Kevin Drum - August 2012

An Itsy Bitsy $716 Billion Medicare Q&A

| Fri Aug. 24, 2012 1:08 PM EDT

Mitt Romney says that Obamacare cut $716 billion in Medicare spending. Is that true?

Yes it is. This is the most recent estimate from the CBO for the ten-year period from 2013-2022.

So seniors are getting screwed?

No, probably not.

Then who is?

Mostly hospitals and insurance companies.

How so?

About a third of the cuts come from reduced reimbursements to hospitals. About a third comes from reducing overpayments to insurance companies for Medicare Advantage plans, which are private competitors to standard Medicare. The remaining third comes from cuts in reimbursements to various other healthcare providers. More details here.

So there are no cuts to Medicare benefits?

Nope.

So Medicare beneficiaries have nothing to worry about?

Probably not. It's possible that the cuts to providers could lead to slight cuts in quality or even, via some unintended backdoor mechanism, to some doctors dropping out of Medicare. And the cuts to Medicare Advantage might prompt insurance companies to reduce some of the extra benefits they've provided. That's all speculative, but it's possible. There's no way to cut a bunch of money out of anything and guarantee that it will have no effect whatsoever.

However, the basic shape of the river here is pretty simple: Obamacare does indeed reduce Medicare spending by $716 billion (over ten years), but it doesn't reduce Medicare benefits by a single dime. It's unlikely that Medicare beneficiaries will see any noticeable effects at all.

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American Doctors, Hospitals, and Pharmaceutical Companies Are Overpaid

| Fri Aug. 24, 2012 10:57 AM EDT

Is the American public addicted to entitlements? Is that why U.S. healthcare costs are so high? Matt Miller says no: the addiction to entitlement is real, but the public isn't the main culprit:

The United States spends twice per person on health care what most other advanced nations spend without better outcomes to show for it....Rightly understood, health-care entitlement reform is not, as conservatives suggest, a matter of lessening the dependency of big chunks of the population on government largesse. It’s about weaning the members of our medical-industrial complex from their entitlement to far higher payments, despite shabby results, than their counterparts abroad get. This license for inefficiency, issued by both parties to doctors, hospitals, health plans, drugmakers and device firms, is diverting precious resources in an aging America from urgent non-health care, non-elderly needs.

Yes indeed. The quasi-free-market approach that we take to healthcare in the United States has produced far higher costs than any other country on earth. To repeat some statistics that I posted a couple of years ago, here's the core of our problem:

  • We pay our doctors about 50% more than most comparable countries.
  • We pay more than twice as much for pharmaceuticals, despite the fact that we use less of them than most other countries.
  • Administration costs are about 7x what most countries pay.
  • We perform about 50% more diagnostic procedures than other countries and we pay as much as 5x more per procedure.

The chart on the right, from a McKinsey study, is based on "Expected Spending According to Wealth." That is, richer countries tend to spend a higher percentage of their income on healthcare, and since the United States is one of the richest countries on earth you'd expect us to spend a lot. That's ESAW. But even if you take that into account, we still spend about $2,000 more per person than we should. The McKinsey chart breaks that down into totals. About a third of our total spending (the dark blue bars) is above ESAW, and that's divided among outpatient care, inpatient care, drugs, adminstration, and investment.

Needless to say, although this may be excess spending to you and me, it's excess income to doctors, nurses, hospitals, and the pharmaceutical industry. And you can hardly expect them to accept cuts to their income without a fight. Nonetheless, that's where a big chunk of our problem lies. Either we start paying all these people less, or else our healthcare costs are always going to be sky-high. Paul Ryan, despite his reputation for courage and wonkiness, doesn't have the guts to say this. But the truth is that there's really no way around it.

Iranian Oil Sanctions Still Biting

| Fri Aug. 24, 2012 9:51 AM EDT

Via Stuart Staniford, here is a chart of Iranian oil production. It dropped in 2008, probably due to the Great Recession, then plateaued for a while, and then began a steep plunge in the middle of last year. "So the sanctions are definitely biting," Stuart says, and "revenue will likely have dropped much more than production (since only a fraction of production is exported and prices paid will have dropped as Iran's few remaining customers use their leverage to extract price concessions)."

