Medicare Chart Book and the Henry J

There is lots of interesting and some surprising information in the Medicare Chart Book Third Edition Summer 2005 published by the Henry J Kaiser Family Foundation. I’d love to have a Summer 2009 edition. Kaiser was a California businessman who established the foundation in 1948. His company produced a car named after him, the Henry J, pictured below. It reportedly got 35 miles per gallon and had a back seat that felt like an ironing board.  Read about it and see the original picture here.

The goal of the foundation as stated on their website:

We serve as a non-partisan source of facts, information, and analysis for policymakers, the media, the health care community, and the public. Our product is information, always provided free of charge – from the most sophisticated policy research, to basic facts and numbers, to information young people can use to improve their health or elderly people can use to understand their Medicare benefits.

Here are some of the interesting and sometimes surprising things in the 2005 report:

1. Medicare covered 14% of the population
        Two major categories of Medicare recipients:
        Age 65 and older             35.4M
        Under 65, disabled            6.3M (Includes folks on dialysis)

        Total                               41.7M (2005 pop. was 295.6M)

2. Recipients had surprisingly (to me) low income and total assets
        Median family income of recipients was $20,400/Yr.
        Only 12% had incomes greater than $50,000/Yr. (Page 6)
        Fifty four % had total family assets less than $20,000. (Page 8)

3. Medicare comprised about 17% of the national health care spending. (Page 53)

4. Total Medicare spending was $297B or a little over $7,000 per recipient. (Page 55) What is surprising is that the total is up 45% since then.

5. Medicare administrate expenses totaled 1.9% of benefit payments. (Page 58) Not bad, but may need more to prevent fraud!

For a less comprehensive but more up-to-date report, see Financing Medicare – An Issue Brief – January 2008.

Fraud is a big issue but I didn’t find any official estimate of the dollar amount at the Kaiser site. Seems it is difficult to separate fraud from errors but fraud could be up to 20% of the total Medicare expenditure. With the total increasing 15% a year, that trend appears to be the major long term problem. Fraud issue is discussed here.

Bottom line: Kaiser Family Foundation Web Site seems to be a good source of information for those who want to better understand current health care issues or run fact checks on stuff coming out of Washington. I love their charts.  Check it out yourself if you like data.

We The Customers...

The president and many in congress have decided that we the customers are spending too much on health care. And, they are concerned that health care is not being distributed fairly. They have no recognition or understanding that it is their fault.

The final result of current proposals on health care will be
     about the same total amount of health care
     at about the same total cost and about the same prices
     distributed more evenly over the population.
    
It will be rationing of health care.
We can live with that, for a while.

Nothing totally new here. It started in 1965 with Medicare.

It has been and will continue to be done without regard to the interests of customers (patients), doctors and other healthcare professionals

That is not what we the customers need.
     We, the customers, need more total health care.
     We need it at lower unit prices but a probably higher total cost.
     Higher because we all need access to doctors on a timely basis.
     And we need a lot more doctors and a lot fewer paper pushers.
     We, not government, need to decide how much to spend on health care.

To get more total health care at a lower unit price, we need:
     More capacity (doctors, hospitals, diagnostic equipment, etc.)
     Fewer claims and claims processors and other paper pushers.
     Better processes with fewer mistakes
     Less overhead and more cash payments at time of service
     Open competition
     Price flexibility so doctors and providers can sell out their capacity.

Good luck! Washington is not going to relinquish the control they have.

What congress is doing with health care could have been done fifteen years ago with cell phones. They could have said the country is spending too much on cell phones and the phones are not being spread uniformly through the population. They could have stepped in and established cell phone insurance with an established price for cell phones. Competition and innovation would have ceased. Everybody in the country who wants one would now have a cell phone paid for by the government at a rate of $300 a phone plus $100 a month for service. And we wouldn’t have to worry about texting and ring tones and built-in cameras and GPS’s and all those troublesome apps.

Well, that didn’t happen. So now almost everybody has a cell phone with features they want at a price that suits them. Some get prepaid cell phones and pay $25 a month or so. Others have iPhones and are paying $150 a month for a variety of services. And the government is not taking taxpayer money to pay for any of them. And cell phones are important…more important apparently to some people than health care.

Same thing could have been done with computers. But, because the market was left free and open and competition abounded, we can now get a new computer of very high quality at prices ranging from $299 or so for a perfectly good basic model with simple software and internet capability up to $3000 or $4000 for the latest in gaming and graphics technology. That beats the heck out of competition killing, government driven, standardization at government established prices.

Which do you think is the better model? Any chance we could change the mind of congress?

Probably not.

But let’s not be discouraged. Physical life is terminal, you know, regardless of the health care we receive. Rumors are that the death rate is approaching 100%. We just need to stay busy serving each other and enjoying life to the fullest and trying to stay as healthy as we can as this unbelievable drama unfolds in the nation’s capital. You couldn’t make up stuff that strange.

Well, maybe the Universal Food Stamp idea is stranger.

Changing Demographics/An Aging Population

I love this animated chart by Calculated Risk which steps through US population distribution charts for every five years from 1950 to 2050.  It illustrates clearly why Social Security and Medicare are continually in trouble.  It also shows the wisdom of Harvard Economics Professor Greg Mankiw's comment on how much wiser it would have been to establish these programs based on the youngest 90% supporting the oldest 10% of the population rather than setting age 65 as an arbitrary separation point.

Cash for Clunkers Update: Needy Cars; Also Bob Herbert Quote

An AP article by Ken Thomas provides an update on the Cash for Clunkers fiasco.  Turns out the capacity for stripping cars of parts and crushing the bodies has been exceeded as a result of the administration’s irrational exuberance in passing out taxpayer money to get people to trade in their older automobiles with the condition that they be destroyed by a certain date.  Some of the cars are apparently needy, because a government spokesman is quoted as saying that many of them “do not need to be crushed until early next year.”  I guess we will get a little boost to GDP when the crushing takes place, even though it is destructive rather than constructive.  

Columnist Bob Herbert (Yes, I read and find wisdom in both liberal and conservative writing.) has an opinion in his latest column about why the US may be in the doldrums: “Being an American has become a spectator sport. Most Americans watch the news the way you’d watch a ballgame, or a long-running television series, believing that they have no more control over important real-life events than a viewer would have over a coach’s strategy or a script for ‘Law & Order.’”– Columnist Bob Herbert

That's very insightful. If he's right, we'll never get the economy back on track with that attitude.

"Public Option" to Drive Out Profits? Give Me a Break!

The idea that health insurance company profits comprise a significant portion of US health care costs seems to be fairly common. That has led some to believe that a non-profit government, or so called “public” option would reduce costs by putting competitive pressure on the truly public health insurers and driving down their premiums. It is not clear to me why a government option that is cost neutral (not subsidized by taxpayer money) would add any competitive pressure to these companies that they do not already have as a result of competing with each other. The problem with the government run “public option” is that there would be no transparency, no quarterly reporting, no motivation to reduce or eliminate waste, and no reluctance to fund any shortfalls with borrowed money to be repaid eventually by taxpayer funds.

