Sunday, October 24, 2010

NY Times Editorial Fail

One of the great things about being on the editorial board of a major newspaper, I imagine, must be the ability to write whatever the hell you feel like without having to actually make any sense or be accountable for what you've said.

The New York Times editorial board contributed a mindboggling piece of partisan stupidity yesterday, in an attempt to influence the upcoming mid-term elections around the country.

In this editorial, titled; "Health Care and the Campaign", the author(s) write:
"Republican candidates and deep-pocketed special interests are spreading so many distortions and outright lies about health care reform that it is little wonder if voters are anxious and confused.

Here are a few basic facts that Americans need to keep in mind before they go to the polls, and afterward."
But I'm here to tell you... the "facts" they'd like you to keep in mind aren't particularly... well... factual. Worse than that, however, they are horrendously poorly reasoned and - as should be expected from the employer of Paul Krugman - utterly ignorant of the basic principles of economics.

The article goes through a list of supposed "lies" being thrown around about health care... I'm not really here to defend specific politicians, especially not Republican ones, but it is worth examining what the New York Times believes is misleading to the American public. So I'll just go through each of their little points in order... Here goes.

The first point, the NYT claims is "Pure Nonsense":
John Raese, the Republican candidate for the Senate in West Virginia, is claiming that the law will require patients to go through a bureaucrat or panel to reach a doctor. That is flat out untrue. You will still choose your own doctor or insurance plan without interference. Nor, despite other claims, will the law provide subsidized insurance to illegal immigrants. They are precluded from using even their own money to buy policies on new exchanges.

The Obama administration will not be compiling a federal health record on all citizens, including each individual’s body mass index, as Ann Marie Buerkle, a Republican running for a House seat in upstate New York, has claimed on her Web site. The administration is offering incentives to doctors to record various vital statistics in electronic medical records and report the data in the aggregate, to help understand national health trends."
Well... What John Raese said (which frankly, I couldn't care less about) might be mostly nonsense... Certainly the phrasing is probably nonsense. But... To a large degree, the NY Times' response is just as awful.

"You will still choose your own doctor or insurance plan without interference"?? What?! That's not been true for the past 50 years, and it's much worse now. The state has its fingers all over the doctors and insurance plans available and the new legislation only exacerbates that issue with ever-more complicated rules and mandates. It may very well be true that you won't physically have to talk to some bureaucrat about which doctor your allowed to see, but that's precisely because that bureaucrat or politician already made the decisions about what's available to you before you even started looking!

This is a fundamental point, and one the NY Times predictably avoided... To be fair, it's also not the point that John Raese made, but it's the point that needs to be made here.

Likewise, it's also may or may not be true that the government will be compiling detailed health records on citizens as Ann Buerkle apparently claimed, but let's take the ridiculous leap and imagine that the folks at the New York Times would prefer a "single payer", fully socialist (state owned & operated) health care system. Well, if that were the case... the government actually would need to keep such records, now wouldn't it?

What's more amusing is that their very next point is about the so-called "insurance exchanges" that are supposed to be set up and run by the government. Not exactly sure what that would entail, if not keeping detailed records of people's health for the purpose of "helping" them find the "right" insurance plan for them, but that's not even the major failure in the following segment, which the New York Times disastrously called "We Call That Capitalism":
"Republican politicians never tire of denouncing health care reform as a “government takeover” — or socialism. What is true is that the law relies heavily on private insurers and employers to provide coverage. It also strengthens regulation of those insurers and provides government subsidies to help low- and middle-income people buy private insurance on the exchanges.

Those exchanges will promote greater competition among insurers and a better deal for consumers, which last time we checked was a fundamental of capitalism."
Uh... WHAT!???

No, New York Times... We don't call that "Capitalism"! We could call this "corporatism", or even quite realistically, (economic) "fascism". We could go old-school and call it "mercantilism". When the government provides immense regulations, takes control over a market and then provides subsidies and special protections to favored companies, that is actually the OPPOSITE OF FREE MARKET COMPETITION!!

How is this difficult to understand, liberals/progressives?  Yes... I'm calling you out specifically because it's always you guys anymore who claim that the health care bill will increase competition. It's the most ridiculous idiocy I could have even conceived of. It is utterly Orwellian double-speak!

That legislation was one of the most anti-competitive laws I've ever even heard of being foisted on an ignorant public in any country in at least the past 200 years. These so-called "private" insurance companies are now getting about half of their paychecks directly from government to begin with, and after this bill fully comes into effect, I have no reason to think it won't rise to around 70-80%.

You know what that means right?

Consumers are even further detached from their own health care decisions - and more importantly, from the costs and the services they're "buying". Insurance companies aren't now (and certainly won't be in the future!) going to be competing for your vote in the market by offering services that benefit you... No no... They are competing for government approval and public funds. Setting up these exchanges, which we have no reason to believe will be run any better than your local State unemployment department's jobs board, will not improve competition in any way that benefits the consumer on tiny little bit. It is pure fantasy to think otherwise.

