Economy Department with Ezra Klein

Economy Department with Ezra Klein

Ezra Klein
Washington Post Business Blogger
Thursday, July 16, 2009; 12:00 PM

Ezra Klein writes a Post blog about economic and domestic policy, and he was online Thursday, July 16 at noon ET to take your questions about collapsing banks, cap and trade, health care reform and pretty much anything else you can attach a chart to.


Ezra Klein: I was going to say good morning, but it's no longer the morning. There's some inexpressibly sad about that. Proust could tell you more.


Washington, D.C.: Does the recent party-line vote in the Senate committee on the healthcare bill significantly jeopardize its chances of passing the entire Senate? Will the bill's failure to attract any Republican support open Democrats up to criticisms that they are not being bipartisan enough, and is this likely to make conservative Democrats like Ben Nelson, Mary Landrieu, or Blanche Lincoln vote against the bill? Or does it not matter, because Republican obstructionism is what was expected all along?

Ezra Klein: There was a hope that Republicans would not obstruct. But hope is not a plan. That's why Democrats preserved the option for reconciliation in the budget. This was always the likeliest outcome, and if Democrats weren't prepared for a world in which they had to rely primarily on their caucus, then they started this whole process believing in a fantasy.

As for what the conservative Democrats do, the only thing that matters is that they vote against the filibuster. Assuming Byrd and Kennedy can be wheeled in on gurneys to cast their votes for cloture, it would be perfectly fine for 60 Democrats to break the filibuster and 56 of them vote to pass the bill.


Clifton, Va.: Maybe you can explain it to me. I am federal employee. How does health-care reform benefit me? All I see is my costs going up, the quality down and the cost of everything else I buy going up because of the increased costs of health care. Sorry I don't care about the 45 million Americans without health insurance and I sure don't care about 11 million illegal immigrants without health insurance.

I made sacrifices for my health insurance. Screw anyone who doesn't have health insurance.

Ezra Klein: What exactly was your sacrifice? Being born in America? Getting a job so you didn't starve? Letting FDR subsidize your employer-based insurance by accident when he was trying to prevent war profiteering during World War II?

Sorry. Not buying it. The 11 million illegal immigrants will probably be left out of health-care reform entirely, but is your contention really that you've sacrificed more to give a good life to your family than they have? Nor is there any evidence your costs will go up -- you're a federal employee, so I doubt you make more than $350,000 a year -- or that your quality will go down (will your doctor become dyslexic? what's the mechanism here?).

This is the problem with health care being a benefit rather than a guarantee. The question isn't who "deserves" access to a doctor when they fall ill, or need to check on a child's racing fever. A government employee who lives in Virginia should have health coverage. And so should a bricklayer who lives in California. This is how other countries do it, and they get higher quality care at lower costs than the median American. We should follow their example.


Washington, DC: What's with the glasses on MSNBC today?

Ezra Klein: I wear glasses.


Arlington, Va.: I haven't heard if the Obama administration is going to give AIG the green light on the bonuses. They don't have to do anything and AIG is on extremely firm legal ground. There doesn't seem to be an easy way out for the administration on this, does there?

Ezra Klein: Nope. I imagine AIG will get those bonuses. They don't actually need the green light from the government. They just don't want to be hit for doing it without warning.


New York, NY: What, in your mind, would prevent the healthcare market from fading out and a single-payer system from emerging if the public plan gets passed? And if a single-payer system does emerge down the road, how can you reconcile the loss of incentive for pharmaceutical companies to invest in R & D that would inevitably correlate with a system that allows them little to no profit?

Ezra Klein: Two questions here. On the first, I think you've got it backwards: What would trigger the private market to fade out? We have public plans in many states. They haven't taken over. We have Medicaid. It hasn't taken over. We have public universities. They haven't taken over. We have the National Institute of Health. It hasn't taken over.

Second, why would the government allow them no profit? I don't love this example because I think defense spending is rife with waste, but we do have an essentially single-payer defense system. It hasn't ended profits for defense manufacturers.