Besides, the original premise is wrong. Profits of the seven big health insurance companies in the Value Line® Investment Survey total only 0.54% of the total health care bill. I know $10.2B seems like a lot of money, but it has to be put in context of the almost $1.9T of health care costs incurred in 2008.

But what if we could take all the profits out of the health care system? Value Line has 160 companies listed that are involved in some phase of health care. They include hospitals, drug companies, biotech companies, medical device companies, medical supply companies, insurance companies, nursing homes, etc. All 160 companies together had 2008 profits of $119B, about 6.4% of the total health care cost of $1.9T. So, why not nationalize all 160 companies, take out the profits, and watch the costs come down! Ha! Or we could set up separate government hospitals, biotech companies, medical device companies, etc., just to provide competition and keep them honest. Well, I hope I don’t plant any seeds in Washington with this line of reasoning. I'd rather free the insurance companies we have to offer national plans and compete across state lines.  That would really enhance competition.  Here’s the data summary.

If you like pictures better than words and numbers, here is what that cost breakdown looks like on a big pie chart.  Click on it for a full size readable view.

How's the Economy Doing?

One problem with using statistics to diagnose the economy is that some statistic can be found to defend about any position a person might want to take. One common trick is to carefully choose a period of time that backs up what you want to say. If you want to defend gold as a great investment, just say, “Gold has more than tripled since 2001.” If you want to steer people away from gold, you can say, “Gold has increased less than 1% per year for the last 28 years.”

A second problem is media fueled obsession with short term results which generally are reflecting only random variability. Have you noticed that whether the market is up or down, the reason is always given. “Market up on consumer confidence figures.” “Market down on housing numbers.” It’s all baloney and useless information.

The way around these problems is to settle on a few key measures of the economy, keep them updated, and always look at very long trends with moving averages to smooth out the variability. For economic strength GDP has to be the key variable. But it has to be adjusted for population and for inflation to get a constant dollar GDP per capita. We know business cycles last a few years so to figure out the long term trends, I like a moving average of five years or so. Such a chart can be looked at quarterly by plotting quarterly GDP’s and using a 20 quarter moving average.

Here is a chart I like, 29 years of inflation adjusted GDP per capita with a five year moving average. You can ignore all the dotted lines. They are just there in case you are interested in how I got to the important dark blue heavy line. Here is my conclusion: Over the past 40 years, through all the ups and downs, booms and busts, and democrats and republicans, our economy has been growing at about 1.5% a year on average. So now we know why everybody isn’t getting big raises and why we can’t keep spending like rich folks and still balance the federal budget. And we know why, on an inflation adjusted basis, the Dow has been returning an average of about 2% per year.

The news on the low rate of growth is bad enough, but there are two sets of variables, charted below, that make it even worse.

1. We are growing the services part of the economy much faster than the manufactured goods part of the economy. That is bad news because it weakens us relative to the countries emphasizing manufacturing. It's tough to trade services in a global market.

2. Consistent with item 1, we are growing imports much faster than exports with an already seriously negative balance of trade.

The only things that move these variables quickly are bubbles and the pops that follow. Fundamental change is a much longer term issue requiring well designed strategies and careful execution of such. The question, assuming we really want to remain economically strong and free, is this: What needs to be done to increase the rate of real per capita economic growth while shifting back in the direction of more manufacturing and a less negative trade balance?  Do you believe the senators and representatives know the answer?  Do you believe it is on their agenda? Do you believe they care?

One thing for sure: Giving up the responsibility of government for infrastructure, security, and regulation (like a referee) to move into the automobile and banking businesses and further into the health care business is not going to help.

Making Bad Choices

In some of the volunteer work I do, potential clients are asked to write the reason for their problems on an application for assistance. Sometimes they will write, “Making bad choices,” or something similar. I think that is a good sign the individual may be on the way to a better situation because he or she acknowledges personal responsibility. Other typical comments are “no money,” “divorce,” drugs,” “incarceration,” “George Bush,” "police," etc. I suspect the outlook for those folks is not so bright.

Making good choices depends on an informed sense of priority and a willingness to let it guide decision making. In my working days, I often argued that management’s response to a request from an organization for additional funds for a particular activity should always be something like this: “So, this activity is your lowest priority, right?” The response might be: “No, it is high priority. That is why I am asking for additional money.” And management would respond, “It must be lower priority than all the things you are already doing or you would make a choice to take money from those things to fund this one.” Yes, I was a real Grinch.

Well, we have plenty of evidence now of “management” making bad choices, especially in the case of bankers and ratings agencies pushing the envelope on home mortgage practices to create a financial house of cards that finally came tumbling down.

For the national economy, our senators and representatives are responsible for establishing priorities and making good choices consistent with those priorities in the way they tax and spend. There is abundant evidence in the economic data charts I have been creating that they are either unwilling or unable to make the hard choices required to reallocate funds from lower priority to higher priority needs, to stop the growth of our national debt, and to strengthen our national economy. If they could do those things consistently and effectively, rather than focusing on getting votes and campaign donations, I believe we could work our way out of debt.

One simple example of a terrible choice made by our national leadership is the decision to fund the military expansion since 911 not only without any additional taxes but while increasing the growth rate of non military spending (See chart below). The historical data, the current trends, the current focus of our leaders in Washington, and the demands of the American people for more and more give me little reason to expect anything other than rising debt, a faltering economy, and a diminishing standard of living. So, when the history of the United States is written two or three hundred years from now, perhaps the list of reasons for its decline as a land of freedom, a beacon of hope, and a source of assistance for the rest of the world will include, “Making Bad Choices.”

(Click on the chart for a high resolution view.)

Government Income and Spending Diverging

This is the second of three posts on the national economy and government budget issues.  If you haven't read the first one, please check it out here.  I'm going to risk boring you with data again, but these are really neat original charts based on BEA data copied right from a government website.

A good friend of mine at work used to ask, “If you don’t have time to do it right the first time, how will you find the time to do it over?” I might ask a similar question of congress about debt accumulation: If you can’t match income and spending now, how are you going to do it later when you have to cover current spending plus repay the debt with interest?

We are in serious trouble with our national economy and with government budgets.  The three charts below are an attempt at diagnosis of the problems.  I think it is going to be clear that, while government's insatiable appetite for spending is problematic, the most fundamental problem is weakness in the economy.  You can get a hint of that here by seeing how things were going during the dot.com boom and how the bust in 2000 reversed the trend line. 

In only three of the last thirty nine years did government revenue exceed government expenditures.  It seems there is good evidence that resulted from the high profits and taxable incomes during the irrational exuberance of the dot.com economy and the mixed leadership in Washington with the team of Clinton-Dole-Lott-Gingrich in charge.  Then 911, war, and Bush's broken veto pen arrived on the scene.  I can't wait to see what the 2009 and 2010 numbers will be.

The only thing the third chart adds is an indication of whether the major problems are on the spending side or on the income (taxing) side of the equation.  Looks like its both.  The spending increases march on regardless of what is happening in the economy, while government income suffers during the economic downturns because of lower taxable profits and incomes.  And, we can't just boost tax rates as some want to do because that will further depress the economy.  I think it was James Carvill who is credited with first saying, "It's the economy, stupid."  I think he was right.

