2012 - %3, December

Gigantic Health Insurance Companies Might Not Be So Bad, After All

| Mon Dec. 3, 2012 3:00 PM EST

Among other things, Austin Frakt has taught me to view the healthcare market as a competition between providers and insurance companies. If you have a market served by lots of hospitals and only one or two insurance carriers, then the insurance companies have a lot of leverage: they each represent a huge chunk of the customer base and can threaten to take their business elsewhere if a hospital charges too much. In the opposite situation, with only one or two hospitals in a region, they're the ones with the leverage. Even if their prices are high, insurance companies can't withdraw their business because there are no other choices available.

What this means is that "more competition" doesn't necessarily lead to lower prices. Over at Economix, a trio of researchers confirms this using a state-by-state comparison:

We examined the relationship between insurer market power (defined as the market share of the two largest companies) and changes in premiums. We found that concentration of insurer power — hence less competition — was not significantly associated with higher premiums, as can be seen in the chart below.

In English, this means that a small number of big insurance carriers generally led to lower premiums:

Hawaii is a good example. Kaiser Permanente and Blue Cross Blue Shield together controlled more than 90 percent of the insurance market in 2001. In this highly concentrated market, the average premium rose only 72 percent over the decade, compared to an overall increase of 135 percent nationwide. By contrast, Virginia had one of the most competitive markets in 2001, with its two largest insurers controlling only 25 percent of the market, yet premiums in the state increased nearly 140 percent over the period.

I've never been persuaded that insurance companies provide any real benefit in the healthcare market, since what they offer is only barely "insurance" in the usual sense. Mostly they're just intermediaries, with their market power to drive down prices slightly outweighed by their high administrative costs. Net effect: pretty close to zero. It's providers and consumers who really drive prices, not the middlemen. Still, this study suggests that as long as we're stuck with private insurance companies, we're probably better off with a few big, powerful ones. Competition between insurers is just another way of giving providers more leverage, and they're the ones who really control prices.

UPDATE: If you want things straight from the horse's mouth, here's the Austin Frakt version of all this.

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We're Still at War: Photo of the Day for December 3, 2012

Mon Dec. 3, 2012 2:10 PM EST

Marines assigned to Fox Company, 2nd Battalion, 7th Marine Regiment, Regimental Combat Team 7, ground guide their vehicles on the way to provide security for an improvised explosive device (IED) post blast analysis near Forward Operating Base Now Zad, Helmand province, Afghanistan, Nov. 25, 2012. U.S. Marine Corps photo by Cpl. Alejandro Pena.

It's Okay to Not Feel Bad For Mitt Romney

| Mon Dec. 3, 2012 1:25 PM EST

After ending his six-year campaign for president, the Washington Post reports that Mitt Romney doesn't quite know what to do with himself:

Gone are the minute-by-minute schedules and the swarm of Secret Service agents. There’s no aide to make his peanut-butter-and-honey sandwiches. Romney hangs around the house, sometimes alone, pecking away at his iPad and e-mailing his CEO buddies who have been swooping in and out of La Jolla to visit.

...

One longtime counselor contrasted Romney with former vice president Al Gore, whose weight gain and beard became a symbol of grievance over his 2000 loss. "You won't see heavyset, haggard Mitt," he said. Friends say a snapshot-gone-viral showing a disheveled Romney pumping gas is just how he looks without a suit on his frame or gel in his hair.

Ben Smith suggests that Mitt's malaise makes him (finally) somewhat likable. Jamelle Bouie finds it hard to feel bad for someone whose campaign was so dripping with disdain. I think we're overstating the desperation of Romney's situation. Contrast Romney's cushy retirement to his ocean-front La Jolla mansion with Theodore Roosevelt—who after his 1912 loss to Woodrow Wilson* literally got lost in the wilderness and nearly died:

Theodore Roosevelt had carried the lethal dose of morphine with him for years. He had taken it to the American West, to the African savanna and, finally, down the River of Doubt—a twisting tributary deep in the Amazon rain forest. The glass vial was small enough to tuck into a leather satchel or slip into his luggage, nearly invisible beside his books, his socks and his eight extra pairs of eyeglasses. Easily overlooked, it was perhaps the most private possession of one of the world's most public men.

In December 1913, Roosevelt, then 55, and a small group of men embarked on a journey to explore and map Brazil's River of Doubt. Almost from the start, the expedition went disastrously wrong. Just three months later, as Roosevelt lay on a rusting cot inside his expedition's last remaining tent listening to the roar of the river, he clutched the vial that he had carried for so long. Shivering violently, his body wracked with fever, he concluded that the time had come to take his own life.

