A Shuttered Past

I think we need some antidote to the depths of derp we’ve seen (and on this blog picked over with all the horror that follows a good look at last night’s supper this morning) coming from the Syrians Are Coming brigade of bed-wetters.

So, instead, let’s take a look at someone who used their media smarts for good — and, in doing so, helped forge the chain that led to the fact (glory be) that we have the president we do right now, serving as a bulwark against the stupid that would have toppled a lesser person.

That would be this man:

Frederick_Douglass_c1860s

 

That’s Frederick Douglass, of course, in a shot taken in the 1860s.

Here he is as a younger man:

Unidentified_Artist_-_Frederick_Douglass_-_Google_Art_Project-restore

 

And in old age:

Frederick_Douglass_LOC_collodion_c1865-80

Those are three of the 160 surviving photographs taken of Douglass — a figure that currently ranks as the most confirmed separate portraits taken of any American in the 19th century.*  Scholars John Stauffer, Zoe Trodd and Celeste Marie-Bernier have a new book out, Picturing Frederick Douglass,  In it they use a sequence of images to drive a new biography of Douglass, and in doing so allow us to see technological change as it was lived — and used — by a brilliant observer of his own life and times.  As the authors write in the introduction, Douglass loved photography, and saw it as an exceptionally potent tool for making the world a different and better place. Douglass loved the fact that

What was the special and exclusive of the rich and great is now the privilege of all. The humblest servant girl may now possess a picture of herself such as the wealth of kings could not purchase 50 years ago.

In that context Stauffer, Trodd and Marie-Bernier make the case that Douglass saw photography as  tool to alter social reality:

Poets, prophets and reformers are all picture-makers–and this ability is the secret of their power and of their achievements. They see the what ought to be by the reflection of what is, and endeavor to remove the contradiction.

 

Such reasoning (and more besides) led Douglass to the photographer’s studio over and over again, actively seeking out the camera as a tool that could help him create the reality of African-American humanity, presence, significance.

Photography allowed him to be seen.  In that determined, asserted presence,  you have (it seems to me) an early herald of of the circumstances in which Barack Obama could become president.  Alas, in the fact of the racist and vicious forces with which Douglass had to contend, we can be similarly reminded that in our times the sight of a black man commanding our gaze drives too many among us into spasms of demented, terribly dangerous rage.

But put that aside for a second, and look at some fabulous images of an extraordinary — and extraordinary-looking — man.  (A few more examples.)

And if you feel the need for some open thread, well take that too.

*The runners-up are cool too:  In the research for this book, the authors found George Armstrong Custer, that avatar of puffed-up vanity, taking second place, with 155 portraits.  Red Cloud came next at 128, followed by Whitman and Lincoln at 127 and 126, the poet and his captain connected again.  It seems likely, according to these writers, that when further work is done, Ulysses S. Grant may trump them all, but that doesn’t change the point of what Douglass set out to do.

Images:

1.  c. 1860s

2.  c. 1850, daguerrotype

3. before 1880, Brady-Handy collection.



Good news everybody

What an amazing failure — goals are being met, costs are being contained, and the expenditure curve is still looking better today than it did seven years ago.

Can we have more amazing failures like this

:)



Medicare 200: Medicare E

Medicare-E(veryone) is a great slogan.

I think it is a good animating vision for a desired end point.

It is not serious policy yet.

Medicare-E instead of managed competition is a debate about means. I want to assume that I share the same desired end of most Medicare-E/single payer advocates (namely making sure everyone in this country has access to affordable, competent and effective health care.) I am assuming that is a shared end goal.  But I have a hard time seeing how the end goal is achieved by an attractive slogan that has minimal policy back-up support.

I understand the desire to use Medicare as the basic structure of a national single payer system as it is a pre-exisiting program whose skeleton is strong enough to build on.  However that skeleton has some odd deformities to it, and a lot of trade-offs have been built into Medicare that would need to be re-examined if we were to massively expand Medicare’s scope.  I have a big series of questions that Medicare-E advocates would need to answer to transform a slogan into a policy program as Medicare E is not a matter of simply printing up new ID cards and mailing them to everyone in the country with a start date three months from the mail date.

