Britain is looking to sell the Royal Mail to escape Out of Control Pension Costs

Posted by PITHOCRATES - July 13th, 2013

Week in Review

The United States Postal Service isn’t the only postal service flirting with the idea of privatization.  So is the Royal Mail.  And, predictably, some are not happy about making government jobs like private sector jobs (see Royal Mail privatisation ‘will lead to soaring prices and job losses while taxpayer keeps debts’ by Graham Hiscott posted 7/11/2013 on the Mirror).

STAMP prices will soar and jobs will be slashed when the Royal Mail is privatised.

The warning came from critics as the Government announced its controversial plan to kick off a £3billion sale.

It is feared the sell-off could see a big chunk of the company snapped up by foreign investors, with investment banks raking in millions in fees.

So while the Treasury pockets a pre-election windfall, the taxpayer will still be paying for Royal Mail’s £12billion pension deficit.

Chuka Umunna, Labour’s Shadow Business Secretary, said it amounted to “nationalising its debts and privatising its profits”.

This pretty much says it all.  Pension costs are so out of control that the only way the Royal Mail can survive is with huge government subsidies.  And if they cut those subsidies they will have to pay for those pensions with the revenue from stamps.  Which means stamp prices will have to rise to replace those lost subsidies.  So these government workers can continue to enjoy those generous pensions.

Britain has an aging population.  Like most of the developed world.  People are living longer.  Giving them more time to suffer more diseases.  Raising the cost of pensions and health care for retirees.  Ponzi schemes like state pensions worked when there was an expanding population growth rate with more people entering the workforce than were leaving it.  But those days are long gone.  As are the days of defined benefit pension plans.  Where today they only result in unfunded pension obligations.  And companies like the United States Postal Service and the Royal Mail unable to pay their bills.

The reason why unions resist the privatization is that these business models cannot survive in the private sector.  For their labor costs (pay and benefits) far exceed anything available in the private sector.  And the only way they can keep those generous pay and benefit packages is by having the taxpayer subsiding their cost.  But if they go private and it costs $7.50 to mail a utility payment people aren’t going to mail their utility payments anymore.  And people will see the true cost of union labor.  Which means either unions must match the pay and benefit packages they have in the private sector.  Or they will lose all their union jobs.  Because no one is going to pay $7.50 to mail a letter.

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As the Brazilian Economy cools Rousseff looks to Tax Cuts and Privatization to Restore Economic Momentum

Posted by PITHOCRATES - July 29th, 2012

Week in Review

The president of Brazil is Dilma Rousseff.  She belongs to the Workers’ Party.  A party that enjoys strong support from the labor unions.  Because it leans towards socialism.  At least in state-ownership of some state assets.  In particular those that employ a lot of people.  But the great Brazilian economic growth is sputtering.  Like an engine no longer firing on all cylinders.  Because of her party affiliation one would expect Rousseff to adopt Keynesian policies.  To stimulate their economy with some government spending.  But no.  She’s talking about doing something completely different (see UPDATE 1-Rousseff ‘very worried’ about Brazil economy by Alonso Soto and Brian Winter posted 7/23/2012 on Reuters).

President Dilma Rousseff is pessimistic about Brazil’s chances for a meaningful economic recovery this year and is pushing ahead with new measures aimed at lowering taxes and increasing investment, hoping they might give the economy a lift by 2013, government officials told Reuters.

The measures include a consolidation of some overlapping federal taxes; a new round of concessions that would allow the private sector to manage more of the country’s congested airports and seaports; and a more aggressive effort to reduce electricity costs for manufacturers and others, the officials said on condition of anonymity because they were discussing private policy discussions…

Rousseff, a trained economist, has reacted with several targeted tax cuts and more than half a dozen packages aimed at stimulating consumption and investment. However, many business leaders and foreign investors have complained that her policies have been too ad hoc and narrow in scope, citing forecasts that now see growth as low as 1.5 percent this year…

Some business leaders have called for Rousseff to take even more dramatic measures, such as an omnibus reform package that could substantially reduce or simplify Brazil’s tax load. Rousseff has opted instead to pursue more targeted reforms to help struggling sectors on a case-by-case basis, believing that Congress would block a more ambitious, organized effort.

