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On the Horizon "After Obamacare"

Many of us have talked about bending the healthcare cost curve by changing the services for fee healthcare cost model to a model of better outcomes for those fees. This is precisely what the PPACA does. Phillip Longman based his book “Best Care Anywhere” on how the VA brought about such a change in the rendering of services to the nation’s veterans. Much of the cost savings today will come from a consolidated healthcare industry delivering healthcare more efficiently and at lower costs. STR has pointed out a few times without explanation the issue of consolidation within the healthcare industry, which if left unchecked, will cause its cost to increase. Both Phillip Longman and Paul Hewitt in a Washington Monthly article take-on the issue of healthcare industry consolidation “After Obamacare” and the monopolistic results. A keynote finding points to the future of America’s healthcare unless certain actions take place outside of the PPACA or whatever evolves.

“A frenzy of hospital mergers could leave the typical American family spending 50 percent of its income on health care within ten years – and blaming the Democrats. The solution requires banning price discrimination by monopolistic hospitals.”

As it stands and even with its faults, the PPACA is a viable solution to many of the issues faced by many of the uninsured and under insured; but in itself, it only addresses the delivery half of the healthcare problem. The other half of the problem rests with the industry delivering the healthcare and the control of pricing through the inherent monopolistic power coming and pushing the industry into greater integration of delivery. As Longman and Hewitt posit, “the message from Department of Health and Human Services stresses the vast savings possible through a less ‘fragmented’ and more ‘integrated’ health care delivery system. With this vision in mind, HHS officials have been encouraging health care providers to merge into so-called accountable care organizations, or ACOs”; while on the other side of Mall, “pronouncements from the FTC are about the need to counter the record numbers of hospitals and doctors’ practices that are merging and using their resulting monopoly power to drive up prices.

This is not solely the result of the PPACA implementation as it has been going over the last decade and has increased in intensity with the signing of the PPACA.

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Announced Hospital Consolidations by Year

The result is a lessening of competition in and about major cities. The Herfindahl-Hirschman Index (HHI) was used to measure competition in and around cities. The results of the HHI revealed an increase in the concentration of hospitals from mergers and acquisitions. Going from moderately concentrated in 1990 with an HHI numeric of 1570; the concentration can be described as highly concentrated in 2009 with a HHI of 2500 and some cities purely monopolistic at 10,000.

Today, much of the struggle exists between the providers of healthcare and the buyers of healthcare. Before the PPACA, this was broken down between the uninsured, the healthcare insurance companies, and the doctors, clinics, and hospitals. With little power, the uninsured absorbed the highest prices while the insured and the providers battled it out with the larger and more powerful of the two getting the better of the negotiation. Today and with the PPACA, many of the uninsured are insured with just the citizens of states not expanding Medicaid at risk. With growing consolidation of provider, the balance of power is shifting towards providers as competition lessens amongst them and they supersede the size of the buyers of healthcare. With the greater concentration of hospital and doctor networks come the higher prices often as high as 20% and sometimes higher. You can witness this phenomenon today with some of the well-known hospitals being able to demand higher fees from insurance companies and in concentrated markets.

– “Berkeley health care economist James C. Robinson studied the prices hospitals charge insurance companies (and, by extension, insured patients) for different procedures. In concentrated markets, the price for a pacemaker insertion averages $47,477; but in markets that remain comparatively competitive, the cost of the procedure averages $30,399.”

“in concentrated markets, the average hospital makes a return of $20,000 above its direct costs on every angioplasty it performs. But in more competitive markets, while the margin is still astoundingly high, at $10,900, it is nonetheless 90 percent less than in concentrated markets.”

– “Massachusetts Attorney General Martha Coakley subpoenaed claims data (reflecting negotiated prices) and contracts from health plans and providers in her state. By examining the behavior of individual hospitals and physician practice groups, a strong link between market concentration and price was established. Within markets, prices charged for the same services typically varied by 200 percent or more. This variation correlated almost exclusively with ‘leverage’ – the relative market position of the provider.”

