Tuesday, April 26, 2011

After Some Delay, the Positive Aspects of that Post on Medicaid I Mentioned the Other Day

So, while I had a negative reaction to Scott Walker's thoughts on the existence (or lack thereof) of sovereignty in the subordinate units in a federal state, I do think he does a very good job of pointing out some of the major flaws in the Medicaid program.  In particular I thought this bit was very perceptive of the problems with Medicaid, I run into these all the time at my job:

"In recent years Washington has taken an obsolete program, which covers health care for low-income Americans, and made it worse through restrictive rule-making that defies common sense. It is biased toward caring for people in nursing homes rather than in their own homes and neighborhoods. It lacks the flexibility to help patients who require some nursing services, but not round-the-clock care."

He is also quite correct in pointing out that:

Time and again states like Wisconsin have blazed the path in Medicaid — from giving individuals greater control over their care to expanding the use of electronic medical records — while the federal bureaucracy has lagged behind. Just now Washington is discovering accountable care organizations (networks of doctors and hospitals that share responsibility for caring for patients and receive incentives to keep costs down) and “medical homes” (a model in which one primary-care doctor takes the main responsibility for a patient).

He is also quite correct in pointing out that (there are a few other things in here I agree with, these are the big things):

We need to modernize not only Medicaid’s benefits and service delivery, but also its financing. In good times, the open-ended federal Medicaid match encourages states to overspend. Amazingly, the program is now viewed by some states as a form of economic development because each state can at least double its money for each dollar spent. That matching feature penalizes efficiency and thrift, since a reduction of $1 in state spending also means forfeiting at least one federal dollar, often more.

I am in complete agreement that these issues are two major flaws in the current Medicaid system.  Medicaid's bias towards institutional care is a major issue and something that comes up a lot in the disability field.  Institutional care is vastly more expensive than home care and the more we can go towards it the better.  I also see cost shifting all the time, the current Medicaid model has different cost share schemes for different services so in many cases the more expensive option is cheaper for the state administering the program.  I think most of this is handled well enough in the op-ed that I don't have to go into more detail (though I may pick it up in later posts, if I ever get around to looking at New York's Medicaid reform many of these issues will come up in more detail).

Friday, April 22, 2011

First (negative) Reaction to a Rather Good Op-Ed on Medicaid

OK, I'm going to preface this that I rather liked this editorial in the New York Times.  I think it illustrates some of the problems with Medicaid well, though I'm skeptical that block grants are a great solution (they're certainly better than what we have).  I'll go into this more tonight.  But this inspired an intensely negative reaction that I have to get out right now.

States are not merely “laboratories of democracy,” but also sovereign governments under our system of federalism. Unfortunately, the encroachment of the federal government in Medicaid threatens to reduce states to mere agents.

No, no, no, no, false, wrong, incorrect, bad history, lies, and the source of far too many of our problems in this country.  States in a federal system are not sovereign by definition!  States sacrifice their sovereignty to be component parts of a federal system.  Sovereignty is maintained in personal unions and in some forms of empires, the Holy Roman Empire or the Hapsburg Empire (partially overlapping at certain points in history) would be examples.  It is partially maintained in confederal systems, such as the Dutch Republic.   In a federal system however, the constituent parts maintain only a limited number of carefully circumscribed powers and are ultimately subordinate to the central authority.  In early political parlance the powers retained by constituent members were sometimes referred to as sovereignty but this is not in the sense as it is used by moderns where sovereignty has a more specific definition that implies a degree of independence.  In modern terms however, it is powers, and not sovereignty, that is retained by the constituent members of a federation.

Of course, if you don't really believe that the US was meant to be a federation and is instead a confederation, than the stance I'm complaining about makes sense.  But, as long as we're using modern terms and not dressing up in costume on stage and feigning bad accents, sovereignty is not something that the states possess in the United States, or in any other political federation.  If they did, we'd be a confederation or empire.

