Archive for August, 2009

The healthcare reform bill being presented by our current administration follows the same thought process as the European and Canadian socialized programs; they are pessimistic with respect to advancements to healthcare and human nature.  In both cases, the focal point is on lowering costs through mandating lower pricing from healthcare providers.  Don’t believe me?  See this quote from Chris Jennings, a health policy expert from the Clinton administration when they were pushing HillaryCare (he is currently assisting the new administration).

“…the power of the public option would come from government’s ability to present doctors and hospitals with a stark choice: accept lower reimbursements or lose access to large numbers of patients.”

So let’s take a step back and think about this.  By wanting to attack the problem of rising costs and lack of complete coverage, our government believes that the best way is to force providers to take less for their goods and services.  In doing so, you will start a cycle of less people going into the field of medicine (since it’s harder to make a dollar doing doctor stuff versus being an electrician) and reduce the future advancements (as capital will go to those areas that offer more promise).

So, I would like us to think optimistically and produce solutions that allow for, and leverage, advancements.  Here are some of my wishes for a reformed healthcare industry.  These ideas are not original to me but those that I have seen presented by others that I find valuable for us to pursue.

1.  Mandate coverage (similar to auto liability as mentioned by a friend) with the intent to offset costs that may be taxing to the healthcare system when costs are pushed to the hospitals and doctors through bad debt (this would be, in my mind, meant to cover the big, expensive stuff like cancer, emergencies, etc), and that it would be delivered through private insurance companies.  This would not be preventative care coverage as I see that as a choice of the individual.  It is an individual’s responsibility to maintain ones health.

2.  Privatize Medicaid by slowly adjusting income qualification levels to be location based (a $44,000 AGI in rural Indiana is completely acceptable to live on, whereas $44,000 in NYC, Boston would not). One way to do this would be for the federal and state governments to go through a bidding process with nationwide insurers, keeping some control.  [The reason I find this important is the amount of expense and inflexibility placed into the system that produces no productive end.  This comes from speaking with hospital administrators and medical professionals that spend upwards of 20% of revenue trying to conform to outdated govt regulations]

3.  Offer a government sponsored (though privately administered) major disability plan (similar to the re-insurance industry) that would act as a supplemental to a regular plan for those with pre-existing conditions.  The way I see it working, it would allow a private insurance contract to be more accurately priced for the chronically ill (as the maximum distribution would be known as the government plan would kick in above some level) for the more preventative care side of healthcare as well as the risks of new ailments.  This would only be offered to those with pre-existing conditions. Also administered through private insurance companies that would have to compete every few years for the business.

4.  Stimulate competition amongst the 1,500 insurers by allowing them to cross state lines, setting the federally mandated standard level of care at the lowest coverage currently offered by the states.  See this study for some good detail.

5.  Reform malpractice laws and payouts.  Having a penalty of $50,000,000 with half of it going to the lawyers is not an effective way of ‘teaching the doctor/hospital a lesson’.  With malpractice insurance composing 15%+ of a procedure’s cost, one needs to rethink how we penalize them for making mistakes or true malpractice.

6.  Don’t allow unlimited tax deductions for health insurance expense, and make the tax code fair (eliminate the favor of deductions given to big businesses).

7.  Revert the FDA back to its original mission: test the safety of new products.  It has turned into an averaging mechanism, where we are getting to more tailored drugs as we refine the technology yet the FDA will not approve based on averages over large samples.  If they were to go back and approve based only on safety, it would allow doctors more flexibility to tailor treatment to the needs of the individual, removing the limited accessibility of potentially helpful drugs.  (from conversations with pharmas, given the genome project, we can invent drugs to target specific DNA types but have problems getting through FDA as they are incapable of setting up useful (and economical) clinical trials (all due to their archaic definition of drug effectiveness)).  With FDA clinical trials representing more than 50% of the drug development costs, this would positively impact the development cycle, both in speed to drug and volume of treatments.

This is a wonderful video on the need to change the educational process.

I’m not an athlete but I do know that the best way to slow down during a race is to turn your head and look at your competitor.  I hear many say that, in the end, it is a race against yourself so push hard and focus on the finish line.  I wish someone would give that advice to our current government.  From our Supreme Court Justices referencing international laws to our current administration looking to Europe for healthcare reform, I see so much time being spent looking at those behind us.

Did I offend anyone?  Sorry, but for those readers outside the US, I hate to be the one to tell you that your nation’s progress toward individual freedom lags the US (there may be argument from Singapore, Australia, NZ, and a few others, but I feel comfortable in defending my statement).  I can’t take credit for it, it’s just a fact that the US fought for independence from tyranny in the late 1700′s and has led the movement against oppression since.  This is the part of the world where those desiring freedom of expression, freedom to succeed or fail, freedom to think as an individual, freedom to pursue unlimited success, etc have come for centuries.  The US has grown to be the largest economy very quickly due to the relatively low barriers placed in our way by the whimsical acts of authoritarians.

So, why is our current administration looking to those that lag for ideas on how to advance our society?  Does Tiger Woods look to the golfer in 30th place and try to copy his swing?  Does Bill Gates try to copy the strategy of the executives of Kodak, Digital Equipment, NCR, or Unisys (for those that aren’t into technology history, those are all failed tech companies)?  No, they are the laggards, the losers.

Whomever was the one to propose the single-payer healthcare plan (aka the government-option, aka co-op plan, aka socialized medicine) should have been laughed out of the room immediately for suggesting something that those that are losing talent (brain drain of UK in the 80′s), that grow much slower than us (Europe GDP has been anemic compared to ours), and that offer little in advancement of personal freedom (class segmentation in UK, France, India) have adopted.  The response should have been “Are you nuts?  Why do we want to go backwards?  We (the nation) have fought long and hard to obtain and maintain our individual rights and you want to suggest we take a step back?  Oppression is oppression no matter what name you give it.  Get Out!”

