March 31, 2010
Are you kidding me? I’m sure the CBO has more than its share of serious, well-meaning bureaucrats, but the fact is that even for the most serious, well-meaning bureaucrat in the world (and even rocket scentists and most psychics, for that matter), predicting the future is next to impossible. And trying to predict how much a proposed transformation of one-sixth of the economy will cost over the next ten years is insane.
Don’t believe me? Take a look at the numbers the CBO has come up with regarding a program infinitely simpler than health care: the TARP bailout. It’s a $700 billion program, signed into law in October, 2008, that essentially involved the government buying bank preferreds and warrants. The program couldn’t be more straightforward. The CBO knows the terms and coupon of the preferred. Valuing warrants isn’t especially difficult. All the CBO needs to do is estimate who will repay, and when, and who will default.
As I say, simple. And yet have you seen the numbers the CBO has come up with? Last week the agency provided at least its third update on what it thinks TARP will cost. In just less than 18 months, the CBO’s estimate has gone from as high as $356 billion to as low as $99 billion. The most recent guesstimate: $109 billion. Not exactly confidence-inspiring! If the CBO can’t cost out the TARP in the near term, why should anyone think the agency can come up with a remotely accurate ten-year forecast of how a project as large and complex as health care reform will play out?
By Murray Chass
March 25, 2010
......If Mauer were a Boras client, he would not have signed that contract. But then, he wouldn’t have chosen Boras as his agent.
Agents have track records, and players gravitate to the agent whose negotiating style suits their needs and desires. If they want to get every last dollar, don’t mind putting up with possible controversy and aggravation, don’t care how long it takes and don’t care where they play, hire Boras. If they care about where they and their family will be happiest and most comfortable and will settle for less than the absolute last dollar, go with Shapiro.
Mark Shapiro may be biased. Ron’s son, Mark is a Princeton graduate and general manager of the Cleveland Indians. He has dealt with all of the agents.
“His distinguishing factor,” Mark said, “is he considers himself an advocate of the player first. He seeks to do the best job for the player in the context of satisfying what he wants. In today’s game that’s not always the case. Some agents put client recruitment ahead of what the player really wants. They seek the best deal regardless of what the best fit is.
“Every single deal they do is a platform for the next client. How will this be viewed in the industry?”
.......Shapiro thinks it’s possible that Mauer could have exceeded that figure, speculating that had the Yankees and the Red Sox become involved, $30 million a year for 10 years might have been possible. But all speculation is irrelevant because Mauer wanted to remain in Minnesota.
“Joe had information from me about potential contracts,” Shapiro said, “and it was pretty clear to me he might be tempted to test the water. But in his heart he had a desire to play it out in the way Cal did in Baltimore and Kirby in Minnesota.”
How then does an agent proceed to achieve that goal while making sure his client is not shortchanged? Doesn’t it make the agent’s job more difficult?
“It makes it more difficult only in one sense,” Shapiro said. “It takes much more of an effort to negotiate with the club in this circumstance. It’s not a regular marketplace. I support the theory there is always an irrational bidder. There’s always someone who will step in and create a new marketplace without any effort on our part.”
......Before initiating discussions with the team of the player who wants to stay, Shapiro said, “you determine if a player is willing to go elsewhere if the club isn’t willing to give him proper value.”
“The club,” Shapiro added, “knows or suspects he wants to be there, but he has already decided if it’s not a fair deal it won’t be a deal.”
Beyond establishing ground rules with the player, Shapiro said, “you prepare like you do for anything. You get the client ready to withdraw from the process so his emotions aren’t going up and down if things aren’t going well. You work with the client to understand a fair deal is a deal that satisfies him but is not a high end irrational market deal.”
........Shapiro said the two sides “probably had two points of frustration.” But, he said, “I operate on the glass-half-full theory so no matter how negative it looks there’s a way out. We told Joe it might go into the season and wanted to find out if he would be willing to go into the marketplace.”
.......“I was reflecting with my partner Michael Maas,” Shapiro said. “People are saying ‘wow, you did this, you did that.’ All we did was spend a lot of time with our client and understand what was happiness in their negotiation, not focus on dollars. That doesn’t mean we aren’t going to try to get the dollars up. But in the end we have the satisfaction of having our players play where they are happiest.”
It is that states can be laboratories where the country experiments to ascertain which mix of taxes, incentives and public administration works best when it comes to health care.
Obamacare threatens such experiments by superseding them. In doing so, the new federal program deprives the country not only of the experiments themselves but also of evidence that might cast doubt on the promises of the new legislation.
