Quote of the Week

Wish I’d written it. From Jesse:

We believe that the stimulus is too backend loaded and unimaginative to affect anything sooner. Adding liquidity to the banks is as useful as filling the tank of a car wrapped around a telephone pole. Who are the banks going to lend to? And increased spending on health care, with the highest and least efficient per capita cost in the world, is like giving the driver of that car a bottle of vodka to ease their pain.

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  1. Cent21

    I suspect the best choice for the long term is to establish confidence that federal spending on projects with long term payoffs will increase to whatever level is necessary to match the long term growth potential of the economy.

    For the very short term, stimulus can simply transfer funds to states, as much as anything so that they can maintain current services including those services that provide economic relief. States are in the process of mid-year cuts right now; mid-fiscal year cuts slash deeper than beginning of the year because they have to make up a larger fraction of remaining budget, so for example, if a locality sends out notices to all departments that state government cuts are forcing a 5% across the board spending cut, to cut 5% with four months remaining in the fiscal year requires cutting 15% of remaining spending. And that doesn’t include transition costs. Politics aside, the federal govt could simply pass a $50 Billion block grant to states that will apply to current and next fiscal year, and put a stabilizer for local and state governments in place as well as helping shore up municipal bond interest rates. The funds should be split roughly proportional to population for transparency. Sorry, California, but your budget problems are due to the Gubernator’s propensity to borrow, and we can’t fix everything for ya.

    Other spending that isn’t an acceleration of things that were really on the books can wait until the nation can re-establish the idea that it is OK for the federal government to do a few things for long term infrastructure. We don’t need to build more roads to distant suburbs; we need to plan competitive efficient systems for next century. We just don’t have plans at the “shovel ready” stage to do a lot of that.

    I think.

  2. Anonymous

    And increased spending on health care, with the highest and least efficient per capita cost in the world, is like giving the driver of that car a bottle of vodka to ease their pain.

    40+ million uninsured Americans probably disagree.

  3. Anonymous

    January 31, 2009

    I’ll see your quote and raise you…

    From the January 26, 2009 issue or “The New Yorker” magazine article “The Dystopians”:

    “Now we’re in hospice care…The bailouts you see can be viewed as bigger doses of morphine for a patient that’s not long for this world.”

    Earl L. Crockett
    Santa Cruz, CA

  4. Yves Smith

    Ah, but they are insured, via the most inefficient, high cost channel: emergency rooms.

    Malcolm Gladwell discussed one extreme case at some length, a homeless man, really well loved, but a chronic alcoholic who would show up in the emergency room very often (and he really was sick). His health care cost $1 million a year. It would have been cheaper to give him an apartment and 24/7 nursing care than have him get his health care via the emergency room.

  5. Yves Smith

    I am not saying this to advocate the current system, quite the reverse, that the proponents of universal health care have done a terrible job of making their case. The place to start is to examine what is going on in emergency rooms and how much of our high health care costs come from that. It’s more than most imagine (the other culprit is the extreme measures in the last month of most people’s lives, and in many cases it takes a very strong health proxy to prevent this overtreatment, even if the patient protests and the bias towards overzealous treatment in general. The last is cultural and may prove hard to break).

  6. Anonymous

    “It’s more than most imagine (the other culprit is the extreme measures in the last month of most people’s lives….”

    As I recall, the last months costs are a far larger component to overall costs than emergency room costs.

    Regardless, you seem to be opining on a policy area you know little about.

  7. Anonymous

    I wrote the comment at 11:53. The comment here about Jesse and 40 million people is more than right.

    For Jesse to advocate not spending money to enlarge the pool of covered citizens is morally abominable, given our health outcomes compared to the rest of the world.

    Yves, I’m a little shocked you’d quote such a narrow minded source.

  8. Anonymous

    The place to start is to examine what is going on in emergency rooms and how much of our high health care costs come from that.

    This discussion (preventative or early-stage care is always much cheaper) actually has circulated around on the left for a while, but the shout-down from the right is that all those people are immigrants who shouldn’t be here and shouldn’t get health care and deserve what they get blah blah blah. Other economic arguments – huge insurance company bureaucracies drive up costs (this is probably the single biggest inefficiency), healthy people are better workers, fear of losing coverage traps people in jobs they don’t like, and good neonatal and early childhood health care produces great ROI – also circulate on the left, but aren’t well-known either.

    As to whether or not proponents of universal health care are doing a good job of making their case, do you really think the media is going to consult or quote people who make these arguments? Or otherwise do good reporting on the issue? It’s no different for health care than it was and is for the housing bubble.

  9. Anonymous

    or like dumping more uranium on Chernobyl after meltdown.

    Their heads just can’t absorb the fact that they, the best and brightest in their Fields, are responsible for the mortal wounding of their idealogical baby, talk about denial.

    Been watching allot of the BBC and c-span media at Davos and the other Gigs on right now, they are in so much denial, it will take a ton forklift to retrieve my jaw off the floor when this is all over.


  10. Yves Smith

    Anon of 11:53,

    I find it rather interesting that you would misrepresent what I said to then make an accusation about my knowledge, or in this case, a charge of a lack thereof. I never said that the cost of emergency room care was greater than end of life care.

