Monday, January 17, 2011

Demographics Drive Health Care Costs Up

It is impossible to stop rising health care costs without cutting treatment. We can slow the growth of costs with competition and innovation, but the primary cost driver is and will remain the amount of medical treatment provided on a per capita basis.

People today see doctors more frequently than people did in prior generations, and they’re increasingly likely to get expensive, cutting edge tests and therapies that were not in existence a generation ago. Once they leave the doctor’s office, today’s patients are medicated with more drugs than ever before, and at much higher costs. And because they get all this expensive care, people live longer than ever before, reaching ages at which they require constant medication and treatment.

In a rapidly growing society, such as America after World War II, such increases in the amount of medical treatment provided may be sustainable since there are many healthy, young workers bringing down the average cost of insurance, be it public or private. In a stable or shrinking society, however, the rapid increase in treatment leads to rapid increases in the per capita cost of insurance. There simply are not enough healthy, young workers buying into group health insurance plans to offset the hordes of baby boomers on blood pressure medication, getting MRIs, having heart surgeries, or receiving diabetes treatment, etc. And so, each year the cost of a health plan goes up in proportion to the increased amount of care provided. Unless we cut back the amount of medical care, there is no way to stop the rise of health care costs. So what can be done?

In the 70s sci-fi movie “Logan’s Run,” a futuristic indoor city manages its population by putting everyone to death at age 30. That keeps the population from overgrowing the city, and would obviously prevent a lot of costs associated with an aging population. The idea of eliminating people at 30 is a bit naïve, though, since that leaves barely a decade of productive labor after two decades of expensive child rearing. Basing acceptable longevity on economic value, age 50 seems a more sound cutoff.

Of course, it’s hard to imagine we’ll ever reach a point where we’d implement such a horrifying policy. Rather, harsh economic realities will make the choice of life or death for us. Total life expectancy will decline as rationing leads to higher infant mortality, fewer preventive treatments, and deaths of people whose drug benefits are cut off, or who are too far down the waiting list for diagnostic tests, surgeries, etc. And eventually, enough older patients will die that the growth in medical costs will abate.

Other than death, only two things may stop the increasing per capita cost of medical care – a dramatic technological breakthrough, or lots of babies.

In terms of technology, it’s possible that science may find ever cheaper ways to provide the same or better treatments than we have today. Or perhaps we will discover cures for such maladies as cancer, diabetes, Alzheimer's, and other diseases that now require expensive treatment and drugs. Personally, I suspect that each technological breakthrough is likely to increase the cost of care, though. After all, once we eliminate each cause of death, we only push up life expectancy and force nature to find new ways to kill us – something nature seems very intent upon doing. New conditions become the leading cause of death, and we in turn search for new treatments and drugs to combat those. Until man becomes immortal, the cycle seems unlikely to end.

Making lots of babies, on the other hand, is a practical solution we can implement with a high degree of certainly for success – not to mention a good bit of fun. If each woman has an average of two children, that is not quite enough to maintain a stable population, owing to mortality prior to child bearing. To grow the population, and hence the number of young, healthy workers offsetting the expense of caring for older folks, women need to have an average of at least three children each. And really, four or five would be optimal. We’d still need to scale back certain entitlement programs, such as Social Security and Medicare, that need six or seven healthy workers for every beneficiary. But with a moderately growing population, at least we could continue to have such programs to care for the aged and infirm.

None of this is an argument to do nothing about the cost of health care. We can and should take measures to control the costs we can control so as to buy time before the day of medical treatment reckoning – the day we have to start cutting back on care because we have no other choice. We should allow a free market in health care, introducing competition into what has long been a closed, controlled system low on choice and high on expense. That means allowing insurance providers to create a multitude of competing plan options, and allowing them to sell these competing options across state lines. It also means requiring care providers to operate transparently, posting prices for treatments up front so as to allow consumers to shop around. And finally, it means opening up the medical professions to competition. Why should a person be required to complete medical school to set a broken bone or dress a wound? Military medics with months rather years of training have been doing these basic tasks effectively for centuries, freeing up doctors and nurses for more critical care. If we make doctors and clinics compete to be our care providers, we’re likely to receive better treatment and lower costs.