In the next posting, I'll have some charts to illustrate trends in the overall health of the economy.  If you want to see some of these charts on a larger scale, you can click on them for a full-screen, high resolution view.  You can download them here.

Long Term Trends in Government Spending and Transfer Payments

I love data and the concept of statistical thinking.  I learned a lot from Dr's. Juran and Deming and even took three graduate level statistics courses at USC after retirement before switching to a Lutheran seminary for further studies.  Still, I remain a "hack" in Dr. Deming's opinion and not a statistician.   But that doesn't keep me from trying to understand what is going on by looking at trends in important variables, what we used to call Key Result Measures at work.  I think everybody would agree that government spending is an important variable so here is an attempt to understand what is going on with it.

The level of government spending is the result of a continuing tug of war between those who argue for bigger government and more restrictions on individuals and those who argue for smaller government and fewer restrictions on individuals.  Government size and individual freedom, cannot be separated because the government spending has to come from taxes thereby reducing choices individuals have and because it always comes with strings attached.  This tug of war is a good and worthwhile struggle because there is no absolute right answer, but, aside from ideological considerations, there are some major economic variables that need to be understood and monitored closely as the struggle continues. There are right and wrong answers about these variables.

1. Amount and trends over time of government size as a percent of GDP
2. Amount and trend over time of government debt as a percent of GDP
3. Amount of wealth (GDP) being generated in the US Economy

To reduce the chance of boring anybody with a long and complicated dissertation and lots of data, I am going to do three posts, one on each of the three variables listed above. You probably already know everything I am going to say anyway, but I bet you haven't seen a neat chart just like this one.

The first thing that jumps out from this chart is that while government spending is at the highest levels ever, it does not appear, through 2008, to be wildly out of control as many seem to think.  From 1970 through 2008, it has ranged from 30% to 35% of Gross Domestic Product.  From 1970 to 1994, transfer payments such as Social Security, Veterans' Benefits, and Medicare doubled from about 7% to about 15% of GDP, and that is about where they were in 2008.  Spending decreased from about 22% to about 19% of GDP, and that is about where it was in 2008.  So the total money passing through government increased from 30% to 35% of GDP over that time, declined to about 30% during the Clinton administration (with the help of Newt Gingrich and Republican majorities in congress), and then returned to 35% by 2008 in the mysterious absence of much-needed Bush vetoes. 

Much of the growth is due to a steadily increasing percent of the population on Social Security.  Much of it is due to programs begun during Lyndon Johnson's War on Poverty which is in its 55th year and still at a stalemate as far as I can tell. 

Some may argue that government spending stimulates the economy, but no government spending can be considered a stimulus unless it is financed by borrowing.  If government spends only money that consumers and businesses would have spent anyway, had it not been taken as taxes, the only issue is whether government is somehow wiser in its spending (not very likely) or is spending on things only government can do (military, space exploration, organized destruction of working automobiles, congressional aides and staff, etc.). 

A fundamental problem is that government has an insatiable and growing appetite for spending, fueled by citizens' demands.  Just in yesterday's news I learned that Washington is sending $3.9M to South Carolina for a "Cash for Appliances" program to begin in March or April plus $4.95M to the University of South Carolina to study the feasibility of underground storage of carbon dioxide extracted from the atmosphere.  If you believe we are facing a climate crisis due to carbon dioxide in the atmosphere (I don't.), you might reasonably argue in favor of the study, but  I see no reasonable rationale for borrowing money from China, to help someone buy an appliance, probably made in China, at a discount while destroying a working model in the process.  That is lousy economics and lousy environmentalism.  (For more reasoning, see my Cash for Clunkers post.)  These two government expenditures, totaling about $9M, may seem small, but you put a few thousand of these together and suddenly the total is hundreds of billions of dollars.  Where is Everett Dirksen when you need him?

The second variable in the list of three at the beginning of this posting has to do with whether or not the government has the money to spend or must borrow it.  The fact is that in 36 of these 39 years, it did not have the money.  But that is the next post.

As far as this particular chart goes, if we were balancing the budget, I, a member of the less government team, would be satisfied to compromise and set an upper limit of 20% of GDP on spending and 15% of GDP on transfers.  Alas, I fear that when the numbers for 2009, the first Obama year, are in, those limits will have been greatly exceeded, and the debt will be significantly higher as well.  We'll add new data to the chart each year and see how it goes.

All the data for the chart are available at the United States Bureau of Economic Analysis Website.  It's a goldmine for folks who like to analyze data.

Signs Of Sobriety in The Big Apple

We just spent a weekend in NY City visiting our son and his girl friend. We enjoyed The Lady with All the Answers and three New Yorker Festival Events. Also had some great food at Trestle On Tenth and at Applewood in Brooklyn. When we ate at Trestle, we had just come from hearing Jonathan Franzen read from his new novel at one of the festival events, and there he was, an arm’s length away at the next table. It gave me a chance to shake his hand and thank him for the reading which was very entertaining and enticing. Order the book, but, if you missed it, read The Corrections first.

During the trip, I saw some hopeful indications that things may be returning to normal and minds getting back in gear after the shock of the financial meltdown and the euphoria of the Obama election. Reality eventually kicks in.

One of the New Yorker Festival events was a panel discussion (on an entirely different subject) at which it was openly acknowledged, with no gasp from the audience, that there is a debate about global warming. Three or four years ago the dominant attitude seemed to be that the debate was over. I know that is still the position of Al Gore and others who either

1. are unwilling to consider all the data,
2. think we must do everything in our power to fight global warming regardless of the data, or
3. stand to profit from the fight against global warming.

Still I was encouraged by the open discussion. I am not going to identify the panelists or the event because I don’t want to discourage or embarrass them or get them banned from future events.

Another positive is a Ross Douthat Op-Ed in the NY Times suggesting an approach to health care reform that would insure all citizens only against catastrophic problems and leave us responsible for our own minor and routine medical expenses. He calls it The Catastrophic Option. I like it, and the reason it is good is explained very well in the previously referenced David Goldhill article in The Atlantic.

Jack Cafferty on CNN exposed Senate democrats for introducing a new spending bill, entirely separate from the health care reform bill, that would add $250B to Medicare so that a similar amount could be eliminated from Medicare as part of the health care reform bill to assure that the health care reform bill meets President Obama’s cost targets without negatively impacting Medicare. Yes, that is a convoluted sentence, but not any more convoluted than the plan. Cafferty’s comment: “I know the government treats us with contempt... but we're not stupid. It's as if nothing is beneath these people.” And that is not coming from Fox.

Representative Sam Johnson of Texas has introduced a bill to allow seniors to opt out of Medicare and still receive Social Security. Seems to me it might significantly reduce Medicare costs to allow all those who have enough resources to buy their own insurance or to self insure to opt out and thereby reduce Medicare taxes on younger folks. Tim Carney was on C -Span Washington Journal asking why he and other young taxpayers should be paying Medicare taxes to cover Warren Buffet’s doctor bills (at minutes 76-78). It’s a good question. I have the same question about Social Security. Universal Social Security is a terrible mistake just as universal health care and universal food stamps would be. They are fine as safety nets to keep people out of poverty, but there is no reason all that money needs to pass through Washington for a haircut on its way to the marketplace.

