options.

So, where are the Walmarts and Southwest Airlines of health care? They are missing, and for a rather obvious reason: regulation and legal impediments.

A small example: In Illinois as in 35 other states7, every new hospital, or even major purchase, requires a “certificate of need.” This certificate is issued by our “hospital equalization board,” appointed by the governor (insert joke here) and regularly in the newspapers for various scandals. The board has an explicit mandate to defend the profitability of existing hospitals. It holds hearings at which they can complain that a new entrant would hurt their bottom line.

Specialized practices that deliver single kinds of service or targeted groups of customers cheaply face additional hurdles, as they undermine the cross-subsidization provided by “full service” hospitals. For example, the Institute for Justice is bringing a major suit8 by a specialty colonoscopy practice in Virginia, which local “full service” hospitals managed to ban.

... The increasing spread of medical tourism to cash-only offshore hospitals is a revealing trend. Why does this have to occur offshore? What’s different about the hospital location? Answer: the regulatory regime.

So, what’s the biggest thing we could do to “bend the cost curve,” as well as finally tackle the ridiculous inefficiency and consequent low quality of health-care delivery? Look for every limit on supply of health care services, especially entry by new companies, and get rid of it.

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John Goodman talks about why Obamacare was flawed from the very beginning.

Do you remember the debates over the Affordable Care Act, aka ObamaCare? Now that repeal of the law has become a major campaign issue, it may be helpful to remember why Congress passed it in the first place.

Early in 2010, as the climactic votes neared, a parade of the legislation's defenders—from the House, Senate and Obama administration—appeared across the media. All had the same message: pre-existing conditions. They named the names of families "victimized" by companies that had refused to sell them insurance, had canceled their coverage or had refused to pay their medical bills.

The message surely resonated, but how many people have actually been affected since the law passed? The Affordable Care Act established a federally funded risk pool—the Pre-Existing Condition Insurance Plan—that allows individuals with such disqualifying conditions to buy a policy for the same premium a healthy person would pay. About 82,000 people have signed up as of July 31, according to the Kaiser Family Foundation's statehealthfacts.org.

That is not a misprint. Out of a population of more than 300 million, some 82,000 have the problem that was cited as the principal reason for spending $1.8 trillion over the next 10 years and in the process turning the entire health-care system upside down.

There is a much better way to ensure people with pre-existing conditions and you don't have to federalize health care in order to do it.

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Specialization in cancer care could lead to better outcomes at the same price. Instead of having every hospital perform every procedure, it might be better to have hospitals specialize in different procedures.

“If all patients needing surgery for colon cancer were referred to hospitals that have consistently achieved mortality rates in the bottom half of all hospitals performing this operation, then the average mortality rate could fall from a rate of 3.8 percent to 2.4 percent,” Ho said. “And if all patients who require surgical resection for pancreatic cancer were referred to hospitals performing 11 or more of these operations per year, mortality rates could fall by half, from a rate of 6 percent to 3 percent.”

“We were concerned that the centralization of cancer care that would result from referring patients to a smaller set of higher-volume hospitals could give these hospitals additional market power to raise prices,” Ho said. “We also wondered whether higher-volume hospitals might have a different cost structure that would raise or lower costs per patient. We found no statistical evidence that hospitals that performed more of these cancer operations were able to charge higher prices to patients for these services. We found that costs per patient were indeed higher for hospitals performing more pancreatic cancer surgery. However, these higher costs were not passed on to patients as higher prices for patient care.”

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Kevin Hassett Aparna Mathur, writing in the Wall Street Journal.

Today we hear that the gains from economic growth accrue to the highest-income earners while the standard of living of the poor and middle America stagnates and the gap between the richest and the poorest grows ever wider. That portrait of the country is wrong.

In the first place, studies that measure income inequality largely focus on pretax incomes while ignoring the transfer payments and spending from unemployment insurance, food stamps, Medicaid and other safety-net programs. Politicians who rest their demands for more redistribution on studies of income inequality but leave out the existing safety net are putting their thumb on the scale.

... From 2000 to 2010, consumption has climbed 14% for individuals in the bottom fifth of households, 6% for individuals in the middle fifth, and 14.3% for individuals in the top fifth when we account for changes in U.S. population and the size of households. This despite the dire economy at the end of the decade.

The data suggest the following picture. Over time, Americans have constructed a vast safety net that has adequately served the poor and helped them—as well as the middle class—to maintain significant consumption growth despite the apparent stagnation of cash incomes. The notion that a society that has accomplished such a feat is rigged or fundamentally unjust is ludicrous.