Very much my own experience between two hospitals reveals similar pricing inconsistencies. One out-of-town hospital in the top 5% for cardiac procedures; billed me for 8 days of hospitalization, catheterization, surgery and the associated doctors, radiologists, and nurses besides home care resulted at ~$80,000. Returning home and going to a major well known local hospital for a hospital walk-about of my heart (catheterization) resulted in a bill of $16,000 for a stay of less than a day, a cardiologist, and a couple of nurses beating me up as I wanted to leave (they took good care of me). One year later and I still do not feel 100%. In any case, the fees would have been lower in the out of town hospital. Why?

So what is the solution if the PPACA will not resolve it and the industry balks at controlling pricing? The authors, Phillip Longman and Paul Hewitt, propose rigorous action by the FTC; however, the FTC has in place a staff 22 lawyers and economists monitoring a $3 trillion industry. It is understaffed to take on such a large industry which would overwhelm it with legalese and paper.

Larger scale (and) integrated healthcare systems can (will) lead to better quality outcomes and efficiencies overcoming today’s fragmented healthcare system – “of specialists ordering up redundant tests and contraindicated drugs as they each treat one body part at a time, often with costly treatments of dubious effectiveness.” Promoting the integration of healthcare systems making them larger in scope also runs the risk of pricing abuse by the industry as evidenced today. In Maryland, pricing established by a review board has lowered costs from a high of 26% over the national average in 1976 to 4% less than the national average today. Maryland also has generous Medicare payments as set by an AMA committee, which has been blamed for lower costs experienced on the commercial side. Providers with their hand still opening the till for their own kind.

Bureaucrats establishing pricing is acceptable in some places; but then, there are those who believe their freedom is impinged upon by government keeping a watchful eye on business which the impinged upon have no control over anyway. If you do not believe so, attempt to negotiate your pending care in an emergency. You will be unconscious or dead first and will receive the care in such a state. The authors go on to suggest a hybrid regime of better antitrust enforcement tied to a “common carrier” methodology.

A common carrier offers its services to the general public under license or authority provided by a regulatory body. The regulatory body has usually been granted ‘ministerial authority’ by the legislation created by it. The regulatory body may create, interpret, and enforce its regulations upon the common carrier (subject to judicial review) with independence and finality, as long as it acts within the bounds of the enabling legislation.”

This moves the competition to delivering the best product or service as opposed to leveraging market power to the market place due to size of the company. A similar methodology was used to prevent monopolistic railroads from offering better rates to other monopolistic enterprises such as Standard Oil and US Steel. Recently, courts used the same methodology with Microsoft. Historically same is being used in the transportation of oil, in phone service, internet, etc. Prices must be the same for the same service.

A similar logic should apply to healthcare. Nowhere does it makes sense that some providers are offered special rates by buyers when the service provided is the same.

“Uwe Reinhardt and other health care economists have noted, in this realm charging different people radically different prices for the same procedures does not even in theory lead to greater efficiency or lower prices. Rather, it just wastes enormous resources as different parties scheme to shift costs onto one another (buyers of service) through secret, special deals.”

In the end, it does not cost a hospital or a doctor to scan a patient through a CAT, X-Ray a patient, do a urine or blood test whether that person has insurance or not. So what makes sense for increasingly consolidated hospitals, doctors and clinics?

If for example, a market threshold was established setting the number of beds or doctors within a locality as controlled by a business was exceeded; that hospital and/or business might have to make public its pricing for all procedures and services to the general public which is already established on the establishment charge master. All customers whether insured or not or out of network would pay the same fees. Affiliated and independent doctors would also pay the same overhead charges. In effect, hospitals and doctors organizations would be similar to public utilities and a basic part of the community infrastructure.

