He ain’t no kossack…

One of the blogs I regularly pay a visit to is David Merkel’s The Aleph Blog. He’s a CPA and investor, and he’s one of the people I check in on as I set my nets for economic and market news. He isn’t a kossack, at least I’d be amazed and totally freaked out if I learned he was. He is, in fact, a pro-business conservative who offers rather sound investment advice. I rather admire him for this.

His post today, A Baker’s Dozen of Notes on the States had a few comments I just had to twitch at, like a hungry trout greedily eyeing what will surely turn out to be the fisherman’s lure.

While my reply awaits moderation, I thought I’d share it here.

In particular, two items in his post struck me:

“Most states are in trouble, so it should not surprise us that Texas is having problems. It’s in bad shape, but not as bad as many other states.”

: and :

“States are laboratories for policy ideas. One stinker came out of Massachusetts on health care, and now the Feds are imitating it. Read this story to see the problems. Better in my opinion to move the whole country to HSAs [Health Savings Accounts]. Costs will drop like a stone, and insurers will starve.”

So I clicked on a few links, and in particular read the WSJ piece on the Massachusetts health care system (coming soon to a theater near you, btw) and that put me over the top. I hate people spreading meme’s that are factually incorrect when I know better. So I joined up in order to post this:

“A few points:

  1. Texas has had problems for decades, in everything from zoning in Houston to one of the highest rates of violent crime in the United States, due to their preference for a laissez faire management style, so it’s hardly surprising to learn of their budget problems. A philosophy which calls for pocket size government will always, by definition, be more vulnerable to exterior forces and events. The truth is that small government is easier to ignore is all, and that’s the point, isn’t it?
  2. On the other hand, Massachusetts, where I live, has weathered the banking meltdown comparatively well. We may have the 5th highest health insurance premiums in the US (as of 2006 – I have no later data than this), but this is less due to RomneyCare than it is to the premium we pay for having world class medicine. Nobody does health care for complex conditions better than Mass General, Brigham and Women’s, Childrens Hospital, Lahey Clinic, Children’s Floating Hospital, Deaconess, Mass Eye and Ear, New England Baptist, etc, etc, etc. Two things about health insurance in Massachusetts which have gone largely unreported in discussions is that we have always had pro-active cost control through the office of the MA insurance commissioner, who is even now being sued by a few insurance companies for allowing only a handful of price hikes out of the 4 dozen or so (not the 274 premium increases the WSJ article cites – you’d think that people who write about money would at least be able to count) requested by insurers this year. This is an annual occurrence. That article is inaccurate on many points, and let’s face it, it’s the WSJ, and their reporting on this is, to say the least, slanted. Deval Patrick isn’t empowered to set a rate cap, neither is Joseph Murphy, the Insurance Commissioner. The article also implies that there is a state carrier in Massachusetts. There isn’t. There are subsidies, but no state carrier. Everyone in Massachusetts is supposed to have health insurance – from privately owned entities. There are some things one simply cannot trust WSJ to be accurate on. The insurers will get some of their requests, and the commissioner will have some of his denials sustained. The other thing about MA health care is the consumer advocate office of the Massachusetts Attorney General, has done tremendous work in keeping insurers honest ever since Francis X. Belloti ran it back in the 70’s. The Massachusetts Department of Public Health is also much feared by hospitals and clinics (my niece works at Lahey Clinic). It’s a case study in how government interventionism succeeds.

Please note that the upwards direction of costs is driven by privately owned entities, and not by government fiat. Thank you very much.

So it is facile and more than a bit misleading to think that RomneyCare has been a “stinker”. The costs are higher, but if you need medical help here in Massachusetts, you’ve a vastly greater chance of a good outcome here than almost anywhere else on the face of the earth. From time to time, I hear nightmare stories about Florida hospitals for example. My niece at Lahey tells me of the many patients who come here for medical treatment, who adamantly refuse to be treated by hospitals in their home state. I had no idea. My assumption was that in the United States, you had to live in the back-and-beyond somewhere in Alaska to out of reach of quality medical care, and this has been an eye opener for me.

I think it’s safe to say that we in Massachusetts are willing to pay a bit more (about $230 more per year, IIRC, than the national average) for this. These costs are about equally borne by employers and employees, btw – healthcare benefits in the workplace have deteriorated badly in the past 30 years. What’s the pay off? I can speak to this from experience. A colleague’s nephew developed a brain tumor at the age of 6 months. Multiple operations were involved. He’s now about to graduate, with honors, from high school. My mother is both a cancer survivor and heart attack survivor who has since gone on to become a life master in bridge and travels all over the US and to Europe to play. The wife of one of my best friends developed a massive tumor just below her left collarbone. She survived, but they were told that due to her treatment she would never be able to bear children, which was tragic because she and her husband had just decided the time was right to begin a family. They’ve three children now, all healthy. I could go on. All these examples predate RomneyCare, to be sure, but RomneyCare hasn’t changed the landscape here in Massachusetts, the insurance commissioner, the Massachusetts Department of Public Health, and the AG’s consumer protection office still sit in the driver’s seat, as they have since the ’60’s and ’70’s.

Not everything in the universe belongs to the free market, nor should it. Were the healthcare system here in Massachusetts Friedmanesque, there’s a very good chance we’d be paying higher premiums and have worse medical care. Much worse. Did I say, “there’s a very good chance?” No. It is an absolute certainty. I know this because it was while insurance regulation in Massachusetts was relaxed by Republican Governor Bill Weld when our insurance premiums doubled (ppt), and this the reason that the Commonwealth of Massachusetts had to step up and find a way to deal with it. Businesses were less than thrilled, and please remember, it was another republican governor and businessman who got pretty much what he wanted when our system was enacted.

This is just one instance of a larger point: do you want to live in a society or just in an economy? Aren’t some things worth paying for? Are the lives of my family, friends, and colleagues? Is the attempt to both maintain the quality healthcare we are famous for while managing it’s costs really a “stinker?”

Sorry Mr. Merkel, but, boy, you blew that one and I know where you went wrong: measures of success aren’t always reflected in bank accounts and portfolios (and hardly ever in income tax returns). Things could be worse. We could be like Florida or Texas.”

Whether my reply passes moderation will be interesting to see. I think he was just being lazy today. It happens.

UPDATE: It speaks well for Mr. Merkel that my comment has indeed passed moderation, even though I disagreed with his position. I’d like to ensure that I give him the recognition this earns him . . . well done, sir, and thank you.

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