So Rousseff would have been a more aggressive tax cutter if it weren’t for Congress.  So one can hardly blame her for her ad hoc ways.  You have to do the best you can with the cards you’re dealt.  Especially when your party tends to favor state ownership of industry and higher taxation to pay for the labor in those state-owned industries.

Lowering taxes and electricity costs?  Privatization?  Other than that part about consumption one would think that Rousseff’s economic training was of the Austrian school variety rather than the Keynesian brand.  Whatever her economic roots with policies like these Brazil should rebound well from this momentary interruption in their economic growth.

The move most likely to stir investors, for both practical and symbolic reasons, is the new round of port concessions. Airports and seaports are routinely cited as some of the country’s most crippling bottlenecks, slowing everything from commodities exports to business travel, as public investment failed to keep up with the boom in the economy over the past decade…

The officials declined to say which additional airports Rousseff was considering, but one of the targets could be Rio de Janeiro’s international airport, which needs renovations ahead of the 2014 World Cup and 2016 Olympics. Rio’s governor, Sergio Cabral, described the airport in an interview with Reuters last year as being like “a third-rate bus station…”

The Brazilian economy had been roaring thanks to the private sector.  What wasn’t keeping up with the private sector was the public sector.  While people were doing remarkable things in the private sector the best the government could do was make Rio de Janeiro’s international airport “a third-rate bus station.”  Which just goes to show you that for the best economic activity you have to release the human capital of the people.  When you let these people think.  When you let them create.  When you let them create the things they thought about you get the kind of explosive economic activity that put Brazil in the BRICS emerging economies.  While running ‘third-rate bus stations’ just doesn’t quite do it.

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Solving Public Spending and Debt Crises with Privatization

Posted by PITHOCRATES - May 23rd, 2011

To Privatize or not to Privatize the NHS

Some want to start privatizing parts of the National Health Service (NHS).  Some don’t.  Some want to improve quality and cut costs.  Some don’t.  But as people live longer into retirement, there is no place for costs to go but up.  Especially when there is no competition (see Where lucre is still filthy posted 5/19/2011 on The Economist).

THE profit motive is alive and well at the Circle hospital outside Bath, in south-west England. The hospital was designed by the architect Norman Foster, and is run by Circle Healthcare, a firm part-owned by its employees and set up by Ali Parsa, a former banker at Goldman Sachs, in 2004. It treats a mixture of National Health Service and private patients. Corridors are wide and gleaming, operating theatres newly equipped. Doctors and nurses have more say in management decisions than in many English hospitals.

So a private, for-profit hospital is well run, clean and has new equipment.  Which implies that the run of the mill NHS hospital is bureaucratic, cramped, dirty and outdated.  Hmmm.  Based on this it would appear that the private, for-profit hospital is a better hospital than your run of the mill NHS hospital.  At least, from a patient’s viewpoint.  And who could argue?

Trade unionists and lobby groups are queuing up to denounce any expansion of the private sector’s role in health care.

So trade unionists and lobby groups are against cleanliness and modernity.  They prefer bureaucratic, cramped, dirty and outdated.  One can only presume so because of the money.  For it usually is.  Of course, they will deny this.  And say they are just looking out for what’s best for Britons.

To some foreign observers, this reticence about private involvement looks odd. There is ample international evidence that competition among private providers yields better results. For example, a report last year by America’s National Bureau of Economic Research found that increased competition in health care was correlated with improved financial and clinical outcomes; adding a rival hospital and instigating patient choice substantially increases the quality of management. As Nick Seddon, of the British think-tank Reform, points out, “It’s a fallacy to think you can choke off the profit motive without losing momentum and innovation.”

And the current debate somehow overlooks the fact that for-profit companies are already delivering many support services in health, education, prisons and other public services. Family doctors have been private operators since the foundation of the NHS in 1948. The profit motive has been making further steady advances in the state sector since Margaret Thatcher’s outsourcing campaign in the 1980s. Tony Blair let privately owned treatment centres provide specialist services within the NHS. His wider reforms were restricted by internal battles in the Labour Party; all the same, a recent report from the London School of Economics found that introducing competition among NHS hospitals in 2006 helped to reduce patient deaths.

The history appears to side with privatization.  Both in the UK.  And the USA.  That is if you’re measuring by the quality of patient care.  And by the number of people you prevent from dying.  Which is a rather important statistic in any hospital I would think.

