Kevin Drum - 2013

Why Are American Doctors Paid So Damn Much?

| Wed Nov. 20, 2013 1:07 PM EST

Conservatives have picked up today on a Kaiser Health News piece reporting on doctor complaints that insurers plan to pay them less for Obamacare patients than for other patients:

Insurance officials acknowledge they have reduced rates in some plans, saying they are under enormous pressure to keep premiums affordable. They say physicians will make up for the lower pay by seeing more patients, since the plans tend to have smaller networks of doctors. But many primary care doctors say they barely have time to take care of the patients they have now.

Matt Yglesias is unsympathetic. He says American doctors are very well paid and should quit griping: "If we ever reach the point where American doctors have been squeezed so badly that they start fleeing north of the border to get higher pay in Canada, then we've squeezed too hard. Until that happens, forget about it."

That's pretty cold. But if you really want to know what's going on, take a gander at the chart below. It's from the OECD, so it includes all of the world's relatively rich countries:

That's damn peculiar, isn't it? If Econ 101 is to be believed, higher pay should produce more doctors. And yet, even though the United States pays doctors far more than any other country on the globe, we're in the bottom third. We have more doctors per capita than poorish countries like Mexico and Poland, but far fewer than Belgium and Britain and Germany—all of which pay doctors considerably less than we do here. So what's going on?

As Matt says, the basic answer is that U.S. doctors operate as a cartel. They artificially limit their own ranks, which drives up their compensation:

What we really ought to be doing is working to further pressure the incomes of doctors through supply-side reforms. That means letting nurse-practitioners treat patients without kicking a slice upstairs to an M.D., letting more doctors immigrate to the United States, and it means opening more medical schools. Common sense says that since the population both grows and ages over time, there should be more people admitted to medical school today than were thirty years ago. But that's not the case. Instead we produce roughly the same number of new doctors, admissions standards have gotten tougher, and doctors have become scarcer.

This is yet another reason not to shed too many tears for doctors. They've basically brought this on themselves. If the market were allowed to produce as many doctors as there's demand for, they'd already be getting paid less. Right now they're enjoying the substantial rents that come from squeezing their own supply, and they've fought like lemmings for decades to keep it that way. You can hardly blame them for that, but there's no reason the rest of us should put up with it. It's time to fight back.

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Chart of the Day: Strategy vs. Execution

| Wed Nov. 20, 2013 11:42 AM EST

Via someone on Twitter whose name I can't quite dig up from my memory banks, today's chart of the day follows the declining appreciation of dreary execution relative to showy strategery over the past half century. This happens to be a pet issue of mine, and it also seems apropos in light of the Obamacare website fiasco. Always remember: amateurs talk strategy; professionals talk logistics.

POSTSCRIPT: This chart is, of course, meaningless since both words have multiple meanings. That's OK. Don't go all OCD on me. Just savor the alleged cultural evolution and add some humorous and/or bitter observations about it in comments.

Democrats Finally Getting Ready to Kill the Filibuster

| Wed Nov. 20, 2013 12:43 AM EST

Republicans have now made clear that they're willing to filibuster all of President Obama's nominees to the DC circuit court. This is not because they have any specific objections to them, but simply because they want to preserve the court's conservative majority even though they lost the election. Greg Sargent reports that this is such a sweeping position that Harry Reid no longer thinks there's any chance of brokering a compromise on the matter. The only option left, according to a senior leadership aide, is to go nuclear and do away with the filibuster entirely:

“Reid has become personally invested in the idea that Dems have no choice other than to change the rules if the Senate is going to remain a viable and functioning institution,” the aide says....Asked if Reid would drop the threat to go nuclear if Republicans green-lighted one or two of Obama’s judicial nominations, the aide said: “I don’t think that’s going to fly.”

Reid has concluded Senate Republicans have no plausible way of retreating from the position they’ve adopted in this latest Senate rules standoff, the aide says. Republicans have argued that in pushing nominations, Obama is “packing” the court, and have insisted that Obama is trying to tilt the court’s ideological balance in a Democratic direction — which is to say that the Republican objection isn’t to the nominees Obama has chosen, but to the fact that he’s trying to nominate anyone at all.

Reid believes that, having defined their position this way, Republicans have no plausible route out of the standoff other than total capitulation on the core principle they have articulated, which would be a “pretty dramatic reversal,” the aide continues.

