Kausfiles: A mostly political weblog.

How Obama Made His Mistake

[This item restored after being vaporized by crap cost-effective Slate blogging software--7/24/9]

Marc Ambinder on how the White House made its fateful choice to try to sell its health plan on cost cutting rather than coverage:

Earlier this year, the White House decided to base its health care messaging on the concept of cost -- the current system was unsustainable and wasteful. They did not focus their argument on access, which appeals to people without access but doesn't do much for people with insurance, or about quality, which is complex and not intuitively helpful for Democrats.   Maybe the price of doing business with the insurance company was to focus on costs. Maybe they overcorrected from the Clinton model in 1994, which focused on "health security."
 
"We tried access and quality, with a tad of moral imperative, once before and it didn't work out so well. Its difficult no matter how you slice it," a senior Senate aide told me. A White House adviser conceded that "access is killer, no matter how you poll it."

1) As is so often the case, overpolling seems to blame. In the event, polls on Obama's cost-obsessed pitch so far do not seem to bear out whatever his aides saw "earlier this year." I suspect they saw what they wanted--and they wanted to focus on costs. It's possible to take polls that show something very different; 2) Is "access" the right word to test-as opposed to "security"? "Access" makes it sound as if you are focusing on the problem of the uninsured--i.e. charity, to many middle class Americans--as opposed to security for everyone. If they polled "access," that may have stacked the deck from the start; 3) "Maybe" they "overcorrected from the Clinton model"? Maybe?

Ambinder goes on, in full captured-by-source mode, to say the "basic problem" with a cost approach is that " in order to reduce costs .. reform will cost something extra in the near-term." Er, no. The basic problem is that it's not clear Obama and Orszag's reforms actually will work to reduce costs in the long term without encouraging unacceptable practices like rationing. They might work! But "bending the cost curve" isn't something that has been done here. So Obama's asking for a huge investment up front for a scheme that might well not have the long run effect he desires.

In contrast, "security" is not a pig in the poke. We know what highly popular health care security in this country looks like. (It looks like Medicare--though that might be just one possible form.)  We know it is attainable if we are willing to pay for it. It dovetails with a traditional liberal idea that the wealth of Americans shouldn't determine whether they live or die when they need a doctor.

Only the sophistication of modern opinion research could obscure this difference and tell Obama, in effect, "go with the untested, hard-to-explain cost-cutting scheme."

**--Don't give the problem a human face! Even the anecdotes Obama uses--even the anecdotes about middle class Americans who've gotten screwed by the health system--seem to confirm the vague sense that it's just a question of helping out a few hard luck cases--i.e. charity, rather than universal, middle class security. This is one instance where the hack CW advice to use telling anecdotes--as opposed to appealing generalities--may backfire. FDR used appealing generalities, no? ...

Update: Kevin Drum adds just a touch of fear-mongering to a security-oriented sales pitch. Not un-powerful! If Obama simply read Drum's post on national TV--and didn't add five Orszag-approved paragraphs on cost-cutting--it would be a step in the right direction. ...

Mark Blumenthal on various way pollsters can skew the results on the importance of "cost"--one promised to "eliminate co-pays and deductibles"! That's a) not about to happen and b) very different in voters minds from the "remote, systematic changes" that Obama and Orszag predict will "bend the curve" a decade or two from now.... 2:20 A.M

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Last Year's Model: Megan McArdle on the trouble with shifting from evil "fee for service" medicine to a "capitation" system, which is being proposed for Massachusetts. For one, with capitation

[d]octors who happen to get stuck with a sicker population go broke.  If you try to rig the payments to account for degrees of sickness, you will quickly get mired in a system even more complicated than the current health insurance system.

Also they have a financial interest in letting you die quickly and cheaply! Or, as McArdle more tactfully puts it:

I don't like a system where the doctor has a financial incentive to give me unnecessary tests.  But I'm even less fond of the idea of giving her financial incentives not to give me necessary ones.  

2:10 A.M.

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Brad DeLong notes that the last two recoveries have been "jobless" ones, in which the unemployment rate took a long time to go down even after the economy as a whole started to grow. He offers some reasons, including:

[F]irms believe that their remaining workers will forgive them if they fire large numbers of workers during a recession out of economic necessity, but not at other times. Hence the start of the recovery is a business's last moment to slim down its labor force and become more efficient and profitable in the coming boom.

Sounds plausible. But why, then, does DeLong seem confident, at the end of his column, that if only the stimulus had been bigger we might not have been in for a jobless recovery? It's obviously a question of degree, but if employers use recessions as an excuse to slim down with a $787 billion stimulus plan, won't they use the recession as an excuse to slim down with a $1787 billion stimulus plan? The latter will produce a bigger recovery, presumably--but at some point don't you also run into the problem of inflation? Mightn't it be that--because of the factors DeLong cites--there is no longer any sized stimulus that produces a non-jobless recovery that isn't also so big that it reignites inflation? Just asking!  ... That doesn't mean the stimulus shouldn't have been bigger. Only that a non-jobless recovery** might be an unattainable goal. ...

**--What's a non-jobless recovery? After all, jobs eventually come back even with "jobless" turnarounds. DeLong suggests one reasonable measurement: Will they return in time for the 2010 elections? .. . 2:08 A.M.

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kf Sees Seeds of Recovery in its Own Suffering!

Wednesday, December 31, 2008 

I recently took a 10% pay cut. Maybe I should have tried to postpone it until 2011, UAW style!  But I've always thought variable pay--rising and falling with the economy--was a good idea, since it enables firms to avoid layoffs in down times. And I'm a terrible negotiator. I didn't think I had much leverage. It was all over in about 40 seconds. Faster than the Wagner Act!

According to the NYT, lots of employers are taking this wage-cuts-not-layoffs approach. In theory this should help the economy recover faster, no? I'm influenced in this view by Martin Weitzman's Share Economy, which notes that one of the flaws in classical economic theory that prompted Keynes' corrective was the stickiness of wages. In theory, they're supposed to fall in a recession until it pays employers to hire people. In practice, they don't. But now, they do. At least a bit more than before.

Taking a wage cut isn't the form of "variable pay" that Weitzman advocates--if I remember right, he wants workers paid a "share" of the firm's profits or revenues, structured so that every time a new worker gets hired (and takes a share) it effectively lowers the pay for existing workers (whose share is now split among more people). That creates an incentive for firms to constantly go out and hire in bad times and good--an incentive that doesn't exist in my case. (My pay's gone down, but it won't go down more just because Slate hires someone new--unless of course they hire them to, you know, replace me).  Still, if wages are less sticky downwards, it should help, no? ...

I attempt to hurriedly make this point in the gala "New Year's Bloggin' Eve" edition of bhTV. ... 6:28 P.M.

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How come you almost never see Saturn Astras on the road here in Southern California? They're still selling them, aren't they? How bad could they be? ... All of GM's efforts should be as successful as its campaign to kill Saturn. ...  6:10 P.M.

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As 2008 ends, the search for Matt Yglesias' manhood is focused on a remote, wooded area near Oxon Hill, Maryland. ... 5:22 P.M.

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