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The Democrats are stupid like foxes: A libertarian argues for single-payer health insurance

By now you’ve probably read somewhere that the new healthcare bill will eventually mandate everybody to own insurance, and that for most middle class folks, the punishment for not doing so will be about 2.5% of your income. You may have also read that given that health insurance premiums will increase (they already have for many people just due to the legislation passing) that a health insurance contract will probably cost about $10,000 a year for a family. So, unless you’re making over $500k a year, it’s in your rational best interests to not purchase insurance, and simply wait until you get cancer, at which point you buy insurance. (Perhaps you keep cheap catastrophic coverage to handle the transition.) Under the new law, the insurance companies can’t deny you coverage, so this is undeniably the smartest thing to do. It’s not a moral issue; the government isn’t criminalizing not purchasing insurance, they are simply saying you are going to pay into the pool one way or another, either by buying insurance or paying the government. The only problem is that the fine hasn’t been set remotely intelligently; given the mandate to cover those with prior conditions, the true cost to society of somebody leaving the insurance pool is probably very close to the actual insurance premiums (minus a little bit to account for the fact that this person will not be using routine services while they are waiting for their catostrophic illness).

There is absolutely no flaw in this strategy, and I’m probably the millionth person to write about it. Therefore, the average consumer is likely to hear about it from somewhere, by the time the bill takes effect, and Americans aren’t a bunch that tend to miss a chance at free buffet. I’m pretty sure people will adopt this approach in significant enough numbers to cause a problem for the insurance companies. So, how the heck did such seemingly poorly designed legislation come to pass?

There are three plausible hypotheses out there, as far as I can tell: (a) The Democrats are fools, too enamored with their own savior complexes to bother to understand even the most simple manifestation of unintended consequences, (b) The Democrats are stupid like foxes, and know this will bankrupt our health insurance industry, and when that happens we will be forced to have the government step in with single-payer insurance, (c) The Democrats know the bill will be struck down by the courts as unconstitutional (you can’t force private parties into contracts) well before the provisions set in, thereby paving the way for a single-payer system.

I think the first is, by far, the least likely of the three scenarios, and yet it is the assumption that seems to be made by the Republicans and everybody I know who is conservative or libertarian. I think it’s very dangerous to assume your opponents are fools, and while Pelosi may make that very tempting at times, I think the way she got the bill passed shows that she’s a lot more shrewd than most people give her credit for. I think the Democrats know exactly what they are doing, and I’m not entirely convinced they aren’t right for doing it.

The free market, for all the worship thrown at its feet, simply finds equilibrium points, nothing more, and sometimes less. Whether or not those points are places any of us really want to be is entirely a function of the constraints we put on the market in question. And in the case of health care our current system has some really unintelligent constraints that lead to us being forced to pay for a health care system where the market is too regulated to limit the introduction of new and expensive technology, and yet too free to cover everybody. I’m fairly libertarian, but I have to admit that if you’re going to operate with the notion that unlimited access to a million dollar PET scan machine is a basic human right (and while I think it’s ridiculous to honestly consider it a right, it is certainly a worthy goal to have) then you really need to have a single-payer insurance system and rationed care, or else we’re going to bankrupt ourselves. Will quality of care suffer? Inevitably. But the system we have now may very well destroy the republic, so that’s wouldn’t be so good for quality of care, either.

If you’re liberal, you’re probably already in agreement with me. You can go back to reading The New Yorker now. If you’re libertarian or conservative, you’re probably saying “Well, isn’t the solution to having a health care market perverted by government regulation to just completely deregulate the market?” The problem is, the free market mechanisms that we normally happily exploit to give us things like cheap computers can yield some pretty unsavory things in the case of health care. For one, the free market would let poor people die on the side of the road. Same with old people, and anybody else who’s future economic output is less than the statistically expected cost of keeping them alive. That’s just the economically rational thing to do. That is only the case, however, because we’re very good at putting a positive price on things involving an exchange of goods, but we haven’t developed a way to price intangible things, like the cost most of us would implicitly ascribe to the outcome of having our fellow Americans dying in ditches. Were there a way to accurately impute a real monetary cost to the intangible (psychological?) cost of that happening, perhaps going with the free market would be a good idea. I’m not sure that’s advisable or even possible, but at any rate, we don’t currently do it. It is thus a simplistic and short-sighted adherance to half-baked economic theory that compels somebody to say we should let our health care be handled by the free market. We may find the market’s equilibrium point is optimizing a cost function we’re not proud of.

Economic theory, as it currently stands, is  the last discipline we should entrust our lives to. In the future, we will look back on our current economic theories and realize that they were just the first steps in a thousand mile journey towards understanding how the world operates. Right now, microeconomics says a few vague things about equilibrium prices provided humans are rational and a million variables are rendered constant. It is more notable for what it doesn’t tell you than what it does. For example, it talks vaguely about the restoritive forces which tend to push down the price of a a good produced with surpluses. But does it say anything about how long that process will take? Does it take into account the “friction” of people avoiding the risk of switching production? The effects of human irrationality? People are just beginning the work of answering these questions with new disciplines like behavioral economics. But we’re a long, long way off from having economic theories on which one can auto-pilot policies affecting matters of life and death.