But does Reid have the votes? The New York Times reports that Republican obstruction has finally gotten so outrageous that even previously cautious Democrats are now supporting Reid's position:

Mr. Reid, of Nevada, has picked up crucial support from some of his more reluctant members recently. Senator Patrick J. Leahy, Democrat of Vermont and the longest-serving member of the Senate today, who is chairman of the Judiciary Committee, has endorsed putting limits on the filibuster despite his history of being protective of Senate institutions. The two senators from California, Dianne Feinstein and Barbara Boxer, said separately on Tuesday that they were leaning toward a rules change.

....The stakes seem higher this time for many Democrats. Many of them strongly believe that if Mr. Obama is not able to appoint any judges to the court — Republicans have rejected four of the five nominees he has submitted — it will retain its conservative bent for decades. It is a crucially important court for any White House because it often decides cases that relate to administration or federal agency policies.

At various points over the past year, Republicans have refused to confirm any nominees to the NLRB so that it would lose its quorum and be unable to pass new rules; they have refused to confirm any chairman of the CFPB in order to prevent it from functioning at all; they have threatened to destroy America's credit unless Obamacare was defunded; and now they're refusing to confirm any nominees to the DC circuit court in order to preserve its conservative tilt. Reid eventually managed to cut deals on the NLRB, the CFPB, and Obamacare, but as Feinstein says, "We left with a very good feeling there would be a new day. Well, the new day lasted maybe for a week."

Add all this up—the NLRB, the CFPB, the debt ceiling extortion, and the DC court filibusters—and it's now clear that Republicans have no intention of allowing Obama to govern normally. Instead, they have adopted a routine strategy of trying to nullify legislation they don't like via procedural abuse. As Sargent puts it:

The GOP position is not grounded in an objection to Obama’s nominees or to the function of the D.C. Circuit Court of Appeals; it’s grounded in the argument that Obama should not have the power to make these appointments to the court at all. As Jonathan Chait argues, Republicans may not have even thought through the full implications of the position they’ve adopted. But Dems have, and taking it to its logical conclusion, they believe Republicans have presented them with a simple choice: Either they change the rules, or they accept those limits on Obama’s power. And that really leaves only one option.

Yep.

Texas Anti-Abortion Law Looks Likely to Survive Court Challenge

| Tue Nov. 19, 2013 8:09 PM EST

Ever since the Republican landslide of 2010, conservative state legislatures around the country have been busily erecting barriers to abortion. The question is, how far can they go? At what point will the Supreme Court rule that these new laws have no legitimate motivation—improving patient safety, say, or guaranteeing informed consent—but are instead designed merely to make it burdensome for women to get abortions?1 Today brought a discouraging but oddly ambiguous omen on just how far the Court is likely to allow states to go:

The justices voted 5-4 to leave in effect a provision requiring doctors who perform abortions in clinics to have admitting privileges at a nearby hospital....Justice Antonin Scalia, writing in support of the high court order Tuesday, said the clinics could not overcome a heavy legal burden against overruling the appeals court. The justices may not do so “unless that court clearly and demonstrably erred,” Scalia said in an opinion that was joined by Justices Samuel Alito and Clarence Thomas.

Chief Justice John Roberts and Justice Anthony Kennedy did not write separately or join any opinion Tuesday, but because it takes five votes to overturn the appellate ruling, it is clear that they voted with their conservative colleagues.

This is discouraging because five justices voted to permit this Texas law to stand, despite abundant evidence that its only real purpose is to make it harder for clinics to hire doctors to perform abortions. But it's weirdly ambiguous because Roberts and Kennedy declined to join the majority opinion. Unfortunately, my guess is that this is mostly for technical reasons, since this case will probably be back before the Court after the circuit court issues its final ruling. When that happens, I suspect that both Roberts and Kennedy will come down pretty firmly on the side of allowing states to enact virtually anything short of an outright ban.

1In case you're not up on the lingo, these are known as TRAP laws—Targeted Regulation of Abortion Providers. They're nothing new, but enactment of TRAP laws picked up serious steam after the 2010 midterms. More here if you're interested.

Quote of the Day: Paul Ryan Continues to Pretend He Wants to Fight Poverty

| Tue Nov. 19, 2013 3:55 PM EST

From Paul Ryan, who's apparently hard at work on a conservative plan to fight poverty:

You cure poverty eye to eye, soul to soul. Spiritual redemption: That’s what saves people.

