In response to what he dubs “the stupidest argument against health reform”–namely the argument that universal health insurance requires people to pay for someone else’s health care–upyernoz writes:

“paying for someone else” is the whole concept behind insurance. the idea of insurance is that there are certain things (floods, catastrophic medical costs, car crashes) which can be so economically devastating that individuals would be ruined if they had to pay the entire thing out of their own pocket. insurance is a way of pooling risk, everyone pays in, only the unlucky ones draw out. but then everyone can feel more secure knowing they have insurance to fall back on if disaster hits.

in other words, all insurance involves you paying other people’s bills (or other people paying your bills). that’s what insurance is all about. you can call it “socialism” if you want, that’s not an argument, that’s just slapping a label on something. but if you happen to believe it’s evil to pay for other people, then cancel all your insurance policies.

While I’m certain ‘noz and I stand united on the moral imperative of health reform that gives all Americans access to high-quality affordable healthcare, I don’t think his account of the argument he targets is fair, and thus I don’t think he offers a very satisfying response to the person who endorses that argument. Here, as I understand it, is ‘noz’s line of argument:

1. Proponents of the Stupidest Argument Against Health Reform maintain that they should not be forced to pay for another’s medical care.

2. But proponents of the Stupidest Argument willingly buy various forms of insurance without complaining.

3. But buying insurance just is the paying for another’s medicare care.

4. So to be consistent, the proponents should either withdraw their objection to health care reform, or else “cancel all [their] insurance policies.”

I think we can see clearly where ‘noz’s line of argument fails by changing the story a bit:

1. Opponents of income maintenance policies maintain that they should not be forced to pay for another’s wages/income.

2. But opponents of income maintenance policies willingly buy stereos without complaining.

3. But buying stereos just is the paying for another’s wages (namely those who make stereos).

4. So to be consistent, the opponents should either withdraw their objection to income maintenance policies, or else stop buying stereos.

It seems clear that while purchasing a stereo does in fact pay another’s wages, it is false to say that paying another’s wages is the “whole concept” of purchasing a stereo. But then what distinguishes purchasing insurance from buying a stereo? Each seems to amount to the same thing: parting with a sum of money to procure a good or service which is available to one only because certain others are willing to help produce that good or provide that service only because they too get something out of the economic arrangement.

The fact seems to be that those who wish to buy stereos and those who wish to buy insurance may not really care about the economic arrangements and contracts that lie in the background of these purchases. They do not really care that buying a stereo and buying insurance involves paying an amount of money a portion of which ends up paying another’s bills. The one person wants a stereo, and parts with a certain amount of money to get it. The other wants protection from the economic risks associated with (the treatment of) ill health, and pays an insurance premium to get it. It just so happens that, in our world, the reason why these purchases are available to one at all is that other people, who play different roles in the relevant economic domain, also get something out of their involvement. So, again, what could make the purported difference between buying stereos and buying insurance?

If this analogy is as revealing as I think it is, it shows why the proponent of the Stupidest Argument may not be making the silly mistake that ‘noz ascribes to him. To extend the analogy: Assume a tax is levied on all stereo purchases in order fund income maintenance policies for the unemployed. And assume that a would-be stereo-purchaser objects to this. Then that objection cannot be met simply by pointing out that he didn’t have a problem paying another’s wage through his purchase before the tax was levied.

In the case of health insurance, what would be the analog to the stereo tax that the proponent of the Stupidest Argument objects to? Since insurance is typically paid for through premiums, the proponent will likely claim that he should not have to subsidize another’s premium. But this raises the question of whether the initial distribution of income is itself fair, as that is the distribution that determines who has what to put toward premiums. To the extent that it is unjust that some work long hours in dreary jobs for what is now a largely depreciated compensation package, that can provide a reason to ask those who are favored by the structure of the economy to give some back to subsidize the premiums of those who get the short end of the stick.

Another barrier to insurance access has to do with differentials in health status (of which “pre-existing conditions” are one kind). To use a stylized example, assume that you and I form a two-person health insurance market, and that I am fairly healthy and you have a disease that can be treated with only very expensive health interventions. In this situation, each of us is presented with the option to buy insurance. But which insurance we buy, if any, will be influenced by which insurance products are available. If the only insurance product is one that pays for the sort of interventions you need, that product will be very expensive. In that case, I may choose not to buy it, since I feel there are other things I’d rather spend that amount of money on. But that may leave you without the prospect of insurance, since the resulting premium for you will be the same price as the expensive medical care you were hoping to avoid having to pay for directly by purchasing insurance in the first place. You will face a similar problem if there are in fact several insurance products available, and if I choose one that is cheaper. For that one will be cheaper precisely because it doesn’t not cover the expensive treatment you need. So while you may be able to afford that cheaper product, it doesn’t do you much good.