Let’s take a closer look at this ‘not dying’ thing.  Suppose there is only one hospital serving an area.  And suppose that 5 out of every 10 patients that enter dies.  Now suppose a second hospital opens up.  Where only 1 out of every 10 patients that enter dies.  Which hospital would you want to go to?  I’m guessing the 1 out of 10 one.  Because that ‘not dying’ thing is pretty relevant when choosing a hospital.  And when more people do in this example, the ‘5 in 10’ hospital will have no choice but to improve.  To become a better hospital.  This is what competition does.  It makes everything better.  And it’s just not the UK and the USA seeing this.

Britain is unusual among rich democracies not in how much private involvement there is in its public services, but how little. Only 4% of acute-care beds are provided by private companies. In Germany, the proportion of hospitals run for profit (32%) overtook the number of publicly run ones (31%) two years ago (charitable and voluntary organisations account for the rest). The Spanish region of Valencia allows for-profit firms to run over 20% of its health-care services, with the sort of long-term deal British providers hanker for. New European democracies are experimenting with similar public-private mixes. Two-fifths of Slovak hospital provision is delivered by private operators.

It’s rather ironic.  The people who did so much to improve the life of the individual coming out of the Middle Ages is now among the least free nations when it comes to health care.  They’re talking about privatizing more health care to improve quality.  And cut costs.  Because the NHS, as all state monopolies do, is trending in the wrong way in areas of quality and costs.  The fact that there is a debate proves this.  Now, don’t get me wrong, the NHS is full of good people.  It’s not the people in the system.  It’s the system.  And the people managing the system.

But old bureaucracies are hard to reform.  People trust them.  Because they’re used to them.  Like a comfortable pair of filthy, worn slippers.  But people are living longer.  Consuming more health care in their retirement years.  Vastly increasing health care costs.  Which the NHS has to pay.  Either by more taxation (which can reduce economic activity, which will reduce tax receipts across the board).  Rationing services to make what they have cover more people.  Or by more deficit spending.  Borrow and spend for today.  Leaving a debt bomb for future generations to worry about.

Italy and Spain Circling the Drain?

And speaking of debt bombs, a couple more are about to go off in the European Union (see U.S. stocks plunge on European debt worries by the Associated Press posted 5/23/2011 on the Los Angeles Times).

Stocks plunged Monday after warnings about the finances of several European countries stoked fears that the region’s debt crisis is worsening. The euro dipped briefly to its lowest level against the dollar in two months…

Italy is the latest European country to be affected by the region’s widespread debt problems. Standard & Poor’s said Saturday that country was in danger of having its debt rating lowered if it could not reduce its public borrowing and improve economic growth.

Too much public sector spending has caught up to the Italians.  High taxation to support that spending is hindering economic growth.  And they’ve borrowed so much that people are starting to think that they won’t get their money back.  Making people that much more reluctant to loan (i.e., buy Italian bonds) them money again.

Spain’s public finances are also worrying investors. Spain’s ruling Socialist party was roundly defeated in local elections, raising concerns that political instability would keep that country from enforcing spending cuts. The Ibex 35 index on the Madrid stock market fell nearly 2 percent in midday trading.

The 10-year U.S. Treasury yield fell to 3.10 percent, its lowest level this year. Bond yields fall when prices go up, so the drop is a sign that investors are clamoring for the safety of long-term U.S. debt.

And the Spanish are in the same boat.  Even with their partial privatization of health care, there’s still just too much public spending.  And a political atmosphere that won’t take kindly to spending cuts.  Unemployment among the young and educated is high.  Close to 50%.  Making their prospects for future borrowing not that favorable either.  So they, like the Italians, will not be able to pay their bills one day.  Which will eventually bring about those spending cuts.  The hard way.

Greece too far gone to Save?

The big public sectors in the social democracies of the European Union (EU) are taking their toll.  Their costs are crippling some of their economies.  And it all started in Greece.  Who is still trying to dig themselves out of their debt hole (see Greece mulls deeper spending cuts as borrowing rates hit record by Derek Gatopoulos, Associated Press, posted 5/23/2011 on thestar.com).

Greece’s borrowing costs surged to another record Monday, as the crisis-hit country’s prime minister chaired emergency talks to deepen austerity measures beyond his own government’s term in office.

