Who Is Responsible for al-Qaeda's Attack?

The recent attempted terrorist attack on a Detroit-bound flight has served as ample fodder for attacks on the Obama administration and the TSA. While there are grounds for criticism, the knee-jerk reaction to begin the blame-game, alongside the TSA’s predictable reactionary response, needs to be evaluated in a more rational light.

Without going too far out on a limb, the administration does need some defending. Critics on the right, and even the left, have been lambasting the administration’s snafu. Bloggers, such as Karl DeVries at The Bootleg Press, have (tentatively) called for Secretary of Homeland Security Janet Napolitano’s sacking. Other critics  have demanded explanations for why the terrorist, Umar Farouk Abdulmutallab, was not on the no-fly list.

The problem is that in American political culture, the impetuous urge to find a scapegoat ubiquitously overrides true insight into a potential (or actual) disaster. When dealing with issues like security, particularly when threats come from disparate sources, there is always some probability that the ‘bad’ event will occur. No matter how secure a system is, it will never be foolproof.  If a system is 99.99% perfect it means that 1 in 10,000 times the law of averages dictates that the bad guy will get through.  This is especially true when having to weigh tradeoffs between security and issues such as efficiency and personal liberty. An extremely cumbersome yet vastly more secure process could be designed (Maybe have everyone disrobe, wear TSA issued jumpsuits, and be forbidden to have any personal effects on planes); however, the costs in terms of money, time, and personal freedoms would most likely outweigh the added security.  For instance, it is absurd to demand that a single phone call from an individual’s father should warrant inclusion on a no-fly list. Such a precedent would overburden the system with meaningless names added to the list. [And, it might prompt fathers of rebellious teenagers across the globe to literally ‘ground’ their children.]  Furthermore, such an inane system would still fail to be foolproof as some committed terrorist would inevitably find a way to beat it.

Likewise, the TSA has clamped down on security in the most arbitrary and ineffectual way.  For instance pilots are now allowed (and have) to prevent passengers from keeping anything in their laps during the last hour of flight.  It is not clear how keeping a Grandma from the Midwest from reading her copy of Going Rogue during the last hour of flight, is going to stop the next Abdulmutallab from blowing up a plane one and half hours before arrival.

The problem is not the current system, per se.  Potential terrorists will inevitably find new and ingenious ways to breach our systems in the never ending game of cat and mouse. We should continue to monitor their methods and tactics and respond by altering our strategies.  However, the unavoidable infiltration does not necessarily mean the system has failed.  What it means is that the laws of probability have finally caught up to us.  Instead of rashly throwing the baby out with the bathwater, mistakes like this need to be studied, understood, and used to incrementally alter the system. The costs of proposed changes need to be carefully understood and weighed against the perceived benefits.

More importantly, we have to dampen our urge to see heads roll. The fact is that the TSA is our defensive force. They will never be the ones to win this war for America. Their successes will be largely unheralded, while their failures painfully public. If every time a mishap occurs we reflexively burden ourselves with arbitrary restrictions and decapitate our leadership, we only raise the costs to the American people without actually addressing the source of the problem.

The real war is in the offense; America needs to stop these young, disillusioned men from becoming Allah’s warriors. The failed foreign policy that has yet to reap the grandiloquently stated rewards is where the Obama administration deserves its criticism.  Regardless of who is on duty – whether Napolitano or her successor, Obama or the Republican President that follows him – no American airline will be one-hundred percent safe when there are still young Muslim’s willing to take their own lives to satiate their hatred of the West. The culture of scapegoating is futile. Let’s focus on the real problems.

Where is Voltaire: Leave Lieberman Alone

Senator Joseph Lieberman (I-Conn.) could not be less popular amongst the Democrats. For obstinately refusing to buy into an irredeemable Democratic healthcare package, Sen. Lieberman has been lambasted by both Democratic leaders and their sycophantic leftist foot soldiers. Lieberman expresses real, genuine concern with the current proposals – specifically the public option and an expansion of Medicare. His refusal to blindly jump on board the faltering plan has earned him much reprobation from his own (former) party.