As things stand, we’ll just have to use the same method engineers use when they don’t have a complete theory of the underlying problem: intuition and trial-and-error. And what’s wrong with that? Our country started out as a big experiment? Since when did we stop seeing the US as a laboratory for good government? Why are people so freaked out by a single-payer system? Give it a shot. If it doesn’t work, we can go back to our current fantastic system, tweak it, or try another idea. And we probably won’t have wasted any more money than we do right now rebuilding Iraq for a month. Personally, I would try a single-payer system where people pay co-pays for each procedure determined as a fraction of their gross income. This would form a progressive tax to fund the system (the equanimity the Left wants and the Right wants but just not if the government does it), as well as motivation to not abuse the system (the efficiency the Right wants but the Left seems to think will happen automatically because bureaucrats always do such a good job). Hospitals should be given bonuses for good performance relative to expenditures. Adoption of medical advances should be subject to a hard limit on medical expenditures as a function of GDP, and decided by ranking effectiveness per unit of cost. Is there a perfect way to quantify results when ranking hospitals and technologies? Of course not, but the beauty of our current system is that it’s so bloody godawful that having a monkey spin a casino-style Health Care Policy Fruit Wheel could not possibly fail to improve things. Let not the perfect be the enemy of the slightly less shitty.

Whether or not you agree with my solution, I think it’s fair to say that trusting our health care industry to the precepts of current free market economic thinking is like building an airplane based on a 19th century understanding of aerodynamics and expecting it to fly. I think there’s archival footage of how well that worked out. Economic principles may be elegant, but that doesn’t mean they work in the real world. And here’s some bad news: if we ever do get economic theory to the point where we can let it dictate health care policy, that theory is probably going to be as ugly as the subject of that theory (i.e. us). In the meanwhile, there’s nothing libertarian about letting people croak so that we can adhere to some imagined Platonic form of government.

How I learned to stop worrying and love Obama

Maybe love is too strong a word. I typically vote for Libertarians and the occasional Republican, and usually consider Democratic primaries like the political version of NASCAR: I don’t care who wins, but enjoy watching the crashes. However, the Republicans have lately forgotten their core values of limited and responsible government, and are spending like drunken sailors on shore leave (back when the dollar was worth something). The most decent man in the race, Ron Paul, was never even given a chance despite being the only one of the lot who actually understands economics or the concept of a republic. On the other hand, the Libertarian party is starting to get on my nerves, as it’s increasingly clear they will never get their act together and be anything more than a loose federation of ineffective idealists drowned out by a core of anti-government shack dwellers who don’t understand the first thing about classical liberalism but simply don’t like paying taxes. Finally, through the dishonesty and mismanagement of decades of administrations BOTH Democrat and Republican (don’t listen to anybody so simple-minded as to tell you that all of our problems are due entirely to Bush) our country is in the worst shape anybody in my generation has ever seen, in virtually every arena possible. You can thank the Bushes for the wars, of course, but you can thank Carter and Clinton for the lax lending policies that were meant to help poor people get homes but ended up turning the middle class into real estate speculators. And we can thank the lot of them for a corrupt government that bails out corporations and throws subsidies at politically powerful industries, devolving us into a perverse version of capitalism where taypayers take on the risks and the owners of capital still reap the profits.

The upside to things being so dire is that they are, in many ways, clarified. In truth, there is much low hanging fruit which honest politicians of any ideology should agree need to be fixed: earmarks, tort reform, corporate welfare, border security, massive government redundancy and inefficiency, etc. People may differ on approaches to economic theory, but I think it’s safe to say that hardly anybody thinks corruption and graft is a good form of government.

From all the partisan rancor, however, you’d think other than baseball steroids and Tibet, all the problems we face are of inscrutable complexity and hopelessly nuanced. But all the partisan heat is just part of the divide and conquer strategy employed by our “leaders” on both sides. Like clever sleight of hand sharps who get you to look at what the Right hand is doing while the Left hand is taking your watch, they hope that if they convince you their opponent is evil, you’ll fail to notice they’re not much better.

At this point, whether or not we have universal health care pales in comparison to whether or not we return to being a society with integrity. It is a common mistake and conceit to think if only we have the right system of government with the right laws, all else will fall into place if we just sit back and watch. This applies to those that think all will be right if we only have more socialism, as well as to those that think more laisez faire capitalism will automatically cure our ills. A government only applies rewards and forces, or the lack thereof. It is a force, not a fate. What matters more, above all, is the value system and cultural dynamics of the people under that government. Capitalism may enable great things, but it is a guarantee of nothing without a society composed of individuals who take responsibility for themselves and their neighbors, and who are thus capable of operating with the trust necessary for free trade to work. Capitalism is merely the absence of interfering artifice, in some sense, and the exposure to natural restoring forces; it will punish a society that does not treat its members with respect and fairness in the long run, but it will not inherently cause anybody to change themselves. On the other side of the idealogical spectrum: to the extent that socialism represents the will of the people to help each other, it is unnecessary, and to the extent that it represents an essential collective coercion of individual actions, it is unsustainable in the long run. I don’t mean to equivocate between socialism and capitalism; that matter is for another time. My point is simply that in either case, the notion that our destiny is in our system is a fallacy. It is in our culture, and a government can either be a road or a bog, but the private sector is the only thing that can do the driving.

