Obama - View to the Future

 

Many of us have felt that Obama is a rather ineffectual President, not able to take the offensive and rally the troops.  President Bystander.  Maurine Dowd is an outstanding avatar of this view.  (See also today’s post from Not Running a Hospital on leadership and Obama -- http://runningahospital.blogspot.com/2013/05/a-continuing-display-of-weak-leadership.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+blogspot%2FmJlm+%28Not+running+a+hospital%29.)  My own view has been that, aside from his inherent elitism and probable introversion and inability to meet and have fun with other people he doesn’t know well, he reached high office too soon.  He hadn’t met enough people to know whom to appoint where, and he hadn’t found out yet how the game works in Washington.  An anti-LBJ.

On the other hand, my friend Michael Nacht says there is nothing he can do.  In the first term it was crystal clear that the Republican game plan was to oppose everything strenuously, even what were previous Republican positions.  Michael thinks that this mindset continues, that it’s all politics and nothing but.  The failure of the Democratic leadership to reform the Senate rules to make a filibuster be a real filibuster as of old – thanks Carl Levin! – simply nailed the coffin further shut, as has the failure of Democratic leadership to arise more broadly.  Maybe this view is right, I don’t know.

That being said, one has to acknowledge, as was brought forward pre-election, that the list of Obama accomplishments is more impressive than immediately comes to mind.  Can’t list them now, because they don’t immediately come to mind, but repealing Don’t Ask Don’t Tell was one of them.  (Transparency in government, honor to whistle blowers, and freedom of the press are not among them – Eric Holder sucks.  I saw a comparison to Alberto Gonzalez today, as someone who holds on to his job because he retains the “confidence of the President” … that’s a “wow” moment.)

Other people say that Obama is actually meeting his goal, which was to exceed the record of the two previous Presidents, to get us out of instead of into wars, and not to have a sex scandal.  Low the bar might be, but passivity actually helps him meet these goals.  Who knows what thoughts lurk in the mind of the President?  The Shadow?

Nonetheless, say that Obama’s domestic accomplishments will be low in this term.  Say that his foreign accomplishments will be low profile and subtle.  What should Obama do to make his positive impression on the history books? 

I have what would have to be a very unpopular suggestion – form commissions and make plans for the future!  Set the future agenda!  That’s right, you heard it first here.  What could be more unpopular than commissions?  Those traditional means of doing nothing?  Those producers of paper to sit on the shelves.  Yuuuch.

But, on the other hand, Keynes said: “The ideas of economists and political philosophers, both when they are right and when they are wrong are more powerful than is commonly understood. Indeed, the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually slaves of some defunct economist.”

I’m not asking for something so deep as that, philosophy.  But what about producing very official documents that might influence the future, the Obama Project.  The most prominent problem has had a commission, the Simpson-Bowles Commission on fiscal responsibility.  I don’t agree with it, actually, and I would get a successor, Simpson-Bowles II, and have it headed by Krugman and joined by Bernanke after he leaves office and Stiglitz maybe.  And add George Schultz for balance.

The most important problem we face, as opposed to the seemingly most urgent, is climate change.  Get an official commission and plot out a way that developing economies can develop, China and India can get enough energy to continue rapid growth specifically, new technologies can develop rapidly, what can be done internationally, etc.  There are lots of plans around, but get something ex cathedra.  Best and the Brightest, however discredited that may be, but policy informed, not self-inflated like the guys who got us into Vietnam.

You can think of four or five other commissions on other issues pretty easily, I bet.  And then, a commission on commissions – what are the priorities?  I go after climate change first, but maybe that’s not right.  Maybe you would want to attack lower hanging fruit first, though I doubt it.  The C on C would figure out how to orchestrate the accomplishment of the goals of the commissions.

Yes, this is the piest in the skiest proposal one could think of, ridicule-beset even as I write this.  But it wouldn’t have to be a centerpiece of the Administration.  It could just be a series of commissions that would be billed as an experiment in governance.  At least the vision would be lifted from shoe tops to horizon.  Call me a wonk, call me pointy headed.  Hey, that’s not so bad!  At least I’m thinking.

Budd Shenkin

Genetic inheritance

The growth of genetic analysis is a wonder to behold.  My father observed that he had personally witnessed and participated in the most profound change of technological culture the world had ever seen.  He was born in 1915, when the major means of transportation in Philadelphia was still the horse.  He died in 2007, 38 years after man reached the moon, not to mention the much-noted invention of Saran Wrap.