Those organizations of doctors or hospitals which did not meet common carrier thresholds would be free to set their own pricing giving way to competition between common carriers and themselves in pricing, services, and procedures. The over ruling authority as to monopolistic tendencies would remain the FTC. The FTC would warrant competition between providers within certain areas.

References:

After Obamacare, Phillip Longman and Paul S. Hewitt, Washington Monthly January/February 2014

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Sunday Reads

The 1% are Still Stealing Our Homes Hat Tip Crooks and Liars Diane Sweet

Following the bank’s instructions, Laura and her partner missed three months of their mortgage payments to qualify for a loan modification. But instead of working with the family, Bank of America put the home in foreclosure, using the highly controversial process of “dual tracking” in which banks simultaneously put families in the process of modifying their loans and put the loan in the foreclosure pipeline.

In Laura’s case — as with so many other homeowners across the country — the foreclosure process won.

Her home was sold at an auction and bought back by the government-owned mortgage giant Fannie Mae — which then allowed a private equity firm, The Cogsville Group, to buy the right to manage her house and collect rent from the family. But when her home flooded this past spring, the company did not help her with clean up, mold remediation or repairs.

100% Of New Power Capacity in US Came from Renewable Energy In November (2nd Month 2013) Hat Tip Crooks and Liars

Here are the full details from FERC on the split for November:

•0 natural gas power plants placed into service = 0 MW
•0 oil power plants placed into service = 0 MW
•0 coal power plants placed into service = 0 MW
•0 nuclear power plants placed into service = 0 MW
•0 waste heat power plants placed into service = 0 MW
•1 water power plant placed into service = 4 MW
•4 wind power plants placed into service = 81 MW
•1 geothermal steam power plant placed into service = 25 MW
•8 biomass power plants placed into service = 108 MW
•14 solar power plants placed into service = 177 MW

Bad news for the GOP and possible good news for average Americans Hat Tip Digsby

House Republicans, including Speaker John Boehner, face a sharp backlash from voters for pushing a budget deal that denies the extension of unemployment benefits for 1.3 million Americans past Dec. 28, according to a collection of polls being released Monday.

In Boehner’s Ohio district, for example, 63 percent of voters support extending the benefits, 34 percent don’t. As part of the budget compromise and at the urging of the GOP, the benefits were not extended.

Chart ‘o the decade Hat Tip Digsby

Chart of the Decade

Digsby: I’ll just note one little thing and then move along. The 1981, 1990 and 2001 recession recoveries all happened under Republican presidents. And a Democratic congress . . .

Americans Surprisingly Supportive of Unemployment Insurance Hat Tip Washington Monthly Ryan Cooper

With conservatives’ bitter hatred for any government spending on the lower 80 percent or so of the income ladder, and the public’s approval of Congress falling into the single digits, one could be forgiven for thinking that regular people aren’t too concerned with unemployment insurance.
But a small set of polls from PPP shows that is not exactly the case. They took some measurements in four Republican-held swing districts, as well as John Boehner’s district. Here’s what they found:

Support for Unemployment Benefits

How Sotomayor undermined Obama’s NSA Hat Tip Washington Monthly for pointing to this MSNBC article

If Edward Snowden gave federal courts the means to declare the National Security Agency’s data-gathering unconstitutional, Sonia Sotomayor showed them how.

It was Sotomayor’s lonely concurrence in U.S. v Jones, a case involving warrantless use of a GPS tracker on a suspect’s car, that the George W. Bush-appointed Judge Richard Leon relied on when he ruled that the program was likely unconstitutional last week. It was that same concurrence the White House appointed review board on surveillance policy cited when it concluded government surveillance should be scaled back.

“It may be necessary to reconsider the premise that an individual has no reasonable expectation of privacy in information voluntarily disclosed to third parties,” Sotomayor wrote in 2012. “This approach is ill suited to the digital age, in which people reveal a great deal of information about themselves to third parties in the course of carrying out mundane tasks.”