Nonetheless, Iran has shown no signs so far of bowing to international pressure to abandon its uranium enrichment facilities. On the contrary, it's speeding things up. This leads Charles Krauthammer to endorse Anthony Cordesman's proposal for dealing with Iran: establish clear red lines, offer generous terms for giving up their uranium enrichment, and then make it crystal clear that we will use military action to destroy their enrichment facilities if they continue to hold out. This is an alternative that I suspect will gain an increasing number of fans as the Iran stalemate goes on. There are even occasional moments when I'm one of them, though this isn't one of them. This is, unfortunately, not a problem with any good solutions.

What Ever Became of George W. Bush?

| Fri Aug. 24, 2012 5:00 AM EDT

This may seem like an odd question, but the other day I found myself wondering what had become of George W. Bush. The answer, of course, is nothing. He lives in Dallas with Laura and…that's about it. For all practical purposes, he's disappeared. You'd hardly know that for eight years he was one of the most polarizing presidents in recent memory.

Why? Partly, it's because Bush himself has chosen to keep such a low profile. He makes motivational speeches now and again, and shows up for the odd dedication or funeral, but otherwise keeps to himself. Even his 2010 memoir barely made a splash.

But the real reason is deeper. Bush may have seemed larger than life for eight years, but he left a surprisingly thin legacy. Take his legislative agenda. No Child Left Behind is now widely unpopular among both liberals and conservatives—so unpopular that Congress has spent the past five years assiduously avoiding a vote to reauthorize it. His tax cuts expired in 2010 and are now little more than a political football. His own party wants to repeal key provisions of Sarbanes-Oxley. The Supreme Court has effectively gutted campaign finance reform. On the foreign policy front, his wars are widely viewed as expensive failures. And he was never able to get so much as a vote on Social Security privatization or immigration reform.

That doesn't leave much. Pretty much all that's left is the PATRIOT Act and the Medicare prescription drug bill. That's not much for eight years.

Beyond that, neither party wants anything to do with him. It's not surprising that Democrats still think of him as the Frat Boy President, one of the worst of all time, but what is surprising is that Republicans largely agree. A guy who was hailed in 2000 as the first real conservative since Reagan, and in 2004 as the second coming of Winston Churchill, was all but dead to the GOP by 2008. He was just another big spender who led the economy into a tailspin and then seemed to have no idea what to do about it. By the time his second term finally petered out, his reputation was toxic on both sides of the aisle.

Finally, there's Bush's curious lack of any intellectual legacy. The cynical will suggest that this is because Bush didn't have much of an intellect in the first place, but that's just a cheap shot. Nobody ever accused FDR or Truman of being intellectual giants, but everyone knows what the Truman Doctrine is. Ditto for most other presidents, even if they don't have a capital-D doctrine to their name. By contrast, Bush actually did have a capital-D doctrine to his name, but when Sarah Palin was asked in 2008 whether she supported the Bush Doctrine, she just stared blankly at interviewer Charlie Gibson. Palin took a lot of heat for that, but I actually felt a little bad for her. When I first heard that interview, I remember wracking my brain too, trying to figure just what Gibson was talking about. Is "Bring 'em on" a doctrine?

I'm not sure what to make of all this. I don't even really have a point. It's just sort of astonishing that a guy who was president only three years ago, and who loomed so large for both liberals and conservatives, has disappeared down the memory hole so completely. In the end, for all his swagger, he was a mile wide and an inch deep. Once he left the White House, it was as if his entire presidency had just been a bad dream.

Hence my question: Has any president in the last century disappeared so completely and so quickly from the national consciousness? I don't think so. In that respect, George W. Bush really did turn out to be the world historical figure he always wanted to be.

From the Annals of Jackassery

| Thu Aug. 23, 2012 10:28 PM EDT

If you would like to read the stupidest story of the day, click here. No, I'm not going to give you a hint first. 

The Backlash to the Todd Akin Backlash Starts to Take Form

| Thu Aug. 23, 2012 5:39 PM EDT

The Todd Akin affair is the affair that just keeps on giving. The entire mainstream of the Republican Party may have excommunicated Akin, but Mike Huckabee is having none of it:

In a Party that supposedly stands for life, it was tragic to see the carefully orchestrated and systematic attack on a fellow Republican. Not for a moral failure or corruption or a criminal act, but for a misstatement which he contritely and utterly repudiated. I was shocked by GOP leaders and elected officials who rushed so quickly to end the political life of a candidate over a mistaken comment in an interview.