In few states is the change as dramatic as in Indiana. Several years ago Republican Governor Mitch Daniels and the legislature began wondering about the same questions that preoccupied the framers of Obama’s health-care plan: why so many of the uninsured mob hospital emergency rooms, why citizens turn their backs on preventive medicine, why health-care spending expands, and how you get Americans to be aware of health-care costs.
In response, Daniels’s team created the Healthy Indiana Plan, known as HIP. It was billed as subsidized insurance for low- and middle-income Hoosiers: citizens who suffer from catastrophically expensive illnesses get coverage subsidized by state and federal dollars. The state doubled cigarette taxes to pay for it all.
But Healthy Indiana features a few other interesting traits. Joining was voluntary. Participants pay a penalty co-pay if they use an emergency-room for routine health-care needs.
In addition, as part of HIP, the state created a health spending account of $1,100 per adult to be used for basic medical needs and preventive care. At the end of the year, patients can roll over what remains in the account. If they have a record of seeking appropriate preventive care, they may also get additional cash from the state for their health needs. Those who don’t get the preventive care do not get those funds.
In its two-year life, Healthy Indiana has proven popular, with some 60,000 Hoosiers enrolling. Ninety nine percent said they would re-enroll.
The preventive component seems to work: Adult HIP members use emergency rooms at a lower rate than adults on standard Indiana Medicaid. They use generic drugs more frequently than the commercially insured. The program hasn’t busted the budget. Some three-fourths of HIP enrollees say they are more likely to seek preventive services. In a state where one in four adults is obese, this is perhaps the most interesting news of all.
........Now Healthy Indiana will be overwhelmed by Obamacare, which will have little regard for individual budgeting and incentives. Perhaps Medicaid administrators will cut off the cash that has flowed to Healthy Indiana. Or perhaps the insurance that Obamacare offers will be more attractive and woo away HIP’s volunteers. Healthy Indiana may survive in name. But the experiment, isolating the effect of a certain incentive upon a certain problem, has been aborted.
I happened to be in the Indiana state house the week that it became clear the president’s plan would become law. Unsure of future funding, Daniels was already freezing new enrollment for the plan. Daniels points out that the federal law will force tax increases at the state level in Indiana and elsewhere. That’s because the federal law effectively mandates expansion of Medicaid, whose costs the states help foot.
........What about other state experiments? The most obvious is Massachusetts and the plan adopted in 2006 under former Republican Governor Mitt Romney. Romneycare resembles the new federal law in that its emphasis is on mandating insurance. Like Obamacare, the Massachusetts plan creates an exchange where customers can buy plans cheaply. It also offers subsidies, of course.
The news on Romneycare has been mixed. On the one hand, more citizens are covered now. On the other hand, the price was out of sight. Massachusetts’s shortfalls are so troubling that this month State Treasurer Timothy Cahill called Romneycare a “train wreck.” Cahill is now under attack for exaggerating the program’s costs. But others also note the cost increase. The Pioneer Institute, a non-partisan think tank in Boston, for example, estimates that the state is spending $360 million more in 2010 than it spent on health in 2006, a greater increase than many expected.
March 29, 2010
.....The U.S. government already spreads the wealth around with abandon. Obama’s efforts are just a continuation and magnification of that lamentable practice.
Look at the health bill. In its use of taxpayer dollars to subsidize insurance for those with lower incomes, it follows many other government policies that steer government spending toward the poor.
In a study published in 2007, the Tax Foundation examined the tax burdens and government spending receipts across income groups. It found that for every dollar it sent to Washington, the lowest quintile of the income distribution received $14.76 in government spending. By comparison, the highest quintile --at that time, those making more than $99,500 -- received just 32 cents for every dollar paid in federal taxes.
........Relying on data from the Tax Policy Center, I looked at how the current system differs from a hypothetical one in which taxes you pay are in proportion to the income you make. My calculations indicate that under current law about 52 percent of the revenue from federal taxes comes from redistributive taxation -- that is, tax rates and policies that don’t apply uniformly to all taxpayers. Under Obama’s proposed 2011 budget, this number increases to about 55 percent. And much of the health-care redistribution doesn’t show up until later.
March 26, 2010
To: Bryan Moynihan,
CEO, Bank of America
Dear Mr. Moynihan,
I awoke this morning to read that Bank of America intends to begin forgiving mortgage principal for delinquent borrowers. I am writing to inform you that I will never bank with your firm ever again.
Principal forgiveness is an affront to every responsible, non-delinquent borrower in your book of assets. Not only is the federal reserve subsidizing the replenishment of your bank's capital by confiscating yield from savers/depositors so you can earn monstrous spreads on your loan book, but now you are rewarding those who bit off more than they could chew, while those who did not take on excess leverage, or who kept their income-to-debt ratios manageable, see no benefit, even as their home equity values have declined. Even worse, you are denying savers who sit in the cash market the opportunity to purchase inventory from the delinquent.