Health Care Is Expensive In This Country Hat Tip Atrios

The NYT’s perpetual pity party for its affluent readership is genuinely annoying.

And, yes, Obamacare isn’t perfect and the subsidies aren’t generous enough. But here are the options to make it better:
1) Nationalize the health care system (or much of it) as the NHS was, at least before the Tories started wrecking it.
2) Have a single payer insurance system in which the government doesn’t run the medical system, but essentially sets the rates (and is empowered to do so).
3) Increase the subsidies in Obamacare, so that the not-quite-rich-enough also have taxpayers pay for at least part of their insurance bill, and the insurance companies can continue to take their pointless cut.

1) and 2) will help to control actual costs if done right, while 3) will just spread it around differently.

This Is the Golden Age of Deficit Reduction Hat Tip Daniel Gross at The Daily Beast

As Washington chewed over the Paul Ryan-Patty Murray budget deal, the Treasury Department announced a walloping drop in red ink. Turns out government didn’t need a “grand bargain” to get its fiscal house in order.

The Murray-Ryan budget deal was anti-climactic. After all this—three years of failed grand bargain talks, the sequester, a shutdown—we have a deal that will cut deficits by a grand total of $22 billion over ten years. No wonder the Tea Party crowd is incensed. Yet the outrage over the federal debt—$17 trillion and rising—won’t stand in the way of this deal. That’s because, thanks in part to the sequester; but thanks largely to the miracle of sustained growth, the annual deficit is shriveling.

Homeless Couple Gets A Home On Christmas Eve, Thanks To Innovative ‘Occupy’ Group Hat Tip to Think Progress – Scott Keyes

run75441: I raised my family in Mad-City, Wisconsin, a liberal enclave amongst a sea of conservatism. We always found a way to do something positive in the city. Red vested Gov. Dreyfus once described Madison, WI “Madison is 30 square miles surrounded by reality.” It appears there are still some innovative minds in Wisconsin in spite of the Governor Scott Walkers.

“For many couples, the thought of living together in a 96-square-foot house sounds awful. But for Chris Derrick and Betty Ybarra, it’s a Christmas miracle.

That’s because Derrick and Ybarra have spent the better part of a year braving Madison, Wisconsin’s often-harsh climate without a roof over their head.

They’ll spend this Christmas in their own home, thanks to more than 50 volunteers with Occupy Madison, a local Wisconsin version of the original Occupy Wall Street group in New York. The group, including Derrick and Ybarra, spent the past year on an innovative and audacious plan to fight inequality in the state’s capital: build tiny homes for the homeless.”

Scott Walker makes Wisconsin No. 1 — in jobless claims The Cap Times – Editorial

How’s this for a 2016 presidential campaign theme?

“‘Under Scott Walker, Wisconsin led the nation in first-time unemployment claims.’

That’s not the narrative Walker wants as he plots his run for the Republican presidential nomination. But it’s the one that has developed.

According to the U.S. Department of Labor, 4,420 Wisconsinites filed initial unemployment claims in the final week of November. The next two highest states combined — Ohio with 2,597 and Kentucky with 1,538 — couldn’t match Wisconsin’s total. And what’s particularly notable is that these numbers come at a point when states such as California, Texas, Florida and Michigan are seeing significant declines in jobless claims.

Walker ran for governor on a promise to create 250,000 new jobs.”