Time Magazine (which, by the way, seems to take the position that the debate on global warming is over) has an article by Jeffrey Kluger proposing replacement of the “fee-for-service” method of paying physicians with “episode care,” a fixed competitive, all-inclusive price, with a guarantee, for medical events such as bypass surgery. Elimination of "fee-for-service" is a good idea I have mentioned in another post. Kluger also proposes quality improvements through use of checklists and written procedures for all surgery. That’s music to the ears of a chemical engineer who used to be responsible for operation of chemical plants. The human body is, after all, a complex chemical plant.

And finally, during our visit, Fox validated its position as a genuine “NEWS” channel by piling on the Balloon Boy non-story along with all the other news channels. May they never be challenged again!

Disrespecting The Homeless

The major causes of homelessness have been well documented, but I’m going to try to restate and rephrase them here, for a limited group of homeless, based on my observations and personal encounters, including counseling and assisting, over the past five years. The category of homelessness I am focusing on here is singles, usually male but sometimes female, who are highly visible on the streets of cities. I’m not talking about disabled folks or those suffering from mental illness.  Those folks should be receiving SSI Disability checks monthly.

Many of these folks I am talking about are always or usually homeless and are pretty resourceful to be able to survive in such a situation. I think it is common for homeless advocates to try to divert attention from such persons by talking about homeless families, but my opinion is that there are lots of agencies and churches who step up to help homeless families with children and get them off the street and into some housing. There should be more agencies to help the disabled and mentally ill. But for homeless singles in reasonably good health, the major assistance is handouts and meals but not beds. The problem of homelessness has to be segmented to be addressed effectively, and I believe the major causes of homelessness for this particular segment are:

1. Alcohol and drug addiction leading to poverty and alienation from family

2. Attitudes of excessive independence and responsibility avoidance leading to rejection of permanent jobs and  reasonable housing options and alienation from family

3. Illegal activity and criminal records making employment extremely unlikely and leading to alienation from family

4. Lack of education and sometimes illiteracy making employment unlikely and leading to alienation from family

5. Any of the above problems in the absence of family

I keep sticking the family reference in all of these because there are millions more who would be homeless if they did not have family to love and care for them and take them in when necessary. I really believe that if I ever end up in such a situation one of my sons will take me in or at least the two would join forces to cough up enough money to rent a cheap room for me somewhere.

There are lots of things that can be done to assist these folks, but one of the worst is to enable their continuing homelessness and disrespect them with handouts. After all, they are people with skills and capabilities too, and they deserve some level of respect and would like to have at least self respect. Homelessness is not healthy. Diets are poor, sleeping is uncomfortable at best, and consumption of all that alcohol just before lying down for the evening is almost sure to cause serious health problems down the road.

Our city has a number of people, a few hundred I would guess, who make a habit of camping outdoors. I see them trudging into the woods in the late afternoons with plastic bags full of sustenance and maybe packs on their backs. As far as I know, they have not been granted camping permits by the city nor have they obtained permission to camp on any private property. The City of Columbia offers a winter shelter in the colder months but even then some of these folks choose to sleep outside because they don’t like the crowding or the quality of the company or the level of service in the shelter.

If the city wants to allow such camping, City Council should set aside an approved area for it, provide security, issue permits, and charge $3 a night or so for the service. Even in state and national parks, camping without a permit is not allowed!  I suggest a higher fee of $5 per night for the winter shelter. Those who insist on sleeping elsewhere illegally should be rounded up and taken to jail. Don’t tell me the homeless don’t have any money for such a fee. That is disrespectful. I know they have money because I have seen them begging and receiving money at the corner of Gervais and Huger. I have seen them getting day labor jobs at the various day labor pick-up points. Some receive monthly checks. I confess, I have even given some of them money myself from time to time though I think it’s not a good idea to do so. And, if they don’t have money, there is plenty of work involved in running such a shelter or campground and quite a few could be employed to do that work. As a last resort, the city could offer the homeless employment picking up litter from around the city and in the wooded areas and along the river. Government rules pretty much prohibit anyone else from hiring them because of onerous taxes and regulations, but maybe governments can get around those.  I believe that would show respect for the homeless, and that is one thing they really need in order to get out of the rut they are in.

And it might improve the image and self respect of The City of Columbia as well.  So why not give it a try?  What we are doing isn't working. 

Medicare Annual Mail Deluge and Related Retiree Musings

Over the next few weeks, whether we fill out and return the postage paid card or not, I and a few million folks a lot older and more easily confused than I will be receiving advertisements in the mail almost daily as insurance companies try to deal with this government imposed system of deadlines for enrollments and annual changes.  I've told my mother, "The plans you have are fine.  Just throw this stuff in the trash."

Some will argue, "Gee, if we just had a government-as-single-payer system, none of this would be necessary."  True, but in view of the downsides of that approach, I suggest a better model is the one we use for homeowners and automobile and life insurance.  Let us change policies and coverages whenever we want or need to and stop trying to cram everybody into this once a year flurry of confusing activity.  I wonder what all the folks who have to get into gear to manage this annual ritual do the rest of the year.  I get offers throughout the year from insurers suggesting they can save me money on my auto and home and life insurance, but there is always plenty of time to investigate if desired and changes can be made anytime.  No reason it can't be the same way for health insurance.

On a related issue, we are billed quarterly for Medicare, and I just got my bill for the Nov/Dec/Jan quarter.  It stated that they haven't been able to figure out what the premium for January will be so they will work on that and make adjustments by the time the next quarterly bill arrives.  For the time being they are just billing for January 2010 at the 2009 rate.  Maybe that is partly because I may make a different choice from the options available during the "Annual Election Period" and partly because Medicare premiums are based on income.  I bet many don't know (and probably don't care) that Medicare premiums are based on income.

I've had some concern about the proposed reductions in Medicare benefits of somewhere in the $200B to $300B range (over ten years, of course) to pay for expanded health care for the uninsured.  Maybe we can get that just by reducing the flood of paperwork and postage and not have to cut actual payments to doctors who accept Medicare.  But, if we get the savings by reducing payments to doctors for procedures listed in the Medicare Physician Fee Schedule, I guess we might see doctors recommending fewer procedures or turning down Medicare completely or retiring early.  Would that be considered rationing?

And then I felt much better about being a retiree when I read today that President Obama is proposing a payment of $250 to all retirees to make up for the fact that one responsible provision of the Social Security law, limits on increases in benefits pegged to inflation, is kicking in this year resulting in no increase.  The White House estimates the total cost of this $250 payout at $13B but the president says he won't allow the payments to come out of Social Security Trust Funds (which apparently just consist of a bunch of US Treasury Bills anyway).  According to the news story, the administration is open to borrowing the money (from China?).  Do they really think that we seniors are such fools that we want to further mortgage the future of our country to add $250 to an average annual social security benefit of $13,764?  As individual citizens, are we really just out for all we can get from each other and from our children?