These thought experiments seem to show that the proponent of the Stupidest Argument is also probably objecting to having to subsidize the insurance choices that the market makes expensive for others because they are either more risk averse than he his, or because they in fact require more expensive insurance than the proponent himself wishes to purchase with the funds he has chosen to dedicate to health risk reduction. This is in fact not an objection we should dismiss as stupid, as I think the two-person example shows.

I’m sure ‘noz and I agree that when the simple two-person example is replaced with the much more complex picture presented by the macro situation in the U.S. today–a situation in which income is not distributed fairly and where individuals’ health status is profoundly influenced by myriad social circumstances beyond their control–there is a solid argument in favor of providing all Americans with at least basic health care paid for by general, progressive taxation. But even if we are right, we cannot dismiss the objections of those who disagree with us simply by pointing out that all insurance involves using what was once one person’s money to pay for the health care of another.

The moral of the story is this: it is false to say that the “whole concept” of insurance as such is to pay for another’s care. Yes, it involves that, but the sense in which it does is just the sense in which buying stereos involves paying another’s wage. Not much of moral relevance follows. But, it is absolutely true that the whole concept of certain social insurance schemes is to spread risk and cross-subsidize care for appropriate moral reasons. But those reasons cannot themselves be teased out of the idea of insurance as such.

Howls of outrage (18)

The first question of a Mensa Quiz I found in a recently published in-flight magazine:

Jerry was buying some candy. He paid 23 cents per caramel, 28 cents per lollipop, and 33 cents per spice drop. Based on this logic, how much will a chocolate bar cost?

My first response was that these so-called geniuses clearly flunked Logic 101. I assumed they wanted an answer of 38 cents, with each item increasing in cost by 5 cents. But obviously no way of thinking classifiable as “logic” would entail this answer.

Turns out they are not asking a question of logic at all, but rather giving something more like a crossword puzzle clue.  (Answer here.) Turns out you need to be a member of the club in order to even understand the question. I wonder, then, how the club got started.

Howls of outrage (4)

In the growing-up department, I still have a long way to go. Many of my habits are bad bad bad, and I have myriad tendencies that I don’t endorse and that leave me feeling full of self-reproach if acted upon.

But I must say that I felt some sense of pride when I saw this and felt revulsion at the thought of reading it. (The fact that it exists at all, in published form, is more than a bit nauseating, as well.)

There is some hope for me after all, I guess.

Howls of outrage (5)

I wonder which group blog this poor bastard writes for.

Howls of outrage (21)

Josh Marshall tells those of us wringing our hands over some of his (potential) appointees to cool it. Appointees implement policies; they don’t set them.

Maybe Josh can forgive us for taking Obama at his word:

One of the great economic minds of our times, Larry [Summers] has the global reputation for being able to get to the heart of the most complex and novel policy challenges. With respect to both, our current financial crisis and other pressing economic issues of our time, his thinking, writing, and speaking have set the terms of the debate. I am glad he will be by my side, playing the critical role of coordinating my administration’s economic policy in the White House and I will rely heavily on his advice as to navigate the unchartered waters of this crisis.

Obama tells us that Larry Summers, who argued that regulating financial derivatives markets would “cast[ ] a shadow of regulatory uncertainty over an otherwise thriving market,” will be a guiding force. Why shouldn’t we believe that?

Howls of outrage (9)

Ezra Klein is right, the news this morning out of the insurance industry’s bunker is a big deal. They have offered a deal. They will agree to offer insurance to everyone, in exchange for a mandate forcing all to obtain coverage. Ezra explains the logic of current arrangements:

The individual health insurance market, fundamentally, is incoherent: Insurers try to deny coverage to those who want it and to sell to those who don’t. That’s because the most profitable customer for an insurer is one that never gets sick, and the least profitable is one who falls very ill. But that’s not how you want your health insurance market to work. We want sick people to get care. That’s the point.