Still, each person’s health care costs, either directly paid to providers or to insurance companies, will continue to rise as long as fewer healthy workers are being asked to carry the load for more and more sickly ones who needs lots of care. Everything we do without addressing that essential fact is only tinkering around the edges of the issue.

Wednesday, August 11, 2010

California to Send Tax Revenue to Neighboring States, Create Black Market

Beginning in February 2011, gun shops and sporting goods stores in Arizona, Nevada and Oregon are likely to see a boom in sales of handgun ammunition as California’s draconian AB 962 goes into effect. The law bans Internet ammo sales to Californians and, more importantly, requires merchants within California to track consumers who purchase handgun ammunition, maintaining fingerprints for each.

The law infringes upon the federal government’s Constitutional primacy regulating interstate commerce, making the sale of a legal good across state lines a crime. On that basis, it’s likely to be overturned eventually. In the meantime, though, the law will encourage many gun owners to buy ammunition in neighboring states. Weekend trips to Reno, Vegas, and other nearby towns will now include bulk ammunition purchases as visiting Californians stock up there to avoid intrusive government monitoring here. And the sales tax revenue that would have been collected by California cities will go to our neighbors instead.

There will still be ammunition sales in California, of course. Folks who keep firearms strictly for home protection and rarely actually shoot their guns will probably buy the odd box in-state. But serious shooters are already planning to stock up on ammo from out-of-state. And criminals, whom the law presumably was intended to deny easy access to ammunition, will stop buying from legitimate retailers (where sales tax is collected) and buy instead from street peddlers trafficking in stolen or illegally imported ammunition.

We’ve seen this tragic comedy before. Governments impose tougher restrictions on guns and ammo claiming they’ll prevent gun violence, but actually just making life harder on law abiding citizens. Unable to buy guns from legit stores, criminals buy them instead out of the trunks of cars or under tables in bars, completely off the books. Now handgun ammunition will also trade hands underground, creating yet another racket for gangs to fight and kill over.

This gets at the actual root cause of violent crime – not the availability of guns or ammunition, or even poverty, but the creation of incentives to commit crime. In our efforts to control the behavior of others, society has imposed various restrictions that have had perverse consequences. Alcohol prohibition in the 1920s was supposed to promote social order and public welfare. Instead, it created the mob and murderous black marketers like Al Capone. For generations since, society has prohibited recreational drug use and prostitution, and these two underground activities continue to fuel gang violence to this day. In poor Mexico, drug cultivators and smugglers serving the American black market now threaten the very existence of the Mexican state, murdering police officers, judges, politicians and rival gang members in ever more violent massacres. Across Asia and Eastern Europe, young girls are sold into slavery or are kidnapped by black market traffickers equally ruthless in their use of violence.

By now, it really ought to be clear that the best way to interrupt this cycle of violent crime is not to give black marketers yet another lucrative incentive to kill, but rather to stop trying to control other people in the first place.

Monday, July 12, 2010

Uncertainty in Afghanistan

I’m no longer certain that we’re doing the right thing in Afghanistan. For the past nine years, I’ve supported an American-led nation-building project there on the premise that failed states were incubators of terrorists and other enemies of democracy. Now I’m not so sure.

After 9/11, President Bush did precisely the right thing in deposing the evil Taliban regime and chasing its al Qaeda allies out of the cities. That decisive action devastated the terrorist network and probably did much to keep us safe. The most important question now, however, is whether we can expect to go beyond that security success to establish a functioning civil society in the long-troubled land. And if we can, at what cost and to what end?

Certainly, well functioning, peaceful societies are preferable to illiberal, threatening regimes. And Afghanistan’s proximity to Pakistan, that nuclear-armed Islamic nation with its own Taliban and al Qaeda insurrectionists, makes the country more important to American security interests than other failed states. Unfortunately, it’s not clear that there’s much we can do to develop and reform Afghanistan under current military and economic circumstances. NATO has proven to be a hollow organization where Europe is not directly threatened – and as European dithering during the Balkan crises of the 1990s showed, the organization is weak even on its own soil. The project in Afghanistan, then, is an almost exclusively American effort.

