Friday, October 10, 2014

Mending Medicare Advantage

Last month the Department of Health and Human Services announced that enrollment in Medicare Advantage had reached an all-time high. This admission put the White House in an awkward position: On the one hand, Medicare Advantage is one part of the U.S. healthcare system that enjoys popular support, enabling approximately 16 million seniors to bypass traditional Medicare and instead obtain subsidized coverage through approved private insurers. On the other hand, for the past two years the Obama administration has had to back off from its threats to cut the reimbursements it pays insurers who participate in the program. The reason? President Obama might like to cut Medicare Advantage, but he knows that doing so would anger an important segment of the voting public.

“The political blowback President Obama would suffer from cutting Medicare Advantage too much would be significant,” writes health-policy expert John R. Graham, a senior fellow at the Independent Institute, in an op-ed for the Daily Caller. “Medicare Advantage (MA) plans are popular for many reasons. Most importantly, they provide better care than traditional Medicare (TM).” Graham cites a recent study by two respected economists, Joseph Newhouse and Thomas McGuire, who found that MA plans “appear to offer higher value than TM” and that government policy should “move more beneficiaries into MA.”

Newhouse and McGuire’s recommendation has irritated many in the health-policy community, who complain that the government overpays Medicare Advantage plans by 6 percent and that fraud is common. Graham responds to the “fraud” criticism by noting that fraud in traditional Medicare is likely a much bigger problem. As to the “overpayment” claim, Graham urges policymakers to combat this problem by offering an alternative to business as usual: Instead of giving premium subsidies to private insurers, give it to the patients enrolled in Medicare Advantage. “As a modest first step, Medicare should give some Medicare Advantage subsidies to seniors directly, through health savings accounts, instead of handing the taxpayers’ entire contribution to insurance companies.”



Amazon’s “Dark Side” Is a Bright Spot for Workers and Consumers

Jim Hightower is an old-fashioned Texas progressive, who, if memory serves, once ran unsuccessfully for the governorship of that state. He may be a great polemicist—see “The Dark Side of Amazon”—but he does not know the first thing about how markets work and how, like Wal-Mart, is a benefactor of consumers nationwide and worldwide.

Before the advent of Wal-Mart, rural America was a retail desert. Small shops, limited product availability and, yes, “hometown service”. But the prices of most items were high because the only alternative to shopping locally was to drive to the nearest city or order through the Sears or JC Penney catalog and depend on timely delivery by the US mail in, it was to be hoped, an undamaged package. The downside of local retail shops (limited options and high prices) fell most heavily on low-income households, which may not have had an automobile or could not afford to take time off work to shop at larger urban retailers or even at local merchants, which typically closed at 5 p.m. Wal-Mart solved both problems in one fell swoop.

Sure, local retailers suffered losses of business and some were forced into bankruptcy, but consumers (the only group whose welfare matters in a free market economy) won big-time. Amazon has generated benefits for consumers many times larger than Sam Walton ever dreamt of.

But what about the jobs that disappeared in local retail outlets as Amazon and Wal-Mart drove costs (and prices) down by inventing markedly more efficient distribution networks and negotiating lower prices with manufacturers and other suppliers on behalf of millions of consumers with little bargaining power of their own? An economic system’s chief purpose is to create prosperity (wealth), not jobs. Creating jobs—at the point of a gun, as Josef Stalin proved, or as FDR did by drafting millions of men to shoulder arms against the Axis powers—is easy; creating wealth is not. Prosperity materializes only if existing resources (land, labor and capital) can be utilized more efficiently, squeezing out “waste” and redundancy so that resources can be released from current employments and redirected by alert entrepreneurs to the production of new products that consumers may not even know they want (an iPhone ten years ago, for example) until they become available.

Hightower bemoans the working conditions in Amazon’s warehouses, a few of which literally become sweatshops during hot summer months. I am willing to bet, however, that if the people employed in one of Amazon’s “dehumanizing hives” (his phrase) were asked whether they wanted to quit their jobs, not one hand would be raised, especially so in an economy with an unemployment rate still hovering around six percent and a rate of underemployment twice that figure.

Hightower, like many before him, claims that Amazon’s ability to avoid collecting sales taxes on orders shipped out of state from the company’s Washington state headquarters or from its warehouses located around the United States gives Amazon a tax subsidy ranging “from about 4 to more than 10 percent.” That subsidy, which actually ranges from zero to more than 10 percent (four U.S. states—Delaware, New Hampshire, Montana and Oregon—impose no local or state sales taxes at all), supposedly confers a significant competitive disadvantage on brick-and-mortar retailers, who must remit sales tax receipts to the appropriate state tax authority.