I graduated from med school in 1967.  We did know about DNA and genetics in general, very general.  We knew very little about immunology, maybe up to chapter 2 of a now 50 chapter book, I'd guess.  Pharmacology was still utterly empirical; no one thought through genetic makeup; no one figured out which molecules would glom onto which receptors on a cell wall, I think.  It was still so totally hit or miss.

The story of anthropology was also aborning in that time.  Africa had been identified as the origin of man, but from pure fossil evidence from the Olduvai Gorge, not genetics.   The path of migration hadn't been identified; that would have to await genetics.  Now we know that Africa holds the greatest genetic heterogenicity in the world, which is evidence for being the place of our origin.  We can also pinpoint the female inheritance side, the male inheritance side, and trace the migration of groups.

And now, totally amazingly, for less than $200, or in my case totally free since I got it as a Christmas present, you can take a little sample of your inner cheek and send it to the Genographic Project and receive back the story of your heritage.  To summarize my story, my genetic makeup is 58% Mediterranean (surprise!), 21% Southwestern Asian, 18% Northern European, and 2% Northeast Asian.  My hominid ancestry is 2.2% Neanderthal, and 2.5% Denisovan!!!  My closest matches are Iranian and Sardinian (?).  Probably should visit those two places as a "homecoming."

Go to genographic.nationalgeographic.com and look around.  It's a new world in finding out about the old world.

Budd Shenkin

Are The Democrats Blowing It Again?

 

Six years in office and 2006 brings a stinging Republican defeat, because the Republicans blew it.  They could have consolidated their victory if they hadn’t been so incompetent. 

Two years in office in 2010 and the Obama forces are routed.  Obama’s whole career shows the fruits of Republicans blowing it, not to diminish the undoubted campaigning expertise and energy of Obama.  Bobby Rush was his last really credible opponent who didn’t blow it.  But in office, their trumpet becomes a weak reed, they don’t know how to put spine in the country, the stock market reels and Obama says hardly a word – he is an economic illiterate, which doesn’t help, and the advisors are poor.  So they lose big time.  Lost the big mo.

2011-12 – Republicans have it in the bag, an incumbent never having won with such weak jobs numbers.  OK, good Obama campaign, smart, smart on the ground electronic cyber campaign.  But, the Republicans field the worst set of candidates this side of Mad Magazine.  Even then, weak as Romney and the Republicans were, they probably would have won, were it not for the 47% video, and other self-immolations.  Did Obama win, or did Romney lose?  It was a cooperative effort.

Cut to my taxi ride home Sunday night.  My voluble but eloquent Pakistani driver, age perhaps 50, inquired about my trip, and as I told him about the Academy of Pediatrics and my worries about Obamacare, he averred that he was strongly for it.  “People need insurance,” he said.

He makes about $60,000 a year,  “I’ll get it, right?” he said.

I said that my best guess, not knowing as much as I would like about the plan – which shows something in itself, since it is my field and I am not lazy about getting information – would be that at that level of income he would have to pay about half of the cost of insurance himself.  That took him back a bit.

Then I said, it’s not certain that your family would be covered.  A recent IRS decision was that for an employed individual, if the cost of the insurance policy for just the employee would be 9.5% or less of his or her income, the insurance policy would qualify.  But the cost of family coverage could be much more.  In this case the penalty for not getting insurance would not be applied.  In other words, for a substantial section of the employed public, families would not be covered.  This was what I hoped for as a business owner, which I no longer am, since I thought it would damage my business.  As a citizen, a Democrat, and a health care policy analyst, I think it’s ridiculous if families won't be covered.

So it’s possible my taxi driver, if he is an employee, could have his family out in the cold.  He said to me, “You are making me nervous.”  I told him I was nervous myself.

Here is a man who is telling his friends that Obamacare will be a good thing.  Will his hopes be dashed?  Will his friends turn on him and say, “See?  You were foolish to be taken in by the government and the politicians.”

It will all be coming down in 2014, which I know I needn’t remind you, dear reader, is a midterm election year, when the party in power is at maximum risk.

Recall the conversation in the Theda Skocpol seminar last week, where the gathering speculated as to why the “good news” of Obamacare hadn’t swept the nation, and why the Democrats hadn’t trumpeted more strongly.  My own diagnosis was incompetence.  Who would trumpet?  Obama doesn’t know details, and he is only responsible for a clarion call now and then.  Nancy Pelosi is not articulate, although she is a hero of mine.  Harry Reid?  Sibelius does talking points only and not very convincingly.  There is no one from the White House.  We are getting sounds of silence.

