TCS Daily


The Future of Health Care Policy

By Arnold Kling - May 10, 2006 12:00 AM

I have eagerly awaited the publication of Crisis of Abundance: Re-thinking How We Pay for Health Care, which is the subject of this essay. However, since I am the author, this does not count as a book review. Call it a commercial.

I should start by saying that the book does not contain a single major policy recommendation that is politically palatable today. That fact will greatly limit its appeal to most Washington wonks. To gauge their reaction to Crisis of Abundance, imagine how you would react if, while waiting in the checkout line at a supermarket, you pulled a paperback novel off the sales rack, thumbed through it, and didn't find any sex scenes. What was the publisher thinking? Who would buy this?

I can't speak for what the Cato Institute was thinking when they asked me to write a book on health care policy. What I was thinking was that I would do a straightforward, fact-based economic analysis. My approach was to get on the economic trail and follow it to wherever it leads. Where it leads turns out to be a political wilderness, as I will explain below.

Pain in Every Direction

In March, I gave a talk sponsored by the Mercatus Center, in which I said that the main take-away from my book is that any direction that we take in health care policy involves pain:

  • If we go straight ahead (making no changes to health care policy), then the problems that we face now will get worse. Health care spending will continue to rise, so that our health care finance systems will continue to unravel. Employer-based health insurance will continue to struggle. The price of health insurance for individuals will rise, and more individuals will choose to remain uninsured. Medicaid's burden on state budgets will continue to increase. The trillions of dollars of unfunded liabilities of Medicare will continue to pile up.

  • If we turn left (increasing government's role through a single-payer health care system), then we will have to use a national health care budget to ration care. Other countries find it acceptable, for example, that not everyone who is recommended for heart bypass surgery can get it within three months. Our culture is not ready for that. If you thought that many Americans reacted badly to managed care, imagine how they will react to managed care with government in charge.

  • Turning right (a market-oriented solution) also would produce culture shock. We are used to obtaining health care services without having to worry about what they cost. Over 85 percent of health care spending is paid for by third parties -- about 45 percent comes from government and about 40 percent comes from private health insurance. A market-oriented solution, as I propose in Crisis of Abundance, would limit government support to the poor and limit health insurance to covering catastrophically large expenditures. Most consumers clearly prefer -- or at least are used to -- health plans that insulate them from a much larger share of the costs than would be the case with true health insurance.

Why Spending is High

The United States is an outlier in terms of health care spending. In my book, I point out that in 2002, 14.6 percent of our GDP went for health care (more recently, this figure probably has reached 16 percent), while for most other countries the percent of GDP devoted to health care is closer to 10 percent or less.

I believe it would be unwise to claim that our high level of spending on health care is a good thing. That would be true if spending were not distorted by perverse incentives and/or it could be shown to yield noticeable benefits. However, the incentives are distortionary. Moreover, while most statistics used to measure overall quality (such as international longevity comparisons) are too flawed to enable one to draw definitive conclusions, based on the information that I found while working on the book, I believe that it is likely that we are not getting good value for all of the money that we spend on health care.

One explanation of high health care spending is that it reflects the inefficiency and greed of our capitalist system, compared with the more socialized systems of other industrial countries. This viewpoint is popular on the left, but it does not stand up to close scrutiny. In the United States, it is the intensity with which we utilize health care services -- particularly specialists and high-tech equipment -- that is responsible for our soaring health care expenditures.

We are getting real health care services for our money. Although there certainly are ways to improve efficiency in health care, efficiency measures cannot provide enough savings to enable us to consume the same services we consume today at drastically lower cost. The only way to rein in health care spending is to change the way that we consume services.

Real Solutions

My TCS readers know that I see our current notion of health insurance as fundamentally flawed. In the book, I describe what we call health insurance as "insulation," and I contrast it with what I call real health insurance. I spell out how a long-term, catastrophic health insurance plan might work.

I also show how a combination of long-term catastrophic health insurance and savings could substitute for Medicare. That makes my book the only health care policy discussion that offers an effective way to prevent the fiscal train wreck that Medicare threatens to become.

I also propose that government charter a commission to study the benefits of different medical procedures. American consumers undergo many health care procedures that have very little expected benefit. Cost-benefit analysis would help consumers make better decisions, particularly if some of their insulation from health care costs is removed, which would give them an incentive to compare benefits and costs in making their decisions.

The Policy Establishment

The health care policy establishment in Washington, including the Heritage Foundation, the American Enterprise Institute, and every think tank to their left, dismisses real solutions to health care financing as politically irrelevant. Instead, the wonks are looking for gimmicks that will "contain costs," which means that they are looking for clever ways that government can cut prices charged by health care suppliers or "improve" markets to make them more efficient.

Where I claim that any direction we take in health care involves pain, the establishment is circling its wagons around the Massachusetts health care plan, which promises a free lunch. Where I say that we need to make realistic promises in our entitlement programs, the establishment says that such talk is politically absurd.

