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"Markets" in everything
The deal with doctors could come at a steep price: a $250 billion fix to a 12-year-old provision in federal law intended to limit the growth of Medicare reimbursements. The American Medical Association and other doctors’ groups have sought to change or repeal the provision, and they are likely to try to extract that as their price for boarding the Obama train, people tracking the negotiations said.
Wal-Mart, the nation’s largest private-sector employer, agreed recently to support requiring all big companies to insure their workers. In exchange, Wal-Mart said it wanted a guarantee that the bill would not “create barriers to hiring entry-level employees” — in effect, code words to insist that lawmakers abandon the idea of requiring employers to pay part of the cost for workers covered by Medicaid, the government insurance plan for the poor.
“It’s kind of a give-and-take, quid pro quo kind of environment,” said Tom Daschle, President Obama’s first choice for health secretary, who remains in touch with the White House on health care issues. “I think that the stakeholders wouldn’t do this if they didn’t think there was something in it for them.”
...Over the past year, Mr. Baucus, Democrat of Montana, has strong-armed industry groups, warning them not to publicly criticize the process if they want to stay in negotiations.
Mr. Baucus, in turn, has said little about his talks with industry players. On Tuesday, he said only that he was “heartened” by how many groups were supporting the health care overhaul.
That's the NYT reporting, not The Weekly Standard. Here is much more.
How should I feel if Obama, or maybe Congress, threatened to re-zone my neighborhood -- unfavorably -- unless I support an active Afghanistan plan on my blog? (Should it matter if I've incorporated the blog as a business? As an association? Even if there is no corporate right to freedom of speech, should there be "forced speech"?) Should it help much if the intimidation against freedom of speech is for a benevolent end? If Republican Presidents had done something similar?
Might it be correct to call this "evil"? I have seen "evil" defined as "morally bad or wrong."
Of course these deals are not unrelated to why health care reform -- if we get it -- won't in fact solve most of the major problems the sector faces.
Posted by Tyler Cowen on July 11, 2009 at 01:59 AM in Political Science | Permalink
Comments
I never understood how freedom of speech implied shilled industry lobbying.
Corporations don't have any "freedoms". Lobbyists are paid to say particular things, so their speech is not free anyway.
Posted by: Tomasz Wegrzanowski at Jul 11, 2009 6:26:35 AM
I get a bit riled when I hear the words mandated coverage. I was wondering if Tyler had any thoughts on when mandated coverage moves insurance from being just insurance to becoming a tax.
We are in our early 60s and a couple of years away from medicare - I/we do not "need" insurance coverage - we can pay for our prescriptions and doctors visits out of our income - and would probably be ahead of the game financially if we were to do so.
What we need is coverage for the "black swan" - auto accident - cancer - hear attack - the big stuff - and we could probably live with a stout deductible - 5-10k a year [or health savings options].
We don't think we are alone in this circumstance - perhaps many of the currently uninsured fall into the same sort of segment.
But everything indicates we will be paying for - either via an employer or directly something we do not want or need.
Sounds like a tax to me.
Posted by: Lonely Libertarian at Jul 11, 2009 6:58:43 AM
And yes Tyler it is "Evil" - with a capital E - another is calling what they are trying to do "Health Care Reform" - the reforms being talked about are not going make us healthier or better cared for in any meaningful way - one might make a strong argument for the result being just the opposite.
I have heard very little [no] discussion of the "moral hazard" aspect of universal coverage - how different will the uninsured behave when they are insured - and what are the costs [or benefits] of such behavioral changes.
Posted by: Lonely Libertarian at Jul 11, 2009 8:35:07 AM
My take on the point between insurance/tax is the probability of the purchased capability being used. Given the nature of health care the probability that someone will use it is at or near 1; making it a tax. Covering pre-existing conditions only reinforces this fact.
Having universal "health insurance" is like saying we have "universal retirement insurance - i.e., social security - except worse since it is quite conceivable for the per-capita expenditures for health to be greater than those for social security.