This isn't Capitalism, New York Times... Not by a long shot. Try again.

Next up is "What About McDonald's?":
Conservative commentators pounced after the fast food chain and several other large employers that provide skimpy, low-cost policies to their workers warned that they might drop their health plans entirely if forced to comply with the new law. They particularly objected to a requirement that they begin raising the low annual limits on what their plans are willing to pay for health care.

In response, the administration has granted some 30 waivers for one year (Rush Limbaugh promptly accused the administration of allowing these employers to “break the law”) and has signaled willingness to smooth out other bumps on the road toward full reform. In 2014, all plans will have to meet minimal standards and large employers will have to provide coverage or pay a stiff fine."
I already had this conversation with a few people who started out (thanks I believe also to another New York Times editorial if I'm not mistaken) claiming that McDonald's wasn't actually going to drop their coverage, but the editorial response here radically misses the point.

First off, why are there any "bumps" in a 2,000+ page law that was sooo damn important to pass, congressional democrats resorted to playing tricks with procedural rules in order to get it done no matter the cost?

Secondly - and this becomes a running theme for the rest of this editorial's comments - are we suddenly living in magic unicorn land where there's no negative consequence to forcing enormous new costs on people? I mean geesh... This isn't rocket science. People, even (especially?) major employers like McDonald's respond to incentives. This really shouldn't be news...

Right now, they have X dollars available to pay for labor. And make no mistake, "X" is an incredibly large number... But here's the thing... It's not an unlimited number! Overreaching politicians and idiots who support them really need to start with the understanding that an employer doesn't actually care all that much in what specific arrangement his labor costs are dispersed. I would imagine that the easiest way for everyone would be to just do 100% in wages... But alas, that's not what the labor market wants or what the government demands. Instead, some percentage of "X" will go to wages, some to taxes, some to benefits, some to training, some to uniforms, some to OSHA, some perhaps even to the INS... It gets complicated.

Here's what doesn't get complicated though. "X" is a finite number for every company. Every hour, every day, every year.

So what does that mean? Well... If government mandates that 10% of "X" must be spent on health care benefits (or whatever else politicians deem "important") then only 90% of "X" is left for other things like wages or training. Government is not magically making "X" a bigger number... So McDonald's, when required to pay more for one aspect of their labor, such as health benefits, must cut back in some other area - such as wages.

Unfortunately for a company like McDonald's, the government also fixes the low-end price of wages so they can't offer lower salaries either. This puts them in an interesting position where they need to find alternatives - many are available to be sure, but it seems that the most effective one they've discovered is to get a government-issued waiver, exempting them from the new law.

Go figure...

The elegance of this solution from McDonald's standpoint really shouldn't be understated... As one of America's biggest employers, they've used their special connections to get them a specially issued exemption to a rule that is extremely costly... Did I mention that it's an exemption that their smaller competitors (think: Inn & Out) have absolutely no hope of getting. Cool, huh?

Of course, let's say that in 2014, that waiver is dropped and MickyD's is required to pay for higher levels of health benefits. Where will the money becoming from?

Well I can't know for sure... But I'm guessing that step one will be reductions in hours, or manipulating the status of their employees into whatever category has the lowest requirements. Step two might involve raising prices to cover the gap (assuming that the price increases won't negatively impact overall revenues, since that would be counter productive). Or who knows? Maybe their lobbyists will just get indefinite extensions on their little waivers - at some point the media will have forgotten anyway.

I know you might be thinking that "X" could be increased if they'd settle for a reduction in their profit margin... This may or may not be an option (lots of reasons why not, actually), but in reality - for better or worse, it's not a very likely one.

The problem of "X" being static is one politicians, especially currently the "progressive" variety don't really seem to understand.

Now... "What About My Premiums?":
Some Republicans are also claiming that health reform is driving up premiums. There have been sharp increases in some states, primarily in response to soaring medical costs. Some insurers may also be trying to increase their profits before the reform law holds them in check. A few very welcome provisions that take effect early, like requiring insurers to cover preventive care without cost-sharing, will play a minor role in premium increases for next year.

Reform has also energized federal officials and many state regulators to challenge and force down big increases sought by insurers. The Justice Department just filed suit against Blue Cross and Blue Shield of Michigan for allegedly using its market power to drive up costs for its competitors and its own subscribers."
It is quite true that a lot of the cost increases are coming "prematurely", in the sense that companies are planning ahead and trying to anticipate future costs. Gee, why ever would they do that? The NY Times makes it seem like there are people out there arguing that it's a 1:1 sort of a thing where if an insurance company raises premiums before some new provision is actually activated as part of the changes in the law then the cause must be something else.

Guess again editorial board.

