The Public Option Versus Enhanced Medicaid

I support full-bore single-payer healthcare. The French model looks good to me, but the British or Canadian systems would be fine. But at my age (61) I'm beginning to doubt that I'll ever see that in superstitious, fearful, hateful America. So I want to ruminate randomly about what is known as the "public option" in the current (mid-2009) healthcare debate.

The so-called public option has been proposed for two reasons by Democratic policymakers. First and most importantly, it serves as a political wedge into the private healthcare system. It does this by providing a publically-funded, nonprofit alternative to private insurance plans. The idea here is that in the short run, it will competitively lower private insurance premiums by offering lower premiums in the public plan (what Obama characterizes as "keeping the insurance companies honest"); in the long run, though, the plan is designed to minimize the role of private insurance and leading the country to a single-payer system. This is very desirable to me, and I believe that were it to go forward, we would eventually plaud it on the left and on the right. However, it is very undesirable to conservative theorists, and it is because of that that the debate has become so fierce. An indicator of this is that protestors on the right rarely complain about the public option per se: they are more likely to complain about things like socialism in general or the Canadian or British "socialized medicine" systems in particular. This is because even though nothing like that is on the table now, both conservative and progressive propaganists understand full well the long-run purpose of the public option.

The second reason for a public option is to make good healthcare available to everyone regardless of their ability to pay. The idea here is that the public plan, being operated by the government, would subsidize the premiums of the poor by the payments of those who are better off, and if need be, by taxes on the wealthiest in the land. Protestors on the right do not say much about this, but as the fortunes of the public option wax and wane, this is what progressive activists focus on the most. For them, there is a clear and obvious need for healthcare for the millions of individuals and families who are not poor enough to qualify for Medicaid, but who cannot get healthcare coverage from their jobs and cannot afford individual coverage, possibly because their poor health puts them into very high premiums or even ineligibility for coverage at any price. And this is in fact the worst thing about American healthcare, that so many people who need it, simply do not have access to it.

However, the political and practical aspect of the public option are actually two very different things, that can be separated from each other rather easily. As much as it hurts me to say it, there are other, much less radical ways to resolve the lack of coverage issue than putting us on the path toward single-payer. I want to propose one of them here and to discuss it a bit.

In fact, America's existing healthcare system is a mixture of private and publically funded programs. There are five major federally-funded, single-payer healthcare systems, each serving millions of Americans. First is the system I was born into and had access to until I was an adult: the military healthcare system, now known as TriCare. Active-duty and retired servicemembers and their dependents have access to the full range of medical care at public expense, and have had this coverage at least since 1947, when I was born in the US Naval hospital in Quantico, Virginia. This was and by all accounts still is a great healthcare system for families with kids. The second system is the VA healthcare system, which is for those who have served in the military but who are no longer eligible for TriCare. This is also a first-rate system, but it has been the object of bean-counting and while this has resulted in a very efficient system in some ways, it has also reduced the number of former servicemembers who are eligible for treatment. The third federally-funded system is the healthcare plan for federal employees, which is basically similar to the employee healthcare plans of any large organization, but since it is for federal employees, it is paid for by the government. This plan, unlike TriCare and VA, consists of payments to private insurance companies: there are no federal hospitals or physicians (with some very minor exceptions such as clinics or physicians attached to specific federal bodies such as the US Congress and the White House). The fourth public healthcare system in the US is Medicare. This is part of the Social Security system and therefore is targeted at retirees, or those over age 65. There are some relatively minor exceptions such as disabled children or adults who under some circumstances qualify for Medicare. Medicare is similar in some respects to a very large insurance organization, in that it makes payments to physicians and hospitals according to a fixed schedule. It is theoretically funded by the SSI payments by employers and employees. Medicare tends to cover only the essential subset of what private plans cover, and there is a lucrative market in so-called MediGap private insurance intended to supplement Medicare coverage. The fifth existing publically funded healthcare system in the US is Medicaid. Medicaid is a joint state and federal plan that is aimed at the poor. It is similar in many ways to conventional private insurance, but the amount of coverage and the amount of reimbursement for physicians varies from state to state, and in recent years it has become a target for balancing state budgets (for example, MediCal, the California version of Medicaid, has recently made huge cuts in "optional" coverage such as dental, vision, and mental health). In order to qualify for Medicaid, there are severe means tests: it really is targeted at the very poor. However, once you qualify for it, there is a decent level of care in many cases.