Well, maybe so. But here on Earth, money helps out too. The quote above is from a Washington Post story about Ryan's newfound focus on poverty, and Jared Bernstein reads through the rest looking for some more worldly policy recommendations. He doesn't come up with much:

Then you read page after page, trying to figure out what the dude is actually saying he’d do to lower poverty, and here’s what you’re left with: vouchers, tax credits, and volunteerism.

All sizzle, no steak.

And is that not the story of Rep. Ryan? His is the classic example of the adage that if you’ve got a reputation for being an early riser, you can sleep til noon....His proposals to block grant major safety net programs (freeze their spending levels and hand them over to states), like SNAP and Medicaid, would gut their critical countercyclical function (as was the case with TANF). He used the Heritage Foundation’s economic wizards to predict the his budget would reduce unemployment to less than 3% (don’t look for this forecast, though–his team pulled it once they actually, you know, looked at it).

For the life of me, I can't figure out the media's love affair with Ryan. Sure, he's young, fit, good looking, and he's not a screamer. He's also a smart guy who understands the details of the federal budget. But everything he's ever done—everything—boils down to a single sentence: reduce taxes on the rich and reduce spending on the poor. That's it. There's literally nothing else he's ever seriously proposed.

It doesn't even take much digging to figure out that this is what he's saying. You only have to be barely numerate, just enough to draw the obvious conclusions from his budget proposals (conclusions that he's very careful not to draw himself). When you do that, you find that his budgets always propose lower taxes and lower domestic spending. Much lower. How is it that so many people seem so willing to pretend otherwise?

MINT and the Retirement Crisis

| Tue Nov. 19, 2013 2:18 PM EST

Should we expand Social Security? Of course we should. We all know that old-style pensions have all but disappeared, replaced by 401(k) plans that are disastrously underfunded. Savings levels among pre-retirement Americans are low. Housing wealth has declined. For the lowest-income retirees, Social Security provides virtually their entire income. And various measures of "retirement readiness" suggest that most seniors won't be able to sustain their normal lifestyle in retirement.

But there's a problem with all this: it's fundamentally anecdotal. Most Americans have never had any pension of any kind, even back in the good old days. Savings levels have always been low. Social Security has always provided the bulk of retirement income for the poor. And retirement readiness has been weak for a long time. What we'd really like to know is the trajectory of all this stuff when you add it all up. Are seniors doing better or worse than in the past?

So I keep coming back to MINT. It comes from the Social Security Administration, not some think tank with an axe to grind, and as far as I know it's the only projection of retirement income that accounts for everything in simple dollar terms: pensions, savings, Social Security, earnings, etc. I've posted about the basic conclusions of MINT before, but here it is again: adjusted for inflation, median household income for retirees is projected to increase from about $20,000 in 1971 to $46,000 in 2041. During that same period, household income of prime-age workers seems likely to stay pretty flat. The latest MINT report is here.

Now, this is still a two-edged sword. The MINT simulation projects that future retirees have better prospects than current retirees in absolute dollar terms. However, on average, their retirement income will be only 84 percent of their working income, compared to 95 percent for Depression-era workers (though that's tricky to intepret since replacement rates are calculated on lifetime income, and will look higher when wages are rising than when they're stagnant). Still, you can say there's not a simple story to tell here. Retirees are doing well by one metric but not so well by another.

I don't want to pretend that MINT is the ultimate statement of retiree prospects. Obviously it's not. But the report I linked to above was written by two researchers from the Urban Institute and one from the Social Security Administration. It's not some kind of right-wing agit-prop. Yet no one ever mentions it. I've heard endless horror stories about the collapse of retirement, but none of them ever engages with the MINT data, even though it's easily the most straightforward and easy-to-understand projection we have.

For my money, I'd like to see Social Security increased for the lowest-income seniors. The minimum Social Security payout is pretty scandalous. High-income seniors, conversely, could probably get by with a lower growth rate in benefits than we currently envision. Obviously you can argue with this, and I'm not wedded to any particular plan. Beyond that, though, I'd sure like to see some real engagement with the MINT projections. Once you look beyond all the pretty but incomplete bar charts that litter retirement white papers, it suggests that we don't really face a historic retirement crisis.

Maybe that's wrong, and we really do. But let's see the evidence. Tell me why MINT is wrong.