Monday, April 18, 2011

Ethnic Heterogeneity in America and the Welfare State

This is just a quick thought on Douthat's NY Times column today.  In it he says:

They could have ugly political consequences as well. Historically, the most successful welfare states (think Scandinavia) have depended on ethnic solidarity to sustain their tax-and-transfer programs. But the working-age America of the future will be far more diverse than the retired cohort it’s laboring to support. Asking a population that’s increasingly brown and beige to accept punishing tax rates while white seniors receive roughly $3 in Medicare benefits for every dollar they paid in (the projected ratio in the 2030s) promises to polarize the country along racial as well as generational lines.

This isn't the research I'm most familiar with, and I'm not going to take the time to go brush up on it for a quick post.  However, while there are some finding regarding ethnic heterogeneity and the welfare state, most of this amounts to trying to explain why the US welfare state is so small.  The rest of the countries that have reached the point of development where a welfare state makes sense amounts to pretty much the US, Australia, Canada, Japan, and New Zealand,  with a few micro-states thrown in (which I don't accept as comparable to full sized nation states for most purposes).  None of these countries have ethnic heterogeneity at US levels, and of the two closest Canada is well within European norms and Australia is noted as a major primary producer, which is also given as an explanation for a small welfare state.

More broadly, I've read that Sweden has been experiencing a fair amount of immigration and its institutions are intact.  It's also notable that a country more diverse than America, Brazil, has been experiencing rapid economic growth along with a large growth in social transfers, though I doubt this has reached the levels of the modern welfare state given their current level of development (I don't know, but wouldn't be surprised either way).  On the whole, this leads me to believe that the ethnic heterogeneity argument is rather weak, we're seeing reasons to question it and the US is such an outlier on any issue involving redistribution and the size of the state for the past 30 years that it skews any regression analysis done on these variables strongly.  I don't find this argument at all compelling, it strikes me as an excuse to not even try, not a reason it wouldn't work.  If Brazil can go in this direction, surely we can.  I've always believed that probably the biggest single factor in US success has been our ability to successfully integrate immigration and our relatively welcoming attitudes towards immigrants.  I'm willing to bet on that, even given the nasty populism of the day, rather than just throw in the towel and say we can't maintain a first world safety net.

Surely any real American thinks we can at least do as good as Europe?  Come on, where's American exceptionalism when we're actually asked to do something?  If Europe can sustain the welfare state with their much worse demographics surely we can with much better demographics along with assimilating new immigrants.

This can't be repeated often enough:

The New Colossus
Not like the brazen giant of Greek fame,
With conquering limbs astride from land to land;
Here at our sea-washed, sunset gates shall stand
A mighty woman with a torch, whose flame
Is the imprisoned lightning, and her name
Mother of Exiles. From her beacon-hand
Glows world-wide welcome; her mild eyes command
The air-bridged harbor that twin cities frame.
"Keep, ancient lands, your storied pomp!" cries she
With silent lips. "Give me your tired, your poor,
Your huddled masses yearning to breathe free,
The wretched refuse of your teeming shore.
Send these, the homeless, tempest-tost to me,
I lift my lamp beside the golden door!"

Friday, April 15, 2011

Some Stray Thoughts on the Budget

This is a very short post before I leave for work, provoked by an Economist article that I thought was below their usual standards.  Mostly because they were swooning over the rather silly Ryan plan (which really amounts to destroying all the programs the Republicans don't like, then not making any tough choices for another decade and forcing cost savings through a mechanism that looks a lot like Medicare payment caps, which keep getting raised, or the AMT limits, which also keep getting raised.  The mechanism he uses has not yet worked in US history but if his program is used we wouldn't know this for a decade.  Also, never mind my constant critique that my generation can afford generous benefits for ourselves with some minor adjustments like a higher retirement age, the problem is the current bulge in the demographics and a plan to simply saddle us with all the debt because my generation does have high voter turnout is good politics but ultimately dodges the problem.  It's like paying for your mortgage with a credit card expecting your kids to pick up the mess when you die.).