The health care policy establishment today reminds me of the macroeconomic policy establishment in 1967. At that time, inflation was a growing menace, and the establishment blamed the "wage-price spiral." The wonks of that era focused on designing "incomes policies," which were ways for government to intervene in wage bargaining and price-setting. That same year, Milton Friedman was President of the American Economic Association, and he gave an address which laid out the basic economic theory behind what is now enshrined in textbooks as the vertical long-run aggregate supply curve. His back-to-basics economic analysis showed that the way to curb inflation was to control the money supply, rather than use "incomes policies."

The policy establishment did not listen to Milton Friedman in 1967. The next dozen years saw incomes policies tried, failed, and finally abandoned. Only when they had unsuccessfully attempted everything else did the establishment give Friedman's policies a chance, in the 1980's. They worked.

What I try to do in my book is provide that same sort of back-to-basics economic analysis for health care policy. Maybe some years down the road, after the public is fed up with health care gimmick policies that don't work, the policy establishment will discover the ideas in Crisis of Abundance.

Arnold Kling is a TCS contributing editor and adjunct scholar with the Cato Institute.

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40 Comments

The Marmot Study
I'm surprised you would even bring up health care at a time like this. The Brits only spend half what we do on health care, yet according to the new study appearing in JAMA the most affluent Americans are sicker than the lowest wage Brits. What's going on?

Simple. American health care is run for the benefit of the providers. British health care is for the benefit of the patients. If we were capable of learning from the successes of others we might be able to take a lesson from this.

http://www.suntimes.com/output/news/02health.html

read the book
The book addresses the issue of international comparisons, and it speaks to the issue of health care being run for the benefit of providers. Suffice to say that nationalizing health care in the U.S. is not a way to reduce the influence of providers. If you want to put consumers in charge, then put them in charge.

The Health of the Brits
Except when it comes to their teeth, the Brits (generally) take better care of themselves than the typical Americans do. Americans by and large have an almost pscyhopathic attitude about preventive medicine--that is, about doing basic things to maintain one's personal health. We can observe many tai'chi practitioners and bicyclers in America, but taken as a percentage of population they are exceptions, not the rule. The vast majority of Americans wait on magic pills and arthroscopic surgeries. And Americans get these things in greater abundance with greater alactriy than those of any other nation. But symptom-treating comes at a price.

Isn't it a British proverb that "an ounce of prevention is worth a pound of cure"? Let's think about that.

people must be allowed to opt for health insurance policies that let them die if they get a very exp
We must face the fact that though people dieing of lung cancer almost all regret having smoked that if fact they may have enjoyed the smoking enough at to time to make up for the shortened life.

What this has to do with heath care in general is people must be allowed to opt for health insurance policies that let them die if they get a very expensive disease. They would select a policy when young and healthy and thus less prejudice and more object, than when such diseases are looming. They could change policies later in life but at some expense. We must stop discount all past pleasure to zero. That includes the pleasure bought by having more money due to paying less for health insurance.

Controlling health costs and quality
I guess I will have to read the book if I want to address its conclusions. But you can't put health care in charge of the consumers. They're just a gaggle of geese. You have to put a provider in charge, so it can speak with one voice about cost limitations-- as well as all the other issues that need addressing. They can speak directly with the health care industry and come to terms with the real issues.

(Disclaimer: my son is a doctor, and I am aware of the serious issues. Malpractise insurance is a big one in need of resolution.)

Medicare-Medicaid is already in place. I can't imagine why it would be necessary to posit still another consumer-oriented healthcare organization, to do the same job they are now doing. I think M-M should become more independent of the government, as Sallie Mae has done. That way they could put their cash flow situation on a much sounder footing, and we would not have to confuse the management of Medicare funds with that of General Fund revenues.

If we go this route, it should be optional. Anyone not wanting to participate should not be forced to. They can go to Optima or BCBS for their health care, or they can just self insure.

Your thoughts on this approach would be invited.

Roy who are you trying to fool?

From the article you provided a link to:


‘Americans reported twice the rate of diabetes compared to the British: 12.5 percent versus 6 percent. For high blood pressure, it was 42 percent for Americans versus 34 percent for the British; cancer showed up in 9.5 percent of Americans compared to 5.5 percent of Britains.’

What does higher rates of diabetes and high blood pressure have to do with healtcare delivery. Nothing.


And the article agrees. See below:


‘However, Britain's universal health-care system shouldn't get credit for better health, Marmot and Blendon agreed.

Both said it might explain better health for low-income citizens, but can't account for better health of Britain's more affluent residents.

Marmot cautioned against looking for explanations in the two countries' health-care systems.

"It's not just how we treat people when they get ill, but why they get ill in the first place," Marmot said.’

Roy who are you trying to fool?

BTW Roy I would wait for the studies of the study to come out. eom

The most minor change
OK, so what if we tried to imagine the most minor change that could insert some amount of market discipline and price awareness into the system. What might it be?

How about taking a "progressive" angle and treating employer paid health insurance as income for those with incomes above $100K? So (a), it would be a "tax the rich" approach, and (b) it would in theory unleash the best and brightest income earners to attack the problems as consumers. Is that politically feasible? Would it have a desired effect where higher earners become more vigilant consumers?