The attacks, although nothing new, have been, at times, quite vitriolic. A quick survey of the blogosphere yields a steady stream of angry tirades against the Senator. However, this juvenile behavior reaches all the way to the halls of Congress. Recently, Congresswoman Rosa DeLauro (D-Conn.) called for Lieberman’s recall. The inanity of her remarks is palpable.  She most certainly knows that there is no way to recall a Senator.  Instead her ridiculous rant displays a deep-seated group-think mentality. Democrats have called for stripping Lieberman of his chairmanships and other punitive measures. For the current Democratic majority, any dissent is castigated and punishable by banishment [And no, I do not think the Democrats are unique in this anti-intellectualism].

The attacks have not been limited to Lieberman, but also have been directed at his wife, Hadassah.  Liberal bloggers have assailed Mrs. Lieberman, demanding action be taken against her involvement in the Susan G. Komen for the Cure breast cancer charity. This is a disgusting display of political abuse. Why has it become acceptable in America to molest a leader and his family, because of his political differences? Where is Voltaire when he is needed?

Democrats are understandably upset with Lieberman. They need his vote to pass the socialized healthcare package that many on the far Left are salivating over. His refusal has all but eliminated the possibility of such a bill passing. Their quest to force a bill through at all costs has driven many of this bill’s supporters to trample the very democratic principles that supposedly underpin our political system.

Lieberman should be commended; certainly by those on the right who oppose this plan, but more importantly by those on the left who value politicians who think for themselves and vote, not on party lines, but for what they believe is right. Contrary to what many on the Left claim, Lieberman acknowledges that healthcare needs reform; however, he will not be browbeaten into supporting a plan that will do more harm than good, just to appease the political establishment. Once again, Lieberman has shown that he is not, as so many politicians are, a mindless fool, but an upstanding politician who is a true leader.  Lieberman stated:

But like each of them, I had to do what I thought was right… I didn’t run for reelection — and no one here did — asking the voters of my state to vote for me because I would always do what a majority of members of the caucus did, even if I thought some of those things were wrong. None of us would pledge that to our constituents.

It is sad that the best and brightest are often disparaged for refusing to toe the line. In a nation where anti-intellectual populists run rampant, leaders such as Lieberman are a true breath of fresh air. It takes real fortitude to continuously stand against one’s party (or caucus) for what one believes in. Many politicians seemingly cannot handle such dissent, and revert to childish attacks rather than logic and reason. What a sad state of affairs.

The Right Medicine for Healthcare - Part IV: Get 'Em the Money

A final necessary step in healthcare reform is to devise and enable new forms of healthcare financing. Health insurance is not a health-related but a financial issue. Generally speaking, the quality of healthcare in America is quite good. Although there are certainly instances where it could be more efficiently provided, few Americans question the available technological level of American health services or the requisite knowledge and skill of American doctors.

Under the American model, personal financial decisions are left to the individual (or family) to manage. While some base level social-safety nets are provided by the government, the majority of an individual’s financial decisions are left to one’s own planning. Individuals are responsible for saving and spending within their means, as well as preparing for their futures.

Insurance is one model that allows people to remove the financial risk of large, unforeseen circumstances. This is why millions of Americans purchase a wide range of insurance products – from auto, to natural disaster, to life. All of these are financial decisions based on an individual’s relative probability of some event happening, the perceived cost, and ability to pay. In any rational model, insurance should only be purchased if the math indicates that it is financially cheaper.

Health insurance should be no different. It should be one tool, out of many, that Americans can choose to rely upon if financially sensible. A number of new, financial tools should be developed to facilitate an individual’s access to affordable healthcare. All of these can and should be established in the private markets.

One of the current problems with health care provision is nonpaying emergency room patrons. This has sparked calls for a legislative individual mandate, where all Americans are required to purchase healthcare. The mandate, while undoubtedly unconstitutional, is a gross misappropriation of government power. Not only does it invade on the fundamental liberties of American citizens, but it drastically distorts the market. It forces individuals to make unwise financial decisions.

Without a mandate, proponents argue that hospitals have to unjustly bear the cost of these freeloading individuals. Ultimately, these costs get passed on to consumers via higher hospital bills and insurance premiums. This is undeniably a correct assessment of the current system; however, the mandate does little to allocate the costs of health to the appropriate recipient.