....Who ordered this “Code Red” on Akin? There were talking point memos sent from the National Republican Senatorial Committee suggesting language to urge Akin to drop out. Political consultants were ordered to stay away from Akin or lose future business with GOP committees. Operatives were recruited to set up a network of pastors to call Akin to urge him to get out. Money has changed hands to push him off the plank. It is disgraceful.

Etc. etc.

So what happens next? My prediction from the start has been this:

  • Akin, figuring that he just has to gut it out until the storm passes, will doggedly insist on staying in the race.
  • Faced with this cold, hard fact, conservatives will eventually invent some reason that liberal criticism of Akin has gone beyond the pale, and will start to rally around him.
  • He will beat Claire McCaskill in November. Not by a lot, perhaps, but he'll still beat her.

I'm going to stick with this. The backlash from the social conservative base has already begun, and I suspect that eventually the mainstream of the GOP will cave in. They'll cave in quietly, but cave in they will. When it becomes clear that (a) Akin is staying in the race and is therefore still key to winning back control of the Senate, and (b) they risk a civil war within the party if they continue to blackball Akin, money and support will begin flowing his way again. It will happen behind the scenes at first, and then more openly as the controversy fades away and the election gets closer.

There are other possibilities, of course. I figure the top three contenders are these:

  1. The pressure gets too intense and Akin bows out.
  2. Party leaders stick to their guns and incite a civil war with social conservatives.
  3. Party leaders eventually cave in and quietly support Akin.

I actually think the open civil war scenario would be a lot more fun and a lot more satisfying, but I'm skeptical that party leaders will let it come to that. I'm sticking with scenario #3. You can cast your vote in comments.

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No, Republicans Have Not Suddenly Developed a Love of Policy Wonkery

| Thu Aug. 23, 2012 1:11 PM EDT

Philip Klein argues that the Todd Akin affair could mark a "watershed moment" for the conservative movement:

In recent years, we've become used to a typical pattern when conservative candidates have come under fire for making controversial or ill-informed statements. Democrats and their liberal allies pounce, as do some Republicans and even conservative pundits. But many on the right are reluctant to join them, because they see a fellow conservative under attack by the Left.

....But in the case of Akin, this usual cycle didn't hold. When Akin made his infamous comments about rape and pregnancy ("If it's a legitimate rape, the female body has ways to try to shut that whole thing down"), the condemnation was swift and almost unanimous. It wasn't just liberals who were excoriating Akin, and it wasn't just establishment Republicans in Washington. The conservative base and Beltway Republicans united against Akin.

....When all the dust settles on the Missouri Senate race, the Akin mess could be looked back upon as marking a shift in the standards that those on the Right apply to conservative candidates.

You would probably expect me to have a more cynical take on this. And you'd be right!

Klein says that conservatives are finally outgrowing their torches and pitchforks stage, and Exhibit A is the GOP's vice presidential pick this year. Instead of a cultural show horse like Sarah Palin, it's a workhorse like Paul Ryan. "What excites conservatives most about him," says Klein, "are his policy smarts, his wonky understanding of budget minutiae."

Please. Conservatives are excited about Ryan because he's a true believer, not because they've developed a sudden love of budget wonkery. They would have been equally ecstatic about Bobby Jindal or Marco Rubio, and they're breathing a sigh of relief that Romney didn't pick Rob Portman or Tim Pawlenty, both of whom are plenty serious policy wonks but don't have quite the right-wing fire in their eyes that the other guys do.1

As for Akin, I agree that the unanimity of the Republican backlash against him has been impressive. But honestly, this has nothing to do with a more serious approach to politics. As Klein himself notes, nobody in the GOP wanted Akin in the first place, not the tea party and not the establishment. So he was friendless from the start. More importantly, everyone understands that Akin's remarks were so outrageous that they might genuinely cost him the election — and with it, Republican control of the Senate. Conservatives have been pretty explicit about this. They want him to step down for the good of the party. That's the motivation here, not the fact that Akin isn't a serious enough policy guy.

1I suspect that a lot of conservatives are also suffering from the Newt Gingrich delusion here. Remember the Gingrich boomlet during the primaries? And do you remember that one of the things that got everyone excited about him was the idea that he was such a brilliant speaker that he'd mop up the debate floor with Barack Obama? Conservatives were really taken with the idea that Obama's smarts were just an illusion manufactured by the liberal media, and Gingrich was the guy who could rip away away the facade and leave Obama a quivering husk. I think they have the same delusion about Ryan.