The "public" expects that no expense be spared to give someone (anyone) one additional second of life and to increase the life span of our society through medication (suppressing/attacking symptoms as long as possible). Heck, we even prevent people for exercising a choice to stop living. When doctors, mere humans, fail those expectations or makes a mistake they get sued and browbeaten. When they try to speak up we threaten to censure them. We are not Evil - we are a nation of arm-chair quarterbacks (which helps to explain our national obesity problem...)
Posted by: David J at Jul 11, 2009 9:32:32 AM
Talking about Evil, there is a lot in NYT and WP. Another NYT story about health reform starts with this sentence "House Democrats will ask the wealthiest Americans to help pay for overhauling the health care system with a $550 billion income tax increase, the chairman of the tax-writing Ways and Means Committee said Friday." (see http://www.nytimes.com/2009/07/11/health/policy/11health.html?_r=1&hp) They will ASK. I understand it is not the first time they use the word "ask" for a proposed tax increase.
Regarding the WP, today we can read this letter from the Ombudsman about the idea of having market salons to exchange information: http://www.washingtonpost.com/wp-dyn/content/article/2009/07/11/AR2009071100290.html?hpid=opinionsbox1
Tyler, I hope you start to address regularly the increasing corruption of US politics and media.
Posted by: E. Barandiaran at Jul 11, 2009 9:50:47 AM
I remember when Milton Friedman would say that the worst case scenario is when big business and big government unite. He favored competition, this union of big business and government destroys competition. That is when we really start to lose the ability to choose, when we lose our freedoms.
We live in scary times. Yet few seem aware of the dangers.
Posted by: DanC at Jul 11, 2009 10:03:49 AM
Your analogy seems misleading in several ways.
First, unlike in your analogy, all the elements of the pressure from the Obama camp are in a single area, health care.
Second, Wal-Mart, like many corporations, is actively "negotiating" the health care issue, presumably with tens of millions of dollars of little-publicized lobbying efforts. I assume that if Wal-Mart doesn't like what gets negotiated, it will use financial incentives to persuade congressmen to vote against it.
In other words, Wal-Mart is a very active agent in all of this, attempting to negotiate the best deal it can. As an active party, it puts pressure on other parties, and is in turn subject to pressure from them. It's not clear to me how, once Wal-Mart entered the scrum, it would be possible, or even desirable, to keep it from being pushed this way or that.
Posted by: Geoffrey at Jul 11, 2009 10:13:23 AM
What makes this different from any other business negotiation? "I'll make a deal with you, but if you publicly bash my company, I'm not going to do business with you." That's essentially what the Obama camp is saying.
Posted by: libert at Jul 11, 2009 10:25:19 AM
DanC,
You're right. And the worst is when big media unite with government, although NYT and WP may not be as big as they think they are.
Posted by: E. Barandiaran at Jul 11, 2009 10:57:53 AM
"What makes this different from any other business negotiation? "I'll make a deal with you, but if you publicly bash my company, I'm not going to do business with you."
When Microsoft did that with the PC manufacturers the Justice Dept stepped in. Are you hoping for something similar here?
Posted by: Tom at Jul 11, 2009 11:07:09 AM
No Geoffrey
Obama is putting pressure on health care, finance, transportation, and energy. He is trying to direct key elements of close to half the private economy.
Forcing firms to hire lobbyists to protect themselves from government control is a form of taxation. Criminal gangs call it a street tax or protection money.
Negotiation is not costless. It is a burden on society.
Government holding a gun to a firm's head is hardly simple, open, or fair negotiations.
Posted by: DanC at Jul 11, 2009 11:23:34 AM
"What makes this different from any other business negotiation?"
The fact that the negotiator on the other side is threatening to use force to steal from me.
" "I'll make a deal with you, but if you publicly bash my company, I'm not going to do business with you." That's essentially what the Obama camp is saying."
No, they're saying they'll do bad things to you. If you ain't at the table, they use the force of the state to harm you in their health care plan. It's basically a protection racket.
