James Pethokoukis

Politics and policy from inside Washington

Healthcare endgame on Capitol Hill

Jul 28, 2009 14:54 UTC

A Capitol Hill source tells me that a public healthcare option is dead, dead, dead in the Senate and thus dead overall. While some healthcare reform proponents hope to use the August recess to rally support, more likely it will be that the Dems will be telling the troops and interest groups that if you want some kind of healthcare bill, give up pushing for a public option. At this point, it is a waste of time, energy and money. But this does not mean Dems still might not push through some pretty big changes. As another source put it:

We might end up seeing something similar to what we chatted about before (individual mandate, highly regulated insurance market, major subsidies).  I see this as mostly a symbolic victory, as the Dems can get most of what they want without calling it a public option, frankly. Pretty close (to the Massachusetts model), I’d assume.


Um, the government (ie: congress) does NOT have a “public healthcare” or a “public plan”. Congress gets their insurance through PRIVATE insurance companies, in a co-op, hence it’s less expensive. That is what the Rebuplicans are currently suggesting, giving the American public EXACTLY THE SAME benefits as they currently enjoy!!!

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More on the dangerous dollar …

Jul 24, 2009 20:15 UTC

It is the last part of this bit from Brad DeLong that really caught my attention (bold is mine):

The fact is that the approporiate fiscal policy for the U.S, right now is to pass: (a) a bigger stimulus over the next two years, (b) a standby tax increase to return the federal budget to primary surplus by 2012, and (c) devout and lengthy prayers that confidence in the dollar doesn’t collapse and send interest rates on U.S. Treasuries above the economy’s growth rate–in which case the situation changes from its current value of “dire” to “catastrophic.”


The reality is that we are approaching a SDR world. Which is how it should be.

However, the talk of a devalued dollar is premature. Relative to other world currencies, the dollar is actually strong considering the current environment. While there is pressure, the $ has been rather resilient in the face of a credit crisis compounded by a downturn, volatility and uncertainty. SE Asia and Latin America were not so lucky.

I don’t think Obama will devalue the dollar. China’s reserves are safe. Remember, that the US has top credit-worthiness because, excepting global disaster, it will not default.

This is still a serious correction, that has annihilated global wealth. We should take a lesson from this event. The future will require more precise policy analysis and flexibility in execution, when dealing with economic cyclical variations. The embrace of the boom times, should be accompanied by the tempering of the bust.

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Healthcare reform has to pass because … because … well, it just has to is all!

Jul 24, 2009 19:40 UTC

Ezra Klein does his gosh-darned best to help restore momentum to healthcare reform, which he is sure people will love to bits if only it passes:

Democrats know full well that there are two plausible outcomes to the health-care reform process. Health-care reform will fail, dealing a huge blow to the Democratic Party and giving Republicans tremendous momentum as we enter the 2010 campaign season. Or health-care reform will pass, and Democrats will criss-cross the country touting the largest legislative accomplishment in decades. Republicans may still attack them on the plan. But attacking a historic legislative success is a whole lot harder than attacking a historic legislative failure. Republicans know that, which is why they want to kill the bill. Democrats know it too, which is why they won’t let them.


lol, keep on reaching there ezra…. Too bad they see it as just a political matter.

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Is Obama playing politics with the dollar?

Jul 24, 2009 16:59 UTC

A weak dollar is not always a bad thing. Stocks are up 43 percent from their March lows while the greenback is off 11 percent against major currencies. Scott Grannis explains the correlation:

As panic set in late last summer, people all over the world flocked to the dollar as a safe haven. People stopped spending money, stockpiling it in the form of currency and in the form of higher money balances. … It all reached a head in early March of this year, as fear of massive deficits and massive tax increases paralyzed financial markets. Since that time, everything has reversed. The economy avoided the catastrophe many had feared, and Obama’s legislative agenda has stalled and his approval ratings have plunged. People have stopped accumulating dollar currency and money deposits, and so spending is starting to ramp up. The economy is starting to come back to life.

But economist David Rosenberg of Gluskin Sheff has begun to worry (this is the second time he has written about it this month) that a weaker dollar is starting to reflect a plan by the White House to send it lower to give the economy a short-term boost, as well as the political fortunes the Obamacrats:

[US Dollar Index futures are] starting to break down, and the moving averages are moving down across the board. Meanwhile, the commodity complex and the commodity-based currencies are on fire. The Kiwi is at a nine-month high; the Rand at an 11-month high and the Loonie at a seven-week high. Meanwhile we saw sugar, wheat, corn, cotton and gold all rally significantly yesterday. As we said before, the last policy shoe to drop, which may be dropping already, is the dollar.


China has over $2000 billion in foreign exchange reserves, guess who’s not going to be amused about this policy.

