At Angkor: Jayavarman VII

 

At the Royal Palace: Phnom Penh

 

At Ho Chi Minh Mausoleum

 

Corrections/Amplifications to the Health Care Post

Sorry, my math was off in the final point in yesterday's post. Those who would be on notice that their health care is fully their own responsibility even in late old age would now be 45, not 40...still plenty of time.

Further, I should have added a point in the opening comments about why I'm not optimistic about a solution in the current political climate. My pessimism stems in part from the President's failure to exert a level of genuine leadership above the rancor of Democrats versus Republicans. Whether from his own instincts, or from some puzzling electoral calculus, President Obama's behavior is much more like chief Democratic cheerleader than as our head of state. When you think back to his election night triumph when he said that "there are no red states, there are no blue states, there are only the United States of America", you can now only sigh at the failure to live up to that promise.

Solving the Healthcare Mess

Anyone who has had even passing experience, recently, with the delivery of health care and the insurance financing arrangements that attend it comes away yearning for improvement; there must be something that can be done. The current political debate about what steps our society can take have raised the issue to fever pitch, but no convincing solution, at anything close to affordable cost, seems to be seriously on the table. I'm not optimistic that the present political environment will yield good results. What follows is my attempt to sort out some of the more important issues...if only for myself...so the conversation I have with myself and with others is not so frustratingly muddled. For ease of reference, I've identified themes as (D) Democrat, (R) Republican, or (N) Neither.

Let's start with the philosophy of where major societal solutions should come from. Acknowledging the over-generalization, one (D) approach is to rely on a wise and benevolent government to provide, or at least catalyze, the solution. The other key philosophical approach (R) is to rely on private solutions, harnessing the aggregate wisdom of millions of participants' self-interest. Philosophically, that latter approach appeals most strongly to me. We rely on private solutions (and tolerate major societal disparities) on such basic human needs as food, clothing, shelter, transportation. In our system, no-one expects the government to provide food, or housing, or an automobile comparable to what the wealthy can afford. In fact, extreme examples of consumption in these realms are usually matters of admiration, a plateau of size, quality, speed, or fashion that most are willing to strive for, without the expectation of any particular help from the government. But none of these examples are pure. Government subsidies (e.g. food-stamps or heavily subsidized public transportation) are often at work to establish a floor level above which private consumption can reach virtually unlimited heights.

Maybe a better example would be education, for there too, as in health care, society, itself, has a substantial interest in every member of that society having access to good quantity and quality. But while government, thru tax revenues, provides a comprehensive system of education at all levels, private alternatives abound and, especially at the primary and secondary levels, are generally considered superior (often very much so) to their public alternatives. If it didn't generally deliver excellence, private education's consumers would look elsewhere and it wouldn't survive. Public education, even where it delivers horrible results, manages to survive because of its governmental aegis. It is often barely tolerated only by those who can't afford to escape it. If society has an interest in broadly available, high quality health care, I'd argue that it has an even greater interest in high quality, broadly available education for its members. Education primarily benefits society through those who have their productive lives mostly ahead of them; health care is mostly spent on those who have already made the bulk of the contributions of which they are capable. So, if health care needs fixing, maybe education needs it even more; and the education "public option" (D) has not made a great case for its providing the solution to either.

Still, a private health care situation can't make a great case either. If it were really able to provide the solution, why hasn't the market place already done so? I think I know a number of reasons, all of which, I believe, can be managed, in time. But, still, some governmental support (direct subsidy and/or tax allowance)(D) may be necessary to "jump start" a better plan.