This is precisely where new financial instruments can alleviate some healthcare cost issues. Arguably, every individual (except for maybe the most indigent) should be responsible for paying for their own healthcare. This is particularly true for those who, under the current system, can afford health insurance but for personal reasons decide not to purchase any. If some do not buy private health insurance, due to poverty or personal decision, the burden of their health care should not fall on those who made the financially astute decision to invest in insurance.

However, under the current system there are few, if any, methods for those who gambled and lost to pay for expensive procedures. Providing new methods would not only benefit willing financiers (and the economy) but those who decide to opt out of the health insurance path.

First of all, private hospitals need to have greater say in how their emergency rooms treat patients. Within limits, private hospitals should be able to refuse care to individuals who cannot pay. [For instance, I don’t necessarily think hospitals should be able to refuse care if such refusal would lead to imminent death.] Hospitals should have the ability to decide whether they will open their doors to everyone and eat the costs or refuse care to the non-paying. From the hospital’s perspective there would be a tradeoff between cost savings and image. Like many environmentalists who pay a premium to ‘save the environment’, some individuals may feel comfortable paying higher prices to use the services of hospitals that cater to the common good.

Much of this tradeoff, however, could be erased with new financial mechanisms. Hospitals, for instance, should be encouraged to accept credit cards in lieu of health insurance [imagine the frequent flier miles!]. Likewise, hospitals could establish on-site financing departments that provide emergency care funding. Such funding could come in the forms of loans – like mortgage loans – that allow individuals to pay their hospital bills with interest over time.

This would enable individuals to take personal responsibility for their health care and prevent freeloaders from weighing down the rest of the system. It would allow individuals to design financially responsible systems for providing for their own health care. People would be able to choose what the most sensible way of covering potential expenditures, given their health and ability to pay. For instance, young, healthy individuals who want to save or invest extra disposable income could purchase minimalist health insurance policies given the low probability of needing coverage. They would be able to supplement this risky decision with on-site funding in the rare case of disaster.

Naturally, such credit related solutions could have significant impacts on individual’s debt situations. Bankruptcy laws would need to be reworked in order to make financing opportunities appealable to lenders. Alternatively, payment systems can be designed that move away from the fee-for-service model. For instance, rather than purchasing health insurance individuals could buy access to unlimited care at specific full-service facilities. Monthly membership dues – like a gym membership – would give individuals access to healthcare whether they use every specialist or just an internist.

While such proposals will not be a complete panacea, they will help to alleviate some of the issues. More importantly they may encourage people to be more proactive in planning and managing their health and finances. Ultimately, the goal is for each American to be able to pay for and afford healthcare, not necessarily health insurance.

The Right Medicine For Healthcare - Part III: Lower the Costs

The second needed step to reform healthcare is to directly assault certain aspects of the current system that cause excessively high costs. In particular, tort reform, medical record digitization, and realigned incentives are stepping stones that will help alter the healthcare landscape.

Tort reform is one of the most widely discussed and easily implemented solutions. The current legal system leaves doctors overly exposed to frivolous lawsuits and often gargantuan penalties. Many of these litigations go after doctors who made innocent mistakes or procedures where bad results were simply the result of probability. After all, medicine is innately subject to human error. While doctors should certainly be held accountable for gross negligence or irresponsibility, America’s overly litigious society has gone too far with malpractice suits. Lawyers looking for a quick settlement and some spare pocket change are aided by a compliant system in squeezing money out of generally well-meaning doctors.

This has indubitably led to an increase in defensive medicine and higher malpractice insurance costs. Defensive medicine – when doctors perform or require unnecessary procedures in order to protect themselves from litigation – is both expensive and potentially harmful to patients. Likewise, malpractice insurance is extremely burdensome to doctors. Together, these cause patients, both directly and indirectly, to have increased medical expenditures.

Tort reform is a relatively easy fix. According to The Washington Post, such reform would save anywhere from $100 to $200 billion. Litigation can be made more difficult, laws can be more narrowly defined to prevent abuse, and losers could be forced to pay opposing attorney fees. Penalties can also be applied to litigants who bring frivolous lawsuits. By restricting litigation to the truly deserving instances, doctors would be freer to practice safe and cost effective medicine (and even try high-risk procedures that might help some patients).

