Term Limits

I am not a fan of term limits.  It does not make sense to me to say that some people can't run for office, or for a particular office.  Furthermore, it really does not make sense to tell the people that they can't have a particular person in office no matter how much they want that person.

The popularity of term limits is an indictment of our voters.  Apparently, human nature results in a bias toward incumbents in the electoral process.  If this is the case (as pretty much everyone seems to agree), it seems better to quantify and erode that bias rather to impose term limits.  Imposing term limits is a form of “throwing the baby out with the bath water”.

My alternative is that, after having been elected a particular number of times, the percentage of votes required to win should increase.  An election between two first-time candidates could be decided by a one-vote margin.  Perhaps a candidate running for reelection the first time could have the same one-vote margin requirement.  Maybe the second reelection would require a 0.25% margin, with a 0.5% for the third re-election, etc. 

I’m sure many people would want to impose more than a one-vote margin even for the first re-election.  That’s fine!  I’m not trying to specify what the margins should be or when they should start.  Research should be done on electoral patterns to determine what might be the right requirements.  In my opinion, the requirements should not be set with the intent of giving challengers a 50% chance of upsetting incumbents.  The incumbents have already demonstrated that the voting public chose them before and they have more experience typically, so most incumbents should be re-elected.  What we’re trying to do is to reduce their percentage of success to the degree that the success results from voter failure.

Some people would probably say that it is unconstitutional to allow someone with fewer votes to win, but clearly it is less restrictive to require a higher margin from an incumbent than to ban that incumbent from running.

The people should be allowed to choose who they want to represent them.  They should not be told that they do not have the right to vote for someone.

I don't know what the right percentages might be.  There are no magic percentages, just as there is no magic number of terms in office relative to term limits.  Researchers could study the possible impact of such a rule historically.  But having such a rule might have changed how people would have voted in the past or how they will vote in the future, both in primary and main elections.  To avoid an over-correction, I’d suggest establishing percentage thresholds lower than the data suggests.  The percentages could be massaged over time to accomplish our goals.  The percentages could be put up for a vote.

Principles of a Sound Health Care Financing System

There are some competing philosophies relative to health care.  It is important to understand the fundamental philosophies:

a)            Same health care for all.  This is the “Equality Principle”.  Although our constitution does not grant a right to health care, we have the ability to amend our constitution and/or laws and regulations.  This principle is appealing from an equity point-of-view.  Its disadvantages are cost and possibly resulting in a lower level of care for all.

b)           Same threshold for all; allow people to buy more health care.  This is the “Rising Tide Principle”.  It provides a safety net, but allows people the individual right to purchase more health care.  It is appealing in terms of individual rights and stimulating more health advancements.  Its disadvantage is that people who can afford to purchase additional health care may not support what others consider to be an adequate threshold.

c)            No threshold.  Supporters of this “Libertarian Principle” note that the constitution does not provide health care guarantees, so none should be instituted.  It maximizes freedom but results in the greatest disparities in health care.

There may be other philosophies.  Below, I’ve laid out what I think are key aspects of a sound national health program.  Certainly there are some aspects with which people might disagree.  But I think it is important that the country consider these principles and make careful decisions which reflect them unless they are consciously rejected.