Then I found an answer to that in a story about some woman creating a buying panic in a Columbus, Ohio, retail store by announcing (falsely) that she had won the lottery and was paying for everybody's purchases up to $500.  By the time she ducked out without paying the bill, there were 1500 or so people in the store or trying to get in and police had been called in to manage the crowd. Apparently people in the store were texting or calling friends and relatives and inviting them in.  Of the seven deadly sins, it appears Pride has been defeated at the expense of a big increase in Greed.  There probably hasn't been a store that crowded since Christmas 1999 just before the dot.com bust.  Maybe President Obama is reading us correctly. Maybe a $250 cash payment today gains a lot more votes than a $250B Medicare reduction over ten years will lose.

Those folks in power inside the beltway are not dummies.  They know we can be bought.  They are just trying to figure out the price and payment terms.

Spending Too Much On Health Care?

Here are some data from the Bureau of Economic Analysis, US Department of Commerce.

That total consumer spending of $10.1T is 70% of our $14.4T Gross Domestic Product (GDP).  The rest of the GDP consists of $2.9T of government purchases, $2.1T of investment, and a negative $0.7T for our trade deficit.  Here is a formula that ties all those variables together.

The “Government purchases” total does not include about $2.2T of transfer payments such as Social Security, Medicare, and Veterans benefits which add nothing to our national output but simply take money from one and give it to another. So the total flow of dollars through government is $2.9T + $2.2T = $5.1T, 35% of the Gross Domestic Product. Government purchases do include such things as salaries paid to government employees and investment in highways, schools, etc. The path to a healthy economy is steadily increasing GDP with most of the growth in investment and exports. Health care, however, is an important part of our GDP and spending there supports millions of families.

The reason I dug out this information was to get some feel for the validity of the popular lament, “We spend too much on health care.” That statement begs the questions, “How much should we be spending on health care and, if we spend less, who will decide where that money goes instead?  Should we spend more on housing?  On clothing and footware?  Should it all go to investment or to government spending?  Even if we are spending too much, the money is not going into a black hole. It is going to millions of people who play various roles in the health care industry, and they are paying taxes on it and spending or investing it.

The judgment that we are spending too much usually seems to be based on comparison with health care spending and life expectancy in small European countries.  I doubt we can trust that the accounting systems are providing valid comparisons, but even if they are, the life expectancy differences are trivial and the life styles and eating habits of the populations, important determinants of life expectancy, are often dramatically different. For discussion of that with respect to comparison with one particular small European country, go here.

The amount we “should” spend on health care might depend to some extent on how healthy we are though it has certainly been proven untrue that spending more on health care will necessarily make us healthier. The biggest health care expenditures are for the serious problems stemming from obesity, poor diets, tobacco, alcohol, sedentary life styles, chronic diseases, and end-of-life medical care.  Some may argue in favor of severely curtailing end-of-life medical care.  The problem with that is that we often don't know exactly when the end of life will be.

I believe that the primary reason for the apparently high level of health care expenditures is the system that has evolved after first employers and then the government completely destroyed any free-market competition by taking over much of our health care, establishing reimbursement rates, and taking us, the consumers, out of the equation. If I, as a Medicare patient, get seriously ill, it will generate all kinds of negotiating activity and paperwork between my health care providers and the government while I just sit, or lie, on the sidelines examining and filing mysterious mail arriving from both and wondering what is going on.

As David Goldhill explains so well in his article in the September Atlantic, How American Health Care Killed My Father, LASIK surgery, which is not usually covered by insurance provides a free market example of how health care costs should and could be continually reduced in a free market environment. As Goldhill points out, while the cost of LASIK surgery has come down by 80% in a competitive environment, the costs of MRI’s just keep rocking along at the same old government reimbursed high rate.

So, bottom line, here are two possible ways to make a significant change in that trillion and a half dollars going to health care:

1. Begin reducing availability of medical procedures through government rationing at established reimbursement rates, or

2. Collectively get off our butts and get some exercise and improve our eating and drinking habits and give up cigarettes, and change the system to let free market competition bring costs down while simultaneously adding capacity of and expanding access to health care services.  Just as we are continually getting more technology for less money, we could have a system that continually delivers more health care for less money.

Seems like a no-brainer, but I have a feeling we are going to go with No. 1. Better do the first half of No. 2 anyway. It will help, and we will feel better.

Quick Highlights of Morning Newspaper

Just a few observations on stuff in the Tuesday morning Columbia SC State Newspaper which is probably the same stuff in papers all over the country:

Don’t miss Tom Friedman’s The World’s Most Important Peacemakers. Of course President Obama can’t use these powerful statements now even if he believes them because Friedman has published them. He should have sent them directly to the president and promised confidentiality. This essay can bring tears to the eyes of patriots.

There is a long article about another ACORN controversy but with only one significant sentence. “ACORN does not file a publicly available report describing all its various entities, their financing, their spending or the various roles of its executives.” So, tell me again why they have been getting tax money.

There is an inspirational story about Dr. Pedro Jose Greer who used to steal supplies from the hospital he worked at to stock his after-hours clinic serving the homeless.

Heart warming story about a new book describing the kindnesses of folks on Flight 1549 which came down in the Hudson River earlier this year. I doubt the premise of the book that southernness had something to do with it, but I pray that if I ever am faced with such a situation I will be able to conquer my own inherent selfishness and fear and behave as kindly as many of these folks did.

An admission from Lindsey Graham that the reason he is working with John Kerry on climate legislation is that it’s the only way he can get expansion of off-shore oil drilling and nuclear power. OK, if that’s what it takes.

Skip the absurdity of the Nicholas Kristof column. I'm not providing any link to it. By the way, in case you have missed or misinterpreted my key point on health care reform, I am strongly in favor of mandated universal health insurance paid for by taxes when necessary. I just don't want it to be an expansion of the seriously flawed Medicare system or anything resembling it.

And Zits, my favorite comic, excellent as usual.

I checked Drudge and found that of these, only the ACORN story is linked there this morning.

OK, But What Happens in Year Eleven?

An Associated Press story by Ricardo Alonso-Zaldivar on Page A10 of the October 11 State Newspaper reveals an amazing but unsurprising thing about the thought processes of congress concerning finance and economics. It says that the emerging health care bill is designed to “make the costs of the plan seem (italics mine) more manageable under congressional budgeting rules.” So, in what the writer refers to as an “eat your vegetables first approach” which is “causing heartburn for some democrats,” cuts in Medicare benefits and increases in taxes will begin immediately but federal tax credits to make insurance more affordable will not begin until 2013. The result will be positive cash flow in the first three years offset by negative cash flow in the next seven so the ten-year total will meet cost targets. With that as the plan, what do you think will happen in the eleventh year? As a matter of fact, since congress is unlikely to stash the excess from the first three years in CD's for payment of the later deficits, what do you think will happen in the fourth year? Sounds like a replay on a national scale of sub-prime mortgages with escalating interest rates and/or balloon payments. And that disaster isn’t even over yet.

I guess Congress uses the ten-year projection rather than a much more rigorous discounted cash flow approach because they know many of their constituents have short memories and many just want MORE from the government however, and, besides, they might not even still be in office worrying about such problems in ten years.

Here's the story. Read it for yourself.