In the span of a few days, Roosevelt, once America's youngest President and among its most vigorous, had become a feverish, at times delirious, invalid. He was suffering from malaria and had developed a potentially deadly bacterial infection after slicing his leg on a boulder. In the sweltering rain forest, the cut had quickly become infected, causing his leg to redden and swell and sending his temperature soaring to 105°F. At the same time, the expedition had reached a set of seemingly impassable rapids. Roosevelt's Brazilian co-commander, Colonel Cândido Rondon, had announced that they would have to abandon their canoes and strike out into the jungle--every man for himself. "To all of us," one of them wrote, "his report was practically a sentence of death." For Roosevelt, who could barely sit up, much less fight his way through the rain forest, the plan was simply an impossibility.

So really, things could be much worse.

Update: I should note that Roosevelt did actually make it out of the Amazon alive, but never fully recovered and died five years later.

*Correction: It was Wilson, not Taft.

Why Sheldon Adelson Spent $150 Million On the 2012 Election

| Mon Dec. 3, 2012 12:13 PM EST

Over at HuffPo, Peter Stone reports that casino mogul Sheldon Adelson didn't spend $100 million on this year's election, as promised. He spent more like $150 million. Why? Well, he's an obsessive supporter of conservative Israeli politics, and figured that Republicans were more likely to toe the Bibi Netanyahu line than Barack Obama. That much is common knowledge. But Stone says there's more:

Adelson, a fierce critic of Obama’s foreign and domestic policies, has said that his humongous spending was spurred chiefly by his fear that a second Obama term would bring "vilification of people that were against him." As that second term begins, Adelson's international casino empire faces a rough road, with two federal criminal investigations into his business.

This coming week, Adelson plans to visit Washington, according to three separate GOP sources familiar with his travel schedule. While here, he’s arranged Hill meetings with at least one House GOP leader in which he is expected to discuss key issues, including possible changes to the Foreign Corrupt Practices Act, the anti-bribery law that undergirds one federal probe into his casino network, according to a Republican attorney with knowledge of his plans.

During the election, Adelson told Politico that the Justice Department investigation, and the way he felt treated by prosecutors, was a primary motivation for his investment in Republican presidential nominee Mitt Romney and other GOP candidates.

Adelson may not know it, but he must be the luckiest guy in the world. Any other president might very well push the Justice Department at least a tiny little bit to punish a guy who spent so much money to turf him out of office. But Obama? Probably not. It's not that Obama is some kind of saint or anything, but he's about a million miles away from the business-hating, class-warring, Arab-loving, Chicago thug that conservatives have all convinced themselves he is. Adelson will probably never figure that out, since he seems like the kind of guy who considers a 4.6 percentage point increase in his tax rate a massive assault on his freedom, but he'll benefit from it.

How Scared of the Fiscal Cliff is Big Business?

| Mon Dec. 3, 2012 11:18 AM EST

Mark Kleiman notes that although Republicans are unalterably opposed to raising tax rates on the rich, the calculus changes after January 1, when the Bush tax cuts expire and rates automatically go back up to Clinton-era levels. After that, it's just a matter of agreeing to lower some taxes but not others, and that's a much easier vote. Plus there will be additional pressure to make a deal:

The reaction from the markets and the corporate sector to the cliff-diving exercise will concentrate their minds. Of course, the CEOs could apply some mind-concentrator right now, but their hatred of Obama is so intense that they’d rather not if they don’t have to, and they don’t think they have to because they can’t imagine that the Republicans on the Hill are so stupid, stubborn, and cowardly that they need to be told.

I was musing about this with a friend just yesterday. Right now there's a strong sense that corporate America is genuinely scared about going over the fiscal cliff and sparking another recession. That's bad for business! On the other hand, the rich people who run corporate America don't want their tax rates to go up. That's bad for their bank accounts! Plus, as Mark says, they really seem to have drunk the "Obama hates business" Kool-Aid.

So what happens? Do they give into their hate and their pocketbooks and stay on the sidelines? Or do they do what's best for their companies and put some heat on Republicans to make a deal? I genuinely don't know which way the corporate frog is going to hop on this one.

And as long as we're on the subject of the fiscal cliff, I also want to push back on something Andrew Sullivan said today. He's reacting to Jon Chait's claim that Republicans will never agree to support higher tax revenue unless they're forced into it:

The trouble with this analysis, it seems to me, and with the Obama administration's current bargaining position, is that Speaker Boehner has already conceded that he is prepared to raise revenues. So I don't see why Chait is insisting he hasn't.