A Cabinet meeting began as yields rose above 17 per cent for Greek 10-year-bonds, hitting a record margin — or spread — over the benchmark German rate.

Greece suffered another bond downgrade late Friday from the Fitch ratings agency, lowering its investment ranking by three notches deeper into junk status. Prime Minister George Papandreou conceded over the weekend that plans to return to bond markets next year may not be achievable.

Junk status.  Wow.  That’s bad.  That means few people think they’ll get their money back if they loan any to Greece.  And according to Papandreou, no one will next year.

Greece’s economy is being kept afloat by €110 billion ($156.6 billion), in a 2010-2013 package of rescue loans from European countries and the International Monetary Fund.

But that rescue package does not cover all of Greece’s financing needs for 2012, and EU countries are demanding tougher cost-cutting action from Greece before considering offering another financial lifeline.

In return for the bailout, the government imposed a series of austerity measures, including pay cuts in the public sector, tax hikes and social security reforms, and is under strict supervision from the EU and IMF to ensure the country is meeting the conditions for the rescue loans.

And here we see why they have such a debt crisis in Greece.  High salary and benefits for a bloated public sector.  And state benefits that are too generous.  Things that are hard to cut.  As is evident by the requirement of another bailout.  And the demand by those doing the bailing for tougher cost-cutting.  Because what they’ve done so far isn’t enough.

In Vienna, top financial official Olli Rehn said Greece needed to take more steps “in the coming days and weeks” to convince other EU nations and lending institutions that it is serious about overcoming its huge monetary deficit.

He urged the crisis-hit national to urgently step up its ambitious privatization program. General elections are due in Greece in 2013.

And here again we come to that wonderful panacea.  Privatization.  For the EU countries with the greatest debt crisis are the ones with the least privatization.  Whereas the strongest economy in the EU, Germany, has quite a bit.  Even in the one area people fear most.  Health care.  Germany has more private hospitals than public ones.  So profit (i.e., lucre) isn’t a dirty word in Germany.  They have a strong economy.  And fiscal restraint.  Which is why Germany is doing a lot of the bailing in the EU.  Of course, they have experience rehabilitating financially weak nations.  They no doubt learned a lot when they reincorporated the former East Germany into a reunified Germany after the Cold War.

Ticking Debt Bombs

Public spending has grown in countries big and small.  And it is crippling countries big and small.  Privatization is a way to cut public spending.  But it doesn’t help win elections.  So it’s not easy to do.  People get set in their ways.  And once people grow up on generous state benefits, it’s hard to convince them that things will be better if they start paying for what they once got free.  So few try.  It’s easier to just keep promising more of the same.  And close your eyes to that ticking debt bomb.  Hoping that it will blow up later rather than sooner.  And that the people continue to enjoy their comfortable pair of filthy, worn slippers.  No matter how filthy and worn they get.

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The International Fight against Universal Health Care

Posted by PITHOCRATES - April 16th, 2011

The Most Effective Cost Control Mechanism is Market Forces

They keep saying that they’re not trying to nationalize our health care.  In fact, Obama promised that if you liked your doctor you could keep your doctor with the new Obamacare.  Of course, that decision won’t be entirely yours.  For your doctor may choose to drop you.  And if they keeping cutting Medicare doctor reimbursements, doctors will finally say enough is enough.  I’m outta here.  No more Medicare patients.  Which could force you to find another doctor.  Even though Obama promised that wouldn’t happen.

There’s a lot of talk about controlling costs in Medicare.  And there’s only one way to that with the current system.  You pay doctors less.  Which they are always trying to do.  Is that fair?  Put yourself in their position.  Would you keep seeing patients?  After doing what so few other people do (go to college, medical school, serve an internship and a residency after racking up huge student loan debt that has to be paid back at the same time you have to pay ever rising medical malpractice insurance premiums leaving you with little money to enjoy the first decade or so of your new medical career)?  Because some government bureaucrat says you’ve earned enough money?  All the while no government restrictions are placed on public sector pay and benefits?  To add the ultimate insult to injury, a lot of those same bureaucrats telling doctors that they’ve earned enough money and should be happy with what the government deems is appropriate will no doubt make more than the doctor.  With far less training.  And far less responsibility.  Which just ain’t right.