What Do You Mean, “Quality Health Care”

Google” quality health care” and you get 1.9M hits. It’s a hot topic, and it’s what a lot of folks have been convinced all civilized nations except the United States provide for all their citizens. A common battle cry goes something like this: “We need quality health care for everybody now!” Often that is followed up with something like, “Norway spends less on health care than we do and they have longer life expectancy.” For discussion of that, read this.

I doubt there will ever be general agreement on the meaning of “quality health care.”

Some might argue that it consists of whatever medical treatment is wanted. We know that can’t work because some are going to want lots and some aren’t going to want any until it is too late. Some might argue that it consists of whatever is needed. That sounds good but is very subjective. Who is going to determine how often dad “needs” a colonoscopy or whether grandpa “needs” a hip replacement or is just as well off sitting in his recliner and watching TV all day. Some might want to throw in criteria such as “timely” and “error free” and “effective.”

I’ve been thinking about a description of “quality health care”, and here is what I have come up with so far:

1. A balanced diet meeting government guidelines for caloric intake.
2. Thirty minutes of aerobic exercise at least four times a week for heart and lungs.
3. Weight lifting three times a week for muscle tone and balance.
4. Moderate alcohol intake of 2 ounces per day or less, and that with food.
5. At least seven hours of sleep each night.
6. Body weight at or below government guidelines.
7. Use of tobacco limited to 1 cigar a week or less and that not to be inhaled. (This is a special allowance just for people like me.)
8. Prompt diagnosis and treatment of all minor infections such as skin, eye, ear, respiratory system, urinary system, etc. and of all minor injuries likely to lead to infection.
9. Prompt diagnosis and treatment of all potential skin cancers.
10. Annual checkup focusing on blood and urine analysis and other important leading indicators of health problems.

I think these should be considered personal responsibility for both execution and payment. Several million of us could probably save enough by implementing 1, 4, and 7 to pay the costs incurred by 8, 9, and 10. For those who truly cannot afford the treatments, government should pay just as it pays for food for the impoverished. As a matter of fact, a good criterion for this medical benefit would simply be qualification for food stamps. If you are on food stamps, your EBT card can be used as a voucher for these costs. No additional bureaucracy required.

The last required item for quality health care is some kind of insurance to pay for the unexpected and expensive problems such as a serious injury, the respiratory infection that turns out to be pneumonia or tuberculosis, the skin eruption that turns out to be melanoma, the urinary tract problem that turns out to be kidney failure or cancer, etc. Unless we hide out in the mountains and refuse treatment, we will, in case of these serious illnesses, eventually end up being treated in an emergency room and somebody will have to pay. Because of that we are obligated and should be required to be insured to guarantee payment. So, I add number 11.

11. Major Medical Insurance for everybody

Such insurance must be widely available in a regulated nationwide market place that requires providers to publish, in consistent format, complete financial statements including profits, sales and advertising costs, executive compensation plans, and benefits payouts as a percent of premium revenue. It must be illegal for insurers to turn away applicants because of pre-existing conditions or inability to pay premiums. For those who qualify, premiums would be paid by the government and the cost would be covered by the existing Medicare tax on all income which would be adjusted annually as necessary to assure that all costs are covered.

For preventive medicine beyond that covered in items 1-10, insurers will provide diagnostic stuff such as colonoscopies to help prevent the extremely high cost of advanced cancers and other serious problems that can be prevented or treated early at lower cost.

To make this plan work, medical billing must be simplified and made transparent. Providers must replace the 10,000 plus services listed in the Medicare Physician Fee Schedule with published, all-services-included prices for at most a few hundred types of procedures. Open-heart bypass surgery, for example, may be priced by Hospital A at $20,000 and by Hospital B at $21,000 but with a better success rate and the patient is free to choose depending on insurance coverage, personal resources, etc. Hospital A may offer CT Scans for $400 and Hospital B, with excess capacity, may offer them for $300. Again, the patient can shop and choose.

Another requirement for success is that artificially imposed restrictions on health care capacity increases must be eliminated. Establishing reimbursement schedules for health services and disallowing capacity additions guarantees that prices will only go up over time. How much would we be paying for personal computers now if Dell and HP had to prove need and get government approval before adding capacity?

This proposal will work because the costs of thousands of employees processing claims for all the minor stuff in items 8, 9, and 10 and for keeping up with all the details in the overly complicated fee-for-service schedules now in effect would be eliminated. I suspect the old 80-20 rule would hold here and that 80% of the paperwork and cost would be eliminated if the lowest 20% of claims based on dollar value were eliminated. And competition will force insurers and health care providers to drive down costs and reduce prices to utilize idle capacity and increase revenue.

OK? Let’s do it! Quality Health Care for Everybody!

A Gift For the President

Here is a golden opportunity for the president to demonstrate some humility. It's a real easy softball pitch. All he has to do is decline the award and say that he appreciates the gesture but has done nothing to deserve the award at this point. He can say that he is dedicated to making a significant contribution to the achievement of peace in Iraq and Afganistan and between the Israelis and Palestinians and hopes to someday deserve such a prestigious award. But not yet.

Maybe the Nobel Committee was thinking in terms of a consolation prize for losing the Olympic bid.

Executive Pay - A Corrupt System

It seems clear to me that our executive pay system is corrupt. I’ve mentioned this in an earlier posting but want to explain a bit. Many of the problems with it are outlined in an October 12 New Yorker Magazine article by David Owen about Nell Minow, part-time corporate compensation activist. Speaking of top executives, Ms. Minow has said, “These guys are doing more to destroy capitalism than Marx.”

The biggest problems with our CEO pay, as generally outlined in the article, are serious conflicts of interest:

1. Combined CEO and Board Chairman jobs since the CEO is supposed to be working for the board which supposedly represents shareholders.
2. Directors handpicked and wined and dined by CEO’s whose compensation they determine.
3. CEO’s in positions to influence CEO compensation trends through board memberships and networks.
4. Mutual funds as major shareholders dependent on managements of companies whose shares they own to steer 401k funds in their direction.

Besides the conflicts of interest, there are poorly designed variable compensation systems and bonuses that are supposedly tied to company performance. There are four major problems:

1. There is no penalty or personal financial risk to the CEO for bad company performance.
2. The upside rewards often result from general stock market performance or general economic expansion and not from superior individual company performance relative to the competition.
3. The annual time frame for such rewards is far too short for reasonable measurement of results of the kinds of long-term performance for which a CEO is responsible.
4. There is often a severance agreement in place alongside the variable compensation plan which means the CEO gets seriously richer by being fired.