Poll: Obamanomics has too much spending, too much government

Jul 24, 2009 13:19 UTC

Notice particularly the the stats for independents …


Public doesn’t like direction of ObamaCare

Jul 24, 2009 11:26 UTC

Why is Obama suddenly talking a lot more about healthcare costs? (And maybe he should do something more akin to a PowerPoint presentation when talking about this stuff. Remember those old Ross Perot presidential campaign commercials where he used charts?) Maybe because of this (from the WSJ):


What Obama forgot to talk about last night

Jul 23, 2009 17:17 UTC

Obama presented a false choice last night, either the status quo or Obamacare. But what about empowering consumers and letting markets work? A great post from the Health Care Blog makes some great points on this very issue. It looks at two fictional familes and shows how each deals with three different medical problems —  back pain, chest pain and dementia? The Smiths are passive and rely on the doctor while the Joneses aggessivey reserach their problems and question authority. Here is one example:

When Sam Smith’s back pain flared at age 45, he was quick to accept his doctor’s recommendation for an MRI and a visit to an orthopedic specialist to make sure it wasn’t serious. The MRI showed a possible cause of the pain and (just to be sure) Sam had surgery the following week, marveling at the efficiency of the system. The cost: about $40,000 for surgery, hospital, physician care and rehab.

When Jay Jones, also age 45, had an identical bout of back pain he reviewed a back surgery decision aid on the Web—even before his first visit. He learned that back surgery is not usually needed or always successful. For him the case for surgery was not very strong.

When his doctor recommended an MRI, Jay pointed out that a decision aid helped him learn that 50 percent of back pain cases go away in four weeks, 90 percent in six months, and only 10 percent of back pain cases need surgery. Jay also learned that MRI reports often find things that can lead to surgery even though they were not the cause of the pain. With that information he asked if he might put off the MRI and the surgery while he determined if his back would get better on its own—it did. The cost: $150 for the office call and $12 for the over-the-counter medications. Back surgery is among the most overprescribed treatments.

How to get more Smith families to act like Jones families, as well further empowering the Joneses. Some recommendations:

Supporting the Joneses

Job 1 is to help the Joneses succeed in their efforts by giving them evidence-based, easy –to-use decision aids and self-management guides to implement three basic rules:

  • The Self-Care Rule: Help people do as much for themselves as they possibly can. With the right tools we have become our own travel agents, bankers and investment counselors. We create our own Websites and edit our own movies. Rule #1 would bring that same innovation to health care.
  • The Guidelines Rule: Help people ask for the care they need. Too often in health care there is a gap between what we know works and what we do. On average, people with chronic disease get only about half of the care they should. Conversely, we are often suggested expensive and invasive treatments when simpler treatments do just as well or even better. By giving patients easy-to-read versions of the same medical guidelines their doctors use, they can ask for and get the care they need.
  • The Patient Choice Rule: Help people say “no” to recommended care that is not likely to improve their lives. With the benefit of good information people should be able to decline duplicative or overly expensive testing, unnecessary drugs or surgeries not likely to make a positive difference in their lives—particularly in the last years of life.

All three rules can be implemented quickly and effectively by implementing patient facing “meaningful use” requirements for electronic medical records and by expanding MyMedicare.gov into a virtual health home.

Motivating the Smiths

The second task is to motivate the Smiths to become more engaged in their own healthcare by offering economic and structural incentives to them and to those who serve them.

  • Reduce co-pays for services that prevent complications.
  • Reduce co-pays or premiums for people who use patient decision aids.

The self-care rule: I once had the recurrence of an infection for which the standard of care is immediate treatment with antibiotics. But it was a weekend and I didn’t want to go to the ER for a non-emergency. Since the symptoms are quite uncomfortable, I hit the Web to see what I could do to alleviate them until that Monday. The first website I happened to hit was British. It said the condition should resolve itself in a couple of days. It advised treating the symptoms and if it didn’t resolve in a few days, see the doctor for antibiotics. It also told how to create an “unfriendly” environment for the bacteria. (All the American websites said the same thing: see a doctor immediately for treatment with antibiotics.) I then called my pharmacist who said he’d have the palliatives waiting for me. I followed the Brit’s advice and the infection was gone within 48 hours.

My telling of this little anecdote does not mean I necessarily endorse Mr. Pethokoukis’ proposals, but this is exactly the kind of conversation we should be having right now (and good luck finding any sign of it in the legislation wending its way through Congress). I, too, am a big fan of the HSA model. Most of the time, all the majority of us need are the services of a nurse practitioner or even a physician assistant (I use them whenever possible and I have great insurance). We’ve known for years that we’ve been over-using and abusing antibiotics, as well as any number of other drugs. We need to find ways to stop our abuse of the system that fall well short of having government dictate to us.

Every segment of the health care industry, including we the consumers of health care, is responsible for the mess we find ourselves in, but IMO none more than the government. I find it ludicrous that the same government now considers itself the solution.