I think Chait is right. During the debt limit negotiations last year, it turned out that the only additional "revenue" John Boehner would agree to was revenue that we get automatically from economic growth. But this was fairy dust revenue, not a real concession. This time around, Boehner has made vague noises about closing "deductions and loopholes," but so far he's been emphatically unwilling to actually name any of the deductions or loopholes he'd be willing to close. Until he does, he hasn't conceded that he's prepared to raise revenues except in a cheap rhetorical sense. I'll believe Boehner is serious as soon as an actual proposal is on the table and both Eric Cantor and Paul Ryan say they've signed onto it.

Rick Santorum Gets Exclusive Deal With Birther Site

| Mon Dec. 3, 2012 11:16 AM EST

Former Pennsylvania Sen. Rick Santorum has landed on his feet after a second-place finish in the GOP primary: He's taken a job as a columnist for the birther bible WorldNetDaily:

Rick Santorum – the former U.S. senator who ignited grass-roots conservatives as a Republican candidate for president this year – today joins WND as an exclusive columnist. His commentaries will be featured each Monday.

His first column? Sounding the alarm about the United Nations Convention on the Rights of Persons With Disabilities, which he contends "crushes U.S. sovereignty."

WND is best known for journalistic masterpieces such as "Bill Ayers admits (again) he wrote Obama bio," and "Obama didn't write his own love letters," and "The birth certificate debate – it's not over," and "Obama's ring: 'There is no god but Allah'," and "Claim: Obama hid 'gay life' to become president," and finally, "Kenyan insiders say Obama was part of takeover strategy." One year ago, he was surging in Iowa; now he's sharing space with Chuck Norris.

Meanwhile, Politico's Ken Vogel reports that former Pennsylvania Sen. Rick Santorum is quietly reaching out to donors in advance of a potential presidential run in 2016—something that seems wholly incompatible with becoming a columnist for a birther site.

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2016 Presidential Hopefuls Are Already Schmoozing Sheldon Adelson And Other Bankrollers

| Mon Dec. 3, 2012 11:05 AM EST
Sheldon Adelson.

In the super-PAC era, it is never too early to cozy up to the biggest bankrollers in American politics.

Just a week after Election Day, three potential contenders for the 2016 GOP nomination—Louisiana Gov. Bobby Jindal, Ohio Gov. John Kasich, and Virginia Gov. Bob McDonnell—paid visits to casino magnate Sheldon Adelson, Politico reported Monday. Adelson and his wife, Miriam, set a new record for individual giving at $54 million during the 2012 campaign. And that's just the spending that was disclosed—it's likely they gave much more. Adelson said in March he might give as much as $100 million to retake the White House, and the Huffington Post reported Monday that Adelson's total giving is actually closer to $150 million. So it's no surprise that Adelson would be at the top of Republican presidential aspirants' must-visit list. 

Democrats are likewise buttering up their biggest donors. Maryland Gov. Martin O'Malley of Maryland will meet with donors in Los Angeles this week, Politico notes, and in posh Chevy Chase, Md., next Monday. Given Southern California's outsized role in bankrolling President Obama's reelection campaign,future Democratic candidates' road to the White House runs through Los Angeles and, in particular, mega-fundraiser Jeffrey Katzenberg, the CEO of Dreamworks. You can expect to see plenty more presidential aspirants swing through L.A. 

Vice President Joe Biden, a potential 2016 candidate, and Sen. Mark Warner (D-Va.), a centrist favorite, have also met with donors in recent weeks.

Lawmakers, of course, probably aren't giddy about spending their time with their party's moneymen. But with public financing of presidential campaigns horribly outdated, and with super-PACs and shadowy nonprofits so influential, any viable presidential bid needs big money in its camp. That state of play has Democrats already fretting about the next presidential campaign:

"I don't think that there would be any way to prevent that," said Paul Begala, a top strategist for the Priorities USA Action super-PAC, which supported President Barack Obama and reported spending $65 million attacking Romney. "The next time around will be an open seat, and you are almost certain to see a proliferation of these things."

But one of Begala's top donors, Houston trial lawyer Steve Mostyn, who along with his wife and their law firm donated $4.2 million to liberal super PACs, predicted Democratic donors could avert a nasty and expensive super PAC primary war.

"Democratic donors already have a distaste for super PACs, and I believe that an agreement not to use super PACs in the primary or at least not to be used in an attacking manner is something big donors on the Democrats' side will push for and get," Mostyn said. Otherwise, "there is a possibility of the same type of demolition derby on both sides."