Claude Thau, 913-403-5824; cthau@targetins.com

Characteristics of a Good National Health Program

1. Permitting death with dignity is critical.  I have seen estimates that 30%-50% of health care costs occur in the last six months of life, which experts say is very different than what occurs in countries with nationalized health care.  People who don’t want such care should not be forced to have it.  Fear of losing control over their lives has led many seniors to commit suicide while in good health.  If they knew that they could control what would be done to them if their health deteriorated, they would not feel the need to commit suicide while healthy.
2. People who can afford it must have significant personal financial responsibility for their health care.  We waste lots of money when people think they’re getting something for nothing and have no incentive to review or manage their costs.
3. People who truly cannot afford health care should get a threshold level by direct health care services or by insurance.  We confuse the issue of whether people are receiving health care with the issue of whether people are insured.
4. Incentives should exist to live a healthy lifestyle (not smoking, no drug abuse, not drinking to excess, maintaining healthy weight, exercising, complying with medical instructions, eating a nutritionally-balanced diet, etc.).  Such incentives may include lower deductibles or contributions or higher maximums for those who practice wellness.  Actuarially, this simply levels the playing field.   For example, obesity costs us $117 billion/year in health care costs, not counting the additional costs in the workplace for absenteeism, other insurance (life, LTCi), etc.  Our sedentary lifestyle appears to be a major contributor to our increased health care costs compared to other countries.
5. Incentives should exist for preventive care (such as annual visits to the dentist and eye doctor) and use of non-pharmaceutical solutions.  For example, the Midwest Center for Stress and Anxiety (www.stresscenter.com) helps people relieve anxiety without medication or commercial psychotherapy.  The “Breathe-Right” nasal strip is an example of a low-cost, low-tech, but highly valuable product, which improves the quality of sleep inexpensively, thereby improving health and productivity.  Physical and mental exercises can improve our bodies and mind.
6. It is critical to have accurate, comprehensive, transparent accounting and cost projections.  A loss of tax revenues is a cost that cannot be ignored.  Too often the costs of our programs are hidden.   Cost transfers are a hidden tax.  A system of “checks and balances” seems necessary to maintain this principle.
7. Clearly an aging population and medical advances will continue to fuel a huge increase in health care costs no matter what we do.  We should acknowledge these costs no matter how we choose to pay for them.  Funding on a “Pay as You Go” basis means that our payments will increase dramatically over time.  If each generation is required to cover its own costs, their payments will explode as they age and likely be considered to be unaffordable.  Asking future generations to pay for our care is an extreme form of “taxation without representation”.  The alternative t o “Pay as You Go”, pre-funding, requires that reserves be established to recognize future liabilities.
8. To make intelligent decisions, people must know the cost of their health care and the alternatives and costs of alternatives.  Consumer-driven health care works; the question is how best to apply it.
9. Aggregating entities can negotiate lower health care costs.  The government can do so (e.g., Medicare) and other sponsors can do so (e.g., insurers or employers).
10. A key method for negotiating lower costs is to limit the number of providers so that participating providers obtain more business.  Plans should also be able to exclude providers based on quality of service.  “Any willing provider” laws protect providers from competition.  It may be desirable to create standards for health plans to assure that adequate service provider coverage exists across the plan’s foot-print (as opposed, for example, to having one doctor for every 5000 square miles), while still allowing a plan to negotiate lower price by delivering an increased patient load.  If an employer offers more than one plan, foot-print requirements should apply across those plans, not separately for each one.
11. Unfortunately, strong controls on fraud are necessary in our society.
12. It is important to continue development of electronic health information and communication systems to reduce costs and improve care.
13. A threshold health care program should not cover items that are not medically necessary.  For example, cosmetic surgery should not be covered unless it involves a major life-affecting issue.  I also think that procreation services should not be covered.
14. We owe more service, including cosmetic surgery, to our wounded soldiers, regardless of how one feels about our wars.
15. People should not lose their right to insurance because they change or stop employment.  Once insured, they should be able to continue to be insured at the same level continuously.
16. On the other hand, people should not be able to move from uninsured (or minimally insured) status to insured status whenever they wish.  Allowing such a shift at any time encourages people to be uninsured until they need care.  No insurance-based system can survive on such a basis.  That’s why many countries require mandatory purchase of insurance.
17. We must limit the adverse impact of lawsuits, while retaining accountability.  Fear of liability encourages expensive unnecessary treatments and tests.  Lawsuits cause liability insurance premiums to explode.  Punitive damages assessed against health providers could be used to offset the cost of health care; winning a liability lawsuit should NOT make someone extraordinarily rich like winning a lottery.  Plaintiffs should be responsible for the cost of lawsuits they lose, at least if the judge or jury determines that the lawsuit was frivolous.
18. We might want to limit cost of a public health care program to some degree.  Are we going to separate all Siamese twins?  Will we give everybody organ transplants?
19. Health care innovation does a lot of good but costs a lot of money.  If we want it to continue, we need to assure that the health care system does not overly discourage it.  Patent laws are necessary to encourage pharmaceutical companies to invest in research and accept the inherent risks in their business.  We should measure such innovations here in the USA and elsewhere so we can track the impact of our programs.
20. Controlling immigration might be significant in controlling costs.  Immigrants can be a source of low-cost care providers.  On the other hand, free or inexpensive high-quality health care can encourage illegal immigration.  Limiting emergency health care for illegal aliens is difficult to enforce because of uncertainty as to status and fundamental beliefs that we should not stand-by and watch people die if we can help them.
21. Permitting abortion is unpopular with many, but unwanted children may increase our health care and other costs.
22. Some health-related issues should presumably be controlled outside of the health care system.  For example:
1. If we don't protect our environment, we'll suffer health losses.  It is my impression that we are getting a lot more leukemia and other conditions among young children, which I suspect are environment-related.  Birth weights are lower in smoggy areas. 
2. Improving our educational system is critical.  More educated people seem to incur lower health care costs on an annual basis (they may incur higher health care costs over the course of their lives because they live longer).  They are more knowledgeable and can afford better diet, care, etc.  Better schools will also develop more health care professionals which would improve service and reduce cost.
23. A national health program should not extend to care for pets, but could cover the cost of pets for medical reasons (i.e., “Seeing Eye” dogs).
24. We should control the risk that insurers profit by declining justified claims.  One approach, the Independent Review process that facilitates appeals, seems to work well, but should be monitored to ensure that it satisfies the need without increasing cost inordinately.  Another possibility would be to separate the insurer from the claims adjudication process.