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Sunday Reads

Senator Elizabeth Warren introduces bill to stop credit checks in job application process
A bad credit rating is far more often the result of unexpected medical costs, unemployment, economic downturns, or other bad breaks than it is a reflection on an individual’s character or abilities,Senator Warren said. “Families have not fully recovered from the 2008 financial crisis, and too many Americans are still searching for jobs. This is about basic fairness — let people compete on the merits, not on whether they already have enough money to pay all their bills.” Hat Tip Crooks and Liars

The Bureau of Labor Statistics shows us the frugal reality of life on the social safety net.
“This month, the Bureau of Labor Statistics compared yearly spending between families that use public assistance programs, such as food stamps and Medicaid, and families that don’t. Surprise, surprise, households that rely on the safety net lead some pretty frugal lifestyles. On average, they spend $30,582 in a year, compared to $66,525 for families not on public assistance. Meanwhile, they spend a third less on food, half as much on housing, and 60 percent less on entertainment.” Hat Tip Atlantic Magazine

Annual Spending

You Don’t Have the Right to Remain Silent
“On Monday, in a case called Salinas v. Texas that hasn’t gotten the attention it deserves, the Supreme Court held that you remain silent at your peril. The court said that this is true even before you’re arrested, when the police are just informally asking questions. The court’s move to cut off the right to remain silent is wrong and also dangerous—because it encourages the kind of high-pressure questioning that can elicit false confessions. Hat Tip Slate Magazine”

Who said the appointment of Federal Judges do not have much importance? A judge’s life time appointment sways the legal course of the nation for decades to come until SCOTUS again finds time enough to rule on cases impacting people and not big business.

Land of The Free?
25% of the world prison population resides in US prisons and jails at an ~ cost exceeding $22,000 annually. As I had written in “One In 31 Adults”, ~50% of those incarcerated have been convicted of nonviolent crimes. Maybe it is time to review sentencing guidelines. Hat Tip Crooks and Liars

The Death of The American Dream in a Single Chart
Upward Mobility in America has become increasingly difficult. Whether black or white, “Children from low-income families have only a 1 percent chance of reaching the top 5 percent of the income distribution.” The odds of advancing up a rung increase when racial background is included. Understanding Mobility in America Hat Tip David Atkins At Hullabaloo

Gatsby Curve

Wealth inequality is even more disturbing than income inequality

Distribution of Income by Source

“Democrats are often afraid to talk in these terms because it sounds positively Marxist to do so. But while I don’t consider myself a Marxist, I’ve been writing for a long time now that it’s important to recognize that we have an asset class and a wage-earner class–and their interests don’t align at all.” Hat Tip David Atkins Hullabaloo

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Trans Pacific Partnership

Trans Pacific Partnership is Not Especially Important

Paul Krugman argues that the Trans Pacific Partnership is no big deal:

I’ve been getting a fair bit of correspondence wondering why I haven’t written about the negotiations for a Trans Pacific Partnership

The answer is that I’ve been having a hard time figuring out why this deal is especially important. …

The big talk about TPP isn’t that silly. But my starting point for things like this is that most conventional barriers to trade — tariffs, import quotas, and so on — are already quite low, so that it’s hard to get big effects out of lowering them still further. …

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Political centrism and journalism

Brendan Nyhan at Columbia Journalism Review reminds us to be careful about debating budget priorities:

How should the United States choose among the difficult tradeoffs it faces in setting the federal budget? There’s no one correct answer, but you wouldn’t know it from coverage of the budget deal between Senator Patty Murray and Rep. Paul Ryan, which passed the Senate last night and will soon be signed into law.

Under the norm of objectivity that dominates mainstream political journalism in the United States, reporters are supposed to avoid endorsing competing political viewpoints or proposals. In practice, however, journalists often treat centrist policy priorities—especially on fiscal policy—as value-neutral. That’s wrong. While it’s widely accepted that the federal government faces limits on what it can borrow in the financial markets, there is significant disagreement, including among experts, over the priority that should be given to reducing current deficit and debt levels relative to other possible policy objectives. It is, in other words, a political issue.

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Bezos and the CIA

Via Alternet comes this reminder:

News media should illuminate conflicts of interest, not embody them. But the owner of the  Washington Post is now doing big business with the Central Intelligence Agency, while readers of the newspaper’s CIA coverage are left in the dark.

The Post’s new owner, Jeff Bezos, is the founder and CEO of Amazon — which recently landed a $600 million contract with the CIA. But the  Post’s articles about the CIA are not disclosing that the newspaper’s sole owner is the main owner of CIA business partner Amazon.