    You also chose to miss the point. An argument could have been made for health care for the uninsured by showing how much was already being spent on them by emergency rooms. That would have shown that the true cost of covering the uninsured was less than commonly believed.

    And you are clearly reacting emotionally, I am not happy with Obama’s health care proposals because it does little to address the root causes of our overpriced, underperforming medical care. I suggest you read Maggie Mahar’s Money Driven Medicine on that topic.

  11. Anonymous


    11:53 quoted you, then agreed with your quote that the last month care costs are high, then somehow decided to conclude with a ‘you just don’t know what you are talking about’ type of comment.

    Not sure why you bother to respond to befuddled anon comments.

    Apparently 11:53 would implement universal healthcare no matter the costs. Because its the right thing to do and the insolvency of the fed gov couldn’t really happen could it.


  12. Jesse

    By all means provide the health care. Seriously. Its a shame in this country that we do not have universal coverage.

    But to excoriate anyone who dares to speak the truth, that the US health care system is high cost and inefficient and needs badly to be reformed is more than abominable. Its the problem. We make too many emotional appeals of this sort to bury too many problems. The drug companies have GSA costs that are out of sight. They and the insurance companies and the hospitals are the Halliburtons of the health care industry.

    Like the banking system, it is broken. It does not need more money, it needs to be reformed.

    Once we ‘get that’ we can begin to approach a sustainable recovery.

  13. mmckinl

    Medicare for All through HR 676 is the ticket to a new economic structure.

    By placing all health care under one roof reform can proceed with all due haste, cutting overhead and profit (25%), drugs(10%) and standardizing and rationalizing diagnosis, treatment, records and preventative care (10%).

    Going forward we will not be in a position as a country to waste effort. Wages will have to be lower, but, services like Medicare for All can fill the gap providing a true benchmark for living wages and standards.

    The measures we need ~

    ~ Nationalization of all banks … to get liquidity and trust back into the banking system.

    ~ Nationalization of the Fed … Why should we borrow our own money? We need a Public Central Bank that creates our currency and credit for the benefit of the public who underwrite its value and shoulder the risk.

    ~ Medicare for All … Saves millions of jobs, helps the under and uninsured, helps business, helps the states and can start to be implemented within a month or two and finished within 18 months.

    ~ Higher taxes on the well to do, the closing of loopholes and all income counted as ordinary income … A Carbon Tax, A Tobin Tax …. The budget deficit must be contained.

    ~ A shorter workweek … Why should we have a 40 hour workweek? Efficiency has been going up for decades, yet real wages and benefits are flat and falling. The new economy won’t have tens of millions of jobs in retail anymore, we have to spread the work. How about a 32 hour workweek? We went from 48 to a 40 hour work week six days to five and it worked just fine.

    ~ Bankruptcy “CramDowns” for consumers to get them back on the right track. Acorn and other social agencies could prepackage BKs for bankruptcy judges. And then credit has to get much tighter.

  14. Anonymous

    Hey Yves,
    Some rendition of this anon's quote should be the subtitle/caption of this blog (or hold some regular presence) until it ceases to hold true.

    "Their heads just can't absorb the fact that they, the best and brightest in their Fields, are responsible for the mortal wounding of their ideological baby, talk about denial."

    Ego did all this. In my dream world, Obama (well, someone w/ the reach and credentials) points out that there is great personal reward to be reaped in this mess, for the people who defy convention and sacrifice a little immediate wealth to mend & restore the financial industry [speaking of salary caps.])

    Is it that crazy for some of these big dogs to get to together decide to voluntarily temporarily cap their pay? I'm sure the media would dub them with some clever title. If they got (get?) in front of this before it was forced upon them (like politicians who are pr-savvy from having to operate in daylight know how to do), they could come out looking human — wait till veil on the phoniness of the gesture is completely gone, and they'll just lose the wealth, good will, and their industry. Even if its all a pr game, the media title and fuzzy memory of it might stick around long enough to keep AARP members dumping into them for decades. Considering that "trustworthiness" and "security" are going to mean something again in the near future, you'd think the smart guys (even if they are rats) would be onto this future trend.

  15. Anonymous

    But to excoriate anyone who dares to speak the truth, that the US health care system is high cost and inefficient and needs badly to be reformed is more than abominable.

    EVERYBODY knows that it is high cost and inefficient – especially those who profit from the current non-system. Hell, I’ve been saying it for over 15 years. What is abominable is advocating austerity at the price of leaving 40+ million people uninsured. Which is to say, it’s not exactly courageous to ask that somebody else suffer.

  16. Lune

    I both agree and disagree with Jesse. We have the highest cost, least efficient healthcare system in the world. But putting money into it is not the same as giving the driver some vodka.

    The Institute of Medicine, in its landmark multi-year study released in 2004, concluded that covering all uninsured Americans would require $34-69 billion / yr (in 2001 dollars). Note that this is without any structural changes to the current inefficient system. Actual reform of the health care system would probably lead to a decrease in our health spending while still managing to provide better care to everyone.