Background info:

80 doctors worked 22 hours to separate Siamese twins born to a Mexican family which came to the USA on a 15-day tourist visa 7 months prior to the operation.

Unhealthy Lifestyles in US Contribute to More Expensive Health Care

One of the more likely focus areas for the political season in the next year will be health care. It has already surfaced as a major point of interest and contention and all the candidates will be waving banners with their own solutions. This will also be a period of a lot of myths and misperceptions. One of the assertions is that the European system is so much less expensive for recipients because the system is fundamentally state run in many countries. There may or may not be elements of truth to this but another factor that is not getting the attention deserved is the general state of health and fitness in the US. The average American spends about $6,000 annually on health care and that is about twice what is spent by the average European. A big part of that difference may be attributable to the fact that Americans are more obese, smoke more, endure more stress and are generally less physically active. This lack of attention to health and fitness may cost between $100 and $150 billion each year.

Analysis: Ten of the most common chronic diseases were studied in both Europe and the US and the Americans were worse off in all ten. These include diabetes, hypertension, arthritis, heart disease, high cholesterol, chronic lung disease, asthma, osteoporosis, cancer and stroke. The two factors that seemed to contribute most to the higher incidence of problems in the US were obesity and smoking and it is the former that is growing at exponential rates. In the US over a third of people are obese (33%) while in Europe the percentage is just 17%. In the US 53% have smoked at some point in their life while in Europe the percentage is 43%. In both regions the rate of smoking has been declining but in both Europe and the US the rate of young people smoking has started to increase again. The bottom line in terms of health care is that Americans are not taking care of themselves and are essentially “too fat and lazy” as the lead researcher on the project points out. -CK

The

Our Deficits and Single-Payor System

Our country is brilliantly based on three independent branches of government (executive, legislature and courts) because a division of power is critical.  The division has been critical to our success because of the fundamental human weakness that power corrupts.

We require a separation of church and state in order to maintain freedom.  Allowing a religion to run our country would undermine the freedoms we cherish, as proven repeatedly in human history -- power corrupts.  Either the person with the power or his/her staff or her/his successor inevitably abuse power.

Likewise, enterprise and government were intended to be separated, but we've been eroding this important distinction.  We need governmnent to monitor enterprises (whether for-profit or non-profit), creating rules that allow a thriving free market with clear disclosures.  When the government runs enterprise, we lack effective monitors because it does not work to put the fox in charge of the henhouse (power corrupts). 

What better proof than Medicare and Social Security?  These programs have consistently been run irresponsibly.  The government requires sound accounting principles from enterprises, but there is no authority that can demand sound accounting from the government. 

President Obama's health care program was touted as being funded on a sound basis, but it:

•  Involved Ponzi-scheme financing, foisting costs on to future generations
• Check-kiting-type of activity, counting money for more than one purpose (i.e., huge amounts of Medicare savings were allocated to cover the cost of the health care program and also counted as reducing the unfunded Medicare liability)
• Ignoring significant administrative costs
• Creating unfunded mandates for states and employers
• Duplicitous claiming of savings that were intended to be reversed (doctor's fees for Medicare services)
• Incorporating totally separate items (like student loans) to make it look as though it was a break-even program.  (That could work if we were not so deep in debt.  But with our great debt, we need to allocate cost savings to reduce the debt and unfunded liabilities.  Applying such savings to new expenditures simply makes it that much harder to fix our financial problems.)