The reason I went over the existing systems is to try to place the propose public option into perspective. As proposed in HR3200, the most fully-detailed current plan, the public option would essentially replace the existing Medicaid system, and modify the existing Medicare system. It would be available to all US citizens and legal residents as an option. The coverage would be at various levels, from the guaranteed minimum "basic" coverage, free to the very poor, up to what is known as "premium plus" coverage, which would be similar to Medicare+MediGap coverage. For those who could afford to pay their premiums, the plan would be self-supporting, but those who are unable to pay would be subsidized at the "basic" level. There are no plans for government physicians or hospitals under the public option. In terms of its similarity to private plans, it would be very similar to those who can afford a private plan, although it could be less expensive than some private plans, and there could be "premium plus" private plans that had more extensive coverage. Under HR3200, limits would be imposed on both public and private plans, including: (1) all applicants would be accepted regardless of any pre-existing condition; (2) there would be a limit--currently very debatable--on the ratio of the highest and lowest premiums for a certain level of coverage, for example, 3:1 or 7:1 (the lower the better for patients); (3) two levels of coverage (basic and medium) would be standardized across all public and private plans; (4) the amount of profit would be controlled in private plans; (5) the cost of treating specific conditions would be controlled geographically to a standard of medical consensus. All these controls and limits are necessary to prevent possible abuses by the private companies, such as for example refusing to cover the sickest people and forcing them into the public plan, keeping just the more profitable healthy people. There are other innovations in HR3200 that are also needed, such as the standardization of digital medical records that will hold down costs, allow much better tracking of costs at the national level, and also allow much easier and rapid transitioning between different healthcare systems and plans.

Here finally is my proposal. It seems to me that if limits and controls on private insurers such as those already in HR3200 are part of the reform legislation, then the public option is not really necessary in order to provide coverage to all. Instead, three changes would need to be made to the existing Medicaid program: (1) a change in means testing to permit coverage and/or subsidization not only of the poor, but of everyone who for any reason cannot afford private health insurance; (2) higher national standards on what must be covered by Medicaid in every state; and (3) higher rates of federal funding for Medicaid to alleviate the burden of states and to make the level of reimbursement to healthcare providers match that paid by private plans. This would be paid for by a small tax on private premium/premium-plus insurance plans (these are the highest "deluxe" plans enjoyed by a substantial minority of Americans). Additional revenues, if necessary, can come from restoring income tax brackets to the more equitable 1950s levels.

As I see it, the main disadvantage of this plan is that it will not provide pressure toward a national single-payer healthcare plan. Instead, it merely patches the existing system. However, it does so in several important ways: it provides coverage to all Americans, it will prevent the worst abuses by private insurers, it will reduce healthcare costs, and most importantly, since it has no new publically-funded plan, relying instead on a "fixed" Medicaid, it may actually have a chance of passing.

Statistical Sampling and the Census

We have a census coming up next year. And of course our political leaders are doing their best to turn that fact to their own parties' political advantage. Since relatively poor people tend to vote Democratic, and since relatively poor people are the ones who are most often missed during census-taking, Republicans basically want to ignore their existence, while Democrats want to figure out ways to include them.

The political dimension of this is easy to understand, but there is a problem: the Republicans state that the reason why they want to ignore people who aren't counted in the census is because they feel that the numbers will then be more "real" or more accurate, than if statistical methods are used to estimate them, as Democrats and most statisticians want to do. The problem with this is that in fact, ignoring these people is less real and much less accurate than using valid statistical techniques to estimate their numbers.

The reason for this is that the undercounts are not randomly distributed. That is, there is a systematic bias that causes potential Democratic voters to be undercounted more frequently than potential Republican voters. An example might help.

Suppose that Farmer R. is paying Worker D. to pick strawberrys, a penny per berry. At some point, the fruit will have to be counted before D. can be paid. However, counting every berry would take much too long, so instead, they are counted by boxes. Each box holds nominally 100 berries, so in the absence of any additional information, it is reasonable simply to count boxes and pay $1 per box.

However, D. decides that he is doing more work than he has been paid for, so, out of hundreds of boxes of berries, he takes a randomly selected 20 boxes and actually counts all the berries. He discovers that there were 2100 berries in the 20 boxes, or 105 per box on average. The actual count ranged from 90 to 110 in the sample boxes.