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Five days ago, I predicted that Mr. Romney would win the presidency. Adam, who's long though I'm daft on Mitt's chances, was quick to challenge me to a bet. I'm betting that Mr. Romney will be elected President, Adam's betting that President Obama will be re-elected. The stakes are simple: the loser has to purchase, read, and review an e-book of the winner's choice. The e-book can be on any topic but can't be a multi-volume work.

When I win, I'll post Adam's assignment here.

This is a fantastic speech from Canadian Prime Minister Stephen Harper. I'd love to hear an American President sound this good.

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Garrett Jones has some good insights into why the Electoral College matters.

We rarely hear too much about regional issues in the U.S. other than farmers vs. everyone else. But if the presidency was decided by majority rule, I'm sure we'd hear a lot more about regional differences. Could a presidential candidate get 75% of the votes in Texas, Louisiana, Mississippi, and Florida by promising broad-based Gulf Coast subsidies and a few other goodies? Could a candidate get 85% of California's and New York's votes partly by offering housing subsidies for people facing high housing costs?

I don't know: But if we got rid of the electoral college and had a popularly elected president we'd sure have a chance to find out.

As it stands, presidential candidates are trying to appeal to the median voter in each state across a large number of states. That's how you get to be president. This reduces regional tensions because candidates are never trying to get 90% of the votes in a state. When you're pitting 90% of one region of the country against 90% of another region of the country, you're substantially raising the probability of social conflict.

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And this is why conservatives, in certain areas, don't like to put up yard signs or put bumper stickers on their cars.

Early Friday morning, thugs presumably supporting President Obama beat up the son of Wisconsin State Senator Neal Kedzie outside of his apartment in Whitewater. Kedzie caught the two men removing a Romney sign outside of his apartment around two o'clock in the morning. After telling them to put the signs back, one of the thugs attacked Kedzie and then put him in a choke hold and continued to beat his head.

Mark Belling spoke to the Senator’s son Sean on the radio earlier today. Sean Kedzie told Belling he was rushed to the hospital by ambulance with possible skull and eye socket fractures.

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Oh, goody. The U.S. is moving towards a never-ending kill list, for drone strikes. We're institutionalizing the process, so that we can keep adding names to lists, keep killing the people behind the names, and then repeat—forever. Bureaucracies are self-perpetuating. What happens when we run out of genuine terrorists, to hunt and kill? Who will we add to the lists next?

The number of targets on the lists isn’t fixed, officials said, but fluctuates based on adjustments to criteria. Officials defended the arrangement even while acknowledging an erosion in the caliber of operatives placed in the drones’ cross hairs.

“Is the person currently Number 4 as good as the Number 4 seven years ago? Probably not,” said a former senior U.S. counterterrorism official involved in the process until earlier this year. “But it doesn’t mean he’s not dangerous.”

In focusing on bureaucratic refinements, the administration has largely avoided confronting more fundamental questions about the lists. Internal doubts about the effectiveness of the drone campaign are almost nonexistent. So are apparent alternatives.

The Obama administration doesn't even want to consider the possibility of ending the kill lists and the drone strikes. I have little faith that a Romney administration would be better.

Obama administration officials at times have sought to trigger debate over how long the nation might employ the kill lists. But officials said the discussions became dead ends.

In one instance, Mullen, the former Joint Chiefs chairman, returned from Pakistan and recounted a heated confrontation with his counterpart, Gen. Ashfaq Parvez Kayani.

Mullen told White House and counterterrorism officials that the Pakistani military chief had demanded an answer to a seemingly reasonable question: After hundreds of drone strikes, how could the United States possibly still be working its way through a “top 20” list?

The issue resurfaced after the U.S. raid that killed bin Laden. Seeking to repair a rift with Pakistan, Panetta, the CIA director, told Kayani and others that the United States had only a handful of targets left and would be able to wind down the drone campaign.

A senior aide to Panetta disputed this account, and said Panetta mentioned the shrinking target list during his trip to Islamabad but didn’t raise the prospect that drone strikes would end. Two former U.S. officials said the White House told Panetta to avoid even hinting at commitments the United States was not prepared to keep.

“We didn’t want to get into the business of limitless lists,” said a former senior U.S. counterterrorism official who spent years overseeing the lists. “There is this apparatus created to deal with counterterrorism. It’s still useful. The question is: When will it stop being useful? I don’t know.”

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Things are getting very bad in Greece.

One of the best sources of news about the Greek social crisis has been the dispatches sent by the BBC correspondent Paul Mason. So we should pay attention when Mason decides to ring the alarm bell.

