Daily Archives: 11/20/2010

Controlling Health Care Costs (via  Modeled Behavior)

This interesting in wonkish discussion, and it more existential aspects as well.

The deficit commission proposals are bringing forward a lot of conversations that I would have thought needed to wait. In that sense I have been presently surprised. Regular readers know that I am skeptical of the general practice of trying to head off problems long before they occur. Nonetheless, there is useful conversation to be had. Ezra Klein notes on cost control On the bright side, conservatives have now found a better way: "If the le … Read More

via  Modeled Behavior


America’s deficit: Confronting the monster | The Economist

America’s deficit: Confronting the monster | The Economist.

End of the Day – PICT1242

Really the train has left the station for winter, but fall is a glorious season.

Obama can be proud

Healthcare is an achievement of this administration because:

I believe that the passage of PPACA will viewed as a historic achievement, because it helped to break a log jam in the health care system and started in motion a process that can lead to a sustainable health care system. It has put the health system in play. Each Congress for the next 5 (maybe 10) will return to health care. It is the first step. The next steps are yet to be determined….but they would never have come about without the first one.


freeforall–a health policy discussion

via Rorschach Test.

Pro Growth Agenda per Keith Hennessy

Keith Hennesy proposes strong emphasis on spending cuts, and waiting for the private sector to produce jobs with little additional federal actions to hurry things along.

I agree with most of what’s in his post.

Here are highlights.

…The goals of an ideal economic-growth agenda are simple and well known: a large and thriving private sector and a small government; reduced government spending, which means lower taxes (or at least not higher ones) and smaller deficits; open trade and investment; taxes and regulations that don’t distort decisions, discourage capital formation or work, or provide rents to the politically powerful; deep and flexible labor markets; a reformed financial sector that channels savings to where they can do the most good; a society in which education and innovation flourish, and the most talented people in the world want to become Americans; a stable, low-regulation legal environment, in which monetary policy is sound and business decisions issue from customers and competitors rather than regulators and judges.

Here, then, are ten practical tips for elected Republican officials, who are torn between trying to govern as a majority party and trying to oppose President Obama’s agenda as a minority party.

One. Prioritize medium-term problems caused by the government rather than trying to push businesses to expand more rapidly. The economic-deleveraging process is painful, slow, and necessary. Tools to mitigate the pain or accelerate the recovery have failed. So, refocus: Stop trying to mess with the economy’s natural process of rebalancing. You’re only making it worse with unintended consequences. Don’t restore the homebuyer tax credit or try to put a floor on housing prices. …

Two. Set the right goal: creating the conditions for growth rather than trying to create growth. Policymakers need to get the policies right and let business leaders decide how to run their firms.

Three. Spending is now even more important than taxes. Every dollar spent by the government comes from current or future taxes. If you focus your legislative energy on keeping current taxes low and do nothing to slow future spending growth, you merely shift taxes to the future. Without a spending-reduction plan, a “no-tax-increase” strategy is incomplete. …

Four. Don’t waste all your time on nickels and dimes and process reforms; instead, slow entitlement-spending growth. Yes, it’s good to cut stimulus spending. To eliminate earmarks. To cut discretionary spending back to 2008 levels or lower, and to wage the usual Left–Right appropriations battles. These are important for restoring confidence in government, for undoing some of the worst spending excesses of the past two years, and for atoning for Republican spending sins. Such actions will be popular with many who voted to remove Democrats from power. Yet they are quantitatively insignificant in the long run. …

We should raise the eligibility age for collecting full benefits to keep up with demographic changes. We should transform these programs from forced-savings vehicles into strong safety nets that protect future seniors from poverty. We should tell younger workers that they must start saving now to supplement that safety net, and that they will be responsible for a greater portion of their retirement and health-care costs than their parents and grandparents were for their own. We should apologize to these young Americans and their children for waiting so long and letting it get this bad, and we should permanently restructure these programs so that government does not expand over time. …

Five. Tax levels and tax structure are both important, but levels are a higher priority. Republicans and conservatives love to debate the ideal tax reform. Structural reform is good, necessary, and very hard to enact. By all means push for an improved tax code, but not at the cost of higher tax levels or of failing to develop a credible long-term spending plan. A perfectly structured tax code that collects 25 percent of GDP is worse than a flawed tax code that collects 18 percent of GDP. Beware the siren call of the money-pump VAT.