They like to blame the doctors for the runaway costs.  But they’re not the lone scapegoat.  They also blame the pharmaceutical companies.  The hospitals.  And, of course, the great ‘big bad’ in the health care industry, the insurance companies.  Whose costs keep going up.  Greater than the rate of inflation.  So the runaway costs in the health care system must be their fault.  Because they’re greedy.  It can’t have anything to do with the system we force them into.  Where third party payments shut out all market forces (the person receiving the service isn’t paying the bill), thus eliminating the only effective cost control mechanism.  And introduces government.  Making health care a public good.  Where non-health care government bureaucrats determine fair pricing, supply and demand.  And you know where that will lead to.  To the here and now.

Labour fights against Market Forces for the NHS in the UK

Government bureaucrats don’t like privatization.  Or market forces.  They’d rather manage things.  Because they’re smarter.  Narcissistic.   And they covet that money and power.  They want all those tax dollars funding health care to go through their fingers.  And having people dependent on them for their health care makes that a whole lot easier.  So when conservatives try to introduce effective cost mechanisms, liberals push back.  In the US.  In Canada.  And in the UK (see NHS bill to ‘substantively’ change, says Oliver Letwin posted 4/16/2011 on the BBC).

Labour wants the plans for the NHS in England, which encourage more private sector competition, to be scrapped.

Under the shake-up, GPs are also to be given control of much of the NHS budget.

To cut costs, reduce wait times and improve quality of the NHS, the UK is trying to decentralize the NHS.  Give more decision-making authority to the general practitioners (GPs) in the local communities.  Letting the local health care providers in the communities they serve determine how to best spend the NHS money.  Which, of course, is anathema to Big Government liberals.  Such as Labour in the UK.

Liberals fight against Market Forces for the CHA in Canada

Wherever you find national health care, you’ll find bitter partisan debate over the money paying for that health care.  Except in Cuba.  Or North Korea.  Luckily, for them, there are no opposition parties.  And no one complains about anything.  For they know better.  But Canada has a national funded health care system.  And opposition parties.  Which can get pretty nasty when they’re trailing in the polls (see Liberals drop gloves with attack ad on Harper’s ‘secret’ health agenda by John Ibbitson posted 4/16/2011 in The Globe and Mail).

Conservatives are reacting with fury to a Liberal attack ad that accuses them of harbouring a secret agenda to cut health care funding if they obtain a majority government.

“The Liberal ad uses some of the dirtiest tricks in the book — including twisting words out of context and deliberately altering dates to make old words appear recent,” Tory campaign manager Jenni Byrne wrote to party supporters in reaction to the new attack ad.

In America, the go-to strategy is to threaten Medicare.  In the UK it’s the NHS.  In Canada, it’s the Canada Health Act (CHA).  The reason is, of course, the sheer size of this budget item.  If you’re trying to cut a budget deficit, that’s where you do it.  Cuts elsewhere just won’t be big enough to matter.  And everyone knows it.

If Mr. Harper is given “absolute power,” the ad warns, he plans to cut $11-billion from the federal budget. “Where would Harper’s cuts leave your family’s health?” the narrator asks.

“The stakes are too high. Vote Liberal.”

So you threaten certain death for you and your family should the opposition get elected.  While all the time promising yourself to cut the deficit.  Which, of course, you won’t.  For it will require cuts in health care funding.  And you’re not going to do that.  For there will be another election.  Eventually.  Sure, it makes you a hypocrite.  But a hypocrite with a job.

The Conservatives do plan to cut government spending as part of their own plan to balance the budget, but they promise to do so without reducing transfers to provinces, including health transfers.

It is true that the Liberal government of Jean Chrétien cut funding for health care in the 1990s as part of its efforts to eliminate the federal deficit. Once the budget was balanced, the Paul Martin government signed a ten-year accord to increase funding by six per cent a year. The Conservatives, when they came to power, honoured that commitment, and pledge to continue the arrangement, as does Mr. Ignatieff.

Anyone living near the Canadian-US border only knows too well the consequences of painful health care cuts.  When doctors and nurses get pay cuts, they scoot across the border for higher paying jobs in the US.  Which makes Canadians’ long waits for health care even longer.  This is the ultimate consequence of national health care.  Cost problems you solve by rationing services.  Whether in the UK.  Canada.  Or the USA.