Last month, the Greek prime minister, Antonis Samaras, warned Europe that his country was on the edge of a Weimar Germany-style social collapse. What I have seen on the streets of Athens convinces me this is not rhetoric. There is a violent far-right party, its MPs committing and inciting violence with impunity; a police force that cannot or will not prevent Golden Dawn from projecting uniformed force on the streets. And a middle class that feels increasingly powerless to turn the situation round.

Is it really that bad? Yes.

How deep is the economic hole? The Greek statistics agency EL.STAT is reporting that the 2011 deficit stood at 9.4 percent of GDP and the public debt at a staggering 170.6 percent. Greece is begging the EU and IMF to release the latest tranche of aid—a staggering 31.2 billion euros ($39.7 billion). Forget trite talk of Greeks losing only their feather-bedded pensions and early retirement. The cuts are deep, the pain real, and the anger white-hot.

The neo-fascist party Golden Dawn won 6 to 7 percent of the vote in the Greek elections of May and June 2012 and is polling at twice that today, as anger rises against the economic austerity measures of the coalition government of Conservatives, Socialists and the Democratic Left.

Recently, the theater director Laertis Vassiliou saw Golden Dawn thugs shut down the play Corpus Christi, assaulting actors while the police—large numbers of whom openly support Golden Dawn—stood by and watched. Golden Dawn MP Christos Pappas was filmed “de-arresting” a demonstrator—removing him from police custody. Vassiliou caught the whiff of Weimar. “People went home with broken bones. Every day they phone me now, they phone the theatre, saying: your days are numbered,” Vassiliou said. “This was the Greek Kristallnacht.”

This is what happens when a nation spends money that it doesn't have for years on end. It's what happens when an increasingly large share of the population depends on that government money (whether through government contracts or through welfare) to survive.

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This is a pretty sad end, after all of the money that Greece spent on hosting the Summer Olympics.

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What an absolutely criminal waste of money.

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A look into President Obama's war strategy in Pakistan.

In the United States, the dominant narrative about the use of drones in Pakistan is of a surgically precise and effective tool that makes the U.S. safer by enabling “targeted killing” of terrorists, with minimal downsides or collateral impacts.

This narrative is false.

Those are the understated opening words of a disturbing, though unsurprising, nine-month study of the Obama administration’s official, yet unacknowledged, remote-controlled bombing campaign in the North Waziristan region of Pakistan, near Afghanistan. The report, “Living Under Drones,” is a joint effort by the New York University School of Law’s Global Justice Clinic and Stanford Law School’s International Human Rights and Conflict Resolution Clinic.

The NYU/Stanford report goes beyond reporting estimates of the civilian casualties inflicted by the deadly and illegal U.S. campaign. It also documents the hell the Pakistanis endure under President Barack Obama’s policy, which includes a “kill list” from which he personally selects targets. That hell shouldn’t be hard to imagine. Picture yourself living in an area routinely visited from the air by pilotless aircraft carrying Hellfire missiles. This policy is hardly calculated to win friends for the United States.

I can't imagine how horrible it must be to not that drone fighters are constantly flying over your village and that you risk being killed anytime a far off leader thinks you represent a threat. For innocent Pakistani citizens, this is the definition of unprovoked war and aggression. And they're going to hate us, a lot, for it. We're creating enemies, not friends.

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Victoria Toensing explains the Lilly Ledbetter Fair Pay Act, in the Wall Street Journal.

President Obama makes much of his concern for women's rights, particularly regarding equal pay, but he seems not to be aware that for nearly half a century we have enjoyed the protection of two laws requiring equal pay. The 1963 Equal Pay Act and Title VII of the 1964 Civil Rights Act combined to settle the matter in law.

Mr. Obama brags that the 2009 Lilly Ledbetter Fair Pay Act bestowed equal-pay rights for women. The act, he has said, "is a big step toward making sure every worker," male and female, "receives equal pay for equal work." No, it was a teensy step. It merely changed how the statute of limitations is calculated.

The Equal Pay Act of 1963 prohibits wage disparity between men and women who work in the same place and perform jobs that require substantially the same "skill, effort, and responsibility." The statute of limitations for filing suit is two or three years, depending on whether the discriminatory act is intentional.

Title VII of the 1964 Civil Rights Act covers discriminatory hiring, firing and promotions as well as pay. It requires filing a complaint with the Equal Employment Opportunity Commission within 180 days after an intentional discriminatory act.