What we need is management of expectations.  There needs to be a knowledgeable, articulate spokesperson.  Probably Don Berwick hoped to be that person, but he was banished by the Republicans.  Daschle probably wanted to be that person also.  But in fact, the Democrats never found that someone.  The advantages of Obamacare need to be highlighted now, one by one, as they come in, and the challenges they are facing and hoping to overcome, and a play by play recitation mixing hope with reality.  Hope and progress needs to be heralded by trumpets and drums.  Instead, what we will get is a denouement that startles everyone with the deficiencies, and leaves the taxi driver embarrassed and embittered, and leaves the Democrats with a 2014 that resembles 2006.

And health reform?  I think it’s here to stay, but enthusiasm and appreciation of the positives would sure make for a better entrance than disappointment in the inevitable deficiencies.

Anyway, that’s my fear.

Budd Shenkin

More Incompetence

OK, two posts in one day.  New record. 

Here is another note from Kaiser Health News - http://www.kaiserhealthnews.org/Stories/2013/April/09/consumer-groups-protest-administration-delaying-out-of-pocket-limits-caps.aspx. 

Consumer Groups Fear Patients Could Be Hit With Large Out-Of-Pocket Costs.

Why will this happen?  Because the Administration has not yet figured out - they have only had three years - how to adjust employers' arrangements for health insurance that combines multiple policies.  Health plans and employers ask for a delay, and they get it with no comment from HHS.  I have heard the excuse - seriously - that while the government was not sure how the lawsuits against the constitutionality of PPACA would come out, they were reluctant to allocate resources to preparing for implementation.

Really?  Do I hear the cry of further incompetence?  You would think, if PPACA is the "signature statement" of the Obama Administration, it would not be government business as usual.  It is just disheartening.

Budd Shenkin

 

PPACA - Get Ready For the Incompetence

Last week I attended a lecture and subsequent discussion of the Patient Protection and Affordable Care Act at the Goldman School of Public Policy at UCB, my alma mater.  The lecturer was Theda Skocpol, a  liberal political scientist enthusiast and booster from Harvard.  (Don't read her book, it's mainly boosterism.)  One question in the discussion remained unanswered -- why has the Obama Administration and the Democratic Party not done better publicity for the virtues of PPACA? 

The opposition has done very well, by contrast.  It's the media's fault!  Of course, it's always the media.  But one audience participant said, hey, I used to be a political reporter, and I don't think it's the media's fault at all.  So the question was just left to lie there.

I wanted to put in my opinion - big surprise there - but I had other fish to fry as I commented on the lack of understanding of the professional political forces.  Skocpol and others lumped doctors and hospitals together, and there was collective derision of the high salaries doctors earned, and derision when a primary care doctor of one of the discussants told him that it was tough to attract doctors to her group because they could only offer $145K as an initial salary.  Collective derision -- who do these people think they are?  Why should they earn more thus us academics? 

Another discussant compared the forces around Medicare and those around PPACA.  It was left to yours truly to point out the stark differences between then and now.  The AMA is now shattered, and mattered little in PPACA.  Medicine has been corporatized.  Hospitals matter much more than doctors.  If there is a bill for a procedure in a hospital, the doctor will bill $500, the hospital will bill $15,500 - at least.  The professional specialty societies and academic medical centers matter more than the AMA.  I was supported in this view by discussant Steve Shortell, Dean of the School of Public Health, but it was amazing to me that Skocpol seemed not to be aware of this.

But back to the point - why did support for PPACA not come from the Administration and the Democratic Party the way one would expect?  Where was the bully pulpit?  My answer is -- did anyone ever hear of incompetence?  The President's bench is thin.  Where are the health heavyweights?  Where was the aggression necessary for the 2010 elections?  Nowhere, because they aides suck, and Obama himself doesn't know details - he is rather health illiterate.  Sibelius seems not to know much, and is not persuasive - she is a talking points person.  Obama is great at big picture rhetoric, but not in nitty gritty.  They just don't have it.

This will be a problem as we go down the road - incompetence in HHS will make the going very rough.  Today comes a report from Kaiser Health News that only a pittance is budgeted for enrolling people in the Health Insurance Exchanges.  Healthy people won't get the coverage, and the finances will suffer.  http://www.kaiserhealthnews.org/Stories/2013/April/08/health-insurance-exchanges-marketing.aspx.  Why?  KISS.  It's just incompetence.  Deadlines keep slipping, the type of insurance will continue to emphasize high deductibles, I predict, and Universal Crappy Health Insurance (UCHI) will reign.  When I brought this up in my brief remarks, Skocpol replied that she is too old not to accept the imperfect. 