Washington, DC: What's for lunch today? We're heading to Luigi's in Dupont Circle. I love their pizza! Alas, will miss your chat as a result.

Ezra Klein: It's a good question. I'm hoping to go to Palena for dinner tonight. I don't eat much meat, but all I can think of right now is their roast chicken. Mmmm...roast chicken....


Chapel Hill, NC: You wrote that people spend money of health care out of guilt. Does that imply the government should restrict the growth of health technology, as it just produces more services that people will feel guilty about not wanting to buy?

Ezra Klein: Not necessarily. We do spend money out of guilt. But we also spend money on things that work. You don't want to end one as you try to reduce the other. That's why government should spend a lot of money on comparative effectiveness review to figure out what works and what doesn't.


Palo Alto, Calif.: Ezra, could you talk about the comments that Mike Ross (D?-AR) made today, essentially threatening to have the blue dogs vote with republicans to bottle up health care in committee? Are there procedural moves or carrots/sticks that Pelosi can use to influence the blue dogs, rather than caving in on important parts of the plan? Thanks!

Ezra Klein: I'd take that as bluster. What Ross is saying is that he has the votes to demand compromises. And I'm sure he does. But he doesn't have the votes to make the Speaker of the House and the Chairman of the Energy and Commerce Committee dedicate their lives to destroying him and his friends. What you'll see, I'd imagine, are negotiations, in which Blue Dogs get some things they want and eventually decide to vote for the bill, or at least avoid standing in its way.


Arlington, Va.: Ezra: What's your take on the best way to finance health reform? Are you okay with the House's plan for a surcharge on the wealthy, or do you prefer taxing health benefits? (I'm a Federal employee and hence have the government subsidized plan. I personally can accept either of these two alternatives, or anything else, if necessary for effective reform.)

Ezra Klein: I prefer taxing health benefits and moving people to a non-employer based system. But I'm not sure that my preference is viable both in terms of congressional votes or public support. Given that, I have no particular problem with a surtax. Health care, as it's being discussed, is substantially redistribution, and I'm down for paying for that progressively. I don't think the middle class sees what they're going to get out of this and so I don't think they

re prepared to pay much for it.


Washington, D.C: I'm particulary amused by the idea of Boehner's health care chart. If you wanted the system that was least complicated on a flow chart, you would have socialized medicine! The chart would have the government on top with arrows to doctors in the middle and to people on the bottom, with an arrow of tax dollars flowing from people to the government. Of course only a few of those people would be paying most of that money, while everyone would be benefiting. On paper, especially boiled down to a flow chart, socialism looks like the best bet!

Ezra Klein: Yep. Incidentally, I really like the term "flowchart socialists." I just need to figure out a way to work it into something.


Philadelphia: You might not have an answer to this question but I figure you talk to plenty of economic policy wonks down there so who knows- Some of the bearish economists on the left like Krugman and Stiglitz are very pessimistic it seems because they appear to think that the Obama Administration is missing the gravity of the economic problem or is just not willing to go to Congress and the public and demand the remedies that are required. Do you agree with this?

I have such a hard time believing that Barack Obama and his advisers drink the neo-liberal Kool Aid and don't see the need to look for other models of the economy. When Obama says we don't need another stimulus, that sounds to me like he is confident as to where things are going and has some basis for that confidence.

Also, I wonder if there was a need for more stimulus, if he could frame it as going back to Congress to get what he asked for the first time but was denied, i.e. this isn't another stimulus, it's just what I asked you for months ago but you didn't give me and you were the ones who were wrong.

Am I the one drinking the Kool Aid? Thanks.

Ezra Klein: It's a bit of both. The Obama administration is pessimistic, I think, on their ability to get another stimulus plan through Congress, and that's leading them to understate the degree to which such a policy might prove necessary. But a lot of observers think that wait and see is the best attitude. I, however, would prefer wait-and-plan. If we need to pass another stimulus in October, it would be good to start thinking about how it should look in July. Not being rushed is a good thing.