Meanwhile, the strategically more important effort in Iraq necessarily consumes more American attention and resources. Iraq has superior existing infrastructure, fewer competing tribes to reconcile, greater potential wealth to fund development, and a well-establish secular tradition. The fact that Iraq is overwhelmingly Arab also makes it more important as a potential example of democracy for the people of Egypt, Syria and the Gulf States. Then there’s oil. Having that precious commodity makes Iraq important in the global economy in a way Afghanistan simply is not. Whether you’re a neo-con hoping to plant democracy in the heart of the Middle East, or a policy realist who just wants to manipulate the levers of power and wealth, Iraq is far and away more critical to your agenda – and to America’s.

So if we can’t leave Iraq to win the supposedly “good war” (according to President Obama) in Afghanistan, what do we do? Hamid Karzai and his corrupt friends and relatives stunt internal civil development, and we don’t have the troops or money to impose a large-scale solution from the outside. More and more, I’m beginning to think maybe the best we can do is to establish Taliban-free zones in the north and around Kabul. Such retrenchment would require fewer troops and less money, and would reduce combat losses. With well armed and organized forces occupying a smaller footprint in-country, we would still be able to execute lethal campaigns against Taliban and al Qaeda forces whenever they pop up.

At present, though, we seem to be pursuing the worst possible strategy – “surging” to a troop level that remains insufficient to actually succeed in a strategy that may be too ambitious. The result is more dead Americans for no clear benefit to our country. That truly is unsustainable.

Thursday, April 01, 2010

Settled Law from a Living Document?

The left likes to say that whatever gains they’ve made pushing the "progressive" agenda over the years are now “settled law.” That is, things such as the unfettered right to abortion and the authority of the federal government to essentially ignore the 10th Amendment are now set in stone, and anyone who disagrees should shut up since that’s all been settled already. Well sorry, in our democracy, the only settled law is the one the left so loves to subvert, challenge and distort at every opportunity by calling that law a “living document.”

By now it should be clear I mean the Constitution, which the left constantly attempts to bend to the leftist program. Forget that the amendment process provides a clear and specific way to actually alter the Constitution. To the left, the words and clauses already there are open to constant reinterpretation so that the Constitution means whatever they say it means “in the current context” or “in accordance with contemporary mores.”

Thirteen states so far have filed lawsuits against the federal government in response to the health care takeover Democrats have foisted upon the country. Apologists for big government retort now that the Commerce Clause empowers the federal government to do all contained in the health care bill and more, and that such empowerment has been settled once and for. No need belaboring the debate. Those of us who believe the Constitution sets strict limits on government power (as the Founders explicitly stated it does) ought to pipe down and accept that the “living document” has adapted to today’s realities – which includes the fact that unlimited federal power is now set in stone.

A living document that sets leftist ideas in stone. What a creation!

Friday, October 02, 2009

High-Speed Rail to Nowhere

This morning's San Francisco Examiner reports that Gov. Arnold Schwarzenegger is submitting a bid for $4.5 billion in federal porkulus funds to get California's high-speed rail project moving forward. Although voters had already approved the sale of $10 billion in bonds for that purpose, the state's terrible credit rating and drowning debt have made it impossible to sell the bonds, and the rail project is languishing. Apparently there just aren't many folks dumb enough to bet on California's government straightening itself out any time soon.

So now the governor is begging Washington for the down payment on a system that is projected (by the California High-Speed Rail Authority) to cost up to $35 billion when all is said and done. Unfortunately, there are two major problems with even this official state forecast. First, the ultimate cost is likely to mushroom as all public project costs do when bureaucrats' rosy predictions run into reality. And second, today's estimates assume the project will actually ever get done. As in, completed. Operational. Functional.

The Bay Area suffered a catastrophic earthquake in 1989 in which sections of the Bay Bridge's eastern span between Oakland and Yerba Buena Island collapsed. Twenty years later, a replacement span still is not complete. Even worse, state engineers actually knew 30 years before the '89 quake that the Bridge's eastern span was vulnerable in the event of a major temblor. In other words, it's been 50 years -- half a CENTURY -- since California first identified a critical, life or death issue with a massive economic impact on the state, and yet the project to replace the troubled span still is not complete.