But perhaps they see the writing on the wall, and know that at some point, they will face legislation enjoining them to adopt “guarantee issue.” Hell, even the vast majority of Republicans voted for a recent bill prohibiting insurance companies from “discriminating” against customers whose genetic tests indicate future health problems. But in order to cover the costs of insuring those who have been traditionally denied coverage precisely because covering them would be expensive, the insurers say they’ll need healthy people to buy insurance. That way when the risky get sick, the premiums of the healthy can be used to pay for their treatment. As Donald G. Hamm Jr., president of Assurant Health, puts it,

In the individual market, people can choose whether or not to apply for coverage,” Mr. Hamm said in an interview. “If they know they can obtain coverage at any time, many will wait until they get sick to apply for it. That increases the price for everyone.

But Ezra is on to Mr. Hamm:

The question is not whether they’ll offer to sell coverage at all, but at what price? Selling insurance products that no one can afford may mean you’re not technically denying people access to insurance, but it doesn’t guarantee accessibility, which is a necessary precondition for a universal system. For that, you need “community rating,” which would force insurers to offer coverage at the same price to everyone, spreading risk equally and ensuring that coverage is no less affordable for the sick than the well.

Actually, even community rating is insufficient. Community rated plans are designed to lower the insurance costs faced by high risk individuals by requiring that any particular health plan’s premium be priced to reflect the population’s average anticipated individual health care costs. While such regulations are well-meaning— high risk individuals will not be charged more than low risk individuals for the same level of coverage—adverse selection can remain a problem. Unless there are also government restrictions on the levels of coverage in the available plans, especially on whether there is a robust minimum that every plan must provide, low-risk individuals may choose bare bones plans that would benefit medium- and high-risk persons little. When this happens, plans providing a robust level of health care will attract only those individuals with higher risks, and this will drive up premiums and drive away healthier buyers interested in cheaper plans. So even if everyone is charged the same price for a community rated plan, the plans providing robust coverage will be avoided by the healthy, thus making them more expensive for those who will actually want them. This leads to premiums that still significantly reflect health status even when community rating regulations are in effect. Here’s one recent NBER working paper on the issue.

So what we need is a mandate, community rating, and legislation establishing a robust minimum that each health care plan must satisfy. Only then will low-risk individuals actually subsidize the care that high-risk individuals need.

Unfortunately, the problem is not solved even then, since general health costs are growing unsustainably. But that is a problem we can discuss another day.

Nada (0)

A friend is getting married next year in New Zealand. While she already has a celebrant in mind, she thought she’d check out the country’s list of official celebrants, in part to see if anyone she knows is one. She then noticed that only one of them seemed to have a website, so she thought she’d take a look. And there, amidst a sea of quite normal sample vows that Geoffrey Vine has used in the past, is this:

THE COLLARING

Celebrant: This is a special day with a twofold purpose. In addition to exchanging vows and rings, AAA is going to place his collar on XXX as a symbol of their bond as Master and submissive.

CCC presents the studded leather collar to celebrant

Celebrant: A collar is not a thing to be taken lightly.  It is an outward symbol of a way of life, the ownership and guidance of one person by another.  In this, the Master undertakes to protect, guide and nurture the submissive, who in turn pledges herself to Him with all her being.  This is a bond of love, trust and honour.  As submission is the greatest gift, Dominance is the greatest responsibility, for without one, the other cannot be.

XXX kneels

Celebrant: XXX, do you of your own free will take AAA’s collar? Will you fulfill His needs, serve His pleasures and meet His wishes, acceding in all things to Him?

XXX responds

Celebrant: AAA, do you accept XXX as your submissive? Will you treasure her gift, tempering power with duty, keeping her wellbeing first in your heart?

AAA responds

Celebrant hands the collar to AAA

AAA places the collar on XXX. AAA then helps XXX stand and they kiss.

XXX will then pour mead into the chalice.

Celebrant: Let this cup of mead be a symbol of the cup of life. As you share this one cup, may life be that much sweeter because you share it; may the past you have put behind you seem less bitter because of it.

XXX kneels and offers the cup to AAA, who drinks and then offers the cup to XXX, who drinks. XXX hands the cup back to celebrant and AAA helps XXX to her feet.

Celebrant: AAA and XXX, you have made the important step of making public, in front of these people, your full commitment to one another for the rest of your days.

Above you are the stars, below you are the stones. As time passes, remember only this: like a star should your love be constant. Like a stone should your love be firm. Be close, yet not too close. Possess one another, yet be understanding. Have patience each with the other, for storms will come but they will go just as quickly. Be free in giving affection and warmth. Make love often, and be sensuous to one another. Have no fear, and let not the ways or words of the unenlightened give you unease.