Ms. Ledbetter didn't file suit until after her retirement, years after the discrimination ooccurred. The Supreme Court ruled against, stating the law's explicit 180-day statute of limitations.

Statutes of limitation are not technicalities. In Ledbetter, for example, the Supreme Court pointed to the dead witness, stating it is unfair to fail to put an adversary on notice within a specific time period because employers should not have to defend claims far in the past. The court reflected that it does not want to alter congressional deadlines.

In 2009, the Democratic-controlled Congress amended Title VII, allowing a suit to be brought within 180 days of any "discriminatory compensation decision"—in other words, any too-low paycheck. In its legislative "findings," Congress proclaimed that the Ledbetter Supreme Court decision "undermines . . . protections by restricting the time period . . . contrary to the intent of Congress."

So the Lilly Ledbetter Fair Pay Act was premised on the legislators' pretending that Congress was not responsible for the precise words of its own law setting the 180-day deadline.

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GM did go bankrupt – filing for Chapter 11 protection against its creditors on June 1, 2009. It’s what happened next that the president can take credit for – a handout of $49.5 billion in taxpayer money to GM, some $27 billion of which remains outstanding, and another $17 billion to its financial arm Ally Financial, which still owes $14.7 billion.

Where did that money go? Mainly, it went to paying off debts owed by GM and Chrysler, and – in an historic distortion of our bankruptcy proceedings – to securing the pensions and livelihoods of UAW workers. It turns out the real debt was that of Mr. Obama to organized labor, which had ponied up some $400 million to help him defeat John McCain.

The Obama administration strong-armed the auto companies’ creditors into accepting undeniably unfair terms – terms that saw pensions obliterated for non-union workers but saved for those carrying a UAW card. Terms that saw non-UAW shops close but UAW factories stay open. Terms that doled out ownership in GM with political favoritism as a guiding principle.

These charges are not at issue. In the government-managed reorganization of GM, bond holders (secured bond holders, who normally are at the top of the pay-out chart) were given equity in the carmaker at a price of $2.7 billion per one percent ownership. The government ended up paying $834 million for every one percent it claimed; the UAW paid only $629 million.

It was not only the ownership share that was skewed towards the UAW. As jobs began to come back, it was the UAW plants that kicked into high gear. Workers at GM’s plant in Moraine, Ohio, who had been laid off in 2007, were not included in the re-hiring. Why? Because they did not belong to the UAW. The Moraine plant was reportedly one of GM’s most productive, but under the terms of GM’s reorganization, its workers were “banned from transferring to other plants,” according to Sharon Terlep at The Wall Street Journal.

Moraine was not the only non-UAW facility to fall under the knife; a truck plant in Ontario organized by the Canadian Auto Workers also went down.

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The Wall Street Journal editorializes in favor of Mr. Romney's tax plan, arguing that it's both fiscally and politically feasible.

The Obama campaign and the press corps keep demanding that Mitt Romney specify which tax deductions he'd eliminate, but the Republican has already proposed more tax-reform specificity than any candidate in memory. To wit, he's proposed a dollar limit on deductions for each tax filer.

During the first Presidential debate, Mr. Romney put it this way: "What are the various ways we could bring down deductions, for instance? One way, for instance, would be to have a single number. Make up a number—$25,000, $50,000. Anybody can have deductions up to that amount. And then that number disappears for high-income people. That's one way one could do it."

But details aside, the tax cap is a big idea, and potentially a very good one. The proposal makes economic sense to the extent that it helps to pay for lower marginal tax rates. Lower rates with fewer deductions improve the incentive for investing and taking risks based on the best return on capital rather than favoring one kind of investment (say, housing) over another. This would help economic growth.

The idea may be even better politically. The historic challenge for tax reformers is defeating the most powerful lobbies in Washington that exist to preserve their special tax privileges. Among the biggest is the housing lobby that exists to preserve the mortgage-interest deduction—the Realtors, home builders, mortgage brokers and the whole Fannie Mae gang.

But don't forget the life insurance lobby (which benefits from the tax exclusion on the equity buildup in policies), the tax-free municipal bond interest lobby, the charitable deduction lobby and more. Each one will fight to the death to preserve its carve-out, which means that reformers have to engage in political trench warfare to succeed.

This is one reason President Obama wants Mr. Romney to be more specific: The minute he proposed to limit the mortgage-interest deduction, the housing lobby would do the Obama campaign's bidding by running ads against Mr. Romney's plan. Mr. Romney is right not to fall for this sucker play.