-Brad Hutchings

Brits
Brits contain health care costs by aggressively rationing care.
If you need non-life saving surgery, you go into a very, very long line.
If you need life saving surgery, you go into another line. Not always as long.

the arrogance of the elite
This quote of roy's, says it all.

" But you can't put health care in charge of the consumers. They're just a gaggle of geese. You have to put a provider in charge, ... "

Like most leftists, roy considers people to be stupid, so people like him have to be in charge.

roy has a long history
of linking to articles that don't support his point.

typical
The best change is always tax the rich guy.

A better approach would be to make health insurance fully deductible for everyone.

Friedman and Monetarism
The reference to Milton Friedman at the end was most unfortunate, because it undermines the credibility (at least with me) of what was said before. The US has largely followed monetarist policies the past 1/4 century, but the results are at best a mixed bag. Friedman advises to expand the money supply in proportion to the growing supply of goods and service so that there is no inflation.

at least 2 problems because of this:

First, the expansion of the money supply is the classic definition of inflation. Inflation ALWAYS causes economic dislocations, or malinvestments. As Hazlitt stated: "Counterfeit money creates counterfeit businesses that can only be sustained by further debasing the currency." Are the falling prices of electronic goods a bad thing? No, the prices decline because of increased productivity.

Second, the money supply is controlled POLITICALLY. And since its supply is political, and since no politician wants to be seen as causing the next recession, there is pressure to ever expand the money supply. Which then drives up priceds, ala a stock market at near 12,000 vs. 2000 or so in the mid 80's, car and real estate prices, higher prices in those industries not so influenced by increases in productivity.
Several, including critics, point out that personal choices influence personal health. By subsidizing poor choices, we increase the disconnect between personal responsibility and better health.

Britains are one of the biggest markets for Apollo healthcare
Britains are one of the biggest markets for Apollo healthcare. If Healthcare where worse in the USA would think that the USA would be the bigger market.

almost right
Inflation is caused when the money supply (multiplied by the velocity of money) grows faster than the supply of goods.

If the money supply is held constant while GDP grows, you get deflation.

Since we started following the monetarist policies advocated by Friedman and others, inflation has collapsed and has held consistently low since.

As to money supply being controlled politically. That is partially correct. The money supply is controlled by the Fed, and the politicians select the Fed governors. While no politician wants to be seen as responsible for a recession, no politician wants to be seen as causing a return to inflation either.

PS: Outside the far left, no economist believes that we can avoid recessions by playing with the money supply.

I agree more the Austrians than on money supply than with Friedman but...
..this 'The US has largely followed monetarist policies the past 1/4 century' is just wrong. Friedman wants a steady money supply growth with no chairman or commity. BTW Greespan is an Austrian but acted pragmatically given that he considered a return to gold or free market money politically unattainable.


Kling is right about at least one thing...
"The best change is always tax the rich guy. A better approach would be to make health insurance fully deductible for everyone."

See, we can't even have this discussion on the right side of the aisle. I am as against taxing the rich guy as anyone here. My suggestion, therefore, was anything but typical!!

And no, according to Kling's hypothesis, it would NOT be better to make health insurance fully deductable because that just insulates us from its costs. By your way of thinking, why don't we make gasoline fully deductable, or shoes? Surely no US citizen should be without gasoline or shoes, right?

What I was trying to do was come up with a proposal that might be politically palatable and could test the effectiveness of Kling's recommended approach, i.e. something that all the usual suspects can get behind by demagoguing their favorite targets yet still be workable. I'll tell you one group that could definitely get behind this proposal: the self employed and entrepreneurs. It would make it a lot easier to get big company talent into new ventures if you don't have to compete with expensive, lavish untaxed health plans.

deductibility
By making health care fully deductible, we make it possible for individuals to buy their own health care. As it is now, it is much cheaper for businesses to buy it, since they can deduct the cost, and individuals don't.

Deductibility does not insulate us from the cost. State taxes are deductible, but I've never heard of someing moving to a high tax state, just so they can have more deductions.

Still Not Right
“Since we started following the monetarist policies advocated by Friedman and others, inflation has collapsed and has held consistently low since.”

Monetary policy can be used to counter or induce inflation/deflation. However, the fundamental causes of inflation/deflation are not monetary policy. Inflation/deflation existed thousands of years before modern currencies and central banks. There are three ways to handle events that can lead to inflation/deflation:
1) Tyranny of the state
2) Market competition
3) Both of the above
In the US, “both of the above” has been the choice in the last 70 or so years. There are many reasons that inflation has been relatively stable in the last 15 years:
1) Low commodity prices
2) Globalization
3) Increased Privatization in many emerging and developed economies
4) Improving productivity (mainly from technology)
5) Supportive Monetary Policies…policies that counter emerging inflation/deflation trends
If it wasn’t for certain highly-inflationary industries (Health Care, Education, etc…) where inflation is caused mostly by lack of competition and ill-advised government policies, there would be near zero inflation today. But smug and content we should not be. History teaches (the 1930’s, WWII, the 1970’s) that sufficiently severe disruptions must result in inflation, deflation, recession or some combination thereof no matter what policies the government adapts. If oil goes to 300/barrel by July 2006, inflation will occur no matter what the FED does. The FED can counter inflation by inducing depression. But this does not mean that the FED CAUSED the inflation, it only transferred inflation pain into depression pain.