Did Mitt Romney Avoid Investments in Gun Companies?

| Thu Aug. 23, 2012 12:05 PM EDT

I just saw a segment on MSNBC with Time's Michael Crowley, who said that although Mitt Romney generally didn't care much about the moral consequences of his investments at Bain Capital (layoffs, pension fund raids, etc.), he did have moral qualms about making certain kinds of investments in the first place. Crowley says that Romney felt there were plenty of places to make money, which meant Bain didn't have to get involved in some of the more noxious ones.

Among those areas that Romney avoided was making investments in gun companies, many of which were attractive targets in the 80s and 90s. That's interesting! Has anyone else reported this before? Is it true? Did Romney really have moral qualms — as opposed to financial qualms — about putting Bain's money into Colt and Winchester and other arms manufacturers? I'd like to hear more about this.

Republicans Wanted a Culture War, Now They're Getting It

| Thu Aug. 23, 2012 11:13 AM EDT

Ed Kilgore is unsympathetic to conservatives who are wailing about the fact that the Todd Akin affair is distracting voters from the state of the economy:

If conservatives do indeed want a "truce" on issues like abortion, that's fine with me: let them start observing one. Leave Planned Parenthood the hell alone. Stop pushing for laws that challenge Roe v. Wade. Shut down all your ultrasounds. Tell Bob Vander Plaats to stop trying to run pro-marriage-equality judges off the Iowa Supreme Court. Take all those dog whistles about "respect for life" and "constitutional originalism" out of your platforms and speeches. Promise us you won't put unholy pressure on a President Romney to ensure the next new member of the Supreme Court will vote to turn abortion policy back to the states or even protect zygotes under the 14th Amendment.

The chart on the right, from the Guttmacher Institute, shows what Republicans have been up to since their historic state-level gains in the 2010 election. Have they been focused on unemployment or job creation? Nope. Mostly they've been busily passing photo ID laws, immigration restrictions, and an enormous raft of new abortion hurdles. Actions speak louder than words, and over the past 18 months the new wave of tea-party Republicans has very clearly shown us what they really care about. Now they're reaping what they've sown.

After 40 Years, Medicare Still Not a Strong Issue for Republicans

| Thu Aug. 23, 2012 9:55 AM EDT

Here is this year's least surprising news:

The Romney-Ryan proposal to reshape Medicare by giving future beneficiaries fixed amounts of money to buy health coverage is deeply unpopular in Florida, Ohio and Wisconsin, according to new polls that found that more likely voters in each state trust President Obama to handle Medicare.

....Roughly 6 in 10 likely voters in each state want Medicare to continue providing health insurance to older Americans the way it does today; fewer than a third of those polled said Medicare should be changed in the future to a system in which the government gives the elderly fixed amounts of money to buy health insurance or Medicare insurance, as Mr. Romney has proposed. And Medicare is widely seen as a good value: about three-quarters of the likely voters in each state said the benefits of Medicare are worth the cost to taxpayers.

Well, sure. Why wouldn't voters like Medicare in its present form? It doesn't cost very much, and then you get gigantic guaranteed benefits forever once you turn 65. What's not to like?

I've read a bunch of brave chatter from conservative writers suggesting that the "Medicare issue" is working in their guy's favor. I guess anything's possible, but I sure doubt it. The idea that Medicare is going broke probably seems like a fairly distant prospect to most voters — isn't everything always going broke? — and in the meantime why take chances? My guess is that people responding positively to the Romney/Ryan Medicare plan are either (a) stone partisans or (b) not really aware of what the Romney/Ryan plan is. Nobody cares about group A, and a few million dollars of targeted attack advertising will take care of group B nicely. If Medicare stays in the spotlight, Paul Ryan's plan will most likely be a smoking crater by election day.

Face it: Medicare reform is a loser for Republicans. They've never been trusted on Medicare, so they go into it with the same kinds of problems that usually beset Democrats on national security issues. What's more, as long as the campaign is focused on Medicare, it's not focused on the economy, where they want it. If Republicans have any brains, they'll stop trying to convince themselves that Paul Ryan's bright, shining wonkery will magically transform decades of devotion to Medicare, and instead do their best to change the subject.