Posted by Kyda Sylvester | Report as abusive

Why Obama might have just killed Obamacare

Jul 23, 2009 16:19 UTC

If President Obama’s prime-time speech and news conference were intended to push national healthcare reform over the political goal line, then the effort almost certainly failed. Do more Americans today better understand the still-evolving plans floating around Capitol Hill than they did yesterday? Unlikely.

Take the idea of a health insurance exchange, a feature found in all the Democratic congressional plans. Obama described it as a “marketplace that promotes choice and competition,” as if it were a healthcare version of eBay. Actually, the exchanges would be a government regulatory mechanism that could severely limit consumer choice. Or maybe not. In any case, there are few outside of Washington think tanks who have any idea this idea would work in practice across the country.

Nor was the president clear about the exact role of the government in a changed healthcare delivery system. Although Obama said any bill he signs would “keep government out of health care decisions,” the whole point of Obamacare is to use government to transform how doctor’s provide service by altering incentives.

Now maybe it would be a nudge — to use the language of behavioral economists — from Washington rather than a shove, but few non-experts have any sense of how a typical doctor visit might change. Sure, having a physician prescribe a cheaper blue pill rather than a pricier red pill if they both work the same is a no brainer. But what if the red pill is pricier, no more effective but has fewer nasty side effects like nausea? Or what if the red pill is 40 percent more effective but costs 80 percent more? Who is going to make the red pill-blue pill decision?

But Obama really wasn’t giving a closing argument as to why his plan would be the right solution to America’s healthcare problems. Instead, lackluster public interest in the issue — at least as compared with the recession and rising unemployment — led him to spend considerable time explaining yet again why reform is needed and needed now.  Ideally, as the White House sees things, the public would have already accepted its narrative that a) Team Obama stabilized the bad economy it inherited, b) although economy is slowly mending it will take time for the jobs to appear, and c) so while we’re waiting, let’s fix healthcare. But Obama probably didn’t help himself by burying his most powerful argument for middle-class voters with health insurance — that rising healthcare costs prevent bigger wage increases.

Then again, maybe the president’s real problem boils down to his apparent belief in the false choice he presented: “You know, just a broader point, if somebody told you that there is a plan out there that is guaranteed to double your health care costs over the next 10 years, that’s guaranteed to result in more Americans losing their health care and that is by far the biggest contributor to our federal deficit, I think most people would be opposed to that. Well, that’s status quo. … So if we don’t change, we can’t expect a different result.”

Yet it might not be a case of Americans being too comfortable with the status quo as much as it is one of Americans being extremely uncomfortable with Obama’s version of a new status quo.

So was the president successful in getting out his message? Here’s one bad sign: The top morning news shows led not with healthcare but with Obama’s slam against police officers that arrested his friend and college professor Henry Louis Gates Jr. With Congress stymied and public interest waning, a muddled message means a lost opportunity for Obama and healthcare reform.


The present form of Health Care proposed by the Obama administration contains regulations that state when a person reaches sixty-five or older, rather then be given adequate health care, they will be consuled on why they would be better off not accepting any further medical help. Instead they will be advised to accept letting nature take it’s course and to die peacully without being a burden to the health care system. If that is not sinister, I don’t know what is.

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That millionaire healthcare surtax would have to be …

Jul 23, 2009 14:57 UTC

… about 6 percent, according to the Tax Foundation, to theoretically raise the same amount of dough as also having surtaxes on those making over $350,000. Now this assumes wealthy Americans wouldn’t scramble to reduce their tax liabilities via all manner of tax-sheltering strategies. Of course, such behavior isn’t economically efficient as Obama himself knows:

The high marginal tax rates that existed when Reagan took office may not have curbed incentives to work or invest, but they did distort investment decisions — and did lead to the wasteful industry of setting up tax shelters.

4 reasons why a second stimulus is a bad idea

Jul 22, 2009 18:47 UTC

Wells Fargo/Wachovia economist John Siliva makes his case:

1) A second stimulus would add fuel to the already recovering economy and would create the false impression that all is now back to the “happy days” of an overleveraged consumer and strong growth. Therefore, estimates of top-line revenues are likely to overstate the true sustainable future pace of sales in a deleveraged economy.

2) A second stimulus would likely add to inflation/interest rate pressures and, thereby, higher interest rates and the cost of capital down the road.

3) A second stimulus would further raise doubts on the ability of our nation to control future spending/deficits and lead to a depreciation of the currency and possible loss of our near-exclusive role as the world’s reserve currency.

4) A second stimulus would further hide the negative impacts of the numerous micro policy proposals in place and thereby obscure, for a short time, the economic losses from the misallocation of public resources.


Meanwhile the list of distinguished economists who disagree continues to grow:

http://www.cepr.net/index.php/press-rele ases/interactive-press-releases/economis ts-who-make-the-third-stimulus-honor-rol l/

Posted by Mark A. Sadowski | Report as abusive