The second aspect to tackle is the digitization of records. Currently, according to CNN, the lack of digitized records costs the industry some $200 to $300 billion a year. While converting to a completely digital system will have implementation costs, in the long-run it is a clear cut necessity. Currently, the time spent by doctors and support staff in reviewing and transmitting paper documents is completely inefficient.

Not only would digitization impact overhead costs but it would have at least two direct health related impacts. First, it would enable a patient’s doctor to more closely monitor the patient’s health. It would facilitate communication between different doctors and potentially prevent life-threatening mistakes, such as conflicting medications. With digitization a doctor would immediately have a patient’s full medical history, thereby allowing better and more accurate diagnoses. This would not only directly improve the quality of healthcare but would lessen the cost.

Likewise, digitization would supply researchers with a vast wealth of information. With the proper privacy controls in place, such information could help researchers develop new procedures, medicines, and techniques. It would also allow potentially harmful cross reactions between medications and harmful procedures to be rapidly flagged and removed from the doctor’s toolbox. Ultimately, this would allow doctors the needed insight to refine their craft and focus on the most effective and helpful remedies.

The final, and by far the most challenging, aspect is to realign doctors’ incentives. Presently, the fee-for-payment system incentivizes doctors to perform repetitive and often useless procedures. With each test doctors receive more money in their pockets. A payment system needs to be developed that induces doctors to only run tests that are beneficial to a patient.

Harmonizing the incentives for a doctor to perform at his best with disincentives to go overboard is extremely difficult. However, some models already show promise. Institutions, such as the Mayo Clinic, are not only successfully but highly admired. Payment systems that are based on access to an institution’s resources, rather than per procedure can limit unnecessary expenditures. Alternatively, diagnoses can be detached from the testing and curing of illness. For instance, individuals could have one doctor, a so-called coordinator, who would evaluate a patient’s issues and then prescribe certain procedures or tests in which he has no financial interest. The tests and procedures would then be performed by other doctors on a fee-for-service basis. Naturally, legal regulations would have to be made to prevent procedure-doctors from unfairly influencing coordinator-doctors (as many pharmaceutical companies do today).

These three aspects are important steps that need to be addressed in any healthcare reform. While certainly only a start, they deserve far more focus than they currently receive. A solidly reformed system will only be successful by tackling the underlying costs of healthcare in America.

The discussion continues with Part IV: Get 'Em the Money.

The Right Medicine for Healthcare – Part II: A More Competitive Market

Any successful healthcare reform needs to formulate a more competitive health insurance market. A more competitive market will drastically alter the cost structure for health insurance. In order to remain in business, insurance companies in a competitive market will need to drive costs downward. A multitude of new insurance products will be offered which will provide consumers with an array of choices with varying levels of amenity and price. There are at least three ways in which the markets can be made more competitive.

The first, and easiest, step would be to allow insurance companies to compete across state lines. The current, useless restrictions only serve to drive costs upwards. By allowing cross-border competition, the number of insurance providers available to any one individual will immediately increase. Companies will then have to compete with more market participants in order to capture a sufficient segment of the now larger pool of potential clients. This will force insurance providers to develop new types of insurance products and cut their own costs to improve margins.

The second step would be to end the employer-based system of the provision of health insurance. Many Americans currently get their health insurance as a fringe benefit from their employer. However, there are a number of problems with this method of provision. First, those that cannot get insurance through their employer often have to pay exorbitant fees in the private market. Second, health insurance is contingent on employment. When an individual loses his or her job, it becomes a double hit with the elimination (or increased cost) of health insurance. Third, employer provision necessarily limits an individual’s options. Most companies only offer three or four options – all generally from the same insurance company. The individual has little say in terms of picking an option that suits his or her financial and medical needs. Insurance companies therefore only need to offer plans that appeal to a few Human Resource managers, and do not need to offer specialized coverage for unique requirements.