That's what makes this evil. You don't have to be a libertarian to remember that the power of the state is based on force. In fact, if you don't want to be an accessory to evil, you have to remember that the power of the state is based on force.
Posted by: Keith at Jul 11, 2009 11:28:14 AM
I never understood how freedom of speech implied shilled industry lobbying.
Because shilled industry lobbying is speech, therefore is covered under freedom of speech.
If individuals choose to form interest groups, corporations, labor unions, organized religions, or other sorts of organizations to speak on their behalf collectively, it is still a natural extension to their individual free speech.
What makes this different from any other business negotiation? "I'll make a deal with you, but if you publicly bash my company, I'm not going to do business with you." That's essentially what the Obama camp is saying.
Because Obama is an elected official who supposedly is working for all Americans (including those Americans who oppose his policies), and not a CEO of a private corporation working to maximize profit for its shareholders. This isn't a business negotiation, it is a supposedly democratic state institution using the implicit threat of violence to squash criticism.
But yes, I understand... Everyone supports freedom of speech, except for the speech they don't approve of. No one actually comes out and admits they want to censor their political opponents, they instead make extremely convoluted arguments about how censoring their opponents isn't really censorship.
It isn't so much that people are pro-censorship that is so annoying... strict censorship has been pretty much thought to be good throughout human history, except for a small pocket of time when liberalism was in fashion. What is so annoying is the capability of self-delusion among the people posting here. They can endorse extremely egregious suppression of free speech, acts that they would find outrageous is done by their political opponents to suppress their own opinions, and yet they still probably think of themselves as fairly liberal pro-free-speech guys. Just admit that you guys support despotism as long as your guy is in charge, OK?
Posted by: Vehical Driver at Jul 11, 2009 11:46:07 AM
QED @ Vehicle Driver
Posted by: Chris Cella at Jul 11, 2009 11:58:51 AM
Lonely Libertarian wrote: I get a bit riled when I hear the words mandated coverage. I was wondering if Tyler had any thoughts on when mandated coverage moves insurance from being just insurance to becoming a tax.
We are in our early 60s and a couple of years away from medicare - I/we do not "need" insurance coverage
So, let me get this straight, you don't want a mandated tax funded health care program for the next couple of years because you will soon be covered by mandated tax funded government run single payer health care?
What I don't understand is why you haven't gone out and bought that $5000 deductible policy for yourself; I have, and at 61 it now costs me $9400 a year from the free market profit maximizing competitive insurance market; you might be able to cover yourself and your wife for $15,000 a year, and still pay all your doctor bills, assuming you have any money left over.
Of course, insurers assume that anyone who is willing to pay such high premiums must not be that healthy or else they are rich and looking to protect their assets. If you don't have much, then what are they going to do - euthanize you and sell your body parts? No, you will get free government health care, or stiff some doctors and hospitals for the bills.
Posted by: mulp at Jul 11, 2009 12:02:23 PM
mulp - you jumped to a conclusion - I am no fan of medicare either...
But how does that matter - we have several years to navigate and I would prefer to have much more control over my choices and decisions than I am likely to have if we enact health care reform.
And yes the current rate structure for high deductible catastrophic coverage seems high - or wacky - when we look at those rates in contrast to more traditional coverage, but I would love to have an economists perspective on whether or not this "rate" is really competitively determined or not - my gut is that it is not and that more open competition [and perhaps more agressive marketing of this sort of alternative coverage] would drive the cost of this type of coverage down - but could be wrong.
There comes a point even in the high deductible market where self-insurance makes sense.
My point was - and is that calling this mandated coverage is a ruse - it is a tax.
My wife and I are probably not the best examples - the person who probably gets the biggest tax impact is a single person in good health in their twenties - they will "be asked" to subsidize the rest of us...
Posted by: Lonely Libertarian at Jul 11, 2009 12:29:05 PM
Libert:
No, this is not like any other business deal. A business deal involves two parties seeking to exchange values for more valued alternatives. And it is always voluntary.
