Health Insurance Exchanges: An Overlooked Key to Reform’s Success — Ezra Klein – Good explanation of the exchanges, but the real gold is the first two paragraphs, which get back to my point about Bill Clinton’s dilemma health care reform: much-needed fundamental change for a population that only grudgingly accepts incremental change. Of course, Klein frames it even better than I did. Also, risk adjustment is very important because it puts the proper incentives in place. Here’s a good explanation by Robert Kuttner: “Risk adjustment refers to the adjustment of payments to health plans (or to doctors) to reflect more accurately the actual health status or recent medical experience of patients. […] If plans receive the same unadjusted premium for each subscriber, then the plan with healthier members reaps an unearned windfall, whereas plans with sicker populations of patients face unfair losses.” This also helps resolve concerns about community rating (see below).
Wars, Plagues, and Europe’s Rise to Riches — Nico Voigtländer & Hans-Joachim Voth – This is disturbing but interesting. For those unfamiliar with Thomas Malthus, he basically said that the population would eventually grow too large for the land and resources to support everyone, and we’d eventually suffer greater poverty, etc. He had the misfortune of making this prediction just as the Scientific Revolution was getting started, which would lead to the Industrial Revolution and the modern economy, which looks nothing like the Malthusian economy because technology continually increases our standard of living. Malthus was correct, however, in describing the pre-modern world. The reason, these authors argue, that incomes stayed as high as they did for as long as they did despite the constraints described by Malthus is that wars and disease killed off enough people at a frequent enough pace for the remaining people to enjoy more of the limited resources per person.
Odds Against Nuclear Disarmament — Charles V. Peña – Quote of the day: “Since the end of the Cold War marked by the opening of the Berlin Wall in 1989, the United States has engaged in nine major military operations, but only one of those – Operation Enduring Freedom – was unambiguously in response to a direct threat to the United States. This is a powerful incentive for countries such as Iran and North Korea to acquire nuclear weapons as the only reliable deterrent against U.S. invasion. As long as the United States continues to have an interventionist foreign policy (and the Obama administration has not overseen a sea change in U.S. foreign policy), it will be next to impossible to prevent proliferation.”
First, Make No Mistakes — Jim Hall – This is a good plea, but it really should be bundled into IMAC. Remember that most medical errors are a derivative of the way we pay for our medical services — overtreatment leads to greater chance of error.
Krugman Blames Adverse Selection Problem on Government Regulation — Bryan Caplan – I owe it to Caplan to note that he was right from the beginning (which I never denied). He was saying that, because of government regulation, adverse selection does not occur as much as it would in the free market, which Paul Krugman and Tyler Cowen proved in recent posts (see my commentary yesterday). And, to bring this all full circle, the point still remains that private insurers spend a lot of money to overcome adverse selection (but mostly in markets without community rating regulations). Community rating therefore reduces the overall cost to society, as does a public plan. The consumers who may be hurt are low-risk consumers who would have to pay more than their expected future health care costs, but the public plan and subsidies for low-income families go a long way toward resolving that problem.
Paralysis by Analysis — Bruce Vladeck – Very good history to keep in mind. This also goes back to my point about Waxman-Markey that the intangible (and secondary and tertiary) benefits are usually higher than expected because they’re so difficult to measure (e.g., doing X gives us the option to do Y in the future, which is an even more profitable investment); the same applies to health care reform (and, as I mentioned yesterday, transportation and infrastructure). Also, for those who have a problem with the moral argument of covering the uninsured, keep in mind Vladeck’s quote that “the absence of health insurance kills 18,000-20,000 Americans a year.” That’s 6-7 9/11’s, and think of all the money we spent in a moral crusade (yes, much of it was based on national security concerns for future, larger attacks) to revenge just one 9/11.