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Medicare 101: Part D

Yesterday we briefly talked about Medicare Part A and Part B. Part A covers in-patient/overnight stays at the hospital while Part B covers most other services that involve interacting with other people.  When Medicare started, prescription drugs weren’t a big cost driver.  Basic drugs were available, they treated most common cases to some degree of effectiveness and unsusual cases were out of luck.  And then drugs got expensive as they got more complex and the US patent regime encouraged non-market pricing of drugs.  Additionally, the US Congress also discouraged non-market pricing of drugs as the federal Medicare program is not allowed to use the simple fact that it is the biggest buyer of medical supplies in the world to get a good price.  Drug costs for old people became a massive political issue.

And thus an opportunity for Republicans in 2003 to do two things.  The first was to offer a solution that emphasized “compassionate conservatism” for old people to help them get their drugs.  Secondly, it was an opportunity to shovel a massive amount of money at drug companies without asking for a whole lot in terms of policy concessions.  Thus Medicare Part D was born.

The initial design of Medicare  Part D was a kludge of managed market competition.  Private insurers offer plans that cover a variety of different drugs according to a basic benefit design.  Companies could offer limited lists of covered drugs (formularies) or expansive (and expensive) lists of covered drugs.  They could create two tiers (generic and brand) or seventee tiers of coverage with different co-pays and cost sharing.  They could decide to require that all beneficiaries try Drug X before they would authorize Drug Y.  The rules and plan requirements for Mayhew Insurance would be diametrically opposed to the rules for Big Blue Drug Value Super Duper Plus.

There are common benefit design elements for the individual beneficiary responsibility of costs.  The individual would be responsible for a medium sized deductible of roughly $250.  After that, the insurer would pay 75% of the contracted costs until the donut hole started at $2,250.  From $2,250 to $3,600, the individual was responsible for all of the cost.  After $3,600 in total drug costs, the insurer would pay roughly 97% of the remaining drug costs.

Compared to the previous Medicare drug benefit of almost nothing, Medicare Part D as originally designed was significantly better than nothing.  It does provide some significant benefits to seniors while being confusing, complex and a massive give-away to drug makers as Medicare was expressly forbidden from getting good deals.

The Affordable Care Act made several signifcant technical changes to Medicare Part D.   It still maintains the managed competition design but changes the payment structure.   Over the long run, the goal is to get rid of the donut hole completely while in the short run, the goal is to minimize the out of pocket expenses for seniors who are still stuck in the donut hole.

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Labor-capital disputes and the ACA

I had a friendly series of e-mails with a commenter late last week.  His bargaining unit at Verizon is now working without a contract.  I don’t know how the contracts that the CWA and IBEW have with Verizon treat healthcare.  My experience and knowledge is solely personal as my family’s health insurance as a child was provided through a benefit/welfare fund administered by my dad’s union for its members who worked for hundreds of companies.  I don’t know if Verizon creates a massive ASO with defined benefit structures for its union contracts or offloads all of the risk onto union welfare funds.  That difference will matter.

My correspondant’s big worry would be what would happen to his health insurance if he either went on strike or was locked out.  He stated that Verizon had stated that health insurance would disappear as soon as a work stoppage of any sort started.  He knew COBRA insurance at 102% of monthly premium would be available, but no one could afford COBRA if they aren’t working anyways.  Pulling health insurance is an effective (and underhanded) way of dividing union solidarity as it pits the members who are either old or sick or who have old or sick dependants against members who don’t have pressing medical needs.  Someone whose daughter needs chemotherarapy next week will push leadership to take a shitty deal far faster than someone whose kids eventually need to go in and get their teeth cleaned.

However, the ACA changes this power dynamic a bit.

Losing employer sponsored coverage is a qualifying event.  It creates a special enrollment period for all locked out or striking workers to go on the Exchanges and get coverage.  That coverage will not be anywhere near as good as the coverage they currently have in their union contract (Verizon workers have the equvilent of Platinum plus plans) but it provides oh-shit coverage possibilities for the families of workers who don’t use a lot of services, and it provides cheaper than COBRA platinum coverage for the worker whose daughter is mid-way through her chemo.  It reduces a pressure point that Verizon can use as health insurance is no longer directly tied to employment.