Go from this place in joy and in peace and may the spirit of all life travel with you throughout your days together.

CLOSING MUSIC (Nothing Else Matters – Metallica)

Howls of outrage (3)

I realize that tea leaf-reading ill befits a serious blog like this one, but I couldn’t resist. You see, for an Obama Presidency that may–may–mark the decisive turn away from the philosophy of the Reagan revolution that many say began with this, this item is a welcome harbinger:

An air traffic controllers group says it has become the first union to represent workers at the Guantánamo Bay Navy base in Cuba. The Professional Air Traffic Controllers Organization says it will represent eight employees who direct flights at the Caribbean outpost. Ron Taylor, president of the group, said the vote was its first organizing campaign victory outside the United States. The Guantánamo workers are employed by Midwest Air Traffic Control Service of Overland Park, Kan.

Also, persuant to my last post, Robert Kuttner does his best to talk me down.

But I may be—call me crazy, call me an optimist, we have reality on our side. Events are going to drive this, and he’s either going to rise to the occasion or he’s going to fail. And I think he’s a very smart, very decent guy who doesn’t want to fail. And unlike certain recent presidents, he’s also very intelligent. And I don’t think this is going to be a man who’s going to be steered by his staff. At all the key meetings, the meetings were run by Obama himself. And it’s going to be—I don’t think the die is yet cast. I think this is still a very fluid moment. I’m unnerved by the people he’s appointing. There are deep structural forces that we’ve talked about that put so much power in the hands of Wall Street, that push him in that direction. But this is one of those moments when things could change, if we get counterweights on the part of organizing at the grassroots.

Howls of outrage (8)

NYT:

A jogger was attacked by a rabid fox, ran a mile with the animal’s jaws clamped on her arm and then drove herself to a hospital, the authorities said. The Yavapai County sheriff’s office said the woman told deputies that she was on a trail near Prescott on Monday when the fox attacked and bit her foot. The woman said that she grabbed the fox by the neck when it went for her leg but that it bit her arm. The woman wanted the animal tested for rabies so she ran a mile to her car with the fox still biting her arm, then pried the animal off and tossed it in her trunk and drove to the Prescott hospital. The sheriff’s office said the fox later bit an animal-control officer. He and the woman are both receiving rabies vaccinations.

I just love that the writer describes her as “tossing” the fox in the trunk, as if it were a picnic blanket.

Howls of outrage (2)

I have been dismayed for a while now that Robert Rubin seems to be Obama’s top economics advisor. I am somewhat calmed by the fact that Jared Berstein also advises Obama, but I have no idea how much of his ear Bernstein has.  Moreover, this talk about Larry Summers getting the nod for Treasury secretary suggests that Obama is inclined to go with the Rubin camp over the Berstein camp. Of course, we can always hope that Obama is in fact going to deviate from the 1990s Rubin/Summers line, and that Rubin and Summers will now simply be his tools to get it done. But the time for Obama-inspired hope is over. We don’t need hope anymore, we need action.

I have similar reservations about Rahm Emanuel. I’ll admit that I have no idea what, if any, influence Emanuel’s ideas will have on Obama, but I think we can assume he’ll have some (maybe a lot). And this worries me. I’m worried that Emanuel’s apparent close connections with the wealthy and well-connected, as well as his penchant for conservative, pro-/ not-too-anti-war candidates in 2006, will infect what many of us hoped would be a strong will toward getting out of Iraq and moving the country in a more progressive direction. True, Emanuel “helped guide the Democrats to wins in 2006,” as Matt Yglesias reminds us. But at what cost? Many said at the time that the 2006 mid-terms were given to the feckless Dems by virtue of the populace’s hatred of Bush’s endless war policy. Yet this account of Emanuel’s role in the 2006 mid-terms describes him doing his level best to ensure that the Dems who won were of the pro-war, Blue Dog persuasion.

Look, I’m prepared to get the shaft from Obama. I really am. But for a guy who won the primary in part because of his opposition to the Iraq war, and who won the general election in part because of a financial crisis, it is really unbelievable that two architects of conditions that created the crisis are his lead advisor and potential Treasury Secretary, and that his first choice for chief of staff is a guy who ensured that Obama’s (hypothetical) progessive, anti-war agenda will be harder to get through the Dem controlled House than it had to be.

I guess what I’m sayin’–a la Rachel Maddow’s favorite teevee segment–is: Please!, talk me down!

Howls of outrage (13)

Leiter tells me that you can win a book. If you answer this question correctly, your name goes into a drawing.