Even for a multi-billionaire like Bezos, a $600 million contract is a big deal. That’s more than twice as much as Bezos paid to buy the  Post four months ago.

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Accurate reporting

Lifted from an e-mail from reader Jack (http://angrybearblog.com/2013/12/20391.html#comments):
(attribution corrected…irony comes to mind)

Compare Fujita’s conclusion from the Fed paper, here  http://philadelphiafed.org/research-and-data/publications/research-rap/2013/on-the-causes-of-declines-in-the-labor-force-participation-rate.pdf#page=7, with da Costa’s description in the WSJ. da Costa, “Philly Fed economist Shigeru Fujita argues that the shrinking of the U.S. workforce over the past year and half was “entirely due to retirement” of baby boomers.” http://blogs.wsj.com/economics/2013/12/09/work-force-is-shrinking-because-of-retiring-boomers-philly-fed-paper-argues/

Apparently what Fujita concludes has gotten lost in da Costa’s translation, and both writings are in English. The WSJ staff don’t concern themselves with that. A word, phrase or sentence left out here and there can significantly change the originals author’s meaning and the details presented in the body of the original report are wholly misrepresented. That’s what slanted media can do to the public’s understanding of issues, especially when the data being presented is complex and a bit arcane in a layman’s vernacular.

Fujita’s conclusion:

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Sunday Reading

Emerging Strategy for the DEMS; Karoli at Crooks and Liars, Dems Strategy on Extending Unemployment Insurance  Dems will leverage their votes to pass the Farm Bill for an extension of Unemployment . “Now that Congress is set to leave town even as unemployment benefits for 1.3 million Americans are set to expire just after Christmas, is there any chance that Democrats can still prevail on Republicans to agree to extend them? Dems who are pushing for an extension have hatched a new plan to do just that: Once Congress returns, they will refuse to support the reauthorization of the farm bill — which will almost certainly need Dem support to pass the House — unless Republicans agree to restart unemployment benefits with the farm bill’s savings.”  I guess two can play that game.

She Did It for the Kids. “Fox News host Megyn Kelly on Friday lashed out at critics who she said had accused her and Fox News of being racist because she insisted that Santa Claus and Jesus Christ had to be white men. For all you kids watching at home, Santa just is white,” Kelly said at the time. “But this person is just arguing that maybe we should also have a black Santa. But Santa is what he is.

Just because it makes you feel uncomfortable doesn’t mean it has to change, you know?” she added. “I mean, Jesus was a white man too. He was a historical figure, that’s a verifiable fact, as is Santa — I just want the kids watching to know that.” So is the verifiable fact both Jesus and Santa Claus are white men or historical figures? Megyn Kelly won’t back down   David’s Feed

PPACA Website Adventures: Next stop, the call center. I got the power cord to my phone, plugged it in along with my headphones so I could be hands-free, and started dialing. First try, I got the “call back later, we’re too busy” recording. So I waited awhile and tried again. Big mistake. I should have just kept dialing.

It took a total of nine tries to get into the queue, but I did finally hit the magic “Press 1 for English” message. I did so, and settled into the wait, hoping against all hope that I wouldn’t get dumped from the queue like I had on two other occasions.

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Who are these missing workers?

From author Heidi Shierholz at Economic Policy Institute:

A blog post by Pedro Nicolaci da Costa in the Wall Street Journal highlights findings from a paper from the Federal Reserve Bank of Philadelphia that much of the shrinking of the U.S. workforce has been due to workers retiring early…

I’ve looked at the breakdown by age of the 5.6 million “missing workers”—potential workers who, because of weak job opportunities in the aftermath of the Great Recession, are neither employed nor actively seeking work. More than three-quarters of missing workers are under age 55 and are therefore unlikely to be early retirees…

(Chart below the fold)

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