But in making that claim, Hightower ignores taxes paid by FedEx and UPS, which deliver Amazon’s packages to customers’ doorsteps. Those delivery services pay, among others, state and local gasoline taxes and corporate income taxes; their employees pay state and local personal income taxes and spend some of their disposable incomes at local grocery stores and other retail outlets, purchases on which sales taxes are due. So, too, do the owners and employees of Amazon’s warehouses.

Amazon relies increasingly on the U.S. Postal Service to deliver packages to customers’ homes or places of business, especially in rural areas, a relationship that must have been seen by the beleaguered USPS as something like a lifeline thrown to someone going underwater for the third time.

It is true that, like Wal-Mart, Amazon has benefited from tax breaks (“incentives”) offered by local and state governments to lure companies to one particular geographic location rather than another. Handed out to encourage local economic development and the jobs and tax receipts associated with it, such corporate “incentives” are a national scandal, squandering taxpayers’ hard-earned money for dubious benefits. But neither Wal-Mart nor Amazon should be blamed for accepting such incentives, which are offered by politicians who want to claim credit at reelection time for attracting high-profile corporations to their home districts or states. Consumers, by and large, don’t care about the points of origin of their orders, as long as they are delivered when expected, whether from Toledo or Timbuktu.

It is someone ironic, but understandable, that Wal-Mart has joined the chorus demanding that Congress put an end to the sales-tax-free Internet retail environment. Wal-Mart has a physical presence in virtually every state and thus is obliged to collect sales taxes on almost everything it sells. Wal-Mart, of course, would benefit itself by erasing one of Amazon’s competitive advantages. But consumers would be harmed, not only by seeing prices rise by the amount of sales tax Amazon collects and then remits to the treasuries of its customers’ places of residence. Even more seriously, expunging the virtual border between the more than 3,000 separate taxing jurisdictions throughout the United States would mute the interjurisdictional tax-rate competition that makes it politically costly for any one of them to jack up its sales tax rate.

Competition can seem to be ruthless to someone who loses a small business or gets fired from a retail job, but the benefits to consumers swamp the harm done to producers. Already, Amazon is facing threats from Uber and other web-based delivery services that will pick up and deliver orders from local retailers in hours, not one or two days. Amazon could respond by getting permission from government regulators to deliver packages via drones. No one knows what the next new thing will be, but the answer cannot be found by hamstringing Amazon or any other large retailer, but by allowing free and open competition to flourish.

But a mercantilist, anti-market mindset is exactly what one would expect from a progressive defender of the Empire against Sam Walton, Jeff Bezos, and innovative rebels like them.



Dr. Emanuel's death wish

by Jeff Jacoby

THE ELDERLY are such a pain, aren't they? Dr. Ezekiel Emanuel thinks so. Half of those older than 80 have "functional limitations," the prominent health policy analyst and key ObamaCare architect writes in the October issue of The Atlantic. One in three Americans 85 and up has Alzheimer's. Old people are more likely to be disabled, or at least "faltering and declining." They lose their creative mojo. They don't "contribute to work, society, the world." Instead of being regarded as "vibrant and engaged," they grow "feeble, ineffectual, even pathetic."

Especially disagreeable are old parents, who can be so irritating: "They set expectations, render judgments, impose their opinions, interfere, and are generally a looming presence for even adult children," Emanuel complains. By living too long, parents blow their chance to impart "the right memories" to their kids. Nothing could be worse, he insists, than being remembered not as we were in our prime, but as old and decrepit — "stooped and sluggish, forgetful and repetitive, constantly asking, 'What did she say?'" To leave behind memories of our frailty "is the ultimate tragedy."

And that, declares Emanuel, is "Why I Hope to Die at 75."

In his 5,000-word Atlantic essay, Emanuel — who heads the Department of Medical Ethics & Health Policy at the University of Pennsylvania, and has an appointment at National Institutes of Health— announces that once he reaches 75, he will decline nearly all medical treatment. No more flu shots, no colonoscopies or other screenings, no pacemakers or surgery. "If I develop cancer, I will refuse treatment," he writes. He won't even take antibiotics to cure pneumonia or an infection, preferring instead to be carried off by the "quick and relatively painless" death untreated infection usually leads to.

Or so he says.

Debate over the health resources consumed by America's elderly have been ongoing for decades. As a candidate for Massachusetts governor in 1990, Boston University's John Silber famously generated sparks when he replied to a question about the surging costs of medical care for the elderly by asserting: "When you've had a long life and you're ripe, then it's time to go." President Obama has suggested the same thing, albeit far more tactfully. In 2009 he cited his grandmother's hip-replacement surgery during her final illness, publicly questioning whether such costly procedures for the terminally ill are a "sustainable model" for health care.