If Americans aspire for the Eden of low inflation, low unemployment and consistently improving productivity, they must earn it in the market place and by being properly prepared for highly disruptive events. Government cannot insure the prosperity of our economy or our civilization…they can only do their part.

Trying to fool no one
My initial comment was "The Brits only spend half what we do on health care, yet according to the new study appearing in JAMA the most affluent Americans are sicker than the lowest wage Brits. What's going on?"

Would you agree that we are sicker?

Marmot may offer that the British system shouldn't get the credit, but I will observe in passing that American health insurors frequently are loath to pay for preventive care, preferring to wait until the situation becomes critical. At that point the far more expensive ameliorative procedures are approved as a matter of course.

I think it's bad policy to wait until someone is sick before addressing their health. We know for a fact, for example, that our hordes of juvenile obese are pre-diabetic. Why not hit this hard, and include it in our premiums?

Not stupid
In order for a group of 290 million people to speak with one voice, they need an organization to represent them. Without such an organization they have no voice. They are as a gaggle of geese, with every one having a different opinion.

This is a basic principle of social organization.

Again, you totally miss Kling's point.
"By making health care fully deductible, we make it possible for individuals to buy their own health care. As it is now, it is much cheaper for businesses to buy it, since they can deduct the cost, and individuals don't."

(A) It is possible for individuals to buy health insurance without a deduction. Many self-employed, self included, already do that. The whole deductable health insurance and employer provided health insurance thing came in during WWII wage and price controls, so it is not the natural state of affairs.

(B) This arrangement does insulate people from the costs of insurance. If the employer has a plan, and the group plan gets a better deal than individual group plans do (again, a biproduct of regulation rather than any kind of natural economy of scale), the members of the group have no incentive to be cost conscious. And that helps drive our total medical spending up over 14% of GDP.

What I am saying is can we find a politcially palatable way to test making some of our smartest and most talented people responsible for containing their medical costs significantly more than they must today. Would it have a positive effect of improving care and reducing costs? If I buy into Kling's argument, I think it most certainly would.

Look, my friend just spent $350 at a doggy dermatologist for an initial consultation and round 1 of treatment for something they can't yet figure out. No insurance to soften that blow or the impending blows 2 and 4 weeks down the road. The costs are making her very vigilent in applying treatment and trying to help pinpoint and eliminate the causes of the skin problem. If it were a kid and $5 copay, the kid would be on prednisone for 20 years and we'd call it cured.

I'll give another example. I have a high deductable insurance policy and have for several years. A couple years ago while running, I felt what is best described as a tiny explosion inside my knee. Doctor said it was a ligament problem and I needed to have surgery and 8 weeks of intense rehab if I wanted to continue running, or I could switch to gym visits and biking and it would get better on its own with time (and no pounding from running). Well, my gym membership to date is about 1/2 what the out of pocket for the surgery would have been. And I can run in the park with no pain or problems. I may even take up a little bit of running running this summer. My deductable for that surgery made me think about it and alternatives which weren't so bad and, frankly, probably better for me in the long run.

So yeah, I think Kling has a point that we are generally way too insulated from costs by our current system. I would love to find a good way to test that, and see if more smart people, having to actually face costs, act in ways to reduce costs, or apply political pressure to reduce costs. Kling has an example of PTs who need tons of post graduate training maybe being adequate with just a year.

Beyond Stupid.. and Beyond Help
In order for a group of 290 million people to speak with one voice, they need an organization to represent them. Without such an organization they have no voice. They are as a gaggle of geese, with every one having a different opinion.

Yes, we should all "speak with one voice", because we aren't 290 million individuals, we're just 290 million fungible parts of something called society. So lets get that leader, who'll ensure we all speak with one voice-I'm sure you'll love Mao's little red book. Another example of how the left devalues the individual and considers everybody too ignorant to mind their own affairs with out "leadership"-notice the analogy of geese-which if you've ever been around are truly stupid birds-follow anything-not unlike the chronic neophilia of TCS resident leftists.


This is a basic principle of social organization.

No, its a basic principle of socialism, in all its reprehensible forms -whether its red or brown.



Not Mao
I wasn't thinking of a leader like Chairman Mao... although Qaddafi might be daffy. I was thinking of an advocacy group that considered itself a focal point for commonly held opinion. My example would be the AARP.

The administration of a newly autonomous Medicare would be well suited to the task. And in its articles of incorporation there should certainly be a way to remove a top administrator who becomes too autocratic, and not answerable to the public. Good systems build good leaders. They don't just come along by themselves.