New York, N.Y.: Hi Ezra, I've noticed a lot of Republican talking points about the deficit go after the big three of "stimulus, health care, and cap-and-trade." But health care is going to be fully funded so it shouldn't increase the deficit and cap-and-trade should actually increase government revenue, or at worst be deficit-neutral. How come Democrats/the media let Republicans get away with conflating these with the deficit? Especially cap-and-trade, that should be obvious, it can't be both a giant energy tax and explode the deficit.

Ezra Klein: The administration would tell you that they don't let people get away with it. They argue and put out press releases. But they can't jail anyone who attacks their plans. And the media doesn't do a good job calling people out for lying, or being ignorant. And so here we are. It's a bit depressing.


Arlington, Va.: No tax hike? Really? You surely can't believe that only those making $350K (4175K single?) are the only ones who're going to see their tax bill go up.

First, there isn't an unlimited amount of health care out there and adding more people to the mix by definition makes costs go up; when that happens they're going to have to go back to the well for more tax money.

Second, see how they're running Medicare, Medicaid and Social Security; any savings, cost reductions, benefits of scale there? They're running out of money and so will health care when the government runs it.

Just name one thing the government runs that it does so efficiently, effectively and in a cost-efficient manner?

Ezra Klein: Actually, I can believe that. Changing the tax code requires amendments to the Internal Revenue Code of 1986. It's Title IV of the Act. You can download it. And read it. Changing it would require new legislation, which we could argue about then. But it couldn't happen automatically. And no one is sneaking anything in here.

Second, all those programs have huge savings, cost reductions, and benefits of scale. Social Security is wildly efficient. Medicaid has negotiated tremendously deep discounts with providers -- so deep, in fact, that they probably need to raise reimbursement. Medicare has held cost growth below that of private insurance. All of them have massive benefits of scale, which are instantly evident in their administrative costs (about 6 percent for Medicare, and about 30 percent for insurers on the individual market).


Chicago: Is there follow-on legislation for health care you can imagine happening if Obama gets a second term? Other than passing again to deal with reconciliation.

Ezra Klein: It's a good question. I could imagine it happening, but there aren't any plans for it. health-care reform, however, really needs to be thought of as a process. This bill might make things better. But it won't solve all our problems. And I do worry about it being sold as the Big Bang of health-care reform.


Battle Creek, Mich.: Hi Ezra,

Love your blog and your nutrition/obesity/wellness commentary. I was wondering what you thought of cutting the cost of health insurance premiums for people who lead healthy lifestyles, specifically those who are not obese. Would that ever work in America, and what effect could it have on the country's obesity epidemic? Thanks!

Ezra Klein: It's hard to do, I think. How do you administer it? How do you check that people are going to the gym? That they aren't smoking? Employers sometimes do that stuff, but that's about the only place I've seen it. And a lot of people who aren't obese have other bad habits (heavy drinking, say, or heroin). So though it makes a lot of intuitive sense, I think it's ground worth steering clear of.


Chicago: a socialist flowchart.

Ezra Klein: Ha!


Seattle: What's the best thing we, as average Americans, can do to get meaningful health reform passed? I've heard a lot of different things from a lot of different people. What's your opinion?

Ezra Klein: Hard to say. Call your congresscritter. Show up at Townhalls. Volunteer for groups you agree with.


Washington, D.C.: You say - regardless of job, location, age, etc. - we all "should" have access to health care, citing other countries' example. I don't disagree, but would love to hear your argument: Moral imperative, inherent right...Ezra's instincts?

Ezra Klein: To ignore part of this question but make a related point, this is a judgment our society has already made. It is law -- with some non-relevant caveats -- that emergency rooms have to treat anyone who stumbles through their doors. Law. We have, in other words, codified access to emergency services. The question is why we haven't codified access to the basic services that could make emergency services less necessary.