This is not voluntary. This is Mr. Baucus and Obama saying "Look, if you don't want us to regulate you to hell, you're gonna work with us so we don't have to work as hard at robbing you." That is not voluntary at all, for one very simple reason: Only Mr. Baucus and Obama have the power of guns to force the deal.
Posted by: Tim at Jul 11, 2009 1:10:48 PM
Tyler wrote: Might it be correct to call this "evil"? I have seen "evil" defined as "morally bad or wrong."
Isn't the "evil" the failure to honestly describe the problem and then honestly seek to solve the problem?
The problem is millions of people who as a group will predictably suffer some accident or illness that will require medical care.
The problem is these accidents and illnesses will be largely beyond the control of the individual, but will be determined by one's parents, the nature of society, and chance.
The problem is those affected are seldom able to pay for their medical treatment alone and must depend on others, with the American way, "invented" by Ben Franklin, mutual sharing of risk, being the solution that has deep roots in American history for medical care, but those institutions have been undercut and displaced by the for-profit model which is explicitly anti-mutual sharing of risk, focused on pushing risk off onto taxpayers.
Traditionally, profit is used to create the incentives to produce more of that on which profit is allowed.
We as a society seek to eliminate profit from crime, for example.
And it is extolled as a virtue that the profits have driven up the share of GDP consumed by technology purchases like computers, telecoms, software like computer games.
So, with the profit incentive being set to promote more health care related services, it should not be a surprise that health care costs as a share of GDP have risen to far more than all the nations of the world which prohibit profit in some or all of the health care system.
Furthermore, the insurers given the right to push the risk of the people who need the risk sharing onto to government, because as profit maximization is seen as virtue, this is the way to maximize profits.
If you want maximum risk sharing, and maximum health, then anything that reduces risk sharing must be thwarted because that is clearly going to result in lower health.
And it is clear that the profit in delivering services has created great profit from the system reducing health and thus generating demand for health care services as an attempt to reverse the decline in health, and which generate increased profit.
When the intellectuals claim that the way to reduce cost is by calling for more profit on more health services, and calling for more shedding of risk sharing because that maximizes profit, and calls any attempt to implement a mutual non-profit system "evil", then by definition, anything within that framework is "evil."
Posted by: mulp at Jul 11, 2009 1:17:35 PM
Ah, the aristocracy of pull.
Posted by: stanfo at Jul 11, 2009 1:24:52 PM
"No, they're saying they'll do bad things to you. If you ain't at the table, they use the force of the state to harm you in their health care plan. It's basically a protection racket."
What are these bad things? All I see is innuendo, and not the Italian proctoscope kind. If anyone can cite examplles please do. Is it possible people opposing the plan are leaking not quite true things? TBH, I do not trust either side, so let's hear what is being said. If they are threatening monetary punishment, it is evil. If what they are saying is,"show up and hash it out with us rather than use smear campaigns on TV and then show up expecting civil treatment", not sure I blame them. We have more then enough sniping. We need serious discussion.
Steve
Posted by: steve at Jul 11, 2009 1:35:17 PM
Hmmm... I find it interesting that everyone seems to feel like it's the AMA or WalMart that's being "pushed around."
Though in most ways I don't consider myself a "libertarian" (at least insofar as many of the GMU economics profs are libertarians), I'm wholly against corporate liberalism or government/business horse-trading over laws and regulations, etc. -- a point on which all libertarians seem to agree.
However, I'm worried more about the effect of the AMA, WalMart, pharma, etc. on the government's drafting of the legislation, and less so on the legislation's effect on the above. After all, without government protection, etc., groups like the AMA and its members would never have the power, influence, etc. that they have today, and the same goes for the drug companies and on and on.
To put a Polanyian spin on things, in the way American capitalism works today, there's no such thing as an entity or market independent of government protection, regulation, etc.
If the government and the AMA were having real negotiations, the Obama administration could just as easily say "We're creating a single-payer system, we're going to pay you whatever we want for procedures, and you're either going to take it or we'll completely deregulate medicine, or at the very least start allowing more immigration of doctors from lower wage countries."
