Reaction and Commentary that nobody asks for, but may fully appreciate

I have to say I wasn't really surprised.

Checking in as the speech ended on a couple of my regular blogs live reactions, I noticed the same one here on a central point of the proposed reforms.


538: "Probably smart, politically speaking, to throw both Wyden-Bennett and single payer under the bus -- but of course, the whole problem on "build[ing] on what works" is that what we have doesn't really work."

Sully: "Classic Obama pivot: describe the right and the left and then say he is in the middle. And the Burkean twist: I believe it makes more sense to build on what works and fix what doesn’t, rather than try to build an entirely new system from scratch."

These two are reacting to the same line (Sully quoted it). The current system has very little which works. So preserving it by making a few (admittedly largely necessary) cosmetic repairs doesn't strike me as a particularly important issue, nor a center position of the left-right. It's a compromise that's better than doing nothing. Most reasonable ideological objections to the amount of intervention of government are based more on the inflexibility or innovation involved in doing so. From what I have seen most economists of the libertarian ilk are resigned to the inevitability of some public investment in this sector. Either in the vein of what we already have (medicare/medicaid/schip) to provide a distributional access to health care to people who cannot afford it, in the interest of public health and general happiness/productivity. Or simply accepting that transferring more generally to taxpayers the costs paid by businesses at present is still a potential improvement over a system that is already so badly lurching around expending tremendous capital and creating a gigantic drag on the competitiveness of both small business entrepreneurship (who cannot always attract the best talent without quality or affordable benefits that their competitors enjoy) and our infamous corporate titans (who can no longer afford the gold standard care they provided so generously). This has more or less been an agreement of people who have studied the issues involved carefully and thought distinctly about it that a serious reform is needed because the current system satisfies no one, costs too much, and will cost even more in future. No doubt it would be difficult, but the problems are at this point best addressed by a firm government action of some kind. If indeed in part because some of them are caused by some of our government actions prior to now. I have not seen that most of what is being proposed is a firm action. Maybe in another generation will end up somewhere where we have something that works. Maybe this will save us some of the time and money needed to make it to that point. I guess those are good reasons to support what is currently on the table.

They are certainly good reasons to see that some sensible ideas for providing what it is that everybody seems to want (namely, a quality and affordable end product of health care) are included if only so that they may be built upon. Baucus's plan has included in it a minor tax on so called Cadillac health care plans. That isn't politically popular (especially with unions), but it seems to me like a perfectly good idea because the average person who has such a plan (besides some union wage earners) can afford to pay for it and gets a substantial tax benefit for receiving this instead of income. It seems dumb to set up a system that requires people to spend their income on health care. So taxing the highest end benefits of employers (instead of wages) is both competitive for small businesses who cannot afford such things and progressively fair on taxation. Do it. It seems to me that this along with two other more trivial things may be a political sop necessary to get the rest passed into law. One is the optional delay on the public option/exchange. This is the supposed bargain needed to get Snowe's approval, combined with a McCain amendment to cover catastrophic problems in the meantime. I think this is a showy move typical of politics, and utterly useless for the bill itself in so far as improving its effect. It provides a fancy cover upon which to judge the effectiveness of a bill until long after it costs legislators something to enact it (by which I mean the time when people will have ceased to care who voted for or against it, in this cases, several years from now). The other is the tagged in position for tort reform, which Republican or conservative leaning policy wonks have insisted is causing massive inefficiencies of its own (libertarians tend to have more of a beef with employer benefits). If this was intended to attract Republican support in any significance, I doubt it will receive any. Though it will be politically useful if it does not. In so far as tort reform can be addressed and needs to be, this is fine if it passes because of a few key political detractors saying its really important. I don't expect it will pay any large dividends for controlling cost and waste (much like the hype and incentives toward preventive medicine). But it will at least serve some useful purposes and is a smart play politically.

One modest critique that occurred to me during the speech itself. His analogy on public versus private higher education made no sense at all, certainly not to explain how this proposed community exchange would function without subsidies as he intended to claim. Public colleges get a tremendous amount of subsidy from all levels of government. Private colleges even get some of course. This might be a good parallel explanation and analogy for how the present health care system works, in that it is often wasting tax payer money to line corporate profit margins or to produce inefficient outcomes in either patient care or university level education and competition, but it didn't explain at all how this proposal wasn't going to be subsidized somewhere. If you were trying to sell a reform by explaining it the way it already "works", you're probably just as confused as the American people at this point. I admit that the various bills can be interpreted as having no specific subsidy poured into the public exchange (ie, people who will be receiving tax credits could just as easily take their tax credit somewhere else, assuming they will want to). But he couldn't have picked a better analogy for it?

To counter my negativity and cynicism over the politics involved I liked this line (so apparently did lots of others) "I don't want to demonize insurance companies--I just want to hold them accountable." Since it looks pretty much the only major reforms involved are in the business practices for insurers operating in bad faith within a specific set of confusing regulatory tangles, monopolistic economics of scale, third party payments, and significant information asymmetry, this is both a great line and a real true political thing that is essential to the reforms at all.

One final point that I caught during the speech but didn't realize had any significance was the heckler over the "insuring illegal immigrants" issue (I wanted to use 4 i's in row there, good times). I wasn't surprised that it happened. There's definitely some goofy people over there in the GOP hierarchy these days. But what I hadn't realized was that it was so entrenched a position that many Republicans choose to voice their opposition in the first place (booing or whatever that was), or that outright heckling of the speech is a traditional non-issue. The Congressman in question was (so far as I know right now) from South Carolina (Joe Wilson). Seems to me we have a bit of history with crazy political ideas and sort of heckling of national policies in South Carolina by now. Sometimes I wonder if we might have been better off if we just let it form their own damn country and see how well off that went without the rest of us paying to support their stupidity in political questions.

While I am no great fan of Pelosi, her reaction to it was classic shock and immediate rage. If nothing else, that guy may expect a whopping good time trying to defend his seat if they can raise somebody halfway competent in South Carolina to run against him. Because I fully expect the Democratic party would fund such a run to the gills after an outburst like that. Watch her in the background.