One of the interesting aspects of health-care reform is that a lot of the moral principles are already enshrined in statute. We just carry them out illogically -- in ways that don't give us much value for our dollar and that don't give the people we are helping sufficient help. The fight, right now, is to make our policy fit more neatly with the ostensible principles underlying it.


Washington, D.C.: Hey Ezra I notice you are reading "Methland." I've read the reviews and it looks good. Any thoughts?

Ezra Klein: Just began. Looks okay, but the Amazon reviews suggest that the small town at the center of it has changed so drastically in the last two years that the book isn't true any longer. But I imagine it will still be an interesting look at how this stuff happens.


Seattle: Why do you think there are so many morons in Congress?

Ezra Klein: It's really hard to say. I'll never forget Rep. Jim Cooper -- a guy many people disagree with, but no dummie -- telling me that he consistently has to correct his colleagues when they mix up Medicare and Medicaid -- and I don't mean mix-up as in misspeak. Mix-up as in don't understand.

I later asked another smart congressman about this story. He laughed. "I have to do the same thing all the time," he said.


Fat People: 1. Is it true that getting people to lose weight would save money? After all, while we might spend less per day on them, they would be around longer and still have those big end of life expenses.

2. Aren't the Australians about as overweight as we are, but don't we spend twice as much per person for worse outcomes?

Ezra Klein: Yeah, it's true for this reason: We're getting very good at keeping sick people alive. You can now live with diabetes for a long, long time. And living with diabetes from age 52 to 74 is a lot pricier than living healthy and dying from a stroke at 86.


Rockville, MD: Ezra,

Thanks for taking my question- I hope this makes this past all the adulatory queries about what you are wearing or where you're going to be eating. Is the Pelosi plan public? If so, where can we access it?

Ezra Klein: Yep.


Washington, D.C.: I find your view of health care reform to be unjustifiably rosy. There are problems with European-style health care programs, and you should acknowledge them. Your views would be more credible if you weren't so strident and partisan.

In any event, I want to know where all the health care providers are going to come from to treat all these newly insured folks. How can you add 46 million people to the system without expanding the supply side? My primary care physician doesn't accept new Medicare patients, and she told me that she will drop Medicare if she has to accept new "public option" patients as part of Medicare. She says that she's tired of losing money on Medicare patients or being forced to over-charge insured patients to make up her deficit. And you don't want to hear what she has to say about the costs of converting her practice to electronic records.

So, I ask you, where are the health care providers going to come from to treat all these new patients, never mind the existing ones?

Ezra Klein: You know, I've actually over the years written a lot about the problems in European systems (Britain, in particular), but in part, I do that because there's pressure to appear judicious on these thing. In all honesty, I think I'm too fair on this point.

People want to believe that this is more of an on-the-one-hand, on-the-other issue than it is. They want to believe that there are hidden, incalculable, unknown dangers to the systems that appear to work so much better. Maybe we'd lose all innovation (a weird critique: If it was really unprofitable for Pfizer to sell to France, they wouldn't sell to France). Maybe we'd lose choice of doctors. Maybe...something. Anything.

But maybe not. Maybe our system looks worse because, well, it's worse. We have a market model for a good that foils the incentives of the market. And that model has failed. And we see that in the data. Not some of the data. All of it. Every other single industrialized country has fewer uninsured than we do. Every single one pays substantially less -- not 10 or 20 percent, but 30 or 40 or 50 percent -- per capita. Every single one has health outcomes that are at least comparable. Sometimes, the correct answer is the simple one. And though people don't always like it -- and I, like everyone else, want to be seen as judicious and authoritative and fair-minded, and so sometimes obscure it -- maybe, in this case, the obvious answer is the right answer.

As for your second question, that's absolutely correct. We're going to need, in particular, many more primary care docs (I think we should have fewer specialists overall, though there will be regional shortages worth worrying about). I'm a big fan of doing that through licensing nurse practitioners and physician's assistants and so-forth. But people can disagree on how to accomplish that goal.


Ezra Klein: Thanks folks!


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