After that lengthy aside, back on topic.  This is what provoked me:

That is not the only instance in which Mr Obama has left the fine print to others. The defence cuts would be determined by a “fundamental review” conducted by the top brass. Big savings from Medicaid, the health-care scheme for the poor that Mr Ryan wants to entrust to the states, will somehow be achieved in consultation with governors, but without the federal government ceding control. Most glaringly, Mr Obama provides neither the details of the tax reforms he has in mind, nor a mechanism for drawing them up.

Ok, fair enough on the defense cuts, but Americans are barely willing to listen to the generals when they recommend cuts to defense so they certainly won't listen to pols.  The Medicaid issue is what jumps out at me, the way the Economist phrases it they seem far more skeptical of Obama's method than they do Ryan's.  I'm going to have to get around to doing my series of posts on Medicaid reform here in New York,  that will make the issues clearer.  But looking at Medicaid, even just a fairly cursory glance, reveals that one of the big issues is cost shifting between levels of government.  By law, Medicaid currently covers a number of emergency services and things like institutionalized care in nursing homes as a minimum floor for the very worst off.  These things are of course very expensive, but the feds pick up the bill so the states don't get crushed under the expenses.  This also means however that it is usually cheaper for the states to dump patients into these programs rather than pay for overall cheaper and more effective programs that they have a higher cost share for.  If reform is left to the states, this isn't going to stop.  I'll draw this out a bit more with some posts on New York Medicaid reform, while I think Cuomo was trying on the whole not to do this too much, it did happen in a few areas with the original proposals, though I haven't compared the proposals to the final program yet to see if these problematic changes were the ones that actually happened.

I realize that people like the idea of the states as laboratories of democracy, but I'm skeptical of the idea myself.  The key thing with a lab is that they do experiments that can later be scaled up more efficiently.  I see very little of this in the US in recent decades.  While some programs are based on programs initially successful in the states, or in the case of the ACA I'd say not so much successful as simply politically doable, on the whole this scaling up seems to be rare.  Rather, individual states make successful programs, a handful of states copy these programs, and then the rest studiously ignore it in favor of their entrenched interests.  For the laboratory of democracy concept to work, there needs to be someone in charge of assessing results and then scaling up successful programs.  Individual states experimenting with policy in the absence of oversight aren't labs, they're just primitive craft workers not operating at efficient scales.

Friday, April 8, 2011

Problems with Decentralization: Tax Breaks to Attract Businesses

The New York Times has an excellent article discussing the zero sum games that companies frequently make states and municipalities pay to attract jobs.  Rather than being job creating, most of the time these tax incentives are little but bids for where jobs a company already plans to create will be located, with or without the tax incentives someone gets the jobs.  With the tax incentives however, businesses will end up investing in a less than optimal location due to its regulatory arbitrage, since the tax breaks are made more valuable than the inefficiency of ignoring comparative advantages.

This is an unsolvable problem with decentralization in a modern economy.  It used to be that most economies were primarily local, or were highly dependent on local resources or the particular skills of a relatively immobile labor force, that prevented businesses from playing these games.  However, in the modern economy these factors are no longer present.  Businesses can pretty much locate where they want (at the extremes of course this isn't true, but generally speaking they can) so if institutions are set up to allow for this, as they are in the US with our relative degree of decentralization allowing states and localities high levels of discretion, they get to play this game of playing states and municipalities against each other for the best deal.

This happens even on a fairly small scale.  A regional rib chain managed to get a basically tax free location for several years by deciding to announce it wanted to come to the region but was looking at several alternate locations.  Local cities fell over each other trying to see who could offer the most shameless deal to attract a restaurant.  The power of business relative to government has shifted fairly decisively in favor of business at all but the federal level. 