If I may say so, there are some curious gates and fences in your mental processes.

more of roy's elitism
he feels that not only must the people speak with one voice, that only he and his fellows are properly trained and educated to be that voice.

roy's perceptions again
Every insurer that I have ever dealt with pays for preventative care.

BTW roy, since you are so big on preventative care, do you believe that your car insurance should pay for oil changes?
After all, oil changes are a lot cheaper than replacing an engine.

absolutely wrong
Rising health care costs is just that, rising health care costs. It is not inflation.

If oil goes to $300/brl, it will not cause inflation. This is because people will stop buying other things so that they can keep buying oil. The price of the other things will collapse. The rise in oil prices will be matched by falling other thing prices. Net result, no inflation.

Recessions and prosperity have nothing to do with inflation or deflation.

My example would be the AARP?
Would be your example of what? Corruption? Self-Dealing? Left-wing activism? Blatant disregard of the rules against intervening in political campaigns by non profits?

Roy How does the British system discourage obeseity?
Roy_Bean wrote: ‘I will observe in passing that American health insurors frequently are loath to pay for preventive care, preferring to wait until the situation becomes critical.’

Roy even my $5,000 per person per year policy pays for preventive care. Why (now this may hard for you to believe Roy) because they like to save money.

‘I think it's bad policy to wait until someone is sick before addressing their health. We know for a fact, for example, that our hordes of juvenile obese are pre-diabetic. Why not hit this hard, and include it in our premiums’

How would you suggest that they do this? Should they charge higher premiums to overweight poeple to discourage this. How does the British system discourage obeseity? BTW maybe people enjoy the eating of food more than they dislike the bad health affects.





Obesity
Obviously there are many people who enjoy eating compulsively, and who can't stop by themselves. Most addictive behaviors are like that, whether cigarets, alcohol, pleasure drugs or food. This kind of syndrome lends itself to a group health approach.

In my state, BCBS has led the way in setting up group health awareness seminars and clinics, which both bring awareness of problems such as obesity to the attention of the community and address them in ways that engage the at-risk individual without charge. Why is that important? To get them to sign up, and start taking their problem seriously.

I used to be aggravated by this as BCBS is ostensibly a nonprofit-- meaning that my dues are to be dedicated to the health care of the subscribers and are to be used for no other purpose. But lately I've come around. As they have now eliminated the competition around here, they're pretty much on their way to becoming our "single payer". And I think such pro-active measures save everyone money in the long run.

Not to mention heading off an early death for many individuals. The severely obese often break down in their thirties and forties-- the body just won't work any more. Obesity programs remind these people that it's not just their own personal problem-- it's everyone's. And it's not just "a little weight problem" but life threatening.

Roy Bean Tax and Economics Expert (not)
"I used to be aggravated by this as BCBS is ostensibly a nonprofit-- meaning that my dues are to be dedicated to the health care of the subscribers and are to be used for no other purpose. But lately I've come around. As they have now eliminated the competition around here, they're pretty much on their way to becoming our "single payer". And I think such pro-active measures save everyone money in the long run."

In the name of all that is, WILL YOU PLEASE get an education before you rant-you are so demonstrably devoid of erudition in these matters, its frightening and more so when one considers there's legions of beans out there, all presumably capable of pulling voting levers-assuming the machines are simple enough.

A "nonprofit" has three major characteristics for federal tax purposes. First, it does not operate to DISTRIBUTE profits to individual shareholders. Second, it is organized in accordance with an exempt purpose permitted under federal tax law and third, it is operated according to those requirements. Under no circumstances does the term "non-profit" mean that the organization doesn't seek profits OR that its executives aren't handsomely rewarded. As far as I can see our local BC spends scads of money fulfilling its female CEO's television star fantasies.
However, because ignorant leftists somehow can't grasp this, and has promulgated such a distorted view of the concept of nonprofit-the IRS has begun using the term EO (Exempt Organization)

Your characterization of "meaning that my dues are to be dedicated to the health care of the subscribers and are to be used for no other purpose" is nowhere to be found in BCBS constituitive or operating documents.
Finally, I'm curious as to how destroying competition is a good thing. Funny you guys on the left are always ripping Walmart for the very same thing, but now you'll tell us this is beneficial?

Finally, just about ALL CONNECTIONS that existed between Blue Cross and Blue Shield organizations are severed. There are no entities that are BCBS.

Mission creep
I first became acquainted with BCBS 35 years ago, back when it was a single company and back when all their advertising assured us that their sole purpose for existence was to use our dues to pay medical expenses. I'm not at all suprised that the mission has changed in more recent years, as the original group has metastasized into many, to now include such expenses as the sponsorship of athletic events and naming rights for expensive sports venues. It's a trend I don't care for, and one that goes well beyond the original mission of organizations qualifying for nonprofit status.

The spirit of the nonprofit, and the definition that the IRS initially tried to capture, is that of an organization performing charitable works that could not readily be performed for profit. But after many years of intervention by expensive lawyers, I see that definition has been lost in the murk. Sad.