The government trumpeted that it was creating laws to keep the big, bad insurance companies from discriminating against people who are already sick when they apply for insurance.  But, to its credit, the government realized that it, like the insurance companies, could not permit people to get health insurance only when they are sick.  So the government mandated insurance coverage.  This is similar to mandating automobile insurance (but automobile insurance is mandated at the state, not the Federal, level).  Mandating insurance coverage could solve the discimination issue without other government involvement.  If insurance is to be mandated, it would have to be done by a state or federal government because private industtry can't mandate coverage.  That is an example of the government creating rules. (Of course, people differ on whether that was an appropriate rule to create.)

Two articles of interest:
Terry Savage on the Payroll Tax Holiday (see exchange below)
My separate post on the principles of health care funding approaches.  Unfortunately, my efforts to engage our politicians in discussion on these principles over the years was entirely unsuccessful.  They never asked me for writings I offered and never commented on writings that I sent.

Sent: Sunday, February 19, 2012 10:27 PM
To: Terry Savage

Dear Terry,

Excellent article!   Here are some thoughts beyond what you wrote:

1.     Not only is the accounting circular (transfers from the general account to OASDI, then reinvested back into the general fund), but the payroll tax waiver will probably NOT be recorded as increasing our published deficit.  That’s because OASDI is an off-ledger account.  What a great way to do business – spend money but don’t report it as a deficit.

2.     The OASDI and Medicare under-funding is grossly understated even by watchdog web-sites because of the “75-year cliff” accounting that is used.

3.     Weren’t reduced Medicare fees for doctors a significant element of the funding of PPACA?  The accounting for that bill was so duplicitous, extending beyond Ponzi schemes to the equivalent of check-kiting.

4.     With the huge debt we have, especially in off-ledger items, savings, particularly in those programs, must be used to reduce those deficits.  Even when the politicians tell us that they have found savings that offset their expenditures, they are digging our holes deeper because they are removing some of the ways we could extricate ourselves from this mess.  Once those savings are spent on something else, how do we solve the problems?

5.     Their efforts are changing the nature of Social Security and Medicare and exposing the reality of those programs:

a.     Analysis has traditionally been inconsistent as to whether these “payroll taxes” have been included in analyzing the income tax burden and comparing the burden for different economic strata.

b.    It is becoming more obvious that these programs consist of:

                                  i.    Forced savings for the less-affluent, with the politicians’ intent to buy their votes by returning more money to them than their contributions justify

                                 ii.    A hidden income tax on the more affluent.

1.     People with more income have paid a lot more Medicare tax (because it is proportionate to income and because business owners have paid half the cost), but do they consume proportionately more services?  They also pay a lot higher Medicare Part B premiums, although they don’t consume proportionately more services.

2.     Now the Medicare tax is being increased to a higher rate for the affluent.

3.     The portion of Social Security being paid by employers has been increased, by breaching the 50/50 rule, creating a mischievous precedent.

4.     Social Security’s cap on income that is exposed to the tax is also likely to be raised “out of fairness”

6.     You noted that the Unemployment Extension and the doctors’ fees do not create jobs or ease taxes.  I think it is unlikely that the payroll tax waiver will create many jobs.  There appears to be NOTHING in this bill regarding job creation.  Perhaps you disagree because you seemed to limit your jobs comments to the other provisions.

7.     By the way, I think few young people really understand or care about what is being done to them.  I have found it very hard to arouse their indignation on such topics.

Thanks for your efforts and best wishes,

Claude Thau

From: Terry Savage [mailto:Terry@TerrySavage.com]
Sent: Saturday, February 25, 2012 9:19 AM
To: Claude Thau 

Claude -- THANK YOU for your incredible analysis of the situation.  And you are truly watching this with an eagle eye.  Yes, you caught my slight diversion re the impact of this bill.  That's because I want people to read - -and if you start talking about the benefits of tax cuts in creating growth, half my audience automatically shuts down.  Since this SS mess impacts EVERYONE -- from young to old, from poor to wealthy, I want them to focus on this "game" being played by both parties in Washington.  I think that's the only way to get Americans to unite to force the politicians to be "honest" -- Gosh, had to put that in quotes!  Is honesty that tough??

Thanks again for your comments.  I think I'll copy my bosses on this one!  Terry

Terry Savage