• Refocus attention on good health outcomes, not on transactions/procedures, regardless of their impact on actual results. Here are some actual ways to do that.
• Change our mentality about the role of health insurance. It is the problem, not the solution. Today, some tend to think of that coverage as needing to provide access to the ultimate in procedures, or treatments, or medications, regardless of cost, from the first dollar. When we insure our homes, we don't expect that coverage to apply to the replacement of burnt-out light bulbs, but some seem to behave as if health insurance should cover small things, as if by right. I happily acknowledge the benefit of this stunning example from David Goldhill's excellent article in The Atlantic, Sept, 2009. I owe much of my current thinking about how to solve our health care problems to his wise analysis. So, instead of thinking of health insurance as a "first dollar" proposition, view it as catastrophe level coverage that would provide extreme care, rarely, to keep anyone from having to exhaust their other resources to meet extreme needs. Because of the very high deductibles and very substantial "co-pays" that this would involve, this catastrophe level coverage could be very inexpensive (if other features apply...read on). To make this "core" insurance coverage especially cheap, we could mandate that everyone acquire it (D), broadening the pool of premium payers and reducing the liability risks of the insurers. This would mean including in the mandate especially the young and healthy. For those very poor for whom even this cheap coverage would be difficult to afford, we could provide some government subsidy (D).
• Since the threshholds of actual coverage would be very high in this regime, individuals would have substantial incentive to carefully evaluate the cost/benefit calculus of their healthcare use (R)...as they do in every other realm of their economic activity. That consumer consciousness would go a long way to discipline the delivery system on quality and cost, forcing providers and the insurers themselves to provide good value for money.
• To make sure people don't just ignore their health situation until extreme care becomes necessary, the mandated core insurance could cover a comprehensive physical examination at appropriate age intervals, with "discounted" costs for therapies that are identified and promptly pursued as a result of such periodic examinations.
• Expand HSA's (Health Savings Accounts) by making the deductible contribution larger and making the HSA funds eligible for payment of premiums for coverage in addition to the mandatory core. But, as a counterpoint, and as a way to make this tax-neutral, eliminate (gradually) the non-taxability of employer provided health insurance. This is an idea whose time has passed (a large industrial employer-based solution, inaugurated when wage controls precluded cash wage increases; the times, they have a changed!)
• Enable a nation-wide health insurance market (R), to provide access to very large policy-holder bases (reduces premium costs and liability risks).
• Cap malpractice awards (R). Some argue that this is a very small problem in the overall tally of costs. Even if true, I'm not sure why it's being small should permit us to not solve a problem that many believe exists. More important than the direct malpractice recovery costs, however, are the impacts on practitioners' insurance costs (passed on to health care consumers) and the mentality of practicing "defensive medicine".
• Finally, and this is the big one: gradually eliminate Medicare (N). Start by raising the eligibility age from the current 65, by 2 years, every 4 years. In 40 years, the threshhold elibility age would then be 85; then, 40 years from now, bring the program to a complete close. Anyone today older than 40 would get some, diminishing Medicare benefit. Anyone today 40 years old or younger would be on notice that they will have to fend for themselves...even in their very old age. But with decades of opportunity to accumulate reserves in HSA accounts and with their mandatory core, catastrophic insurance policies in place, everyone (younger, or older, than 40, today) will probably be in a much better place to wisely manage... and pay for... their health care needs than most other aspects of a comfortable life in old age. And, in the meantime, society as whole will have saved an enormous cost.

Removal of Stimulus should be GOOD News

After the close of US markets today, the Federal Reserve raised it's discount rate (the rate at which it lends to eligible institutions, generally commercial banks) to 75 basis points. This was the first increase in three years and is part of the already announced plan to gradually reduce the significant monetary stimulus that it has engaged in as part of the global effort to combat the recent severe credit crisis. This is important evidence of the Fed's belief that the economic recovery underway in the US is real and sustainable (though still fragile...the rate is only .75%). Taking an even medium term view (weeks or months), investment markets should rejoice in the prospect of fundamental economic growth continuing. Instead, the perverse initial response appears to be more than modestly negative. Asian markets have declined today by more than 2% and, if the same mentality prevails, one can expect the same directional movement in Europe and the Americas as the new trading day unfolds.

The immediate fear that reduced governmental stimulus (even if only a very modest reduction and only gradual) will stall the recovery seems to be trumping the notion that the withdrawal of government stimulus is precisely what must occur if the world's economy is to stand on it own feet. Of course, it is true that the Fed and its counterparts around the world could get it wrong: the withdrawal of stimulus being too early or too much. But, they could get it wrong in the other direction, as well: too little and too late, with consequent inflation and renewed asset bubble risks...the very error of recent times probably contributing to the problem of excessive leverage that we are now suffering through.

My bet would be on the monetary authorities getting it more right than wrong. Consequently, if one has long term confidence in market performance but is tempted to time market entry based on "irrational" behavior, this will probably turn out to be a good day to be buying.

When does History Begin?