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Why Does Stimulus Work? A Follow-Up

| Tue Nov. 19, 2013 1:09 PM EST

Just a quick note: a few days ago I linked to a John Cochrane post in which he suggested a big difference between the Old Keynesian and New Keynesian explanations for why fiscal stimulus works. Aside from any other disagreements that liberal economists might have with Cochrane, I was curious about whether his description was correct. Well, for those of you who have been sitting on the edges of your seats waiting for an answer, now we have one. Robert Waldmann (here) and Paul Krugman (here) basically say that Cochrane's story is so fundamentally confused that it's all but impossible to even criticize it. "Cochrane’s fantasy has so little connection with reality that it is hard to discuss," says Waldmann. "He can’t be bothered to actually figure out how the models work," says Krugman. So that's that. No punches are being pulled in this cage match. Just thought I'd pass it along.

Regionality is Alive and Well in American Politics, But So Is the Urban-Rural Divide

| Tue Nov. 19, 2013 12:53 PM EST

Ryan Cooper writes this morning that his world has been rocked. Conventional wisdom suggests that American politics is heavily dominated by a rural-urban divide, but is it possible that it's actually dominated primarily by differences between regions, as hypothesized by Colin Woodard? To check this out, Woodard took a look at the urban-rural spectrum in the recent gubernatorial race in Virginia:

In Greater Appalachia, Cuccinelli won every category of county, from the very largest cities in the section (where he won 49.1 to 45.7) to counties without so much as a big town (62.8 to 30.8)....By contrast, in Tidewater, McAuliffe won by large margins in counties large and small, taking five of the six categories. In the biggest cities he won 56.3 to 37.3. In the most rural counties he won by a convincing 51.0 to 41.1.

Hmmm. Obviously the conservative Cuccinelli did better in the western half of Virginia (part of Greater Appalachia) and the liberal McAuliffe did better in the coastal half (Tidewater). At the same time, in Greater Appalachia Cuccinelli won big cities by 3 points and rural counties by 32 points. Conversely, in Tidewater McAuliffe won big cities by 19 points and rural areas by only 10 points. It looks to me like the urban-rural divide is alive and kicking.

Does regionality matter? Of course. Everyone knows the South votes differently from the Northeast, which in turn votes differently than the Mountain West. But within those regions, rural areas trend considerably more conservative than big cities. Both factors are at work. I'm not sure I see what's new here.

Obamacare Takes a Hit, but Not a Big One

| Tue Nov. 19, 2013 12:19 PM EST

For a long time, the tsunami of bad news surrounding the launch of the Obamacare website didn't seem to take much of a toll on public opinion. But several polls this week suggest that both Obama and Obamacare have finally taken hits. Obama's approval ratings are down, as is support for Obamacare. But not that much. The chart on the right, from today's Washington Post poll, is a little messy looking, but it shows that although support has gone down, there's been only modest movement. It's now about where it was two years ago and two months ago. (And even this tells us little, since, as usual, it fails to distinguish between people who really oppose the law and those who only "oppose" the law because they want it to go further than it does.)

In other poll news, for the fifth year in a row virtually no one thinks President Obama is too conservative. Only 9 percent of the country would prefer a more liberal president. This is up a whopping two points from early 2010, a year after Obama was inaugurated. This is the fundamental problem for American progressives: the country just doesn't support a more robust progressive movement than we have now. Until we change that, fantasies of expanding Social Security and electing Elizabeth Warren are going to remain just that.

In States Where the Website Works, Obamacare Works Too

| Tue Nov. 19, 2013 2:38 AM EST

From the LA Times:

A number of states that use their own systems, including California, are on track to hit enrollment targets for 2014 because of a sharp increase in November, according to state officials.

"What we are seeing is incredible momentum," said Peter Lee, director of Covered California, the nation's largest state insurance marketplace, which accounted for a third of all enrollments nationally in October. California — which enrolled about 31,000 people in health plans last month — nearly doubled that in the first two weeks of this month.

Several other states, including Connecticut and Kentucky, are outpacing their enrollment estimates, even as states that depend on the federal website lag far behind. In Minnesota, enrollment in the second half of October ran at triple the rate of the first half, officials said. Washington state is also on track to easily exceed its October enrollment figure, officials said.

It really is all about the website. In places where it's working, people are signing up and are pretty happy with what they're getting. Rate shock is an issue for a few of them, but not for a lot. The bottom line is the Republican Party's worst nightmare: Once Obamacare has been up and running for a while, it's going to be pretty popular.

Just get the damn website working.