Over the years Emanuel has energetically weighed in on these issues, but that's not the focus of his Atlantic essay. His argument is not about dollars and cents, it's about quality of life. Death is a loss, but "living too long is also a loss" — loss of vigor, of autonomy, of productivity, of smarts, of ambition. If we're to take him at his word, he cannot bear the thought of slowing down as he ages. He recoils from the way the old gradually learn to "accommodate [their] physical and mental limitations" — retiring from a profession, taking up hobbies, doing and daring less.

"As walking becomes harder and the pain of arthritis limits the fingers' mobility, life comes to center around sitting in the den reading or listening to books on tape and doing crossword puzzles." Emanuel, whose essay is accompanied by a picture of himself and two nephews on Mount Kilimanjaro, would rather die of pneumonia than live like that. He maintains he is "certainly not scorning or dismissing people who want to live on" despite the debilities of old age. But it's hard to take that disclaimer seriously, when the whole point of his essay is that a diminished life isn't worth prolonging.

He mocks Americans who exercise, do mental puzzles, and consume "various juice and protein concoctions" in their quest to live longer. "Manic desperation," he calls it. "Misguided." "Potentially destructive." That's not scorn?

Maybe Emanuel is merely being provocative. He acknowledges that 75 is an arbitrary age to designate as the boundary between a vibrant life and a feeble one. He admits there are "myriad people I know who are over 75 and doing quite well." At the start of his essay, he claims "I am sure of my position" — yet reserves the right, at the very end, to change his mind once he reaches his 75th birthday.

Emanuel is 57 now, which gives him 18 years to reconsider his death wish, and to learn, perhaps, that the declines of advanced age can be a blessing as well as a curse. To be able to accept the pains and impediments of mortality requires a measure of courage and dignity that few of us are blessed with — or can even imagine — in our prime. Emanuel's own father, now 87, has slowed down considerably. His career is over. His son describes him as "sluggish." And yet the old man describes himself as happy.

Emanuel may dread the prospect of ending up like his father. But he's still young, and not yet wise.




There are lots of good reasons to hope that the Democrats suffer a humiliating defeat in November, and this one is pretty far down the list. Still, it isn’t insignificant: as we have documented over and over, the Democrats, from the White House and Harry Reid on down, have run this year’s campaign largely against Charles and David Koch. It is rare for the Democratic Party to send out a fundraising email that fails to invoke the specter of the “Koch brothers,” who are treated essentially as bogeymen.

This is unprecedented in our history. Never before has a political party based a campaign on demonizing individual, private citizens who hold opposing beliefs and who exercise their First Amendment right to participate in the political process. In my view, it would be a very bad thing if attacks like those the Democrats have made against Charles and David Koch–which, frankly, border on the insane–were to become the norm.

On Chris Matthews’ Hardball, Howard Fineman of the Huffington Post criticized the campaign the Democrats have run this year, and said specifically that “campaigning against the Koch brothers is idiotic.”

I hope he proves to be right. If the Democrats get clobbered in November, their anti-Koch strategy will go down as a failure, and parties in the future will be unlikely to repeat it. If, on the other hand, the Democrats outperform expectations, they likely will conclude that their diversionary attack on the Kochs worked, and they are likely to try the same thing in the future, against the Kochs or others who disagree with them. Our politics are plenty dirty enough without giving the Democrats that sort of encouragement.



Walmart Nixes Insurance for 30,000

Another 30,000 employees are finding out they can’t keep their insurance plans, even if they like them. The Associated Press reports, “Wal-Mart Stores Inc. plans to eliminate health insurance coverage for some of its part-time U.S. employees in a move aimed at controlling rising health care costs of the nation’s largest private employer.” The terminations will be effective Jan. 1 and will affect 30,000 of the company’s workforce clocking in less than 30 hours a week. “The announcement follows similar decisions by Target, Home Depot and others to completely eliminate health insurance benefits for part-time employees,” the AP adds.

Senior vice president of benefits, Sally Welborn, defended the move, saying, “We are trying to balance the needs of (workers) as well as the costs of (workers) as well as the cost to Wal-Mart.” In other words, the retail giant is trying to keep its business afloat while also maintaining a profit margin – a tedious process every business owner faces that’s been made all the more difficult because of ObamaCare.

Then again, Walmart endorsed ObamaCare, only to turn around and do what leftists really wanted – put more people on the federal dole. Oh, and they’re offering health insurance advice, too.



For more blog postings from me, see  TONGUE-TIED, EDUCATION WATCH INTERNATIONAL, GREENIE WATCH,  POLITICAL CORRECTNESS WATCH, AUSTRALIAN POLITICS, and Paralipomena (Occasionally updated) and Coral reef compendium. (Updated as news items come in).  GUN WATCH is now mainly put together by Dean Weingarten.

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