Capitalism should migrate assets from the weak to the strong, not the contrary. If you want to mitigate your loan losses, I suggest you advance an organized short-selling process to mitigate the expense of foreclosure, and to discover the fair market value of your delinquent assets. But for me, allowing those who are delinquent to now benefit from their financial excesses is a despicable solution that ignores the integrity and responsibility of those who actually finance the lion's share of your earnings: those who don't default.
Moral hazard be damned. Count me as one future cashflow stream you will never see again!
1. Minor league batting statistics will predict major league batting performance with essentially the same reliability as previous major league statistics.
2. Talent in baseball is not normally distributed. It is a pyramid. For every player who is 10 percent above the average player, there are probably twenty players who are 10 pecent below average.
3. What a player hits in one ballpark may be radically different from what he would hit in another.
4. Ballplayers, as a group, reach their peak value much earlier and decline much more rapidly than people believe.
5. Players taken in the June draft coming out of college (or with at least two years of college) perform dramatically better than players drafted out of high school.
6. The chance of getting a good player with a high draft pick is substantial enough that it is clearly a disastrous strategy to give up a first round draft choice to sign a mediocre free agent. (see note #1)
7. A power pitcher has a dramatically higher expectation for future wins than does a finesse pitcher of the same age and ability.
8. Single season won-lost records have almost no value as an indicator of a pitcher's contribution to a team.
9. The largest variable determining how many runs a team will score is how many times they get their leadoff man on base.
10. A great deal of what is perceived as being pitching is in fact defense.
11. True shortage of talent almost never occurs at the left end of the defensive spectrum. (see note #2)
12. Rightward shifts along the defensive spectrum almost never work. (see note #2)
13. Our idea of what makes a team good on artificial turf is not supported by any research.
14. When a team improves sharply one season they will almost always decline in the next.
15. The platoon differential is real and virtually universal
From today's WSJ:
As if governors these days don't have enough on their plates. Now that ObamaCare has become law, there's a whole new to-do list for my state:
1) Plan for the termination of our Healthy Indiana Plan. This is the program that's currently providing health insurance to 50,000 low-income Hoosiers. With its health savings account-style personal accounts, it has been enormously popular among its participants. I hope those folks will do all right when they are pitched into Medicaid.
2) Start preparing voters for a state tax increase. The axe won't fall until someone else is governor. But when we are forced to expand Medicaid to one in every four citizens, the cost will add several hundred million dollars to the budget.
3) Check to see if Indiana should drop its health insurance plans and dump its government workers into the exchanges. Paying the new tax penalty might actually be cheaper for the state, as it will be for many private firms. I'm not certain the same rule applies to government as to business, but since no member of Congress read this entire bill before the vote, I don't feel embarrassed about not knowing.
4) Ramp up our job retraining programs to handle those who will be fired by our medical device companies, student loan providers, and small businesses as they wrestle with new taxes, penalties, or in the student loan case, outright nationalization of their business.
5) Call the state's attorney general to see if we can join one of the lawsuits to overturn ObamaCare. Yes, it's a long shot. But why not try?
6) Investigate an offset to all this extra cost. We may no longer need the Department of Insurance since insurers will now be operating as regulated utilities under the thumb of the federal government.
It's discouraging that all of this could have been avoided. Congress could have done what Republicans should suggest now: Shift to a system that allows individuals—not businesses—to buy health insurance tax free. They could also create tax credits for buying health insurance based on income and health status to guarantee everyone coverage and encourage medical care and insurance competition. Republicans should push to lower barriers for buying insurance across state lines, create incentives for states to repeal mandates, and limit frivolous lawsuits that increase the price of insurance.
But for the moment, our federal overlords have ruled. We better start adjusting to our new status as good Europeans.
Mr. Daniels, a Republican, is governor of Indiana.
March 25, 2010
…For the moment let me point out three small problems with the “We made God” hypothesis. First, it falls into the very same trap that the atheist cunningly sets when he asks, “If God made everything, who made God?” Because when he confidently declares that we made God it must then be asked, “If we made God, who made us?” Since the answer “God made us” is obviously excluded ab initio, the question “Who made us?” is no more answerable than “Who made God?” Just to replay, “Evolution made us” simply will not do. As Scott Adams has observed, “Evolution isn’t a cause of anything; it’s an observation, a way of putting things in categories. Evolution says nothing about causes.” Or to put it more simply, if evolution made us, who made evolution?