Jesus, what a cheerleader.  For a smart lady, she is too willing to overlook incompetence, in my view.  But maybe I'm wrong, and it is all just the necessary first steps.  Maybe the compromises were not incompetence, but just necessary.  I only worry that poor first steps can lead to a long ramp up.  Like, how long does it take teams to overtake a history of bad draft picks?  Answer: a long time.

Budd Shenkin

Health Care Reform, Not Revolution

Readers, I find myself again in a state of outrage.  Screed to follow.  The subject is once again healthcare.  The frustration is that Obamacare, and now Medicare reform, is totally reform, and not at all revolution.  Not even mini-mini-revolution.  What I mean by that is, the power that be are the powers that will be.

The Institute of Medicine has listed areas of potential savings in health care.  Here they are:

Unnecessary services $210 billion

Inefficiently delivered services $130 billion

Excess administrative costs $190 billion

Prices that are too high $105 billion

Missed prevention opportunities  $55 billion

Fraud $75 billion

To me, this list is interesting because of the categories.  Notice – you can’t say from this list just who is responsible for all this.  It is a list asking for technical fixes.  It underplays just who is doing what.

When you’re not talking revolution, you’re saying that them that has is them that gets.  And them that has gotten is them that keeps getting.  Where is the power?  In hospitals, in academic medical centers, in procedural specialists, in pharma, in technical equipment companies.  Where is it not?  In patients and primary care doctors.  I’d also say that the power is with the emerging power of community health centers, and probably nurses, because they are organized interests, the nurses as a powerful union that has for years constrained entry to their ranks and now holds the hospitals hostage, and in the case of CHC’s a government-friendly socialistic movement with a strong lobby.

Where is the fabled AMA, you might ask?  Nowhere.  The AMA doesn’t count anymore.  Doctors are totally fragmented.

So, where are we going with health care reform?  I have to refer you to my previous post on High Deductible Health Plans, which are the fastest growing plans in the country.  A recent report says that 15% of large companies are going to offer only HDHPs this year!  I think the most popular plans on the Health Insurance Exchanges will be the bronze plans, and they will probably be basically HDHPs.  Who do these plans screw?  Patients – more out of pocket – and primary care doctors.

The ideologues of the right wing, without relevant experience in health care, think Americans have too little insurance, not too much, which leads patients to indulge themselves in the “moral hazard” of overutilization.  That’s just ideology.  Patients are the least powerful element in the equation – they are the cause of over-utilization of, say, back surgery, when orthopods and hospitals profit enormously from these usually useless procedures?  Give me a break. 

The problem of overutilization is too much primary care?  Again, give me a break.  It just doesn’t make sense.  Yet that is the cause prosecuted by HDHPs.

What does make sense is this: if you don’t think about rationality in health care, if you don’t think about equity, if all you think about is protecting your turf and decreasing costs without decreasing your own profit, and if you have the power – then you will increase deductibles, so patients pay more, and primary care takes it on the chin.  And that’s what is happening.

So – and here’s the outrage – what does the Obama Administration start to offer as a concession to the Republicans in trying to reach a budget agreement?  You know what it is, if you have been reading this screed with even minimal attention.  They are proposing to consider the Republican proposal, from that icon of disinterested intelligence Eric Cantor, that parts A and B of Medicare be combined, so that there is one (large) deductible, and patients get to pay more.  So the pressure builds again to reduce primary care visits, just what the doctor of rational reform didn’t order, but which was instead ordered by the political gods, the hospitals, and the procedural specialists.

Obama is basically a health care illiterate, and the people around him are obviously just conventional politicos.  Or they figure there is nothing to be done with the basic powers that be, and they have to just bow down to power.  There is no deep thought, there is everything about obeying the powers that be – the ones responsible for the state we are in.  That’s why I’m thinking that the Obama years will be regarded as a benefit mostly because of the worse outrages they prevented, rather than what they actually did.

God help us.

Budd Shenkin

Banks - Too Big to Fail? Policy Choices.

