Thursday, January 27, 2011

Why is the New York Times so silent?

Where is the New York Times when it comes to the testimony regarding Obamacare that was heard yesterday in Congress?

The Story

Associated Press reports that Medicare's "indepedent economic expert," Chief Actuary Richard Foster was testifying before Congress yesterday. He was asked about two of the major selling points that Obama has attached to his health care regulations. Obama has repeatedly told the public that his measures would reduce health care costs and that people would be able to keep the insurance they have. Critics, including this blog, have said that neither of those points are true. They are selling points, political campaigning points, etc., but they are not accurate.

Asked if he could give true or false assessments to these claims the government's own expert said that regarding costs, "I would say false, more so than true." In other words, the health care reforms will actually push up health care costs, not reduce them. As for keeping their own insurance, he said that is "not true in all cases." It certainly isn't. But to be fair no one said that everyone would lose insurance they like. Over time more and more will but certainly in the short term it will be limited numbers. What will happens is that insurance options will be reduced on a regular basis and you will face a dwindling pool of options, making it harder and harder to find one that fits your needs the best. Government is notorious at believing in one-size-fits-all" theories. It does with education, social security, welfare benefits, etc. It really has to since government is like a lumbering dinosaur moving about in a small space, it can't make individual exceptions because it wouldn't be able to move fast enough to make decisions. They would accumulate and backlog the system. So, everyone is forced into tiny boxes.

When You're Good to Mama, Mama's Good to You

The problems with the tiny boxes is that they are designed by special interest groups that most directly benefit by changes in the system. If the pharmaceutical lobby wants to push certain types of drugs, over others, they lobby for coverage for those drugs while others, which may be cheaper, are ignored. Consider the expansion of medicare that Big PhRMA pushed during the Bush administration.

Take an opportunist politician like Billy Tauzin as an example. Tauzin had been a Congressman from Louisiana for years, as a Democrat. When the relgiously-motivated Southerners decided to use Big Government to regulate morality more the South went Republican. So did Tauzin who quickly switched political parties so he could stay in office. Tauzin was a major player in Congress on pushing through the Medicare drug expansion and was co-sponsor of the bill. Before his term in office was finished, but after the "reforms" were law, Tauzin announced his resignation from the House, where his salary was $174,000 per year. He already had a new job lined up with PhRMA which would pay him $2.5 million per year. As USA Today reported at the time, Tauzin, "stepped down earlier this year as chairman of the House committee that regulates the pharmaceutical industry, [and] will become the new president and CEO of the drug industry's top lobbying group."

Tauzin had survived cancer and was recovering when he made the announcement. He said: "The question is what I wanted to do with the new life God had given me. This is the mission I want to take on." I'm thrilled to know that Jehovah—God of the universe —is concerned about lobbying for the pharmaceutical industry.

This illustrates a key fallacy in progressive thinking. Progressives are right on many, many things. They generally want the right results but they simply don't know how to get there and are blind to the institutional failures of big government. They demanded lots of regulations on the pharmaceutical industry and political oversight of the industry. They got it. Then it turns out that the head of the committee, who had been both a Democrat and a Republican, was so much in the pocket of the industry that they rewarded him with a $2.5 million per year position. Tauzin worked for them for five years and then retired with a cushy nest-egg not counting the pension he'll collect from Congress for all his valiant efforts at regulating Big PhRMA.

The sad reality is that the regulatory state almost always ends up in the hands of the people it was set up to regulate. There is a species of businessmen who long ago discovered that they can increase profits more through manipulating the political process, and skewing markets, than they can do in markets that are not open to political manipulation. Right at the birth of the Progressive Era, when these regulations were created, this sort of manipulation was taking place. Big Business was a major funder of efforts to regulate Big Business, because they knew they would effectively write the regulations.

Why Big Business Promotes the Regulatory State

Left-wing historian Gabriel Kolko did an exhaustive study of the origins of the regulatory state in America and says most people view the period as if it were a mirror image of itself. For instance, "it was not the existence of monopoly that caused the federal government to intervene in the economy, but the lack of it." He wrote: "It is business control over politics (and by 'business' I mean the major economic interests) rather than political regulation of the economy that is the significant phenomenon of the Progressive Era." The reason for that is not hard to understand, "regulation itself was invariably controlled by leaders of the regulated industry, and directed toward ends they deemed acceptable or desirable. In part this came about because the regulatory movements were usually initiated by the dominant business to be regulated."

My guess is that Obamacare will end up dominated by a few big insurance companies who will continue to tweak the system to shut out smaller competition. While the insurance industry appears competitive it is largely illusionary in that, in regards to health insurance, individuals are forbidden to buy from out-of-state insurers, which dramatically limits the options given the consumer. Limiting options is what the insurance industry has demanded and what the politicians want. Sure, the industry will scream and holler during the forging of the regulatory chains but that is to help guarantee the chains will quite profitable for themselves while restricting the movement on smaller competitors. Regulation, in reality, leads to de facto cartelization, which is why I support depoliticized markets instead.

Foster said that around 7 million Medicare recipients who are in private "Medicare Advantage" programs, will have to find other coverage because the new policies will raise premiums and causes some insurers to drop coverage completely.

So Where is the New York Times?

This is a major story in regards to Obamacare, so precisely who is covering it? We had the Associated Press report, which means it went out on the wires to the major media outlets of the country, yesterday. A conservative columnist at the Washington Post blogged about it. The Tucson Citizen didn't actually report on it, but they did link to a blog talking about it on their own blog. The Boston Globe did run a truncated version of the AP story. However, the story was not run in the main news section, or even under the politics section. It was isolated in the "Home/Lifestyle/Health" section instead.

The so-called "newspaper of record," the New York Times doesn't appear to have anything about the story. An on-line search, at their own website, indicates that "Richard Foster" has not been mentioned by the paper in the last 30 days. The Associated Press story was yesterday so clearly they decided NOT to report to the public that two major talking points of Obamacare were wrong. The Los Angeles Times ran the AP story saying: "The landmark legislation probably won't hold costs down, and it won't let everybody keep their current health insurance if they like it." So did the San Francisco Chronicle, The Chicago Tribune, and The Miami Herald. But no matter what search terms I use, the New York Times site shows nothing about this important testimony.

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