So, my recommendation to our government, look forward, not backward.  Advance freedom, don’t rescind it.  Leverage the skill and knowledge base that collectively makes up our healthcare society rather than alienating it and risk losing it.

No doubt this will be taken as a scare tactic by those that favor government run healthcare, but examples of this behavior already exist within our country (think of our financial system and how a few people in Washington got to choose which ones survived and which failed, or the automobile companies and which managers were given new powers and which were pushed out by the auto czar).

The article is Klavan’s way of expressing the end that could come about from the government’s desire to control healthcare.  This quote sums up, for me, the attitude that appears pervasive in D.C.

“Free people can treat each other justly, but they can’t make life fair. To get rid of the unfairness among individuals, you have to exercise power over them. The more fairness you want, the more power you need. Thus, all dreams of fairness become dreams of tyranny in the end.”

I read the weekend Wall Street Journal interview of Mrs. Clinton with great interest.  I have written before that I was confused by the current administration’s direction with foreign policy, especially with regards to Latin America, and I was hoping that this article would help me understand their rationale.  Unfortunately, it didn’t speak to Latin America at all (shame on you, WSJ, for not hitting this after all the good articles you have written on this topic).  And, unfortunately (again), she was quoted in ways that make me very nervous.

Before I mention why these quotes made me cringe, I will let you read them below.

“First I think it is important to stress that human rights remain a central driving force of our foreign policy,” she says. “But I also think that it’s important to look at human rights more broadly than it has been defined. Human rights are also the right to a good job and shelter over your head and a chance to send your kids to school and get health care when your wife is pregnant. It’s a much broader agenda. Too often it has gotten narrowed to our detriment.”

and

“I always start from the conviction that countries act from their own self-interest as they define them. Part of diplomacy is to open different definitions of self-interest,” she says.

Ok, now that you read them, let’s take the first one.  Does anyone else find her statements to be contradictory?  If human rights are central to their mission, how can they place some of them (and I will argue that the dominant right is freedom of thought and action) below others?  To state that our administration places good jobs, shelter, education, and healthcare above freedom is very tough for me to swallow.  How is it different than if the North decided to settle with the South when it came to slavery by stating that the South was going to focus more efforts on providing their slaves with a nice shelter (basement or horse stall), a good job (picking produce), schooling (how best to pick the most produce in the 16 hour workday), and healthcare for your pregnant wife (so that the slave owner will have another work-hand in a few years time)?

Implicit in her statement is a failing of respect for the fundamental right to be free.  Something I have mentioned many, many times is the sickness of the current administration to focus on ends rather than means.  She will succeed at getting an agreement from Syria, Iran, North Korea, China, or Russia that states that they will lower their carbon emissions, add more aid to build schools, or whatever so that she can then claim victory in advancing human rights.  But she will be fooling herself and others.  She has accomplished nothing other than legitimizing dictators since they can at any time withdrawal the “gifts” they have given to their subjects.

Moving on to the second quote, she shows her hand by suggesting that countries act from their own self-interests.  It’s not countries, its the current despots, dictators, monarchs that act from their own self-interests.  As long as our government recognizes them and diverts the discussion away from advancing individual freedoms, these rulers strengthen their position in their country and increase their control over their people.

This interview just added to the concern that I have that our current administration either doesn’t understand the fundamental right to be free or, worse, doesn’t agree with it.

This the first of a many part post concerning value.  With the US going through the healthcare reform discussion, Europe looking to stimulate job growth through government spending, and everyone talking about the end of capitalism (the only economic system that can form the foundation of individual liberty-based ecosystems), I find myself reading way too many articles that neglect basic truths about money.  So here is my attempt at laying out some of those basics.

What is money and why do we have it?  Money is meant to be a store of value.  Instead of carrying a bag of corn around or having live chickens in your trunk, our society has collectively decided that we all will honor the basic premise that a piece of paper (called a dollar in the US) can act as a means of paying for goods and services.  Imagine if we hadn’t arrived at agreeing on a proxy for value and remained stuck in trading hard goods and services directly for other hard goods and services.  I would have to find that one person that has the pork lard I want and needs the chickens I have (yes, most of my understanding of currency comes from watching Gunsmoke and F-Troop).

With the very basic understanding that currencies act as a store of value that can more easily be exchanged, we need to understand the word ‘value.’  For me, value is the difference between the cost of a good or service and that which someone will be willing to pay for that good or service.  Wait, you say, you described value as the profit of a good or service, not the actual price.  Yes, I did.  The price of a good or service is the aggregation of all the profits (i.e. value) that were achieved in order to arrive at the final good or service.

The inherent value of something is directly tied to the amount of pain/friction/discomfort that is alleviated when it is applied to a particular situation.  Implicit in that statement is the understanding that the value of a good or service is different for each individual.  Actually, it will vary depending on a lot of different factors.  Take a knife as an example.  The actual price of a knife will depend on the costs to get the basic materials and the costs of labor, electricity, etc to arrive at it’s final form.  The value of that knife will vary depending on the person and the environment she is in.

Continuing with the knife example, imagine a person dropped into a jungle with nothing, I would hazard a guess that a knife would carry a greater value to her than if she were dropped into an all-you-can-eat Vegas buffet.  And, while in the jungle, I expect that the value of the third knife would drop considerably as she only has 2 hands.

To summarize the example above; material goods and services carry value only to those  that find value in them and that the amount of value is dynamic; varying with the individual’s needs, situations, and skillsets.