Companies have to think several years in advance and attempt to predict the environment that their services will be provided in - including the legal landscape - in order to continue operating successfully.

And then of course, the editorial board praises the Justice Department for prosecuting Blue Cross & Blue Shield for "price gouging" (Seriously? Are we living in 1940s Russia??), when in reality that's utterly ridiculous. The problem with Blue Cross & Blue Shield is that they hold special privileges that the government has granted them which no other insurer gets - it's no surprise that they wind up being part of the top-tier of insurers in every single state where typically 2-3 companies hold 90% of the market share.

Insurance is a cartel... And it's not because of their greed, or because they are good at doing what they do... They are a cartel because the government controls and "regulates" the industry to an immense degree, giving special protections to favored companies and prohibiting competition in virtually every meaningful way.

In a free market, prices tend to drop across all services & goods because companies compete to offer consumers what they want in better and more affordable ways... There are plenty of ways to drive customers to your business, of course, but the main ones are obviously price and quality. Insurers don't face much in the way of competitive pressures and as a result, they rarely work towards increases in efficiency or make any systematic changes that would provide consumers with a better product at a lower price.

And why should they? 50% of their revenue already comes from government! There is very little that ties health insurers to the end-user of their services. You can thank bad policy over the last several decades for creating that situation, though... Whining about their price increases after-the-fact is just idiotic.

Moreover, there are tons of mandates and other requirements in this legislation that are incredibly costly.

I spent months trying to explain this - and now that the consequences are starting to become somewhat apparent, we get papers like the New York Times desperately trying to tell us that the Emperor's bare ass is covered by a fine fabric we're just not smart enough to see. Bah!

I'm going to skip over their parts on "Medicare & Medicaid Scare Tactics", and move right on to their conclusions. The final segment of the editorial claims to expose, "What They're Not Saying":
"Health care reform has already brought substantial benefits, mostly starting in late September. Insurers are now barred from dropping coverage after a beneficiary becomes sick. Dependents can stay on their parents’ policies until age 26. Insurers must cover preventive services and annual checkups without cost-sharing. Lifetime limits on how much insurance plans will pay for treatment are gone.

The major benefits start in 2014, when tens of millions of the uninsured will gain coverage through Medicaid or by buying private coverage — with government help for low- and middle-income Americans — on the new competitive exchanges. If you lose your job, you will no longer lose access to insurance. And with government help the coverage should be affordable.

Far too few Democrats are explaining this on the campaign trail. The barrage of attack ads are hard to push back against. But the voters need to know that health care reform will give all Americans real security."
How in the hell are any of these things ultimately beneficial?? We are simply back into the territory where the New York Times' editorial board pretends that the government mandates can replace production by some magical process where making hundreds of new rules for companies to follow, ballooning the supposed benefits that must be provided by force and subsidizing consumer demand will somehow not result in huge price increases.

The reality is much different. Skyrocketing prices for care will necessarily make it harder for the poor to afford adequate treatment, and the government subsidies and expenditures (such as the already massive $800 Billion we spendon Medicare every year) will come at the expense of current & future prosperity as Americans must be taxed more and more to pay for all of this nonsense. The result will be entirely the opposite of "beneficial". For all their supposed good-intentions, this foolishness is going to cause some remarkably severe damage to a lot of people - all because our ruling class and their various lapdogs don't seem to be able to grasp basic logic. It would be a lot more funny if it wasn't so devastating.

As a side note... How is it that the New York Times doesn't grasp the irony of whining about things like McDonald's dropping coverage for their employers, who are nearly all teenagers working their first jobs while still living with their parents, and then touting the greatness of letting "kids" stay on their parents insurance until age 26?

By age 26, I had been living on my own for 7 years already... Is America really at the point where we're calling people closer to 30 than 20, "dependents"?? This is just pitiful.

The Times wants to have their cake & eat it too.

They spend the whole editorial pretending that fears about government-takeovers and massive cost increases are fictional and silly, while then explaining that by 2014, there will be a miracle shift in health care in the United States that provides everyone with everything they need at no extra cost. They make all the classic mistakes in economic reasoning here... They focus on the short-run and ignore the long term, they fail to grasp that mandating this or that doesn't actually make what they want to do possible, and they avoid even trying to deal with the obvious consequences of punishing production and encouraging consumption.

This article is a fine enough attempt to make some (probably idiotic) Republican politicians look bad - and no doubt a lot of them deserve to be highlighted... My response here really isn't designed to "defend" any politician and certainly not partisan ones who are barely smart enough to tie their own shoes, but the Time has just made themselves look utterly ridiculous. They've definitely created an editorial that is about as enlightening   as hitting oneself in the head with a brick.

But hey, at least we have this to look back on in 4 years after prices continue to explode in health insurance and all the magical benefits that were supposed to help people don't actually materialize.

At least I'll be able to say "I told you so", cause you know... that makes the destruction of quality health care in the United States worth it.


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