Worker D. then goes to Farmer R. and says that he wants to apply the results of his experiment to getting paid: he wants $1.05 per box instead of $1. Farmer R. refuses, since the boxes are plainly marked "100 ct.", and so they must hold 100 berries each, and in any case, why is D. so concerned about a mere 5¢ difference?

Clearly, based on probabilities, since we now know based on the result of our empirical sampling that the expected number of berries per box is 105, then it is most likely that the actual, underlying count of all berries picked is going to be about 105% of the number estimated by counting boxes. That is, it is very likely that using statistical estimation will be more accurate than simply using the nominal counts, even though the number is derived mathematically rather than from a direct count.

Although this is by no means a perfect analogy with the census, the point I wanted to make was that the purpose of statistical estimation is not to favor one side or the other, but rather to reduce the amount of systematic bias in the data.

Let me add that Farmer R. could do his own empirical study, and if he did it correctly, and found a lower count than D.'s study did, then he could promote, and defend, an alternative, lower statistical estimate. The Republicans could absolutely do the same thing for the census data: instead of trying to eliminate statistical estimation, if they think that the Democratic-supported estimates introduce a new source of bias (e.g., overcounting certain potential Democratic voters), then they should do their own empirical studies and use them to support a modified estimate. In fact, if they don't do this, and continue simply to argue for not using statistical estimation at all, then it seems pretty clear to me that they basically accept the premise of systematic pro-Republican bias in the raw counts, and are just trying to preserve an error that benefits them.

Greg Shenaut

Unpacking the Supreme Court

We currently have to wait for a Supreme Court justice to die or retire before a new one can be appointed. The idea is to keep the size of the court relatively constant and to avoid FDR-style "packing" of the court to favor one side or the other of the ideological spectrum. Your Random Philosophizer has a different idea.

Yes, we shouldn't let the Supreme Court get too small. I would say that there should be at least one justice for every federal circuit, currently thirteen. If the number of justices should fall below that number, then the current president should appoint one. If the appelate court system ever gets modernized so that there is a more reasonable number of circuits, then the number of justices would rise. The reason for this is that since the "business" of the court comes primarily from the appeal courts, the court could assign one justice to handle preliminarily one circuit court's output. However, the minimum could be tied to some other factor, such as one justice for each 50 million US citizens, or one justice for every four states. It could even be set at the current number of justices (nine). I like using the number of US circuit courts because it is a number that will necessarily vary, but conservatively, and because there is a functional relationship between the circuits and the Supreme Court.

However, I think that regardless of the size of the court, each presidential term should see the appointment of one justice. That is, one of the duties of each president, during each term, would be to appoint a new justice to the Supreme Court. Two-term presidents would obviously get two turns at bat. In fact, this may be about average for presidential terms, or at least in the same ball park.

It's a simple idea really. Every term, the president will appoint a Supreme Court justice. If, due to death or retirement, the number of justices should fall below the number of federal circuit courts, the current president will appoint a replacement. If a death or retirement in the court should occur before the president has appointed a justice during the term, bringing the number below the minimum, then the standard appointment for that term would come first. That is, the appointment would replace the retiring justice and restore the minimum. However, if after making his or her appointment for the term, the number is still lower than the number of federal circuits, then the president will continue to make appointments until the minimum is restored.

Under this system, the court could grow at the rate of about one justice every four years if relatively young, healthy justices were appointed, and the composition of the court would tend to reflect the recent history of electoral trends. Since the court would be larger, the results of the court on decisions would have more "dynamic range", and, possibly, be more just and more reflective of the will of the People. While it is true that every president would, under this system, leave his or her mark on the court, since the size would be larger, the impact of any given president would be, on average, less than what we have seen recently where some presidents have made two appointments (2/9) of the court. Each president, under the new system, would have an impact of 1/N, sometimes 2/N, where N would currently be at last 13; this is generally smaller than is currently the case. Since the court would usually be larger than the minimum, it would be possible for justices to die or retire without triggering a political frenzy, since they would not need to be replaced. If there are more justices than circuits, assignments to different circuits could more accurately reflect differences in the activity level in each circuit.

There would be an interesting political dimension to this: since after each presidential election, a new justice would join the court, presidential candidates could speak openly about their philosophy regarding the court. It would become a new element of presidential elections, one that I think deserves to be given a higher profile.