    Let’s step back and think about that for a second: for the price of bailing out AIG, we could insure every American. For the amount spent on the TARP, we could insure every uninsured American for 10 years.

    It's true that reforming an industry as vast as healthcare is almost incomprehensibly complicated. But I do think that opponents of reform like to play up this complexity to mask the fact that there are some very easy things we can do right now. For example, making Medicare available for anyone under 65 willing to pay its average premium (i.e. no govt subsidy, but you get the benefit of a large pool, and the reduced overhead from an efficient public administration that costs less than a quarter of private insurance overhead) would cover lots of people who can't get cheap coverage right now. And liberalizing income requirements for pre-existing programs like Medicaid and SCHIP (the State Children's Health Insurance Program) would cover a larger portion of the working poor.

    Is that the entire solution? Of course not. But the costs are minimal (at least in comparison to what we're spending to bail out the financial industry), and why condemn people to sickness and death waiting for a "perfect" solution when easy steps can be taken right now?

    And now to steer back on topic :-). For those looking to stimulate the economy: there is probably no more effective way to do it than spending on health care, because probably 90% of health care dollars are spent within the U.S., either at U.S. health care facilities or with U.S. manufacturers.

    It's a little known fact that in most cities / towns, the biggest employer is usually the local hospital system. Even mighty NYC, until a few years ago, had more workers employed by the healthcare industry than the financial industry. If Jesse thinks a stimulus dollar spent on healthcare is inefficient, exactly what industry, pray tell, will make better immediate use of it with more public good? Building bridges to nowhere? Funding capital intensive but job-poor green R&D (something I support as a long-term strategic goal, but not as an immediate stimulus plan)? Funding corporate investments so they can buy capital goods from Germany and Japan?

  17. Anonymous


    I thought we’d been through this already? “From each according to his ability, to each according to his need” rings a bell, doesn’t it?

    How’d that work out so far?

  18. mmckinl

    Anonymous said…

    I thought we’d been through this already? “From each according to his ability, to each according to his need” rings a bell, doesn’t it?

    How’d that work out so far?


    LOL … Every other G7 nation has single payer, they all pay less per person by half on average and have better outcomes. They subsidize their goods with it.

    On the other hand, those that know say our health care system will bankrupt us in a decade or two …

    It’s simple really, we need HR 676 to reform the system. Despite what you think health care is a social good, not an economic good.

    I am a capitalist but the current crony capitalism only enriches the already rich at the expense of all Americans and the very country that made them rich.

  19. Yves Smith

    Anon of 11:53 AM,

    Actually, I think you’d be surprised as to how much disagreement and denial there is on that point. I lost a friend on this issue, someone who had worked for the NIH and has the good sense to deem medicine a medieval art, so not a conventional thinker in most respects (there is much less science behind it than is commonly believed).

    I made a passing comment on how our health care system ranked middle to low on health outcomes international comparisons with other advanced economies. I got huge pushback: “Our medical system is the best in the world” with non-representative datapoints (people form Saudi Arabia flying to Sloan Kettering for cancer care).

    I made the mistake of sending links to various studies supporting my contention, got more emotional replies, and then the cold shoulder.

    A lot of people have been fed the line that the other systems restrict choice, involve queuing. Ahem, what does being in an HMO or PPO entail? Getting advanced approval, or needing a referral, or worse, fighting denial of care (or refusal to endorse a treatment or test a doctor recommended) is queuing. We have it here as well, but it’s done by the insurance companies.

    I have experience with only one, significantly socialized health care system, Australia’s. The care I got (with no particular connections) was on a par with what i got in New York, and was vastly cheaper (even if you used an FX rate of A$1 to $1) even though I was paying the out of the system rate. And people were much happier with the quality and access to care than here.

  20. Anonymous

    I’ll back Yves statement, having lived in the states for 35 years and now 17 years in Australia. I find the model here much better and have 4 kids through the system.

    We have Private on top of the national health care, to cover the issues the national does not or to expedite/expand options eyes/glasses, selective dental and a few others.

    My family in the states consists of MD/surgeon, nurse/HMO administration/married to HMO V.P.
    and it seems the hole discourse revolves around vested interests or were number one mentality and not the facts.

  21. Anonymous

    @mmckinl again…

    Health care is a social good, not an economic one? You’re in BS up to your eyeballs.

    EVERYTHING is an economic good. Someone has to pay for it. Period. Anything after that is semantics. Whether I have to pay for it myself or government hands me your taxes to pay for it is irrelevant. You want to replace one inefficient system with another which most likely will be worse. This isn’t progress and I wish to almighty God that hot shots like you with your bright ideas and fervor to “do something” would keep you hands out of my pockets. Seriously, just cut it out.

  22. Anonymous

    11:42, every other advanced economy in the world has health care that is cheaper, universal, and produces no worse outcomes, and in the vast majority of cases, better health outcomes.

    But no, you’d defend a failed system. Pretty much the same logic obtained in Communist Russia until it fell.

    The inability to fix this mess is a symptom of American corruption and blinkered thinking, not the inherent insolubility of the problem.

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