A logician vacationing in the South Seas finds himself on an island inhabited by the two proverbial tribes of liars and truth-tellers. Members of one tribe always tell the truth; members of the other always lie.

He comes to a fork in a road and has to ask a native bystander which branch he should take to reach a village. He has no way of telling whether the native is a truth-teller or liar. The logician thinks a moment and then asks one question only. From the reply, he knows which road to take.

What question does he ask?

…For our purposes here, we’ll assume that the answer is confined to a single “yes” or “no.”

I had heard this one years ago, and cannot now remember if I figured it out on my own or not. (Probably not, knowing my limitations.)  The only snag is that either I’m wrong, or else the last instruction—”the answer is confined to a single “yes” or “no.””—is slightly misleading. Here’s a hint: the instruction is playing fast and loose with the use/mention distinction. Oh, and if my solution works, then there are actually two questions he could ask.

Anyway, I submitted an answer.  We’ll see what happens.

Howls of outrage (5)

I’ve wrote a post little while ago about the role that credit default swaps might have played in the whole Bear Stearns saga. And now they rear their ugly head again:

The Fed’s extraordinary rescue of A.I.G. underscores how much fear remains about the destructive potential of the complex financial instruments, like credit default swaps, that brought A.I.G. to its knees. The market for such instruments has exploded in recent years, but it is almost entirely unregulated. When A.I.G. began to teeter in the last few days, it became clear that if it defaulted on its commitments under the swaps, it could set off a devastating chain reaction through the financial system.

I’ll admit that I’m no expert in economics—god knows I have a lot to learn. But reading Dean Baker this morning reminded me how markets in things can work, if structured and regulated correctly. Baker was arguing that while we should have no intrinsic concern for the fates of short sellers, enabling this practice to occur in the right environment and with out undue distortion–that doesn’t mean with no government regulation– would be a good thing, a way for the market to regulate itself, to tell others, Whoooooaaaaaa!!!!! Simmer down now, ’cause there’s gonna be some tickers tumblin’ (or something like that). It seems to me that credit default swaps could have worked this way too. Because they are insurance policies issuing a payment if the bonds that the holder of the poilcy owns go bust, an unwillingness of issuers such as AIG to issue such policies could have indicated to potential buyers of bonds that maybe something isn’t right with them, thereby cooling the mortgage-backed-securities mania.

Of course, AIG was duped into thinking that the bonds were good and so bet on not having to pay out billions and billions in indemnities via their credit default swap obligations. And so, it seems, was everyone else. (Except Dean Baker, and a few others.) So the problems we’re seeing would not have been avoided simply by regulating the default swap market. But surely regulation there, combined with regulation elsewhere–especially the requirement that lenders make loans whose long-term sustainability does not depend on extremely unprecedented annual increases in homeprices–would have done some good. 

Moral: Another lefty communist supports government regulation. I know: woopty doo.

Nada (0)

Next time you get to create a video from scratch to sell Obama to the millions of people that’ll view it, don’t include a clip of Obama saying, “When you have the name ‘Barack Obama,’ that’s a killer.”

Thanks.

Nada (0)

A friend writes with some help for McCain: “i think an effective line of attack/ridicule against the new Obama/Biden ticket would run something like this: “Obama/Biden: talking the enemy to death.”

Recalling this, I think he’s probably right.

A single voice crying in the wilderness (1)

Okay, first things first.¹ One true answer to the title’s question is: not entirely. Phew. Dodged one there, didn’t you? Not so fast, though. The answer may well be “Somewhat,” in which case it behooves you to read on to see how.

Alright, I’ll admit it. It’ll behoove me if you read on. You see, I might have gotten myself into a bit of hot water, although with some thought and an even keel, this water may turn out resemble more the palliative springs of many a television boom town than the terrifying pit at the end of Indiana Jones and the Temple of Doom. The sitch is that I am giving a talk on Friday. My first talk professional talk post-grad school. And I’m nervous. I’m nervous for the usual reasons. These include the fear that I’ll make a fool of myself in the Q&A, and that my central argument is just not that good. But there is an additional, more idiosyncratic reason that I really want to think hard about before delivering the talk. And that’s the distinct possibility that while my central argument is fine, I have used a poorly chosen example to add support to my conclusion. This would leave me dialectically naked, even if my underlying argument remains cogent. So I want to try to extract myself for this situation as carefully as possible, and this is my test run.

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Howls of outrage (8)