Grasping Reality on TypePad, by Brad DeLong

The Economist loses its mind:

Economist.com | Economic policy: It is hard to claim that economists guarantee success: witness for instance the Clintons' economist-packed health-care plan...

"Economist packed"? I remember Ken Thorpe, Len Burman, Sherry Glied, and David Cutler (all of whom are superb). I remember me translating what they said for the benefit of the Treasury non-economists. I remember their having little impact on what came out of the White House. I remember *lots* of internal Treasury memos from civil servants like Jim Ukockis and Mike Springer--both of whom gave the American taxpayer at least ten times their salary in value added--discussing economic issues that Ira Magaziner and company simply did not get, and warning that the process was not set up to deal with issues of economic or administrative policy substance.

For example... due to freakish administrative mishap by the White House, some of their--very frank and very private--memos wound up getting publicly released. The picture is not of an "economist-packed" health-care plan with flocks of us darkening the skies and ruling the roost, but of a small shrill band desperately trying--and failing--to get the White House to listen to them:

Box Number: 1403
To: all health care task force and working group psnl
From: John D. Podesta, asst to pres and staff secy
Title: Task Force and Working Group Records

Summary: 1. must preserve all records; 2. may not delete electronic documents; 3. all property of White House and you may not take copies for any personal use or retention with permission of Marjorie Tarmey; 4. segregate TF from agency documents; 5. return all TF documents to intake center to Mary Schuneman, OEOB 287; identify general category of docs in each box...

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Box Number: 1407 Date: 3/23/93
From: James R. Ukockis
Title: meetings 18, 20, 22 of Cluster Groups on short-term cost controls

Summary: "One particularly important point was made by Farah Walters (the CEO of a large non-profit health system in Cleveland) (fallacy of assuming high cost=inefficiency). Ms. Walters is a recent, and invaluable, addition to our wg. She is perhaps the only one who is sufficiently familiar with the institutional circumstances to be able to understand the real-world havoc the various constraining measures would entail." "Every option has fatal flaws." IM using euphemisms "a consensus is forming..."

Comment: Ukockis questions who is forming the consensus and what arguments/evidence are being considered; he may think the process is a sham and that outcome is predetermined; Also evidence of private sector participation.

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Box Number: 1407 Date: 3/23/93
From: James R. Ukockis
Title: March 18, 20 and 22 Meetings of the Health Care Working Group--Cluster Group on Short-term Cost Controls

Summary: cont. from previous record "Every option has fatal flaws, which, although passed off as problems 'still under examination', are actually major roadblocks to successful implementation. Yet, because this adversarial process ahs been missing one adversary -- the con side -- there is substantial risk at least one of the cost containment options may become part of the May 3 reform package by default. ... Mr. Magaziner is employing euphimisms such as '...the current thinking is...', and '... a consensus is forming around...' to indicate certain policy choices are winning out. But, who makes up the consensus, and what arguments/ evidence are being considered? We need to press these issues or the Secretary may find he is confronted by a fait accompli when he is finally brought into the health policy process."

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Box Number: 1407 Date: 3/30/93
From: Mike Springer
Title: Activity report: working group on health policy initiatives for underserved populations.

Summary: Concerning federal grants, "there are no mechanisms to hold states accountable in terms of consumer -oriented performance standards. In other words, it is the old categorical game would be covered with a grant consolidation fig leaf." "The Pres and Mrs. C’s committee will not be provided the analysis necessary to make that assessment; it appears that the decision has already been made by the leadership of a WG largely made up of agency and congressional staff whose perspectives and interests predispose them to continuation of the full array of existing categorical grant programs with as little change as possible."

Comment: WG mere window-dressing; main decisions already made to serve entrenched govt interests

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Box Number: 1435 Date: 3/26/93
From: James R. Ukockis
Title: Comments on cost Control Options

Summary: "All four of the cost control options being considered involve generic problems common to any attempt to control price behavior. Non-price responses such as quality degradation, decreased availability, and investment disruptions can be expected to varying degrees if price is eliminated as an adjustment mechanism to cope with changing circumstances.... The need to judge the necessity of volume changes would be further confounded by the expected addition of large numbers of individuals seeking health care as the goal of universal coverage is pursued and accomplished. The surge of newly insured would make available aggregate volume data essentially noncomparable with data for the transition period..." [more]

Comment: dissension within the TF Classification: substance

Box Number: 1435 Date: 3/26/93
To:
From:
Title: Ukockis, p. 2

Summary: "If the marginal tax rates are made more draconian... it would not produce much tax revenue and would only force providers to take their income gains in nonmonetary form --particularly increased leisure.... In the present circumstance, the Medicare payment rates can be tolerated without bankrupting providers because the providers have an escape in the rates charged other payers. If the Medicare rate structure is extended to all payers, the escape is no longer available and great care would be needed to avoid financial havoc for many providers..."

Comment:

Box Number: 1435 Date: 3/26/93
To:
From:
Title: Ukockis, p.3

Summary: Problems with premium regulation. "The policy looks favorably upon the prospective forced exit of many companies from the health insurance field. The scenario is hardly one to entice timid investors. Second, the long run outlook is no more attractive. In return for exposure to significant short-term risk, aggressive investors dema nd a chance for big winnings later on. Nothing in the current policy rhetoric suggests the surviving insurance companies will have the chance to reap large profits under the new system. The result is obvious -- aggressive investors will not be attracted either. With both timid and aggressive investors excusing themselves, we are left with only crazy investors, which brings us to the government...." More on interest subsidies, drug price controls

Comment: pitfalls of price controls Classification: substance

How the Economist came to think that the Clinton health-care effort was "packed with economists" is a very interesting question. During the key months most of the Clinton administration's economists were working on the budget or NAFTA or both.

I'll try to find out.