Kevin Drum - August 2012

The Supreme Court Did Not Say That States Can Pull Out of Existing Medicaid Rules

| Tue Aug. 7, 2012 8:41 AM PDT

In the Obamacare case, the Supreme Court ruled that the federal government couldn't threaten to take away existing Medicaid funding from a state that refused to go along with Obamacare's expansion of Medicaid. The level of coercion was too great, the court said. In practice, it left states with no choice in the matter.

In the LA Times today, Tom Campbell suggests that this opens up a whole new era in Medicaid governance:

Before the Supreme Court's ruling....only the federal government had the authority to say what kind of coverage was sufficient. If a state, for example, wanted to cover more people by cutting out more expensive kinds of treatment, a federal waiver was required — and seldom given.

But under a reasonable interpretation of the court's recent decision, that might no longer be true....The Supreme Court's rationale [] holds significance for a much broader question: What might there be in the existing Medicaid rules that could also be held to constitute coercion? The governor of Maine contends that if his state wants to limit eligibility for Medicaid, to save state dollars, it has the right to do so without having to get a waiver from the federal government or losing any federal funds it now gets in proportion to the level of coverage. Maine will pay its share, and the federal government should pay its too, for the smaller amount of coverage. Anything else, according to his argument, constitutes coercion, and the logic of the Supreme Court ruling should strike it down.

Campbell is a smart guy and a non-wingnut conservative. But I sure don't see where this comes from. Medicaid expansion is a brand new program, and the Supreme Court said that states couldn't be forced to accept a new program. There had to be some legitimate scope for real negotiation. But current rules are different: the states accepted those long ago. The federal government isn't forcing anything new on them when it says they have to get a waiver if they want to deviate from these rules.

So what am I missing? This seems completely unrelated to anything the Supreme Court said in the Obamacare case. It would mean that states can unilaterally opt out of rules they've already agreed to without any penalty, which in turn would essentially mean that the federal government would have no authority to set rules at all. Even the court's conservatives would surely balk at that, wouldn't they?

Or would they?

Advertise on MotherJones.com

Why Obamacare Probably Won't Lead to Doctor Shortages

| Tue Aug. 7, 2012 7:51 AM PDT

The New York Times reports today about evidence that the HCA hospital chain has performed lots of unnecessary heart surgery over the past few years:

“The allegations related to unnecessary procedures being performed in the cath lab are substantiated,” according to a confidential memo written by a company ethics officer, Stephen Johnson, and reviewed by The New York Times. Mr. Tomlinson’s contract was not renewed, a move that Mr. Johnson said in the memo was in retaliation for his complaints.

....At Lawnwood, where an invasive diagnostic test known as a cardiac catheterization is performed, about half the procedures, or 1,200, were determined to have been done on patients without significant heart disease, according to a confidential 2010 review. HCA countered recently with a different analysis, saying the percentage of patients without disease was much lower and in keeping with national averages.

....HCA denies its decisions at these hospitals were motivated by financial considerations, but rather “demonstrate the strong focus we have on quality patient care.” The company also says that more than 80 percent of its hospitals are in the top 10 percent of government rankings for quality.

I'm going to use this as an excuse to make a fairly tangential point: Stories like this are why I'm not all that worried about a doctor shortage after Obamacare fully kicks in in 2014. It's not that the fear is totally groundless. If you put a lot more patients into the medical system, that's likely to make hospitals and doctors' offices more crowded. But there's also a lot of evidence for a substantial supply-side effect on medical care: the more doctors a city has, the more treatment people get, whether they need it or not. Likewise, if a hospital buys an expensive piece of equipment, they're highly motivated to keep it in constant use whether it's really necessary or not.

So yes: more patients might cause more crowding. It's a reasonable concern. But there's a pretty good chance that it's mostly going to crowd out a fair amount of unnecessary care, like the stuff HCA is accused of providing. That will eat into bottom lines, but it won't necessarily make it any harder to see a doctor when your kid has an ear infection. We'll just have to wait and see.