But the underlying problem, in my opinion, and the one that drives all these other issues is the apparently outsized ego growth and sense of entitlement that often accompany or may even be the prime drivers in achievement of such lofty and well-compensated positions. How much does a person have to think of himself to accept with a straight face a severance package of $210M as Robert Nardelli apparently did (I'm trusting the New Yorker Mag fact checkers here.) after already collecting $37M for leading Home Depot through six years of lackluster performance? (Well, I don’t really know that he had a straight face.) Severance agreements should be like prenuptial agreements: designed to prevent loss of what the CEO brought to the table initially rather than to reward early departure. Some of these guys must be benchmarking sports and entertainment figures for their compensation goals, but at least the sports and entertainment people are selling tickets and bringing in advertising dollars. (I hasten to add that the problem of outsized egos is not limited to CEO’s. It occurs in all professions)

I agree with the basic kinds of changes that the article claims Nell Minow would like to see and am paraphrasing and expanding on them here:

1. Index stock options and awards to the market so CEO’s and other managers don’t get rewarded just because there is a bull market or general economic expansion underway.
2. Make payouts for bonuses pass some test of time. They could be escrowed for five years or so and paid out only if the board in place at the end of the five years agrees that the accomplishments claimed to justify the bonus were actually valid and were maintained for the long term.
3. Don’t be drumming up weird, economically unimportant or easily manipulated variables on which to base compensation. (Minow uses the example of the sub-prime mortgage crisis being driven “in part by a compensation structure that rewarded the quantity of loan transactions rather than the quality.”) The only thing that really matters economically in the long term is cash flow rate of return on the investment.

President Obama seems to have brought the AFL CIO to a new and undeserved level of prominence, and I hate to give them any additional publicity, but a Google search just led me to an amazing compilation of CEO compensation data on their website. Thankfully such data for publicly listed companies are readily available for compilation. It’s not so easy with non-profits and mutuals apparently as I found in looking for data on Blue Cross Blue Shield of SC. I‘m not an AFL CIO fan, but wide exposure of such data can be helpful in bringing a little daylight and reasonableness to the situation. The New Yorker article quotes Minow’s Law of Corporate Quantum Mechanics: “C.E.O.’s and directors, like subatomic particles, behave differently when they are observed.”

Serving as CEO of a large corporation is a tough job and doing it well requires exceptional skills and total dedication and deserves generous compensation. Bottom line, I’d like to see a little more emphasis on the dedication and hard work and service to shareholders and employees and customers and a little less ego and sense of entitlement in our CEO’s. I think that would make everything better.

Embarrassed Again by the Republican National Committee

I am frequently asked to complete and return Republican National Committee surveys that include Yes/No/Undecided questions so simplistic and slanted that they are insulting. I toss them right in the trash and will continue to do so until they come up with something that comes across as an honest request for informed opinions.

Here are a couple of examples from the current survey:

Do you believe that American business and industry will be able to compete in the world economy if the Obama Administration bends to pressure from radical environmentalists and implements draconian regulations on emissions, energy consumption and transportation beyond what is required in other industrialized countries?
Yes No Undecided

Do you feel that total Democrat control of both chambers of Congress and the Presidency will make our nation more prosperous, safe and free?
Yes No Undecided

Those two are clearly ridiculous, but some seemingly straightforward questions are included. For example:

Do you support raising the age of eligibility for Social Security benefits?
Yes No Undecided

Do you support expanded exploration and drilling for fossil fuels off of U.S. coasts and on federal land?
Yes No Undecided

Well, on second thought, maybe even those aren’t so straightforward. My answer to both would be “yes and no.” Universal Social Security at age 65 was a huge mistake just as universal health care would be. Social Security should always have been a safety net that phased out at some level of income, say $50,000 a year or so in today’s dollars. Because of that error, young families today are paying large and ever increasing Social Security and Self Employment Taxes so Warren Buffet and other financially secure folks can receive unneeded Social Security benefits, just running dollars through Washington for no valid purpose except to increase the size of government and get everybody used to the idea of depending on it. So, let’s raise the age of automatic eligibility to 100 and let folks who actually need social security income to stay out of poverty receive it at age 60 or so.

As far as the oil exploration and drilling go, I believe we need to fully explore and develop all our possible sources of oil and then leave it in the ground, pumps in place and ready for immediate action, as a negotiating tool and as ready reserves against the day our suppliers try to cut us off.

It’s a complex world, and there aren’t many questions with easy answers. But the first two above are idiotic questions which, I guess, someone must consider helpful in fighting party-in-power tactics such as teaching young school children Obama cheers and songs or having the President leading the AFL CIO, a very narrow self interest group, in a Yes We Can cheer against other segments of the American population or appealing to the NEA to produce art aligned with the themes of the administration.

It is time for both parties to put aside such tactics. The election has been won. A new president is in office. The time for campaigning and appealing to special interest groups is over. Now it is time for the president to speak to and lead all the people in achieving the only important goal: keeping our nation free, strong, and prosperous so we can continue to be the beacon of freedom and source of aid that have been so important to ordinary folks around the world and so resented by those who would suppress them. Surely at least half the Republicans would join President Obama in that effort.

Why So Many More People Than Jobs?

I haven’t seen or heard much about the impact on unemployment of technology driven productivity improvements. Several examples of jobs that might have employed hundreds of thousands but have disappeared or significantly decreased are telephone switchboard operator, gas station attendant (pumping gas), check processor, mail sorter, retail store clerk, ditch digger, stenographer, and mid level manager. Yes, it’s true. Even mid level managers whose primary function was to serve as communicators between top management and the front line workers have disappeared along with stenographers, both driven out by improvements in digital real time communication. In the chemical industry where I spent my career, process and technology improvements and automation have dramatically reduced the number of employees required to operate chemical plants while significantly increasing the training requirements for such jobs. Things have changed, but, we haven’t given up the old language. We still hear about stimulus projects that are “shovel ready.” Lots of road repairs going on in my home town, but you don’t see many employees wielding shovels at the worksites.

Speaking of gas station attendants, we could make a huge dent in unemployment simply by outlawing self-pumping of gasoline, as in New Jersey, and the pay at the pump option. Think of the demand that would create for gas pump operators and convenience store clerks! We could increase the job opportunities even more by requiring oil checking and windshield cleaning at each fill-up. And think how unhappy we would all be waiting in line to face sullen gas pumpers and clerks.

Of course many thousands of new jobs have replaced the obsolete ones, but they are not usually jobs for high school graduates, at least not with current high school curriculums. When I graduated from High School in 1960, it was not unusual for new graduates to move from Tennessee to Atlanta and begin careers with Delta Airlines or other big companies. Today, high school graduates without job related training or experience do well to get a minimum wage job at a fast food place. The good jobs today all require advanced training in specialized fields. That is one of the main drivers for outsourcing of many technical jobs to India and such places where education in technology is strong and cost is low by American standards. One of the growing jobs has been medical coding, now employing about 170,000 and comprising part of our health care costs without actually providing any health care.

Of the entry level jobs that do not require specialized training, many are difficult and dirty and low paying and unattractive to this generation of texters, twitterers, and gamers. That is one of the main drivers of illegal immigration as ambitious and hard-working folks from Mexico and points south flood into the United States willing to do those tough jobs at low pay for money to send home to their families.

The extreme example of a country with high GDP and little or no work to be done is Saudi Arabia. I visited there in the 1980’s and heard a story of how, when oil riches began flowing in, they implemented a plan to distribute the wealth by putting people to work. They offered a program to finance dump trucks, for example, for anyone who wanted to get into the business of hauling sand in from the desert to concrete mix plants at the numerous new construction sites. That only goes so far. Now they are in serious trouble with imported workers doing the dirty work and young Saudi’s unemployed. About 38% of the Saudi population is under 15 compared to about 20% in the USA. I’m a little worried about how they are spending their free time.