Posted by: J at Jul 11, 2009 1:42:39 PM
BHO in Ghana:
"This is about more than just holding elections. It's also about what happens between elections. (Applause.) Repression can take many forms, and too many nations, even those that have elections, are plagued by problems that condemn their people to poverty. No country is going to create wealth if its leaders exploit the economy to enrich themselves -- (applause) -- or if police -- if police can be bought off by drug traffickers. (Applause.) No business wants to invest in a place where the government skims 20 percent off the top -- (applause) -- or the head of the Port Authority is corrupt. No person wants to live in a society where the rule of law gives way to the rule of brutality and bribery. (Applause.) That is not democracy, that is tyranny, even if occasionally you sprinkle an election in there. And now is the time for that style of governance to end. (Applause.)"
As they say in Chile: "Como el padre Gatica, predica pero no practica" (as Father Gatica, he preaches but not practices)
Posted by: E. Barandiaran at Jul 11, 2009 1:45:11 PM
Lonely Libertarian write: But how does that matter - we have several years to navigate and I would prefer to have much more control over my choices and decisions than I am likely to have if we enact health care reform.
If you or your wife developed cancer, clearly it would be wrong for an insurer to cover you, because after all:
a person in good health in their twenties - they will "be asked" to subsidize ... us.
Of course, if a twenty year old has an accident that breaks his neck, then they will be asking everyone else to subsidize them for decades to come.
Unless we apply the economic principle of creative destruction: euthanasia and sale of his body parts, helping to maximize the productive people in society who are clearly productive because they have the wealth to pay for body parts.
You do think it would be wrong for you to be expected to pay for the care of a twenty year old paraplegic who may or may not ever be productive, don't you?
And what of a child born with Downs or cleft palate or ....
Health care becomes very simple if we treat people like we treat machines. Is it more profitable to repair it, or should we scape it and sell it for scape?
Posted by: mulp at Jul 11, 2009 1:57:09 PM
mulp, you say "Health care becomes very simple if we treat people like we treat machines. Is it more profitable to repair it, or should we scape it and sell it for scape?"
But that is exactly what many fear will happen if healthcare becomes a solidly public bureaucracy... if treatment becomes conditional (why should we subsidize X behavior that resulted in your paralysis?) on how you became needing of it, then it would essentially lose whatever moral imperative nationalization had.
Something about your overall tone suggests to me that you would not want national healthcare to cover illnesses that smokers, drinkers, or the morbidly obese get because of their personal choices... yet what gives the government the prerogative to declare healthcare "a right" or at the very least something under its dominion...
And I realize I may very well be raising a straw man here, but it's one that is not too terribly far outside the realm of possibility... and, though it makes little difference, I survived most of my life with no healthcare, because of my parents' personal choice to forego the company care offered for religious reasons. I have some resentment of them for that, but at the same time, it gives me a perspective of what it's like to be uninsured, and it's not as horrible as you might imagine, or as the politicians salivating at the prospect of yet more executive-branch power would have you believe, even for those without much "wiggle room" financially.
Posted by: Neal at Jul 11, 2009 2:17:02 PM
OK mulp. Markets are unfair, profits are bad, government control and regulation are the path to prosperity. At least you must be very happy with President Obama. Heck, some Russians miss Stalin, so you never can tell how many freedoms some people will give away for a few poorly run social programs.
And mulp the next time you seek medical care tell those providing services that they make a living from the misery of others, exploiting the ill, for profit. Tell them they need to take a pay cut because you don't think you are getting enough services given what you pay.
And J, your comments make no sense. You think the government should just stop the pretense of negotiation and implement whatever they want. That is real negotiation?
And Steve, read Tyler's link, read this WSJ piece http://online.wsj.com/article/SB124718217595120225.html. Congress is using carrots and sticks. The carrots are increased taxes (in various forms) that they will distribute to their "friends". The sticks are higher taxes and increased regulation (which are really just different types of monetary punishment) for those who are not helpful.
Posted by: DanC at Jul 11, 2009 2:35:36 PM