Just returned from a week in Cambodia. Traveling with The Asia Foundation gave the visit an especially insightful focus on the country's economic, social, and governmental development. What a story !...though only vaguely in mind to Americans, despite the fact that some of the most significant events occured quite recently and were in part the outcome of the regional destabilization our military activity in Vietnam caused. You'd think we'd be more aware, but attention spans are both short and narrow. There is no substitute for actually experiencing a place first hand.

In some ways, it's amazing that this country still exists at all. Roughly one quarter of its people (especially including all "elites") were annihilated in a few years in the mid to late '70's under Pol Pot's ultra-communist Khmer Rouge regime. Phnom Penh, now a blur of vibrant activity, was completely depopulated by the KR as it moved all of it's people to agricultural collectives in the countryside under the inspiration of the worst of Maoist Chinese excesses. Eventually, the country was rescued by the army of its historical foe, Vietnam, supported by the Russians. The French, having stronger interests elsewhere, left peacefully in 1953...but it was another 45 years before that power vacuum was filled by a political stability that we would recognize as "comfortable" today.

You are struck by how gentle and open the Cambodian people are. They are very young (65% under 25), still very poor (GDP per capita under $600/yr), with a very weak education system and a culture of petty corruption at all levels. Still, they are optimistic, deeply devoted to their families, and eager to welcome visitors. It's easy to see why many wealthy Westerners have engaged in private philanthropy to assist education and preserve local culture. The attraction of this place is stunning and the needs are very great. The Cambodians appear genuinely grateful for even small attention and meager support; but you feel that so much more is truly deserved.

Angkor: Cambodia's capital, Phnom Penh, has the bustle of a developing country's major city, a very fine National Museum, a royal enclave of exotic state buildings, reminiscent of Bangkok's Grand Palace, and the Silver Pagoda (the King's own Buddhist temple) where the entire floor is paved in silver tiles fashioned from melted coins. But the reason tourists come to Cambodia is its old capital, Angkor. Angkor Wat (the largest religious structure ever built) is merely the largest of hundreds of major and minor sites that together comprise an absolutely breathtaking assembly of ancient architecture and the evidence of a once great empire.

A few observations/recommendations:

• Come in January, the dry and relatively cool season and spend at least 3 days; I would have been happy to spend twice that long. There are many 4 and 5 star accomodations and more on the way. You can "rough it" if you want but there's no need to leave Western luxury behind.
• Make sure you devote time to some of the "lesser" sites like Preah Kahn and Ta Keo; this place is immense. The UNESCO park that encompasses the major temple areas is 144 sq. km, about half the size of Chicago.
• The great builder of many of these sites was the king Jayavarman VII ("J7") who reigned for 34 years. All of his many constructions, start to finish, were done in that brief time, with gigantic pieces of stone quarried many miles away and moved only by human and animal power and then carved, with stunning beauty, after they were in place (as high as 280 feet above ground level): in only 34 years! The great European cathedrals were tiny by comparison and took centuries.
• Religious extremism is nothing new: The Hindu pantheon and cultural legacy forms the backdrop for most of the architecture, but J7 used his building campaign to aggrandize himself, of course, but also to provide suitable venues for devotion to Buddha. Many hundred thousand statues and other carved images of Buddha were the central theme of these temples. The very next king reverted devotion to Hinduism and had all of the Buddha images removed or destroyed...all of them. An enormous amount of work, done, and then undone.
• The city that surrounded and maintained these edifices in the 9th-15th centuries is estimated to have had a population of one million people! (The largest European cities at the time had maybe 50,000). All physical traces of their habitations (all wooden, including the royal palaces) are long gone to the monsoons and forests.
• Consider what is means to "preserve" this world treasure. There are many competing points of view: all in evidence as you explore different sites that have been, still are, and are expected to still receive attention. Should we restore the structures to a pristine state, with toppled stones replaced and fresh stone installed where former pieces are missing (but... Buddha...or Vishnu?); should we merely make them safely accessible, as is, to modern tourists, enthralled by the "Tomb Raiders" romance; or something else? The monsoons, the forest, and earthquakes are not going away; and the people who built and used these temples are not coming back. When does history begin? *

*Thanks to John Sandey, our guide and teacher on our first encounter with Angkor and the author of this question.