All of these issues can be resolved if individuals or families obtained health insurance on the free market. Like auto, homeowner, or other forms of insurance, health insurance should be an individual’s personal decision. If insurance companies competed for individual policyholders, rather than for corporate HR managers, they would be forced to diversify products to meet individual needs. Insurance policies that ran the gamut from expensive with maximum coverage to limited cost and coverage would be widely available for individual purchase. This would help lower costs as individuals would self-segregate into policies that better meet their needs and budgets [for instance why does a single man need health coverage for an OB/GYN?]. Likewise, entrepreneurial insurance providers will be able to successfully target niche markets that formerly went uncovered.

The end of the employer-based system can be easily achieved through simple legislation. A law that requires employers who provide health insurance to offer an employee opt-out clause would allow individual employees to select their form of compensation. If the individual chose not to receive his employer’s health insurance policy, he would receive the money which the employer would have spent on health insurance. The employee could then turn to the private market to purchase his own policy.

This coincides with the third step: ending tax exemptions for employers. This will further facilitate the transfer from an employer-based system to a free-market system. Not only will this end the incentives for employers to provide insurance, but it will also increase revenues (or allow tax cuts) for the government. Employees will naturally receive higher salaries as their compensation switches from a fringe benefit to direct pay.

All of these steps will facilitate a more competitive environment. Insurance companies will need to compete with a larger number of competitors and for a larger number of potential customers. This will help force costs downward, as only the most efficient and cost-effective insurance companies will be able to survive. Consumers will be offered a wider array of choices, with varying degrees of price and services. Customers will therefore be better able to afford, at least, minimal coverage. A increase in competitiveness would drastically alter the health insurance landscape and promote free-market reform.

The discussion continues with Part III: Lower the Costs.

The Right Medicine for Healthcare – Part I

With the Senate now beginning debate on a healthcare bill, it is time to step back and really think about where America could end up. The bills – and ideas – that are prevalent in Congress are devoid of commonsense. Under the current system of thinking, any bill, such as the current one on the Senate floor will be disastrous.

No one disagrees with the fact that American healthcare is in desperate need of reform. However, the current proposals do not offer good solutions. They attempt to patch a broken system without understanding what is not working. Like a charlatan doctor peddling a homemade cough syrup, they offer the wrong medicine.

The essential problem with America’s healthcare system is cost. Some may frame it in terms of accessibility – too many people do not have health insurance. However, accessibility is, in essence, an issue of cost. People that want, but do not have, insurance are precluded due to prohibitive prices. However, the present top-down approaches advocated by Congress do not address the fundamental cost issues. Instead, they attempt to make healthcare “more-affordable” by redistributing costs between different parties - whether taxpayers, the young, insurance companies, the poor, etc.

Not only is this a divisive and politically-charged (as we all know) approach, but it ultimately will fail to make substantial, lasting change. For instance, if insurance companies are simply forced to ignore pre-existing conditions, they will need to find ways to pay for these more expensive patients. This means either increasing premiums for everyone or lowering services across the board. In essence the current Congressional proposals create a zero-sum game, with clearly defined winners and losers.

What needs to be done is to develop a solid system of proposals that counter the inanity in Congress. America needs a reform that fixes the system and benefits all. The fundamentals of any successful reform rely on the mechanisms of the free market to create a cost efficient system. As Soviet Russia has shown us, centrally planned economies end in dismal failures. Regulatory bodies that determine maximum prices, public-options, individual mandates, and outrageous restrictions on private enterprise will not solve the problem, but exacerbate it.

Over the next few articles I will try to outline a few points that may serve as a rough skeleton for some detailed reform. In particular, (1) greater competition needs to be created between insurance companies by ending the employer based system, (2) medical costs need to be driven downward through tort reform, digitization of records, and realigning incentives, and (3) new financial instruments should be established to cover emergency room visits of the uninsured.

Ultimately, healthcare is a financial not a health-related issue. Insurance is one tool to make healthcare affordable. However, it is not the only, nor always the best way, to pay for healthcare costs. The desirability of health insurance is, and should be, an individual’s decision, based on relative risk and one’s financial situation. By failing to acknowledge and address these issues, Congress is suppressing true reform that could have a lasting impact on America’s future. The government should serve as an impartial referee, not a troublesome participant, in the realm of healthcare.

The discussion continues with Part II: A More Competitive Market.