Greg Shenaut

Voodoo neuroscience

OK, here's another in a long stream of published experiments that take a well-known psychological phenomenon X, scan people's brains somehow (in this case, fMRI), and say "Look: brain waves or cerebral blood flow or whatever has a pattern that correlates with X, so we now understand why X occurs!" However, no new understanding of why X occurs has resulted from the brain information. Instead, we simply know another fact about the phenomenon, and a rather insignificant one at that, because if you accept that brains underlie all psychological phenomena, then the important news would be a well-tested null result, that there was no brain correlation with a given psychological phenomenon. Let me expain.

The reported study follows up a phenomenon regarding the behavior of gamblers that is so well-established that the entire slot-machine industry builds and programs their machines to take advantage of it: near misses (two lemon and a strawberry) and machine that allow the gambler to control the process partially (e.g., to make one of the spinning columns stop at a certain point) motivate certain gamblers to keep playing almost as much as consistent wins. They measured fMRI bloodflow and found that, indeed, the brains of gamblers respond similarly to wins and near misses. However, nothing in their research explains why the brains of gamblers respond in this parallel fashion, or even if perhaps the similarity in the blood flow pattern is present because the gamblers perceive winning and near misses as similar, that is, reverse causality.

Yet, a purely behavioral study of the phenomenon, one that perhaps measured the effects of things like task complexity, intelligence, income level, and so on, would be much less likely to excite readers, and, even though the research would be much less expensive to run (fMRI machines are expensive!), it would probably be much less likely to be funded.

Why? My explanation is what I will call "voodoo neuroscience". The experiment I linked to above is a perfect illustration. You just take expensive technology and apply it to find some new correlation or enhanced precision of measurement, even though it adds nothing or very little to our understanding of the underlying phenomenon, and it is viewed as exciting, revolutionary, and important. A linguist I knew used the expression "physics envy" for such voodoo scientific endeavors.

I'm not saying that we should not do the cognitive fMRI experiments, but I am saying that in terms of costs and benefits, the magnitude of the benefits should not be inflated as they currently are, and as they were in the fMRI slot machine study.

Greg Shenaut

Another screwy tax proposal

Well, I don't know about you, but when it comes to taxes, I think I'm bothered as much by the complexity of our current system as I am by paying the actual taxes. The recent disgrace of Tom Daschle et al. hasn't made me change this idea. I mean, take the money but don't make it so difficult and stressful.

One perennial idea to simplify taxes is the consumption tax, basically a national sales tax. When you buy something, you pay taxes, and you don't pay any other taxes. This is definitely simpler, and no one has denied that it could be used to raise all necessary revenues. The problem is that in all forms of it I have heard of, it is horribly regressive, in that poorer people would end up paying a much greater portion of their income in taxes than wealthier people.

So, the screwy idea I came up with this morning is that by default, a national sales tax rate -- possibly with per-locality or per transaction-type adjustments -- is set to a universal amount. For the moment, let's say 15%, just to pick a number. 15% of all normal transactions would go to the tax collector. Yes, the rate could be modified to get some state taxes in there, and also there could be lower rates on things like carrots and bread and higher rates on things like television sets and cigarettes. But the nominal rate would be a standard 15%. However, people could apply for something called a "tax discount card", which would contain ID information and electronically coded information that could reduce the tax rate applied to a certain transaction. This would be the means to implement progressivity in the sales tax.

From the retailer's point of view, the tax discount card would simply be swiped just like a credit card, and the tax rate of the transaction would be adjusted accordingly. It would really be no extra work for them. All of the necessary information to document the tax would be supplied automatically.

What about privacy? Well, use of the tax discount card would be optional. If you didn't want to use your card (or if you don't qualify for any discounts), you can do an undocumented transaction and be taxed at the full nominal rate for the transaction type and locality. Basically, if you want to pay less taxes and if you have low income, lots of kids, or some other reason why your taxes should be reduced, you can apply for and use a card.

In terms of simplicity, the process of applying for and renewing the discount card could be complex, no question about it. But what this plan does is to separate out the complexity from the taxation itself. And, except for people whose circumstances change rapidly, once the first card is acquired, renewal cards would be less complex.

Families could get "family rate" cards instead of having each individual apply for their own.

One interesting twist is that tourists and other transients would pay the full rate, and people from out of state would not pay the local state supplementary tax.

Well, that's the idea.