Mostyn says he's not ready to commit to a 2016 candidate. "I have not thought about it, and at this time I have no desire to," he said.

Science Museums Celebrate the Wonders of…Fracking?!

| Mon Dec. 3, 2012 7:03 AM EST
An artist's rendering of the Perot Museum's fracking-themed Shale Voyager exhibit.

If oil companies designed the lessons contained in middle school science textbooks, it would be a national scandal. But helping to design scientific displays in natural history museums that host countless school field trips each year? Apparently, that's just fine.

Take the shiny new Perot Museum of Nature and Science (yes, as in former presidential candidate H. Ross), which opened in Dallas on Saturday. A $10-million donation from Hunt Petroleum (now owned by Exxon) helped finance the museum's Hunt Energy Hall, where exhibits include a larger-than-life drillbit cutting through a slab of faux rock, and a fracking-themed virtual reality experience known as the Shale Voyager. The New York Times' Edward Rothstein got a preview:

The Hunt Hall has its virtues. Some science centers treat environmentalism with almost devout attention, eager to drive home homilies, so it is a novelty to see it treated in this hall, as it is in other parts of the Perot, as one subject among many. It is refreshing as well to see some attention devoted to the engineering difficulties in the extraction of oil and get some idea of the science, however awkwardly presented.

But it is almost bizarre to see a major exhibit about energy whose central focus is on fracking and its machinery, even if the process ultimately transforms American energy production. We also get little sense of the controversies and debates that now fuel any examination of the energy issue. Even if the hall is meant to reflect Texan preoccupations, we learn in only a small part of a display case that "Texas produces more wind energy than any other state in the U.S."

The Perot Museum is far from the only one pumping up fossil fuels. Forth Worth's Museum of Science and History features the XTO Energy Gallery, named after the eponymous Barnett Shale fracking outfit. And in North Dakota, fracking billionaire Harold Hamm has shelled out $1.8 million to help construct a new wing of the North Dakota Heritage Center that will include an exhibit on—you guessed it—fracking.

These relationships might seem less problematic if the museums actually built firewalls between their fundraising and curatorial departments. I don't know how things work at the museums in Dallas and Fort Worth, but when I visited the North Dakota Heritage Center earlier this year, museum staff told me that they'd sought Hamm's input on the content of their energy exhibits. This brings to mind the kind of "science" espoused by the Creation Museum—the transmutation of opinion and faith into "fact" through the magic of pseudo-scientific dioramas.

Hamm and Perot Musuem donors T. Boone Pickens and Trevor Rees-Jones represent a new generation of philanthropically inclined Texas oil magnates. But while their names are showing up on a lot of buildings, they haven't begun to build the kind of legacies left by, say, the Whitneys or the de Menils—families that underwrote world-famous art museums in New York and Houston. Funding fracking exhibits might be a good PR move, but in the long run, the best PR is the kind that lacks an obvious political agenda.

CHARTS: To Fix Climate, World Needs to Boost Spending by 185 Percent

| Mon Dec. 3, 2012 7:03 AM EST

Today Barbara Buchner, a market analyst for Climate Policy Initiative, arrived at the UN climate talks in Doha, Qatar, not to offer solutions, but to figure out how we're going to pay the tab. In her hand is a new report from CPI adding up just how much money the world is spending on climate change mitigation and adaptation. The good news, she says, is that global climate investment is greater than ever before. The bad news: It still might not be nearly enough.

"The gap really is still large," she says.

Buchner's measuring stick is a report released this summer by the International Energy Agency showing that to stay within the internationally agreed-upon two degree celcius warming limit set in past iterations of the UN's climate talks, humanity will need to spend an additional $1 trillion a year between now and 2050 (on top of what current policies already stipulate) on climate-related investments like renewable energy, energy efficiency, and climate-proofed infrastructure. Today's CPI report pegs current global climate investment at $364 billion, for 2010-11:

Chart by Tim McDonnellChart by Tim McDonnell

Koch Brothers: It's Only a Flesh Wound!

| Mon Dec. 3, 2012 7:03 AM EST

This has been a very bad year for conservative megadonors. That includes Charles and David Koch, the famously secretive industrialist brothers who pledged a do-or-die effort to unelect President Obama with the help of their wealthy allies and affiliated dark-money groups. So how have they been spinning the disappointing election results to their friends and fellow donors? This (entirely fake) letter imagines one possibility… 

Read more on the Kochs' political activities in 2012 and the real stats cited in the phony letter above.