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I've thought for a long time that Romney could win the election, in spite of the Conventional Wisdom that President Obama couldn't possibly lose to Mr. Romney. After the conventions were over, I thought that Mr. Romney had fumbled his chance to win over voters. But, after watching the debates and the way the polls are trending, I not only think that Mr. Romney can win, I think he will win.

Here's my prediction.

This analysis, as well as other reports from Ohio make me think the Mr. Romney is steadily moving in the right direction and will ultimately win Ohio. If the trend lines don't reverse, I think it's possible for Mr. Romney to win Wisconsin as well, increasing his electoral college lead.

It looks like Pell grants are subsidies for universities rather than being a true aid for needy students.

For private universities, though, increases in Pell grants appear to be matched nearly one for one by increases in list (and net) tuition. Results for out-of- state tuition for public universities are similar to those for private universities, suggesting that they behave more like private ones in setting out-of-state tuition.

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Take it away, Matt Ridley.

Generally, technologies are judged on their net benefits, not on the claim that they are harmless: The good effects of, say, the automobile and aspirin outweigh their dangers. Today, arguably, adopting certain new technologies is harder not just because of a policy of precaution but because of a bias in much of the media against reporting the benefits.

So to redress the balance, I thought I'd look up the estimated benefits of genetically modified crops. After 15 years of GM planting, there's ample opportunity—with 17 million farmers on almost 400 million acres in 29 countries on six continents—to count the gains from genetic modification of crop plants. A recent comprehensive report by Graham Brookes and Peter Barfoot for a British firm, PG Economics, gives some rough numbers. (The study was funded by Monsanto, which has major operations in biotech, but the authors say the research was independent of the company and published in two peer-reviewed journals.)

The most obvious benefit is yield increase. In 2010, the report estimates, the world's corn crop was 31 million tons larger and the soybean crop 14 million tons larger than it would have been without the use of biotech crops. The direct effect on farm incomes was an increase of $14 billion, more than half of which went to farmers in developing countries (especially those growing insect-resistant cotton).

In addition, a range of non-pecuniary benefits have been recorded, from savings in fuel, time and machinery to a better health and safety record on the farm (since less pesticide is needed), shorter growing cycles and better quality of product. In India—where the International Service for the Acquisition of Agri-Biotech Applications says 88% of cotton is now genetically modified to resist pests and insecticide use has halved—bee keepers are losing fewer bees.

As this illustrates, the most striking benefits are environmental. The report calculates that a cumulative total of 965 million pounds of pesticide have not been used because of the adoption of GM crops. The biggest impacts are from insect-resistant cotton and herbicide-tolerant maize, both of which need fewer sprayings than their conventional equivalents.

The use of less fuel in farming GM crops results in less carbon-dioxide emission. In addition, herbicide-tolerant GM crops can often be grown with little or no plowing in stubble fields that are sprayed with herbicides. The result is to allow more carbon to remain in the soil, since plowing releases carbon as microbial exhalation. Taken together, Messrs. Brookes and Barfoot estimate, this means that the GM crops grown in 2010 had an effect on carbon-dioxide emissions equivalent to taking 8.6 million cars off the road.

There is a rich irony here. The rapidly growing use of shale gas in the U.S. has also driven down carbon-dioxide emissions by replacing coal in the generation of electricity. U.S. carbon emissions are falling so fast they are now back to levels last seen in the 1990s. So the two technologies most reliably and stridently opposed by the environmental movement—genetic modification and fracking—have been the two technologies that most reliably cut carbon emissions.

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More ways to communicate with patients that we used to think were brain dead.

Scientists have been able to reach into the mind of a brain-damaged man and communicate with his thoughts.

The research, carried out in the UK and Belgium, involved a new brain scanning method.

Awareness was detected in three other patients previously diagnosed as being in a vegetative state.

The study in the New England Journal of Medicine shows that scans can detect signs of awareness in patients thought to be closed off from the world.

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It may turn out that fewer patients are actually in a vegetative state than we think.

Researchers are currently testing the Halifax Consciousness Scanner, a device that uses words and tones to measure brain function in patients that have suffered severe trauma or stroke-induced brain injuries.

... In developing the scanner, doctors first measure brain-wave patterns to create a picture of a healthy individual’s brain, which is then compared to the picture that is produced by an impaired brain.

Doctors are then able to determine the extent of the injuries and a long-term outlook for a patient’s recovery.

The team behind the Halifax Consciousness Scanner is hoping to test the device on more brain trauma patients and eventually have units in ambulances and emergency rooms to gain accurate brain status readings of unconscious and semi-conscious patients.

Researchers are also teaming with engineers to develop a hand-held consciousness scanner and headset.

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