Massachusetts:  Blueprint for Obamacare

We have Obamacare now.  Maybe.  We’ll see.  There’s a popular movement to repeal it.  After it was snuck through Congress.  By the time people learned what was in it (long after Congress voted it into law), the majority of the population didn’t want it.  It’s a big reason why the Republicans won back the House of Representatives in the 2010 mid-term elections.  For the people felt betrayed by their representatives.  So they fired a bunch of them.  Except Nancy Pelosi.  Who the good people of San Francisco reelected with like 80% of the vote even though her national approval numbers as Speaker of the House were closer to 10%.  Which makes it clear that the San Francisco district she represents is an anomaly in the American fabric.  Where the people think against the national grain, so to speak.  But I digress.

Anyway, before Obamacare there was Massachusetts.  And their little experiment in universal health care.  Which now covers every man, woman and child.  Well, almost.  Only 98% are covered.  That other 2% are the state’s Republicans.  I’m kidding, of course.  I don’t know who that 2% is.  Except that they must be the most unlucky sons of bitches ever to live in Massachusetts.  To live in a state where everyone gets free health care and they still get bupkis.  Imagine how that would make you feel.

But even there, in that universal health care utopia, they have a problem.    They gave health care to everyone (except that unlucky 2%, the poor bastards) but they never figured out how to pay for it (see Massachusetts, pioneer of universal health care, now may try new approach to costs by Amy Goldstein posted 4/15/2011 on The Washington Post).

Massachusetts Gov. Deval L. Patrick (D) is trying to “shove,” as he put it, the health-care system here into a new era of cost control. He is proposing a new way of paying for care that would try to propel changes in the way it is delivered. It would give lump payments to teams of doctors responsible for almost all the care of a group of patients, with bonuses for saving money and dispensing high-caliber services that keep people healthy.

Interesting.  Sort of going the route of the GPs in the UK.  Decentralizing the health care system.  After they just centralized it.

Massachusetts in 2006 created a health insurance exchange, a requirement that most residents carry coverage and subsidies to help them pay for it — central elements now in the federal law. As a result, 98 percent of the residents here are now insured, the highest rate in the nation. But the state’s first round of health-care changes devoted far less attention to medical costs.

“We did access first,” said state Senate President Therese Murray (D). “Now we have to figure out how we afford that.”

Oops.  No doubt during the debate for universal care the opponents said something like, “Are you out of your minds?  You have any idea what something like that will cost?”  Which, of course, the proponents replied, “Don’t worry about it.  We have a plan.”  And that plan was apparently to get the law passed first then figure out how to pay for it.

Fee-for-service medicine “is a primary contributor to escalating costs and pervasive problems of uneven quality,” the commission unanimously concluded in 2009.

Despite the consensus, huge questions loom: Who should be part of the new medical teams? How would the idea work for most doctors who practice alone or in small groups? How much clout should the state wield to blunt the ability of powerful local health systems to drive up costs? And, importantly, how heavy a hand should the government use to compel change?

Fee for service is NOT the problem.  It’s never the problem.  If I want to hire a contractor to build a deck in my backyard, I’ll ask some contractors to quote their fee to build a deck.  If the prices are $15,000, $10,000 and $5,000 for identical services, guess who I’m going to hire.  Now, for the sake of argument, let’s say that each of these prices are fair prices for each of these contractors because of their cost structure (e.g., one may have his office on the beach and pays ten times as much in property tax as the others and therefore has to charge more). 

Now in a system where the government steps in to make prices fair, let’s see what happens.  Say a bureaucrat gets three quotes and determines the fair price is $10,000 (the average of the three).  So the contractor who quoted $15,000 now has to build decks at $10,000 and lose money, eventually going out of business.  The contractor that quoted $5,000 will get rich making over a 100% profit on each deck.  And me?  I’ll end up paying twice as much as I had to for the deck.  This is what happens when you don’t let the market set prices.  You get a mess.

In the pressure-cooker of medical costs in the United States, Massachusetts offers a particularly vivid example. The spending per person on health care is 15 percent higher than the national average — even taking into account the comparatively high wages here and outsize role of medical research and training. The move to near-universal coverage, state figures show, accounts for a sliver of recent increases in insurance premiums, which have soared above inflation. The main reason has been a rapid escalation in prices.