It's Time to Stop Celebrating Harry Reid

| Tue Aug. 7, 2012 7:31 AM PDT

Here is Harry Reid on Mitt Romney's taxes: "I was told by an extremely credible source that Romney has not paid taxes for 10 years." PolitiFact rates this a Pants on Fire lie.

An awful lot of liberals disagree. Typical reasons include sophistry ("PolitiFact doesn't know that Romney paid any taxes"); revenge ("Romney's been telling lots of lies, so why shouldn't we?"); disingenuousness ("All Romney has to do is release his tax returns to clear this up"); or lying as a virtue ("Politics ain't beanbag").

Come on, folks. Reid didn't say I'll bet Romney didn't pay any taxes. He didn't say he talked to someone familiar with high earners who told him Maybe Romney won't release his returns because he didn't pay any taxes. He made a flat statement of fact. He said he has an "extremely credible source," which in this context means someone with direct knowledge of Romney's taxes who decided to pick up the phone and dish about it to Harry Reid. Does anyone really believe this? Really? Then, as if that weren't enough, Reid made his little bluff even less plausible by deciding that Romney didn't just avoid all taxes for one year, he avoided them for ten years. Yeah, baby, that's the ticket! Put these two things together with the fact that Reid hasn't even tried to make his fairy tale sound believable (it's just some guy he talked to) and this is not a story that a five-year-old would credit. It's just Reid making stuff up in order to put pressure on Romney, and I think we all know it.

Can I prove this? Of course not. Given the epistemological limits of proof, I can't prove Barack Obama was born in the United States either. Nevertheless, I feel safe saying that anyone who claims to have an "extremely credible source" that Obama was born elsewhere is either crazy or lying. The same is true for Reid, and Reid isn't crazy. It's simply vanishingly unlikely that he's telling the truth, and no one — not liberal or conservative — would spend even ten seconds on a story so patently far-fetched if it were anybody but Reid and the background were anything but the frenzy of a presidential campaign.

Politically, of course, Reid's ploy has worked like a charm. Romney's taxes are back in the news and Romney's ham-handed handling of the whole affair has kept it there. And that gives everyone a fifth reason to cheer on Reid: the end justifies the means.

Take a deep breath, folks. This is contemptible stuff and it's not just business as usual. We've spent too many years berating the tea partiers for getting on bandwagons like this to get sucked into it ourselves the first time it's convenient. It's time to quit cheering on Reid and get off this particular bus.

No, Barack Obama Isn't Trying to Undermine Military Voters

| Mon Aug. 6, 2012 12:39 PM PDT

Today's Outrage of the Day™ is Mitt Romney's contention that Barack Obama hates our men and women in uniform and wants to prevent them from voting. Here is Katie Biber, legal counsel for the Romney campaign:

We disagree with the basic premise that it is "arbitrary" and unconstitutional to give three extra days of in-person early voting to military voters and their families, and believe it is a dangerous and offensive argument for President Obama and the DNC to make.

That does sound offensive, doesn't it? The nickel version of the truth is that Ohio recently restricted early voting for everyone except members of the military, and the Obama campaign wants the law overturned. They want everyone to be able to vote early. In other words, if Obama gets his way, nobody in the military will lose their early voting rights. Romney was just flat-out lying when he implied last week that Obama was trying to "undermine" the voting rights of members of the military.

On the other hand, it's also true that if Obama's suit succeeds, members of the military will no longer get special consideration, as the Ohio legislature wanted to give them. There's little doubt that the motivation for this was largely partisan (the military tends to vote Republican), but you know what? There's also a perfectly defensible case to be made that military voters do indeed deserve preferential treatment. Obama's suit argues otherwise, and Republicans are making hay with it.

Anyone suggesting that Obama is trying to restrict military voting rights is pretty plainly lying. On the other hand, if you stick to the argument that the military deserves special treatment and Obama opposes giving it to them — as Biber did — you're in the clear. It's nasty stuff, but still pretty garden variety attack politics.