It is my understanding that nonprofits still can't seek "profits" in the sense of disbursement to shareholders. The harm they can potentially do is twofold: they are allowed to accrue cash reserves that are excessive in light of anticipated requirements, and then search for novel ways to expand their mission and thus spend those reserves; and they can shower their executive officers in outrageous emoluments.

I've attended several hearings locally to fight this trend, as our local BCBS-NC is among the worst transgressors.

The moral is that any time there is a large pile of money, no matter how well protected by statute, custom or charter, it will still in time be eaten away by rats. That's just a fact of life.

Next topic, I did not say destroying competition was a good thing. It is true that in NC, BCBS has destroyed the competition. It may be that one good thing comes of it-- that our dues do not just pay to aggrandize the life style of Mr Bob Greczyn, but also fund badly needed public health measures in a state that is still in many ways poor and rural. He needs to do these things, it's true, in order to maintain a righteous profile with the state Department of Insurance. So be it-- some good is still performed.

Finally, nameless fellow, good form requires that one sign his or her insults and diatribes. Darts thrown from the shadows don't carry much weight. You can make one up, just give us an identifier so we know what to call you.

Darnn Right I'm nameless
I do not intend to be tracked or identified for having posted on an internet site. It wasn't to long ago that a national publication cited employers "googling" the names of potential employees as a screening device. If you were an adult 35 years ago, perhaps you have exited the job market and are free of such concerns, I have not. My economic responsibilities have complete and absolute primacy of the arbitrary rules that would be imposed by some faceless individual on the internet.

I googled Roy Bean. All I got was the name of a judge from the the 19th century. I'm the one who honest here, I clearly signal my pseudonomity, you appropriate a real sounding name. However on the off chance your mother thought it novel to name you after a Texas jurist-your name would in fact be lost in "hits" about the historical figure-my name isn't. Don't like it, tough.

Not insults-facts
first became acquainted with BCBS 35 years ago, back when it was a single company and back when all their advertising assured us that their sole purpose for existence was to use our dues to pay medical expenses.

It is my understanding that nonprofits still can't seek "profits" in the sense of disbursement to shareholders. The harm they can potentially do is twofold: they are allowed to accrue cash reserves that are excessive in light of anticipated requirements, and then search for novel ways to expand their mission and thus spend those reserves; and they can shower their executive officers in outrageous emoluments.

I'm sorry you've failed to keep up to date over the past 35 years and that you don't have enough economic discernment to exercise a little caveat emptor. The fact remains, your post was riddled with inaccuracies.

Paranoia runs deep
Fine, I recognize you now. Superheater is a fine web handle, and it connects me with your previous posts.

I don't need to know your birth name, nor you mine. Others on the site have had no trouble figuring out that "Roy Bean" is a nom de web. You can just google me under my other real name, John Smith, and learn everything you need to know about me.

I wouldn't think either of us have cause to worry, though. Our new capo in charge of monitoring phone calls will have his hands full just writing down all the phone numbers that communicate with one another. I don't think they have the required number of drones on staff to read all our e-messages for content yet.

And if they did, in the climate of the times, it would certainly be me and not you being shipped off to the gulag. So post without fear, Super. I recognize you, even if they don't.

re:almost right
Inflation has been variously and incorrectly defined. The rise in prices is NOT inflation, but its result. Inflation, correctly and classicly defined is the expansion of the money supply. This may or may not be followed by price increase. It is possible that increased productivity plus competition may check a general increase in prices, at least for a while. But the effects of an expansion in the money supply are not all benign, and not evenly spread thoughout the economy. Created money is in fact counterfeited money. And just as the illegal counterfeiter benefits first and most, likewise with the legally counterfeited. First to recieve the money buy before it is realized generally that more money is in the system, and benefit from lower current prices. Those who get the money 2d, 3rd or later have to compete for goods at higher prices. Or money lent to businesses who can not be sustained without further money creation, even if general price rises do not occur. Also, as in current situation, some prices may rise dramaticly, while others stay relatively stable. More on this later.

As to your discussion of velocity, it is relatively stable except in inflationary environments. As people increasingly suspect their money will rapidly lose value, the spend it faster while it still retains some value.

"Since we started following the monetarist policies advocated by Freidman and others, inflation has collapesed and has held consistently low since."

Entrely false. See my definition of inflation=expansion of the money supply. See Ron Paul's interview of Greenspan on the House floor, when Al waltzed around Paul's observation that as the M1 and M3 money supply grew, the stock market went to the moon in roughly the same proportion. Recall Greenspans observation, at Dow=6300, that the current level dispayed "unwarranted exuberance." And note than Greenspan and company inflated the currency, that is, expanded the money supply to a level that supported almost Dow=12,000, nearly double the level of "unwarranted exuberance."

Perhaps you have noticed that land prices as well as stock prices have gone up? How about the price of petroleum? This is due in part to an adventurous foreign policy that is causing disruptions in supply, as well as the fact that producers are knowledgeable of the fact that the US has been legally counterfeiting its money, and therefore it is worth less, perhaps on its way to becoming worthless if all petrodollars become repatriated. And perhaps you have noticed lately that groceries, paint, lumber, many commodities have gone up in price? Sometimes, as with lumber, as the velocity of transactions has cooled. We NEVER had a time recently where there was no inflation, either as measured in money supply or price increases. The last significant deflationary period was in the mid/late 80's when a change in tax law made many real estate investments untenable, and the resulting loan defaults wiped the money off the books, leading to real deflation, that is, a reduced money supply.