 

More and more information is coming out about the JP Morgan London Whale debacle.  As always, the wonderful Gretchen Morgenson illuminates it with opinion and bite in today’s NYT. http://www.nytimes.com/2013/03/17/business/jpmorgans-follies-for-all-to-see-in-a-senate-report.html

(Of course, I have to admit, since I am not a financial professional and insider, I could always be wrong in my Gretchen Morgenson opinion.  I have great faith in the media.  As far as I can see, they are almost always right.  The only exception appears to be in things that I know a whole lot about.  In those cases, the media often gets it wrong.  But with that small exception, I think they are very reliable.)

Anyway, the gist of the argument is summed up by Morgenson at the end:

“We already know that banks of JPMorgan’s size are also too big to be allowed to fail and too big to prosecute. Such banks are too big to regulate and apparently too big to manage. So how much more evidence do we need that banks like JPMorgan are simply too big a risk for taxpayers to bear?”

Very, very interestingly, the WSJ editorial page comes to … the same conclusion!  They start from a different place – they say, banks are a private business, why is the government poking its nose into the workings of a private enterprise?  Why is the Senate concerned with JP Morgan, and why hold those awful hearings? 

(Morgenson’s take is: “…let’s congratulate the Permanent Subcommittee on Investigations, led by Senator Carl Levin, a Michigan Democrat. This is the second time in recent history that this subcommittee and its staff have served the public by illuminating the dark corners of the financial world — the first being the riveting hearings and reports on the causes of the 2008 financial crisis, which dove deep on Washington Mutual, Goldman Sachs and the credit ratings agencies.”)

But then the WSJ takes a left turn, blessedly.  They say, the Senate is concerned because of the potential of bailouts.  It happened once and it sure could happen again.  So the Senate is right to be concerned.

Therefore – and here is where the WSJ takes a surprising plunge, if I remember correctly – the banks are too big to fail, and consequently, they should be broken up!  Only then can the government not worry about the state of any individual company, and not micromanage, and not fear that the economy is at risk.

Of course, and the WSJ doesn’t go here, a whole industry can go down the wrong track – see mortgages, and Countrywide and friends – and there is ample reason for government to survey and regulate at the industry level.  But let’s leave that alone for now.  Enough to say, it seems that when the “best” bank, JP Morgan, is shown to be completely derelict, the argument for bigness in banks seems to go out the window.

On the other hand, even though the London Whale and his overlords went awry, overall there was really no cause for panic.  Even in the time period in question with $6 billion down the drain (and let’s not forget, what JPM lost, others gained), JPM still made a profit.  So you could say that bigness actually was a blessing.  You could say that the market could and should and actually did exert its pressure on the stock, and the market will work its magic – aided by the revelations of the government investigation, which shows also how poor JPM’s internal investigation was.  You could say that the biggest lesson, actually, is that pusillanimous regulators are the problem, and as long as there is very big money on the bank side, and very small wages on the government side, the risk-adverse and under-intellected (or maybe just under-cajonied) feds will always be captured by the industry. 

Where are we then?  If we can’t regulate, and the bank can’t self-regulate well, should we enforce the Buffet Rule, so banks can’t bet with their own money?  Also, a separate question, should we go with bigness, or smallness?

My own opinion is that we should look closely at societal gains.  Does society gain by allocating resources well, as banks can do by betting money on emerging industries, say?  Yes.  Does society benefit by betting on derivatives, as an example of pure trading risks?  Probably not, I’d say.  It seems pretty clear that there is a lot more betting going on, and a lot less hedging of bets than advocates will admit.  That being the case, I think we have to deemphasize trading as a major source of profits, and that will take governmental regulation – not micromanagement, but just a prohibition of certain courses of business.  That would be, the Buffet Rule.  You can’t just indulge in betting.

But what about size?  Should we regulate size?  If we mandate a limit to size, would that inhibit the ambition of banks, and make them less effective?  The reward for good bets on industries and other allocation decisions, after all, is profit and thus increased size.  Would a limit on size inhibit a single institution’s having enough resources to take good business risks in allocating capital?  That is, if you want to bet on an industry, but if you’re wrong you don’t want to have the whole firm go down the drain, you have to have large resources to withstand a bet gone wrong.  This is precisely the situation that JPM faced – they were able to withstand the London Whale debacle because they were very big.  Think not trading risk, but capital allocation risk, and being big takes on a completely different complexion.

So, although I hate the idea of big size, and I hate the model of Wall Street where these guys make so much money just because they are handling lots of money, I’m going to come down on the side of not regulating size.  But I’m also coming down on the side of implementing the Buffet Rule, hard as it may be to accomplish.

Now that I have made my decision, let’s see how the markets react….

Budd Shenkin