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Economics Makes for Strange Sick-Bed Fellows

Obama ready to cave in to insurance industry


‘Her Way’; Obama Health Plan Could Go In Clinton’s Direction
Teddy Davis, John Santucci and Gregory Wallace ABC News 06.29.2008

Obama’s surrogate [Dr. Kavita Patel] made her comments Wednesday while representing him at a National Journal health-policy forum moderated by Ron Brownstein, the political director of Atlantic Media.

Patel’s individual mandate remarks were made in response to an insurance industry leader suggesting at the same forum that insurers will oppose Obama’s plan as currently structured. Insurers are worried that the Illinois Democrat has not tied an individual mandate to “guaranteed issue,” the industry’s term for requiring patients to be covered without regard to pre-existing conditions.

“We’ve had the conversation about . . . guaranteed issue,” said Karen Ignagni, the president and CEO of America’s Health Insurance Plans. “But we are prepared to have that conversation in the insurance industry if the politicians are ready to stand up and say we are going to get everyone in.”

Ignagni’s words are watched closely because the organization she heads emerged from the Health Insurance Association of America, sponsors of the “Harry and Louise” ads which played a critical role in killing Clinton’s effort to reform health-care in the 1990s.”

I didn’t see that coming, but I should have. Obama’s plan has the part consumers like but has the problem that it would bankrupt the health insurance industry. Hmmm what if his plan was to terrify them into accepting universal health insurance with the public sector allowed to compete ? Current proposal sounds lovely. It would make it advantageous to the young and healthy to wait till they get sick to get insurance. The problem is that it could cause the industry to enter a death spiral.

But it sounds lovely. Do you want to bet your industry on your ability to stop the 46 year old African American major party nominee whose middle name is Hussein and who beat the police and the newly elected Democratic governor in a *unanimous* Illinois senate vote ? Better to deal I’d say. Maybe, just maybe, Ignagni really agrees with me that opposing Obama on a superficially appealing plan whose only fault is that it will destroy her industry is not a bright move.

And look at the headline from Green Change. We have Obama caving to the health insurance industry by accepting 100% universal health insurance (sort of like the time that he adopted Republican talking points by proposing his donut social security funding huge progressive tax increase, class war, soak the rich and spread it out thin plan).

I don’t know if he is is just brilliant or is also blessed.

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Hello My Name is Robert Waldmann

Hi I am Robert Waldmann. rdan has very kindly invited me to guest post here some. I have a blog of my own (to which he kindly linked in the announcement). I am officially an economist, but tend to blog about politics at my home blog. Here I will try to fit the interest in, you know economics.

I wasn’t always like this. Until age 25 I was a biologist. I currently live in Rome Italy. I am irrational and like to write about irrationality. I am also egalitarian.

My latest effort, which is a joint paper with Emanuele Millemaci is about relatively rational people who have dynamically inconsistent preferences. It is strictly empirical. Our hypothesis is that people with more severe dynamic inconsistency would hold less of their wealth as checking account balances, because it is too easy to spend.

This appears to actually be true (Oh I love to blatantly split infinitives)

Dynamically Inconsistent Preferences and Money Demand

Emanuele Millemaci and Robert J. Waldmann

This research wouldn’t have been possible without CentER at the University of
Tilburg which designed the survey and collected the the data.

This paper focuses on two main issues. First, we find that, on average,
households’ discount rates decline. This implies dynamically inconsistent
preferences. Second, we calculate an indicator of the degree of dynamic
inconsistency that may help us to understand how households overcome their
self-control problems. We use a micro dataset containing households’ reports
on the compensation for receiving hypothetical rewards with delays. We find
that individuals with more severely dynamically inconsistent preferences on
average hold a statistically significantly lower share of their total wealth
in checking accounts. A possible interpretation is that subjects use
precommitment strategies to limit their temptation to consume immediately.
(JEL classification: D11, D12, D90)

Comments very welcome. If you want the pdf ask in comments.

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