"PS: Outside the far left, no economist believes that we can avoid recessions by playing with the money supply."

Almost right. The monetarists seem to believe it. The school of thought I most closely follow believes that recessions may be inevitable, but are almost always made deeper, longer and more severe by money manipulation.

"See especially Rothbard's book on "The Great Deression."

I fail to see your "corrections" of my statements regarding the political nature of money in the US as substantially different from what I previously stated. And any politician who supports our current Federal Reserve System is in fact responsible for inflation.

See Rothbard, Mises and others on how inflation causes economic dislocations, even if price levels generally do not rise. And that these malinvestmenst caused by inflation, that is, an expansion in money supply, are largely responsible for the following recessions.

re:almost right
Inflation has been variously and incorrectly defined. The rise in prices is NOT inflation, but its result. Inflation, correctly and classicly defined is the expansion of the money supply. This may or may not be followed by price increase. It is possible that increased productivity plus competition may check a general increase in prices, at least for a while. But the effects of an expansion in the money supply are not all benign, and not evenly spread thoughout the economy. Created money is in fact counterfeited money. And just as the illegal counterfeiter benefits first and most, likewise with the legally counterfeited. First to recieve the money buy before it is realized generally that more money is in the system, and benefit from lower current prices. Those who get the money 2d, 3rd or later have to compete for goods at higher prices. Or money lent to businesses who can not be sustained without further money creation, even if general price rises do not occur. Also, as in current situation, some prices may rise dramaticly, while others stay relatively stable. More on this later.

As to your discussion of velocity, it is relatively stable except in inflationary environments. As people increasingly suspect their money will rapidly lose value, the spend it faster while it still retains some value.

"Since we started following the monetarist policies advocated by Freidman and others, inflation has collapesed and has held consistently low since."

Entrely false. See my definition of inflation=expansion of the money supply. See Ron Paul's interview of Greenspan on the House floor, when Al waltzed around Paul's observation that as the M1 and M3 money supply grew, the stock market went to the moon in roughly the same proportion. Recall Greenspans observation, at Dow=6300, that the current level dispayed "unwarranted exuberance." And note than Greenspan and company inflated the currency, that is, expanded the money supply to a level that supported almost Dow=12,000, nearly double the level of "unwarranted exuberance."

Perhaps you have noticed that land prices as well as stock prices have gone up? How about the price of petroleum? This is due in part to an adventurous foreign policy that is causing disruptions in supply, as well as the fact that producers are knowledgeable of the fact that the US has been legally counterfeiting its money, and therefore it is worth less, perhaps on its way to becoming worthless if all petrodollars become repatriated. And perhaps you have noticed lately that groceries, paint, lumber, many commodities have gone up in price? Sometimes, as with lumber, as the velocity of transactions has cooled. We NEVER had a time recently where there was no inflation, either as measured in money supply or price increases. The last significant deflationary period was in the mid/late 80's when a change in tax law made many real estate investments untenable, and the resulting loan defaults wiped the money off the books, leading to real deflation, that is, a reduced money supply.

"PS: Outside the far left, no economist believes that we can avoid recessions by playing with the money supply."

Almost right. The monetarists seem to believe it. The school of thought I most closely follow believes that recessions may be inevitable, but are almost always made deeper, longer and more severe by money manipulation.

"See especially Rothbard's book on "The Great Deression."

I fail to see your "corrections" of my statements regarding the political nature of money in the US as substantially different from what I previously stated. And any politician who supports our current Federal Reserve System is in fact responsible for inflation.

See Rothbard, Mises and others on how inflation causes economic dislocations, even if price levels generally do not rise. And that these malinvestmenst caused by inflation, that is, an expansion in money supply, are largely responsible for the following recessions.

Re: I agree more with the Austrians.....
..this 'The US has largely followed monetarist policies the past 1/4 century' is just wrong. Friedman wants a steady money supply growth with no chairman or commity. BTW Greespan is an Austrian but acted pragmatically given that he considered a return to gold or free market money politically unattainable.


While not precisely following Friedman, the policies are largely monetarist in that the Fed attempts to create "just enough" money so as to not create "inflation" by which they really mean "an increase in the Consumer
Price Index (CPI.) How we would create "Just enough" of anything without a controlling body is a mystery to me.

Recall also that Friedman has an inordinate admiration for one of the great enemies of freedom and free markets, Keynes. Keynes advocated creating money to stimulate the economy, and then once it got rolling, to deflate so that prices did not increase. This requires a lot more control and wisdom than any political structure has the capacity to produce. Keynes either did not realize that politicians would have every incentive to inflate (expand) the currency, little incentive to deflate, or he did not care, because after all, "In the long run, we are all dead."