And back to the cost overrun issue, the Bay Bridge project is a cautionary tale. In less than a year in 2005, the project costs skyrocketed from the state's $300 million estimate to about $6.5 billion.

What chance does the state have of actually finishing a high-speed rail system across the entire state, and doing it for its current cost estimate of $35 billion?

No chance.

Wednesday, September 02, 2009

Afghan Endgame?

George Will certainly stirred up a lot of anger among my fellow righties with his column yesterday saying that the U.S. ought to withdraw the bulk of troops from Afghanistan and transition to a more remote engagement relying on drones, special forces strikes, and such rather than pursuing the troop-intensive strategy of counter-insurgency General Stan McChrystal has laid out.

Counter-insurgency is necessarily nation-building, as it relies on establishing not only security, but also civil relations and functioning institutions. Will has been consistent, unlike many on the right, in opposing such endeavors on traditionally conservative, politically realistic grounds. He made similar arguments about our involvement in Iraq.

As a neocon, I must disagree with Will and that near-isolationist impulse, as well as with pure political realism generally. Having little engagement and even less influence in places like Afghanistan is what created such a headache for the United States in the first place. Make no mistake, there always have been and always will be those who want to kill on a mass scale. The U.S. is not to blame for its suffering the 9/11 attacks because of our inattention to that region. But there can be little doubt that our inattention did at least allow Al Qaeda and its Taliban allies to increase their operational capability, enhance their training and grow bolder and more confident in their agenda.

As so many of us said after 9/11, never again.

Americans cannot allow the festering sores on the other side of the globe to become wounds in our own national body. We cannot rely on technology, no matter how impressive, to keep us safe from cells of enemies who hide in caves and blend in with civilian populations. Drones and satellites and cruise missiles cannot help us weed out the bad guys from the innocent civilians across Afghanistan. And if we do not continue to root out and kill those bad guys, they will grow more powerful once again.

We cannot allow that.

George Will is a brilliant, thoughtful conservative. But he's wrong on this issue. America must not only remain in Afghanistan, we must win our counter-insurgency and embrace the nation-building so many of us on the right still bemoan. Like it or not, we live in a world of intervention now. Either we intervene on our own security behalf, or the terrorists will intervene in our lives in the most horrific of ways.

Monday, July 13, 2009

Media Spreads Untruisms about GM

One of the dumbest things I've heard or read from reporters talking about GM over the past several months is that, at some point, the company just started making cars no one wanted to buy.

Ridiculous. Until last year, GM sold more cars worldwide each year than any other manufacturer. Then Toyota passed them by. Now exactly who on Earth was buying all those GM cars year after year, even during the 1980s and 90s when the company was supposedly completely ignoring consumers? How can any company sell more of something than every other company on Earth when “no one” wants their products?

Obviously, plenty of consumers did want what GM was selling. More, in fact, than for any other auto maker, including Toyota and all the supposedly more consumer-oriented companies.

What did GM in was not that no one wanted their cars, but rather that their cost structure and distribution network could not support merely being No. 1. They were based, rather, upon the shortsighted assumption that GM would continue to utterly dominate the auto market. UAW workers and retirees enjoyed pay and benefits that made them not merely middle class, but outright affluent.

My grandfather retired from GM after 30 years with a 90 percent pension and generous lifetime benefits I can only dream of. Now my high school dropout grandpa stays home every day and collects more than I do working full-time in a professional position, having graduated from one of the finest universities in the world. I'm glad he's comfortable. But even he complained for years about how the union was strangling the company, how lazy workers were untouchable, and were paid just as much as truly dedicated employees.

Well, the chickens have come home to roost.

I admit that I've been rather uninspired by most of GM's designs over the past couple decades. But then, Honda, Subaru and Mazda haven't done much to pique my interest either. Most auto makers, it seems, started churning out dull, lifeless, cars over the past 20 years intended to be acceptable to the widest possible market segment rather than actually turning anyone on. Of that, GM was as guilty as anyone. But it's absurd to say no one wanted their cars when more people were buying them than were buying any other make.

This reminds me of the the famous quote from media film critic Pauline Kael in 1972 about Nixon's election: “I don't know how Richard Nixon could have won. I don't know anybody who voted for him.”