The more we seek to decentralize away from federal control the worse this will get.  Which isn't to say this doesn't happen at the federal level, look at defense contractors, Boeing, or claims about being able to relocate internationally, but it is far more difficult to make this threat credible at the national level than it is the local.  Same with the idea of the rich leaving.  With the lowest tax rates in the developed world they ain't going anywhere.  Few are willing to trade the amenities of the developed world for an armed compound in Nigeria, no matter how much lower the taxes are.  On the state level however, many will trade the high taxes of California or New York for the low taxes of Texas.  Never mind that Texas has to import so many of its skilled workers from the school systems that the high taxes of California and New York pay for, as long as they're big enough suckers to pay for this, Texas makes out like a bandit because plenty of workers are available from these high tax states which, once trained, would love to maximize their income in Texas.  Of course, once those states get driven to the lowest common denominator by an eroding tax base everyone loses out since they'll have to lower taxes to retain their workers, cutting the services that produced the high skilled workers in the first place.

This is what I mean by externalizing the costs and internalizing the benefits.  A business playing two municipalities against each other leads to each trying to internalize the benefits of the new jobs.  The costs are externalized since it is born by the tax payers that have to pay additional taxes to make up for the taxes that the business would have contributed.  This scales up at the state level so that Texas externalizes the costs of training its workers to states such as New York or California while internalizing the benefits of those skilled workers.  Rather than having to pay the cost of training these workers while they are unproductive children, it just gives a sufficiently large tax incentive to attract them.  This strategy however simply hurts everyone in the long run.  It works when only a few places are doing it, but once it goes on for awhile people learn and lower taxes to match.  At this point, everyone ends up worse off to prevent anyone from defecting to profit from others investment.

Kinda went off on a tangent on that.

Thursday, April 7, 2011

Assistance to the Rebels

Another New York Times article details some of the problems with the current level of support we're giving to the rebels.  With the current weaknesses in the rebel army it will be difficult for them to take substantial ground and there is doubt that the coalition can hold together for the months it will take to shape a real fighting force.  This leads me to a couple of thoughts.

First of all, there should be absolutely no western troops participating in anything but training exercises.  This is the Libyan's battle, or at the widest I'd go, the Arab's battle.  If an Arab state is willing to commit some troops, then that might work.  But even this I'm cautious about unless it is something like specialized forces, such as armor or mobile artillery.  Infantry has an emotional appeal that other branches of the service don't have to the same degree and will be necessary to creating the national myth they will need to hold the country together afterward.

It may also be wise to support them with additional arms.  I have a strong reservation about this however.  We gave a lot of small arms to Afghanistan back in the 80s, since then this has proven rather costly.  To limit this. we should discuss with the rebel forces how many soldiers they have trained on heavy equipment.  Once we know this, we should donate as much equipment as they can use.  This would avoid the problems of filling a country with small arms that can further destabilize it and that could later prove lethal to our forces, either through sales abroad or if on the ground action is necessary later on.  To do this we would have to drop the fiction about maintaining an arms embargo, but the disadvantages of smuggling in small arms, which I'm sure is already happening, are great enough to lead me to think the trade off is worth it.  Of course, if the rebels haven't had defectors from armored divisions, it's really not clear exactly who defected, this might not work since piloting a tank probably isn't intuitive (I don't really know however).  In this case, we'd need someone on the ground to use the equipment, which would bring complications.  Also, the disparity between Qaddafi and the rebels seems to be mostly a combination of troop quality and heavy equipment.  Small arms don't close this gap, heavy equipment would close one of the two.

I'd also worry about supplying too much artillery.  I fear the rebels will prove indiscriminate in their attacks and armor seems less prone to collateral damage than artillery.  Our air support can mostly fulfill the same role as artillery, though this would require a level of organization and coordination between our forces and the rebels I haven't seen any reports of yet.

Rebel Professionalism

There's a very good article in today's New York Times on the lack of professionalism in the Libyan rebel's armed forces.  It's not anything surprising, it's exactly what should be expected from this kind of spontaneous uprising.  But there's a couple of things worth commenting on here.