Likewise the monerarist school. The Fed, whether under Dems or Rep administrations, has always strived to postpone the inevitable day of reckoning. One result was the Great Depression. Other results were the significant recessions that seem to occur about once every 20 years or so.

Greenspan was an Objectivist, a disciple of Ayn Rand, more than an Austrian, but did share a sound money philosphy with them until he found it poltically expedient to turn his back on his roots.

I suspect that his greatest legacy will be an economic decline not witnessed at least since the great Depression. Unfortunately, someone else will get the blame.

re:almost right
Inflation has been variously and incorrectly defined. The rise in prices is NOT inflation, but its result. Inflation, correctly and classicly defined is the expansion of the money supply. This may or may not be followed by price increase. It is possible that increased productivity plus competition may check a general increase in prices, at least for a while. But the effects of an expansion in the money supply are not all benign, and not evenly spread thoughout the economy. Created money is in fact counterfeited money. And just as the illegal counterfeiter benefits first and most, likewise with the legally counterfeited. First to recieve the money buy before it is realized generally that more money is in the system, and benefit from lower current prices. Those who get the money 2d, 3rd or later have to compete for goods at higher prices. Or money lent to businesses who can not be sustained without further money creation, even if general price rises do not occur. Also, as in current situation, some prices may rise dramaticly, while others stay relatively stable. More on this later.

As to your discussion of velocity, it is relatively stable except in inflationary environments. As people increasingly suspect their money will rapidly lose value, the spend it faster while it still retains some value.

"Since we started following the monetarist policies advocated by Freidman and others, inflation has collapesed and has held consistently low since."

Entrely false. See my definition of inflation=expansion of the money supply. See Ron Paul's interview of Greenspan on the House floor, when Al waltzed around Paul's observation that as the M1 and M3 money supply grew, the stock market went to the moon in roughly the same proportion. Recall Greenspans observation, at Dow=6300, that the current level dispayed "unwarranted exuberance." And note than Greenspan and company inflated the currency, that is, expanded the money supply to a level that supported almost Dow=12,000, nearly double the level of "unwarranted exuberance."

Perhaps you have noticed that land prices as well as stock prices have gone up? How about the price of petroleum? This is due in part to an adventurous foreign policy that is causing disruptions in supply, as well as the fact that producers are knowledgeable of the fact that the US has been legally counterfeiting its money, and therefore it is worth less, perhaps on its way to becoming worthless if all petrodollars become repatriated. And perhaps you have noticed lately that groceries, paint, lumber, many commodities have gone up in price? Sometimes, as with lumber, as the velocity of transactions has cooled. We NEVER had a time recently where there was no inflation, either as measured in money supply or price increases. The last significant deflationary period was in the mid/late 80's when a change in tax law made many real estate investments untenable, and the resulting loan defaults wiped the money off the books, leading to real deflation, that is, a reduced money supply.

"PS: Outside the far left, no economist believes that we can avoid recessions by playing with the money supply."

Almost right. The monetarists seem to believe it. The school of thought I most closely follow believes that recessions may be inevitable, but are almost always made deeper, longer and more severe by money manipulation.

"See especially Rothbard's book on "The Great Deression."

I fail to see your "corrections" of my statements regarding the political nature of money in the US as substantially different from what I previously stated. And any politician who supports our current Federal Reserve System is in fact responsible for inflation.

See Rothbard, Mises and others on how inflation causes economic dislocations, even if price levels generally do not rise. And that these malinvestmenst caused by inflation, that is, an expansion in money supply, are largely responsible for the following recessions.

NEW STUDY SUPPORTS ETHNIC IDENTITY


Race-mixing puts youth at risk

Not only is miscegenation dangerous to our genes and chromosomes
and the biological survival of our race. A new study has concluded
that race-mixing is harmful and damaging to the unfortunate individual
product of such violation of natural law.
Multiracial youth more prone to violence
UPI Monday 1 May 2006

CHICAGO — U.S. scientists say multiracial middle school youths
are significantly more likely to engage in violence and substance
use than are single-race youths.

Researchers from the University of Chicago and the University
of Washington also found perceived racial discrimination in schools
and home neighborhoods puts adolescents at risk for such problems.

However, the study suggests a strong, positive ethnic identity can
shield some multiracial youth from behavior problems.

Among the findings, the study found multiracial adolescents were
significantly more likely than white, black or Asian-American youth
to have smoked cigarettes. The figures were 38 percent less for
whites, 32 percent less for blacks and 51 percent less for
Asian-Americans.

Similarly, whites, blacks and Asian-Americans were 45 percent,
30 percent and 65 percent less likely, in that order, to have ever
consumed alcohol than multiracial youngsters.

When it came to violent behaviors such as carrying a weapon, being
in a fight or threatening to stab someone, multiracial youth again were
significantly more likely to report having engaged in such activities
than were whites or Asian-Americans. Fewer differences were found
between multiracial and black youths.
The study is published in the American Journal of Orthopsychiatry.

http://www.upi.com/NewsTrack/view.php?StoryID=20060501-041643-9873r

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