So, is the situation hopeless for America? No, but, in the absence of job related education, ingenuity and hard work at least are required to find one’s place in the developing services economy. At the hard work extreme, the suburbs are crawling with pickups pulling trailers loaded with lawn maintenance equipment and charging significant fees for regular lawn maintenance. Twenty five years ago most of the folks mowing somebody else’s lawn were teenagers trying to make some spending money. As an example of ingenuity breeding absurdity, Amazon is offering a new product by Joseph Enterprises, the Chia Obama Handmade Decorative Planter with a choice of determined pose or happy pose. (Thanks, Ash, for pointing this product out!). And for jobs that require some training, plumbing isn’t bad. Friday I paid a plumber $468 for about two hours of work that I could have done myself in six hours with a couple of trips to Home Depot thrown in.

If current trends continue, we will end up just doing each others’ laundry and lawn maintenance, selling each other useless junk, and serving each other fast food as we text and twitter and blog.

On the other hand, if we are not ready to give up and settle for a services economy, we could reinvigorate our education and employment and competitiveness and image by means of an inspirational and productive focus on space exploration and nuclear energy development leading to energy independence. And, as a bonus, we would reduce our CO2 emissions at the same time. Abandoning nuclear energy because of the possibility of an accident is as foolish as abandoning the automobile because there were 34,000 automobile accident deaths last year.

(Yes, we can work on wind and solar and hydrogen too, but I don't believe they are going to solve the problem in the absence of expanded nuclear energy, US oil exploration and drilling, and improved coal burning processes.)

For a good chuckle, take a look at what it was like to be a telephone switchboard operator in the early days of the phone system. Good riddance to some jobs! Somehow though, Ernestine made it look like fun.

Follow Up on Civil/Religious Marriage (Plus Nuclear Energy)

A few weeks ago I wrote a piece about separating the civil and religious aspects of marriage in the USA to avoid pressure on religious leaders to conform to whatever definitions of marriage the states and the courts and the congress might come up with. I used Japan as an example of a country that does that because I was aware of it from having lived there.

A friend wrote in that she thinks some European countries separate civil and religious aspects of marriage also. I checked and, sure enough, found that France at least does so. You can read about it here. It says:

Foreigners Marrying in France

France has specific laws concerning marriage. These must be followed by both French citizens and foreign nationals. A marriage in France is recognised as valid in most other countries.

French law only recognises civil marriage. This must be performed by a French Civil Authority (officier de l'état civil), which includes the mayor (maire), their legally authorised replacement - the deputy mayor (adjoint) - or a city councillor (conseiller municipal).

Religious ceremonies are optional, have no legal status and may only be held after the civil ceremony has taken place (which can, but need not be, on the same day.)

Well, use of France as a positive example may be questionable to some, but that makes three items on my list of things they do really well.

1. Use nuclear power for 77% of their electrical energy requirement
2. Prepare great food
3. Protect the religious aspects of marriage from civil intervention

As a matter of fact, I have the same three items on my list of things Japan does well. No's. 2 and 3 are identical, and Japan gets 35% of it's electricity from nuclear energy. (An item that shows up on Japan's list and not on France's is "Builds great cars.")

In The United States about 20% of electricity comes from nuclear energy.

For a breakdown of nuclear energy capacity by nation, look here. Of course we are by far the biggest but not on a percentage of total energy required basis. Seems to me that expansion of this capability is the best way to reduce our foreign oil dependence and our CO2 emissions.

OK, I know its flaky to put two widely divergent topics in one posting, but thought I might trap somebody into investigating something that is currently not even on their radar screen.

Universal Food Stamps: Next Big Thing

I was just thinking about the “simple bare necessities of life” which traditionally included food, shelter, and clothing. Now “health care,” however the government decides to define that, is included also. That caused me to wonder about this: If universal health care with a single government payer is a good idea, why not universal government issued food stamps as well. Bloomberg news recently reported that 35.9M people, about 12% of the population, received food stamps in July 2009. The Food Stamp program, like Medicare, which currently covers about 45M people, is well tested and works and could easily be extended to the rest of the population.

Of course “Food Stamps” is incorrect terminology now but is so ingrained in the language that it will probably never be successfully replaced with the new term, SNAP, an acronym standing for Supplemental Nutrition Assistance Program. And there are no stamps now. Recipients of “food stamps” are issued EBT (Electronic Benefit Transfer) cards tied to individual accounts that are restocked with funds at the first of each month. For the purposes of this discussion, I will stick with “Food Stamps.”

Why even consider this bold new initiative? Primarily because we are clearly spending too much on food! Total expenditures in 2008 for food and non-alcoholic beverages purchased for off premises consumption totaled $669B, almost $2200 per person per year. With Universal Food Stamps, that could be reduced to $1200 per person per year. I’m not sure what to do about the $1600 per person we spent for on premises consumption (restaurants). Probably, for the time being, we can just say that restaurant dining is not a necessity and leave it alone. Those who feel they can’t survive on their allocation of Food Stamps can, for the time being, go to a restaurant.

Besides the excessive level of spending, there are other United States food related problems that could be eliminated by establishing Universal Food Stamps and outlawing direct purchase of food with cash. One of those problems is variability of prices caused by weather, competition, and the law of supply and demand. It seems we never know how much a gallon of milk is going to cost! This variability raises issues for farmers and for consumers and elimination of it could be a big boost for economic stability, though I am unsure what it would do to the milk supply.

Over-consumption and even gluttony are prevalent serious personal problems that could be eliminated by the improved diet controls available with Universal Food Stamps. (Maybe we will have to rethink that restaurant option.) And our balance of trade is being skewed in the wrong direction by all the exotic and possibly contaminated foods being imported from South and Central America and Asia. Universal Food Stamps could eliminate that problem by simply excluding those foods from the approved purchase list.

Standard prices for all approved foods and standard consumption rates for all individuals based on age and required professional activity level would have to be established. (Non-professional activity, such as exercise, would no longer be required because of the restrictions on caloric intake.) Implementation of these new standards will be greatly facilitated by the already established requirements that packaged food be labeled with widely ignored caloric content and serving size. (I bet that wasn’t cheap.) Given that basis, the simplest way to proceed would be to just establish approved dollar values per serving size and approved standards for servings per day per person. We can force people to pay attention to those expensive labels.

This standardization requirement could be a big boost to the Government Spending part of the economy and largely offset the reduced consumer spending for food because a system similar to the MPFS (Medicare Physician Fee Schedule) with its more than 10,000 defined medical procedures would have to be established and kept up-to-date. Of course a serving of ice cream is not the same as a serving of spinach, so there would have to be quotas for all the different types of foods.

Wow, this is getting complicated and expensive. Maybe we should go the other way, leave the food stamp program alone, and use it as a model for how to do health care. Under that model, we would provide health care assistance to those who are unable to take care of that personal responsibility themselves and leave the health care market and all those who can pay for their own insurance or health care alone. Probably that would be better. Of course it is too late for the over 65 crowd. We are already on Medicare and our numbers are steadily increasing. Bill Gates and Steve Jobs will eventually be on Medicare, but let them buy their own food!

I’m sorry I even brought it up!