First, they do seem sufficient to take ground and slow down Qaddafi's advances alongside air strikes.  At this stage all they need to be able to do is not lose.  Eventually the soldiers will get blooded and learn enough to carry on some kind of real offensive.  Until then, lines are likely to stay very fluid.  This kind of combat probably won't be able to reliably hold territory but it should be able to limit the mobility of Qaddafi's forces now that they don't have air support.  They may not be able to stop a slow, measured advance but they can probably hammer a strung out column that is trying to blitz Benghazi.  Once the rebels manage to organize the real soldiers they do have into units and these irregulars become somewhat organized they might have a chance of advancing.  This will take several weeks, if not months, as I said before.  Anyone that thought this would be over in days either doesn't know anything about revolution war or assumed that Qaddafi would give in easily, which was obviously not a possibility within a few days.

Second, anyone that thinks that the 2nd amendment actually protects us from government needs to study this.  If assault rifles, machine guns, rocket launchers, and a couple of jets can't fight back effectively against a marginal military force such as Qaddafi's without overwhelming outside strategic support what the hell are a bunch of rifles, shotguns, and pistols supposed to do against a military able to take on the US army, or the US army itself?  This shows pretty clearly what it actually looks like when an armed citizenry rises up against a dictatorial power in the era of modern arms.  Even if everyone had an assault rifle, which is more or less the case in Libya, they can't fight back against organized military opposition with modern equipment.

Sunday, April 3, 2011

What We Avoided: Civil Wars of the Past

There's a meme circulating among those that opposed the war that we don't really know how bad things would have been and that there's no way of knowing.  In a facile sense, this is true.  We can't know the future.  However, there have been a lot of civil wars in the second half of the 20th century.  Here's what a few of them look like.  (Numbers are for the losing side and wars posted in no particular order because I'm lazy.  All of these conflicts are primarily civil wars, though some do involved intervention of outside powers, more on that at the end of the post.)

Algerian War: 800,000+ civilians killed or wounded
Hungarian Revolution of 1956: 2,500 killed, 13,000 wounded, 13,000 imprisoned, 200,000 refugees estimated 350 executions
North Yemen Civil War: 100,000 dead
Zanzibar Revolution: 2,000 - 4,000 with estimates up to 20,000 civilians killed in aftermath
Indonesian Invasion of East Timor: 60,000 to 100,000 soldiers and civilians
Internal Conflict in Burma:  121,000 killed
Greek Civil War: This one's a mess and representative of other political conflicts that lasted many years and with multiple sides.  The winning side claimed about 16,000 dead all told and the losers just under 40,000.  Another 1,000,000 were displaced.  Other major civil wars of this complexity, such as Congo's, have been omitted.
Al-Anfal Campaign:  Saddam Hussein had a much more effective army than Libya.  This is what he did to combat an uprising: 182,000 civilians killed.  I think this is probably the most comparable of these as to what could have been expected in Libya if Qaddafi had his way.  In these sorts of conflicts, the worst killing happens after the main fighting is over.
Nepalese Civil War: 12,700+ deaths
1994 civil war in Yemen: 7,000 - 10,000 dead, appearing twice on the list is one reason why I don't think we're going to get involved in Yemen.  In this case most casualties are listed as soldiers, but I question how distinct the civilian/soldier divide is in a weakly institutionalized state such as Yemen.
Spanish Civil War: 500,000 dead on both sides.  Both sides engaged in substantial killing of civilians

This is just a brief round-up of what I could easily find on Wikipedia.  While there are rational reason to oppose intervention, it does look like the kind of terrible outcomes of many of these conflicts have been avoided.  I find it unlikely that the rebels will feel able to act without outside support, while there will very likely be reprisal killings by the rebels afterward I expect these to be at the very low end for a civil war.  If Qaddafi had instead hung on to power, I would have expected towards the higher end since he would have already been angry at the other powers and seen little reason to take their reactions into account.  It's simply not true that we don't have any idea what would have happened if Qaddafi had succeeded, reprisals after a civil war are a nearly constant feature of them.  While there are exceptions, such as our own Civil War where post-war executions and extra-judicial killings were fairly rare, these are very rare exceptions and there is absolutely no reason to believe Qaddafi would have acted as the exception, rather than the rule.