Quote of the Day: You Need to Let Your Kids Fail

| Mon Aug. 6, 2012 10:49 AM PDT

From Madeline Levine, offering some advice on overparenting:

If you can’t stand to see your child unhappy, you are in the wrong business.

The rest of the piece is equally sensible. For that reason, I expect it will get very little attention.

Chart of the Day: Algobot Wars Now Rule Wall Street

| Mon Aug. 6, 2012 10:10 AM PDT

Felix Salmon passes along this animation that shows the remarkably chaotic growth of high-frequency trading on all of America's various stock exchanges over the past five years (this includes the three exchanges you've heard of plus the dozen others you probably haven't). The basic idea behind HFT is that humans are taken out of the trading equation entirely. Instead, computer algorithms trade stocks directly, executing millions of trades per second and occasionally going crazy, as they did during the Flash Crash of 2010 and then again a few days ago, when an HFT bug cost Knight Capital $440 million in 30 minutes. Felix wants it to stop:

Back in 2007, I wasn’t a fan of a financial-transactions tax; today, I am. And this chart shows better than anything why my opinion has changed. The stock market is clearly more dangerous than it was in 2007, with much greater tail risk; meanwhile, in return for facing that danger, society as a whole has received precious little utility. Are spreads a tiny bit tighter than they might be otherwise? Perhaps. But that has no effect on stock-market returns for long-term or even medium-term investors.

The stock market today is a war zone, where algobots fight each other over pennies, millions of times a second. Sometimes, the casualties are merely companies like Knight, and few people have much sympathy for them. But inevitably, at some point in the future, significant losses will end up being borne by investors with no direct connection to the HFT world, which is so complex that its potential systemic repercussions are literally unknowable. The potential cost is huge; the short-term benefits are minuscule. Let’s give HFT the funeral it deserves.

I agree. The problem with HFT isn't that we know it's dangerous, it's that we don't know anything at all. It's become flatly too complex for even its creators to understand what their creations are doing. Here's an example. The heart of HFT is speed: even the speed-of-light delay can make a difference, so most HFT shops locate their computers as close to the stock exchanges as possible. Even a few milliseconds can make a difference. At least, that's what a company called UNX thought until it moved from Burbank to New York:

This is where the story gets, as [Scott] Harrison put it, weird. He explains: “When we got everything set up in New York, the trades were faster, just as we expected. We saved thirty-five milliseconds by moving everything east. All of that went exactly as we planned.”

“But all of a sudden, our trading costs were higher. We were paying more to buy shares, and we were receiving less when we sold. The trading speeds were faster, but the execution was inferior. It was one of the strangest things I’d ever seen. We spent a huge amount of time confirming the results, testing and testing, but they held across the board. No matter what we tried, faster was worse.”

“Finally, we gave up and decided to slow down our computers a little bit, just to see what would happen. We delayed their operation. And when we went back up to sixty-five milliseconds of trade time, we went back to the top of the charts. It was really bizarre. I mean, there we were in the most efficient market in the world, with trillions of dollars changing hands every second, and we’d clearly gotten faster moving to New York. And yet we’d also gotten worse. And then we improved by slowing down. It was the oddest thing. In a world that values speed so much, you could be slower, yet still be better.”

The problem here isn't that UNX's move failed, it's that Harrison still doesn't know why it failed. Until we do, allowing HFT bots to control our equity markets is just begging for a catastrophe.

And that's where the transaction tax comes in. HFT works by making tiny amounts of money on a huge number of trades. Even a tiny tax, maybe a quarter of a percent per trade, would make HFT unprofitable and would put our markets back in the hands of human beings. Those human beings will still screw up, but at least there's a limit to how fast and how badly they can do it.

Advertise on MotherJones.com

Maybe, Just Maybe, the Economy Is Starting to Recover

| Mon Aug. 6, 2012 8:57 AM PDT

Is the economy finally getting better? A friend writes in with some anecdotal evidence: his father, who declared bankruptcy two years ago, got cold called by Bank of America offering him a refi deal. What's more, his brother finally got evicted from his foreclosed house in Riverside. "I've told people that the recession won't end until his creditors evict him," he writes. "His presence in the house was a sign that the house can't be sold. Well, my brother is getting evicted next week."