The atheist will no doubt replay that evolution is simply the way nature works; it is just part of the “everything” that theists wrongly attribute to God. But the logic of this contention leads us in an unexpected direction – that I’ve written a diminutive one-act play to prove it.
[On stage three people: “theist,” “first atheist” and “second atheist” engaged in an argument. Enter left “enquirer” wearing a duffle coast and a puzzled expression.]
Enquirer: Excuse me interrupting, but can you tell me who made everything?
Theist: Yes; God made everything.
First atheist: Oh? So who made God?
Second atheist: We made God.
Theist: Then who made us?
First atheist: Evolution made us.
Theist: Who made evolution?
Second atheist: It’s part of everything; “everything” made evolution.
Enquirer: Excuse me interrupting…but who made everything? Oh, never mind.
[Enquirer exits left (the way he came in) wearing an even more puzzled expression.]
…A philosophical argument that ends up where it started is even more pointless – and such, as out little drama indicates, is the claim that “We made God.”
The second problem with this contention is that it is devoid of any evidential basis, as we shall see in due course. It is not, in fact, an explanation at all. It doesn’t explain religious concepts, religious experience or the almost universal religious instinct of mankind, ancient or modern. Rather, it is a smokescreen concealing ignorance, a speculative shrug of the shoulders concerning the substantial phenomenon of religious belief. Like many atheistic arguments, it is at heart a tautology. Beginning with the hidden premise that God does not exist objectively, it looks for (and finds) an alternative explanation of religious faith and experience entirely within ourselves. It then reasons as follows: since God definitely exists in the minds of those who believe, and since God does not exist otherwise, then God must exist only in the minds of those who believe. Bingo! We made God.
Thirdly, whenever A makes B (and whatever A and B might represent) it is reasonable to assume that A (the creator) is greater than B (the creation). Beethoven was greater than any of his compositions and Rembrandt, Turner or Picasso greater than any of their pictures. When my wife makes a cake, however well it turns out, it is soon gone – a thing of transience and insignificance in comparison with the once who made it. But if man fashions a transcendent and all-powerful God out of his own imagination, the creation is greater than the creator – which, while not proving the existence of God, takes a lot f explaining. I accept that my reasoning here is ontological in character but it remains valid, I thin, as a refutation of the “Who made God” hypothesis. After all, Richard Dawkins argues strenuously that a God who made the hugely complex universe must be even more complex than his creation…. I assume I’m allowed to say the same thing when it’s a case of man allegedly creating God.
March 24, 2010
March 23, 2010
The sections described below are taken from HR 3590 as agreed to by the Senate and from the reconciliation bill as displayed by the Rules Committee.
1. You are young and don’t want health insurance? You are starting up a small business and need to minimize expenses, and one way to do that is to forego health insurance? Tough. You have to pay $750 annually for the “privilege.” (Section 1501)
2. You are young and healthy and want to pay for insurance that reflects that status? Tough. You’ll have to pay for premiums that cover not only you, but also the guy who smokes three packs a day, drink a gallon of whiskey and eats chicken fat off the floor. That’s because insurance companies will no longer be able to underwrite on the basis of a person’s health status. (Section 2701).
.....4. Think you’d like a policy that is cheaper because it doesn’t cover preventive care or requires cost-sharing for such care? Tough. Health insurers will no longer be able to offer policies that do not cover preventive services or offer them with cost-sharing, even if that’s what the customer wants. (Section 2712).
......11. If you are a physician and you don’t want the government looking over your shoulder? Tough. The Secretary of Health and Human Services is authorized to use your claims data to issue you reports that measure the resources you use, provide information on the quality of care you provide, and compare the resources you use to those used by other physicians. Of course, this will all be just for informational purposes. It’s not like the government will ever use it to intervene in your practice and patients’ care. Of course not. (Section 3003 (i))
12. If you are a physician and you want to own your own hospital, you must be an owner and have a “Medicare provider agreement” by Feb. 1, 2010. (Dec. 31, 2010 in the reconciliation changes.) If you didn’t have those by then, you are out of luck. (Section 6001 (i) (1) (A)).
.....14. You are a health insurer and you want to raise premiums to meet costs? Well, if that increase is deemed “unreasonable” by the Secretary of Health and Human Services it will be subject to review and can be denied. (Section 1003)
.......19. You will have to pay an additional 0.5% payroll tax on any dollar you make over $250,000 if you file a joint return and $200,000 if you file an individual return. What? You think you know how to spend the money you earned better than the government? Tough. (Section 9015).That amount will rise to a 3.8% tax if reconciliation passes. It will also apply to investment income, estates, and trusts. You think you know how to spend the money you earned better than the government? Like you need to ask. (Section 1402).