The Steussy Ranch

President Obama is one of the most scintillating, intelligent people of our generation. He is, largely, a speaker of the truth, even when those truths are not convenient (to steal a phrase). Above is his speech in Cairo – a speech he was born to give, that no other president could possibly have given and it is etched in uncomfortable truths from one end to the other. The text of the speech (which can be read much more quickly than the 55 minutes it takes him to speak it) is here.

On a more curious note, I discovered over the weekend that Obama appeared on my favorite comedy radio show, Wait Wait Don’t Tell Me on NPR in 2005 when he had just been elected senator. It was fun listening to him discuss important national issues such as the non-wearing of underwear by baseball players’ mistresses and his duties washing dishes in the home. Find it here, under the section Not My Job.

The following is written by Brad DeLong (T-shirt quote: “There was a time when I had to decide whether to be a Civilization addict or an economics professor.”) DeLong is an adviser to several of the Democratic presidential candidates, so I am firmly encouraged. Note that this is from an economist – there are incentives built into everything.

So here it is:

20% Deductible/Out of Pocket Cap: The IRS snarfs 20% of your family economic income. 5% of it is an increase in taxes (but that replaces your and your employer’s current health insurance premiums). 15% of it goes straight into your Health Savings Account. That HSA is then used to pay all your family health bills. If your expenses in a year are less than what’s in your HSA, the balance is rolled into your IRA (or, if you prefer, returned to you with your tax refund check).

Single-Payer for the Rest: If your HSA is emptied and you still have more health bills that year, the federal government pays them. The main point, after all, is insurance: if you fall seriously sick, you want right then and there to be treated whether or not your wallet biopsy is positive.

Sin Taxes: on Tobacco, Gorgonzola, Three-Liter Bottles of Liquid High-Fructose Corn Syrup, Tanning Clinics (Melanoma), et cetera: Sin taxes (and, perhaps, someday general revenues) pay for an army of barefoot doctors and nurses and mobile treatment vans roaming the country, knocking on doors, and providing preventive and other long-run lifestyle services for free: Let me examine your prostate. Mind if I check your refrigerator and tell you how to eat healthier? Have you exercised today? I’m a Pilates instructor, and we could do a session now? Are you up on your immunizations? Anybody here have a fever and need antibiotics? Come on out to the van and I’ll clean your teeth.” The idea is to make the preventive care cheaper-than-free, to insure that nothing with a high long-run benefit/cost ratio gets left undone because people would rather get a bigger check the next April to use to buy an HDTV.

A Lot of Serious Research on Best Public-Health, Chronic-Disease, and Hospital Practices: Made easier, of course, by linking the payment records from the health branch of the IRS to hospital records to the wirelessly-transfered logs from the barefoot doctor vans.

That’s it. No deduction for employer-paid health expenses. No insurance companies.

The key is that we face not a health-care financing crisis but a health-care treatment opportunity. Technologies are going to do marvelous things: we are going to have livers grown from our own tissue on reserve in hospital basements in case we go picnicking and eat the wrong mushrooms. We need to figure out (1) how to spread the benefits of current and future medical treatment options as widely as possible while (2) also making sure that a lot of thought and energy goes into figuring out what effective treatments have the highest benefit/cost ratios–i.e., cost least–because those are the ones we can collectively afford to do the most of, and while (3) making sure that we collectively earmark as much of our total resources to health as we really want. Government programs are good at (1). Markets are good at (2). And insurance is good at (3) if we can deliver the right incentives to insurers. These three goals are in considerable tension.

The package above strikes this relatively ignorant economist as likely to give us the best chance of getting as close as possible to utopia.

Why the 20%? Because I am very impressed by the use of technology to drive the cost reductions–which means the reductions in doctor and nurse time: the increases in the number of procedures that a given treatment unit can perform, and thus in the number of people whom we can, collectively, treat–in beneficial-but-optional areas like eye surgery and lenses. It does seem to matter that consumers are cost conscious and economize when they have financial skin in the game. This is the mother of all Health Savings Account proposals.

Why the barefoot nurses? Because there are an awful lot of games where we don’t want economization. This is the mother of all public-health and subsidize-preventive-medicine proposals.

Why single-payer above 20%? Because I think there’s no space left for insurance companies. Insurance executives’ and actuaries’ incentives are horribly wrong–they are either to figure out how to exclude the sick from their coverage or to skimp on preventive stuff because twenty years hence the patient will be covered by some other company. You want doctors to have incentives to deliver necessary and appropriate care better. You don’t want insurers to have incentives to deliver shoddier and cheaper care in hard-to-monitor ways.

The original is here.

While addressing a meeting in Madrid, Alan Greenspan (former US Reserve Chairman) made a number of comments. Bloomberg and the other major financial news sources took hold of his prediction that Chinese equity markets are destined to fall.

Far more interesting, and of more long-term value, is the following:

Greenspan, who stood down as Fed governor last year, said cheap Chinese imports were one of the elements stoking world growth, along with Eastern European workers and the knock-on effects on lower inflation and rates. “In the last five years, the world as a whole is a growing faster than at any time in the world’s history,” he said. “It can’t last and it won’t last because it’s a one-shot adjustment.”

In other words, our current situation of low interest rates, rapid growth, no inflation is a one-time-only event as the political and technological environment allow billions of new entrants into the world’s market economy. Wow. Big thought. And very certainly right.