Karl Smith has some anecdotal evidence too, but he also has some statistical evidence to offer. According to the BLS payroll series on employment, job growth has been pretty flat for the past year (that's the red line). But the household survey tells a different story. From a near stall in June, employment growth has been accelerating steadily for the past year and is now up to nearly 250,000 new jobs per month. So maybe the economy is doing better than we think.

It's worth noting that none of this matters much for the election. If the economy really is poised for takeoff, it will come too late to do Barack Obama any good. For now, this is just something to scratch our chins about.

Mitt Romney Not Such a Great Real Estate Investor

| Mon Aug. 6, 2012 8:18 AM PDT

The LA Times reports that although Mitt Romney may be pretty good at making money in the private equity biz, he's apparently not so good at the real estate investment biz. His La Jolla mansion, the one with the car elevators, hasn't worked out so well for him:

After paying cash for the Mediterranean-style house with 61 feet of beach frontage, [the Romneys] asked San Diego County for dramatic property tax relief....Initially, the Romneys asked that their 2009 assessment, $12.24 million, be reduced to $6.8 million, maintaining that their home had lost about 45% of its value in the first seven months they owned it.

Impressive! A lot of homes here in Southern California lost value during the housing bust, but Romney must be the only guy to lose 45% in the space of seven months. Or to claim he did, anyway. The San Diego County assessor rejected Romney's rather dramatic sob story, and eventually everyone settled on a 29% reduction over the course of three years — though Romney's lawyer still thinks that's a lot higher than the home's current fair market value. I guess mansions on the beach in La Jolla aren't what they used to be.

Here's Live Coverage of the Mars Rover Landing at 10:31 pm Pacific Time Tonight

| Sun Aug. 5, 2012 6:24 PM PDT

Via BoingBoing, here's a live feed for tonight's landing of the Mars rover Curiosity. The livestream starts at 8:30 pm Pacific time, and the rover is scheduled to land at 10:31 pm Pacific time. More details from BoingBoing here.

Even if you don't care about Mars exploration — in which case, why are you reading this blog? — you should watch anyway. The entire landing process is mind-bogglingly complex, and there's always the white-knuckle, NASCAR-like possibility of total catastrophe. You won't want to miss that even if visiting nearby planets doesn't excite you. Remember: these are your taxpayer dollars at work.

Hooray for Obamacare!

| Sun Aug. 5, 2012 3:52 PM PDT

The New York Times reports that even liberals are now referring to the Affordable Care Act as "Obamacare":

Whether Democrats can change a pejorative into a positive is unclear, but after three years on the defensive, they have resigned themselves to the fact that “Obamacare” has become the popular name for the sweeping social program, and they are trying to spin it in their direction. Particularly since the Supreme Court upheld the law’s constitutionality, Mr. Obama and his allies have tried to take ownership of the term.

“The right created it and spits it out as an epithet; it has that tone, a sneering quality like they’re hanging it around his neck,” said Jeff Shesol, a former White House speechwriter under President Bill Clinton. “But it has so taken hold, it reached that level of saturation that it’s very difficult for Obama or the Democrats to escape it. So why not then try to appropriate it?”

I've always been fine with Obamacare as a nickname, much the same way that Reaganomics is a nickname for supply-side economics. And whether embracing it converts the term Obamacare from a pejorative into a positive depends entirely on Obamacare itself, I think. "Neoconservative" started out as a pejorative term and did just fine when neocons made it into a popular doctrine. Conversely, "welfare" used to be so plainly positive that conservatives urged other conservatives not to use the term. But that changed when conservatives made welfare itself suspect.

Likewise, if ACA eventually becomes popular, then Obamacare will be a positive term. If it fails, then it will fade away. It's that simple.