Six. Don’t delink income-tax rates. The strategy we developed in 2001 and 2003 worked. Forced by reconciliation rules to sunset the tax cuts, we set them all to expire on the same day. President Bush reframed the top income-tax rates as small-business tax rates. This argument won the day in 2003 and 2010 and will win again as long as the expiration dates remain synchronized. Don’t fall for the trap of temporarily extending the top rates and permanently extending the others. This would guarantee future increases in the top rates.

Seven. Offer to help the president expand free trade and open investment. Rebuild the center-right free-trade coalition. …

Eight. Offer to help the president fight the teachers’ unions and improve elementary and secondary education. You agree more than you disagree with the president on education. He has shown a limited willingness to take on the teachers’ unions, and you need him to deliver Democratic votes to overcome a Senate filibuster. …

Nine. Now that cap-and-trade is dead, build a supermajority to stop the EPA from pretending it is a legislature, and then cut a deal. After the Copenhagen implosion and the death of a domestic economy-wide carbon price, the president cannot block the EPA from fouling up the economy without something to show for it. Offer a little more money to further subsidize carbon-reducing-technology R&D in exchange for legislatively stopping the EPA from taking over much of the economy. Its unchecked use of regulatory authority would create uncertainty and be a significant threat to future economic growth.

Ten. Lay the groundwork for repeal of the Obama health-care laws in 2013. Develop multiple alternatives. Pass repeal in the House. Pressure in-cycle Senate Democrats to take a stand, and make repeal a centerpiece of the 2012 policy debate. In doing so, stop playing the Medicare card. While the health-care legislation cuts Medicare spending in the wrong way, to prevent fiscal disaster we need even more Medicare and Medicaid cuts than were enacted in those laws. If you use Medicare to scare seniors and repeal Obamacare but, as a result, cannot address Medicare’s unsustainable spending path, you have made things worse, not better.

While some measures to prevent the economy from going over an unprecedented cliff may have been in order, the impact of the past or any future stimulus is debatable at best and the concern about our fiscal situation outweighs going down that path. Unwise policy to get us out of the 2001-2002 recession likely contributed to the current Great Recession, so I think patience as he suggests is wise.

There are two exceptions in my agreement.

First, he wants to repeal health care reform.

I think actually making a comprehensive commitment to health care was an enormous step forward in making this country a better and humane society. Presidents of both parties have pursued this goal for close to century, and I think Barack Obama has a major accomplishment in getting a health care law on the books, even if the law is substantially changed to address other issues. Finally getting the law on the books has jarred us out of the idea of continuing the status quo with band aids that is likely to be impossible over time.

I share his concern that the the cost of it may be difficult to sustain, and it at least takes away options to deal with our fiscal situation. More ways to curb costs than in the ACA are needed. Some of that will involve greater choice and responsibility for choice in health care. The problem with most proposals to do this is I think they do nothing to increase access to care for those least able to afford it. Making people responsible for more of their own medical costs will not address that issue.

In Keith’s post I don’t see any addressing of this issue. Is there a way to address access and costs? I think that a stretching out of the time table for improved access and maybe reducing the level of subsidies might be in order, but I want the goal of improved access retained. I can’t see treating those who lose access to health care by loss of employment as expendable to deal with our budget issues.

Second, he wants to maintain the Bush tax cuts.

I understand his desire to keep the tax cuts established under President Bush. However, it seems to me those cuts were made with the idea of encouraging economic growth and giving back the anticipated surplus.

The growth that happened with the cuts was not impressive enough to make much of case that they are or were needed to cause economic growth or should be retained. The surplus that they were to come from is clearly long gone also. So I don’t see much of a case for retaining the Bush tax cuts. I think they should go both for people above and below $250,000 annual income.