Of course, there are a couple of complicating factors.  First, most 20th century civil wars have involved an element of great power competition.  This surely lengthened them, raised the stakes, and thus increased the casualties.  Second, many of these civil wars involved some degree of outside interference, which is exactly what we're doing in Libya.  While this gives some reason for doubt, the unusual combination of substantial defected forces and a huge disparity in arms quality between those intervening and Qaddafi's forces gives a strong reason to expect a different outcome.  More detail could certainly be given for these differences.  But, at a glance, there's good reason to believe that the situation prior to intervention would have looked much like most civil wars, while the ways that this intervention differs from earlier cases gives good reasons to believe that casualties will be relatively small. 

That said, I won't be at all surprised if the scale of what happens approaches Srebrenica (8,000) in total, though not in any one place and including battlefield deaths.  This will still be ugly, it's against the mind-numbing horror of what most modern civil wars end up looking like that intervention is justified.  The sheer scale of destruction caused by civil wars is rarely appreciated when so few of them occur anywhere near reliable reporters and television cameras.  As long as there is some form of international force deployed in whatever settlement arises from this conflict, I believe the worst of the reprisals will be avoided.

Some Additional Thoughts on Libya

First, sorry for the irregular posting, my personal life has been getting in the way of following current events closely.  Regular posting will hopefully resume this week, no promises however.

The situation in Libya is something that I've been trying to follow, though my impression so far is that there haven't been too many new developments from my last post on the subject.  The situation seems to be currently in a stalemate, my best guess is that it is likely to remain so for some time, likely weeks.  The dynamic I expect is a continued slow erosion of Qaddafi's government with a slow trickle of officials out of it.  This will lead to either a negotiated settlement where Qaddafi accepts exile or a sudden collapse as some of his officials mount a coup.  I don't expect this to be settled on the battlefield.

At this point, the rebels have time on their side.  All they have to do is hold on and let the slow rot of Qaddafi's government do their work for them.  They seem to have sufficient numbers to be able to do this though they lack the organization to push Qaddafi out in a major offensive.  Given evidence of Egyptian and American support, if Qaddafi hangs on long enough they may gain the capacity to score some major battlefield victories once they get the organization to charge through the shelling of mortars and artillery that seem to play such a large role in throwing them back in recent battles.  This is likely to take weeks at least, and I'm unsure if the conflict will remain in play this long.  If this scenario does happen, it tips the balance in favor of coup against Qaddafi rather than a negotiated settlement with him.  Though a settlement will have to be negotiated with whoever the coup leaders are.

Probably the biggest question I have right now is how bad Qaddafi's intelligence is.  A constant theme with authoritarian governments is that their access to information, and particularly bad news, is very unreliable.  People don't want to contradict the dictator.  Given the number of defections that have occurred, I would expect this tendency to be even stronger than it is in most authoritarian governments; anyone with bad news about the military and political situation will fear that sharing it will be looked upon as doubts about the regime and disloyalty, with the predictable consequences.  This would mean that Qaddafi will continue to hang on well past his situation becoming hopeless, anyone with information that the situation is in fact hopeless will have reason to fear sharing this with him and an incentive to defect abroad to protect their own hide.

There is a wild card.  Qaddafi has shown himself to be fairly reckless in the past.  Recent accounts have shown that he is reducing his use of heavy equipment and favoring weaponry similar to that used by the rebels.  With his troops superior training and advantages in superior light equipment such as mortars this should prove sufficient for him to score incremental gains against the rebels for some time.  Most likely, this will be used as a bargaining chip to gain a better settlement for himself and those loyal to him.  Alternately, he may seek to grind down the rebels and to provide few targets for airstrikes for a time, relying on friendly fire casualties like that reported on recently (NY Times) to reduce the rebel's reliance on those, and save his armor and mobile artillery for a final attempt at a blitz.  Given this already failed once in Benghazi I feel this is fairly unlikely, but given someone as reckless as Qaddafi I wouldn't regard it as impossible.  Especially if he feels there is no avoiding the ICC or capture by the rebels.