“The growth is outstripping every single measure of society’s ability to keep up,” said Glen Shor, executive director of the Commonwealth Health Insurance Connector, which runs the insurance exchange.

So much for the theory of an insurance exchange being the panacea Obama claimed it would be.  For whenever has a bureaucracy been cost efficient?  Never.  It’s impossible.  You can’t manage an economy and do better than market forces.  It’s never happened yet in human history.  So why do some people (i.e., Big Government liberals) still think they can do a better job?  Oh, but we must remove filthy, nasty profits from health care.  This ‘public good’ deserves better.  It deserves the tender love of a caring government bureaucracy.  Not some evil corporation trying to maximize profits.  Of course, look at what happens when these corporations do just that.  Stuff we like and want to buy is plentiful and inexpensive.  But God forbid if we do that to health care.

Some doctors are embracing the new way of working. David C. Pickul is the medical director of the physicians group affiliated with Lowell General Hospital, in an economically bruised community about 30 miles northwest of Boston. The group is in the third year of a five-year “alternative quality” contract with Blue Cross involving a hub of 70 primary care doctors and a looser group of 200 specialists who are responsible for 20,000 HMO patients. The team now has a financial incentive, Pickul said, to track down patients when it is time for their mammograms or for eye exams for those with diabetes. Under Blue Cross’s quality rating, Lowell has soared the past two years.

Blue Cross is not alone. At Partners HealthCare, the famous Boston-based medical system that dominates health care here, Massachusetts General Hospital has been conducting a Medicare experiment in which nurses are assigned to coordinate care for about 2,500 older patients with multiple ailments. The experiment, which began five years ago, so far has reduced hospital re-admissions by one-fifth and cut medical spending by 7 percent.

“Frankly, the market has already . . . responded,” said Gary Gottlieb, Partners’ president and chief executive. “There is enough momentum for us to do this without instrumental regulation” by the state.

The governor and some other officials disagree. The need to lower costs, they say, is urgent enough that the government should step in, and they have been laying groundwork.

Financial incentive?  Isn’t that another word for profit?  And this pursuit of profits has done what?  Improved patient quality?  Reduced hospital readmissions by one-fifth?  And cut medical spending by 7 percent?  Amazing what will happen when you let the market respond.  What a success story.  But they want to do what?  Step in?  To lower costs?  After the market lowered costs already by 7 percent?  You got to be kidding me.  Whatever happened to if it ain’t broke don’t fix it?

And Alice Coombs, president of the Massachusetts Medical Society, is especially concerned about physicians who work alone or in small groups, older physicians who might choose to retire rather than switch or new doctors who might leave for other states.

And how do you solve that problem?  With compulsory medical service.  Which universal health care coverage gives you.  If you worry about doctors opting out of a new cost-contained system, you make it impossible to opt out.  You simply nationalize health care.  Letting the doctors know, yeah, they may be miserable and unhappy with the new system, but you’ll be just as miserable and unhappy where ever you go.  So why move out of state?  For any where you go, we’ll be there.  Understand?  So just keep curing the people and stop your bitching. 

Sure will make all that medical school, internship and residency worth it, won’t it?

The Song Remains the Same

Liberals everywhere want to expand the size of government.  And a national health care is the holy grail of government expansion.  But everywhere it’s tried the same thing happens.  Cost and wait times increase.  Quality decreases.  And services are rationed.  Most people (especially liberals) want to blame the greed of those who work in health care.  So they come up with new ways to manage and control costs.  Which inevitably adds yet more layers of bureaucracy.  Which benefits liberal governments.  At the expense of the taxpayer.  And patients’ health.

But nothing they try works.  Costs keep going up.  For good reason.  Because the problem is not the greed of the health care people.  It’s the health care system.  There are no market forces in it.  Which is the most efficient cost control mechanism.  Of course, admitting this is an admission that Big Government has failed.  And liberals can’t have that.  So they fight.  Demonize.  And scapegoat. And try to scare the bejesus out of everyone by saying conservatives want to cut health care funding so they can kill your family.

Whatever the name, whatever the country, the song remains the same.  Conservatives will try to cut deficits by reforming the biggest budget item.  And liberals will fight them every step of the way.  Ultimately giving us a health care system with greater costs, longer wait times, lower quality and rationed care.  As demonstrated everywhere in countries with a national health care system.

www.PITHOCRATES.com

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