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Superdelegates already jockeying to justify brokered convention

A recent article in the Washington Post talks about the fact that, as I mentioned earlier, the “Democratic” race will end up being decided by superdelegates at the convention in Denver. Most disturbingly, uncommitted superdelegates who are leaning towards Clinton are starting to make noises suggesting that they will be comfortable overriding the will of the people if the final numbers are close (which they will be):

But Oregon Secretary of State Bill Bradbury said that if there is no clear leader, he is prepared to exercise his judgment. “If the pledged-delegate total is within 100 votes or whatever, I don’t think there’s a great deal of significance in that,” said Bradbury, who also represents other secretaries of state as a superdelegate.

He added: “I just believe that the determining factor for superdelegates shouldn’t be, ‘Well, 49 percent voted for Hillary and 51 percent voted for Obama, and that decides it for us.’ Sorry, but that’s not how it works.”

Actually, that’s exactly how it works. Does the DNC, of all people, need a refresher course on Democracy? After the flap they made after the 2000 election, you’d think not. And yet on last weekend’s Meet the Press, Ed Rendell weighed in with his justification for making a joke of the Democratic primary:

…the governor of Pennsylvania and a Clinton supporter, countered by arguing that “the traditional role of the superdelegates is to determine who’s going to be our strongest candidate.”

Tradition is an interesting choice of words for a system that was invented in the 1980s to put power back in the hands of the party elite. But regardless, wouldn’t the strongest candidate be Obama by any rational measure? He polls better against McCain than Clinton, has more support from moderate Republicans and independents, and doesn’t have the historically high negatives of Clinton. Is it possible that Rendell is not, in fact, looking out for the best interests of the party and country, but is looking out for himself?

What’s amazing is that for all the handwringing about this, nobody in “the party of the people” has floated the idea that maybe having superdelegates isn’t such a super idea. Why do the Democrats always manage to leave themselves with outs when it comes to democracy?

Having the superdelegates choose the candidate means the decision will be tied to political debts owed, and more importantly, favors promised them by the candidate they choose. In other words, a brokered convention favors the established and the dishonest. That is to say, it favors Hillary.

Why Republicans love the Democratic superdelegates

For all the righteous (and understandable) complaining the Democratic party makes over the Electoral College system, you’d think they’d let the popular vote determine their primary system. In fact, they instead use a system that is even less democratic than the Electoral College by employing “superdelegates” who are allowed to vote for anybody. Superdelegates are party leaders and other members of the Democratic party establishment, and they comprise about 800 of the roughly 4000 total delegates. So, about 20% of the delegates aren’t democraticaly allocated!

Given the closeness of the Hillary/Obama race, it’s highly likely that the final decision will not be in the hands of the people, but in the hands of the party establishment, which is largely controlled by the Clintons who have far better Washington connections. They already have nearly double the so-far pledged superdelegates than are in Obama’s camp, and if that proportion continues, the superdelegate system will spot Hillary a 6% advantage over Obama. This is a significant handicap in a race whose national poll margins are less than that. The process is pretty much preordained in her favor. Besides being patently undemocratic, the system also presents a pragmatic problem. With 700 superdelegates outstanding and unpredictable, it takes that much longer for a clear winner to emerge. All of this makes the Republican’s penchant for winner-take-all primaries look rather smart, actually. While McCain is busy already starting on his national campaign and closing rank with other Republicans, the Democrats are still locked in a divisive internal fight. At the rate they are going, this will continue all the way to their convention with neither side attaining enough delegates to ensure victory. The superdelegate system is thus handing the Republicans a distinct advantage, and its hard to chide the Republican party for their winner-take-all system when at least 95% of their delegates are determined by actual voters.

The superdelegate system was created to allow party officials to retain significant power over the nominee, preventing the people from choosing somebody the party deems unworthy or unelectable. While the wisdom of that is questionable, given that polls show Obama to be more electable than Hillary, it doesn’t even apply here. In the end, the superdelegate system appears to be just more of the same corrupt, self-dealing Washington establishment politics. The more ambitious of the superdelegates will use their power to buy their way into the administration of the eventual winner. This is why so many of them have not yet commited either way; they are biding their time, waiting for more clarity on who that will be before they make their pitch.

When the Democratic party doesn’t choose its own candidates democratically, it’s no wonder people are disenchanted with politics. And I’m guessing the superdelegate system isn’t something to which Hillary plans to “bring change” if elected.