This is a subtle value add of PPACA. It is a slight corrective to the massive bargaining differential between Capital and Labor that has tilted so many agreement zones towards capital instead of labor over the past forty years.



Why not charge more?

Insurance companies can make their money in two basic ways.  The first is to organize themselves as a funky looking hedge fund with an odd cash flow model.  Insurance companies often will invest their reserves in a wide variety of instruments, some liquid and some extremely illiquid in an attempt to get better than market rates of return.  Health insurance companies, if they keep only slightly more reserves than required, often can’t play this game too aggressively as they need a lot of cash on hand.  Property and other insurers that operate on longer contract horizons with fewer but bigger pay-outs are more likely to make their money as finance companies.

The other, and far more prosaic way an insurance company of any type makes money is to pay out less in claims than they collect in premium revenue.

None of this is earth shattering, but I want to reply to a comment by Raven on the Hill as it is something I’ve seen a number of times — namely that the ACA is a corporate give-away that will only feed the gaping maw of corporate America.  There is a limited model where I can see that critique, but in general, I think it is more of a shiboleath instead of a model.

The insurance industry only gets paid if it funds treatment. And these days the percentage they can take is limited to 15% (the medical loss ratio) (or I think 20% in some cases) depending on the type of insurance. So how to increase profits? There is only one way: spend more on treatment.

The one case where this makes some sense is when an insurer is the only insurer in a region, and it is operating right at the threshold medical loss ratio.  If the insurer is the only insurer in the region, they are taking on all of the medical risk, but they are probably fat and lazy.  Here the decision to either make hard decisions and start saying no to high cost providers who want to perform low value treatment versus raising rates can look attractive. Cutting administrative costs would be a second choice (trust me, I spent a year of my life on a project that had a goal of reducing mail costs by a nickel per member per month (PMPM), three years out, the reduction was six cents PMPM, so it was a smashing success) .

There are a couple of constraints on how high the rates can go.  National insurers are available to provide a ceiling on rates, state level political pressure can name and shame rate increases downwards, and finally PPACA has lowered the cost of entry for insurers to enter new markets as the exchanges can serve as the a common, low cost sales platform.  If a monopolistic insurer started to charge as its base Exchange rate $1,000 PMPM for 21 year olds, I guarantee that there will be 10 insurers looking to enter that Exchange market for the next open enrollment as there is too much money on the table not to.

Now if that same insurer is operating at three or four points above the minimum required MLR, raising rates to increase profits could work. However, cutting the MLR and administrative costs are other ways to increase profits. Here the insurer could offer a narrow network with 80% of the providers of its broad network in order to exclude the high cost, always ordering expensive treatment providers.

One of the major differences in the PPACA world versus the pre-PPACA world for this monopolostic insurer is the underwriting standards. Previously, the insurer could underwrite based on medical history and experience. That meant each individual could be assigned a unique price point. In practical terms, the insurer could have several thousand price points for a single product in a single county depending on age, gender, zip code, BMI, smoking history along with dozens of perosnal and family history variables. In economic terms, underwriting allowed for an insurance company to massively segment a market. A perfectly segmented market with no information costs would lead to insurance being offered at each individuals maximum willingness to pay. This means the insurance comnpany would collect a massive amount of the social surplus as monopoly rent.

In the PPACA world, insurers have far less ability to segment the market as they can only use age, zip code and smoking history as direct pricing variables for individuals. There might be 80 PPACA allowed price categories instead of 1,500 potential price points for the same zip code in the pre-PPACA world. Some of the social surplus is returned to the general public.

That is the monopoly case. I think it is an interesting case, but it is a limited case for both empirical reasons as there are very few pure monopoly regions in this country, especially on Exchange (West Virginia is one, I think significant parts of Alabama is another), and the binding constraints of fat, dumb, lazy and already paying out at minimum allowable MLR. Now let’s take a look at the other extreme, the perfect competition model.

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Good news everybody

Now let us hope that the five Sadists on the Supreme Court don’t fuck this up.