As I blogged last fall, I had the opportunity to participate in a Fred Friendly Seminar on the future of health care reform. Hosted by NYU law professor Arthur Miller, the program featured — in addition to me — AARP CEO Bill Novelli, former U.S. Comptroller General Dave Walker, Washington Post Bureau Chief T.R. Reid, and Harvard Business School professor Regina Herzlinger, along with family doctors, business owners, hospital administrators, and health policy experts in a lively debate over how to control health care costs, expand access, and improve the quality of care. That debate will be broadcast by PBS the week of January 18. For information on when it can be seen in your area, click here.

The latest issue of the journal Health Affairs publishes a letter I wrote to the editors concerning articles on health care regulation in China and India. The entire letter follows (links added):

Recent articles on China and India (Jul/​Aug 08) share the assumptions that markets for medical care and health insurance require extensive government regulation and that each nation should focus on universal coverage.

I am unfamiliar with the history of regulation in those nations. But the track record of clinician and insurance regulation in the United States is not encouraging. Both have been used by incumbents to block competition, leading to higher costs and lower quality. Gerald Bloom and colleagues worry that unless India imposes clinician licensing, “the natural process of competition is expected to force each insurer to come up with its own accreditation policy and reimbursement procedures.” Does that mean that prepayment would compete openly with fee-for-service? And that physicians could not increase costs by blocking health plans from employing mid-levels when appropriate? Dear God—not that.

Ashoke Bhattacharjya and Puneet Sapra write, “It is encouraging to note that notwithstanding the myriad issues and challenges discussed above, both countries are developing a constructive working framework to balance the interests of government, providers, employers, the insurance industry, and patients, en route to the goal of universal coverage and fairness in health care financing.” That’s just the problem: a policy of universal coverage puts too much power in the hands of elites. It inevitably “balances” those interests, when patients’ interests should trump all others. Does not the fact that “these countries lack the fiscal resources required for universal coverage because of their…low average wages” suggest that many residents have more pressing needs than health insurance? For things that might just deliver greater health improvements? In a profession where universal coverage is a religion, such questions are heresy,I know.

China and India are in the process of a slow climb out of poverty. It is entirely possible that the best thing those governments could do to improve these markets and population health would be to enforce contracts, punish torts, contain contagion, and nothing else.

Michael F. Cannon
Cato Institute, Washington, D.C.

This month’s Cato Unbound began yesterday, with a fascinating title and topic: Keep Calm and Carry On: How to Talk about Terrorism.

The term is trite, perhaps, but terrorism is handily described as a form of psychological warfare. It’s a wonder, then, that more time and attention hasn’t been paid in official Washington to communications strategies pertaining to terrorism.

People elsewhere have been giving it focus, and the author of the lead article is Bill Burns, a research scientist at Decision Research and consultant at the Center for Risk and Economic Analysis of Terrorism Events. His piece is called “The Path Well Taken: Making the Right Decisions about Risks from Terrorism.”

You are hereby assigned it as reading, but here’s an inspiring quote from Burns’ closing paragraph:

America may yet offer the voice of calm and deliberative action to a world as shaken as we. And through these travails, we must lead by example, inspired by our constitutional freedoms and drawing from the best of our science and culture.

Watch for follow-on commentaries by Bernard Finel (January 7), John Mueller (January 9), and Camille Pecastaing (January 12).

Burns is a speaker, and this topic will be one of the subjects, at Cato’s two-day conference on counterterrorism strategy which begins on Monday next week. Read more and register here.

The selection of Harvard Law School Dean Elana Kagan to be the next solicitor general (and the first woman nominated for a position known as the “Tenth Justice”) is not at all surprising. While President-elect Obama is under great pressure to nominate more women for cabinet and judicial positions, in Kagan and former Stanford Law School Dean Kathleen Sullivan he had two highly credentialed candidates who would have been front-runners regardless of their gender. Two things we know about Kagan is that she is very smart – even before the Supreme Court clerkship and record of scholarship, she won a Sachs Scholarship, sometimes called a “Princeton Rhodes” – and has done a fabulous job as dean (including poaching star professors from law schools across the country). While the White House and Attorney General will, of course, be setting the administration’s legal policy, we can expect Kagan to defend those policy positions ferociously and expertly. Whether those efforts will coincide with a defense of the individual liberty and limited government encapsulated in the Constitution remains to be seen.

A postcard in my mailbox this morning from Stan Hart, inmate #800054, at Iowa State Penitentiary:

“Is there a chance of stopping the great giveaway ‘stimulus’ plan? Isn’t the fact that none of those ‘shovel-ready’ projects are currently funded mean that they are neither necessary nor essential?”

Great point Stan. State and local investment spending is at high levels, and many governments have so much extra money that they have been wasting billions of dollars on sports stadiums and convention centers. How could it be that “the highways are crumbing” as stimulus supporters claim?

The answer is that policymakers misallocate investment. They always have, and they always will, because governments are nonmarket institutions. That’s why the hope for a more rational infrastructure policy comes from privatizing highways, airports, and other facilities.

As Barack Obama prepares to take office, a few crucial administration positions remain unfilled. Herewith a modest proposal for one still open position: Bernard Madoff for Social Security Commissioner.

True, there may be a minor problem since Madoff is under indictment for running a $50 billion “Ponzi scheme” on Wall Street, but think of the qualifications. Madoff is accused of running a scheme in which he took money from people with a promise to invest it. But instead of making investments, he kept the money for himself, and simply took more money from later investors and used it to pay earlier investors. Now compare that to a Social Security system that takes money from workers but does not save or invest it. Instead the government simply uses money from younger taxpayers to pay benefits to earlier retirees, while spending any “surplus” on other things. In the end, neither Madoff’s scheme nor Social Security are sustainable.

The big difference is that Madoff will likely go to jail; the politicians in Washington will likely get reelected.

In his weekly radio address, President-Elect Obama regurgitated some typical nonsese about how everyone “across the political spectrum” agrees that the burden of government spending should increase and that this somehow will “stimulate” the economy (for an explanation of why this is nonsense, see here). Perhaps the most disturbing aspect of his radio address, though, is that he says he wants to create three million new jobs, eighty percent of them in the private sector. I’m no math genius, but 20 percent of three million works out to be 600,000 new bureaucrats to harass the American people. This is hope and change?

Economists from across the political spectrum agree that if we don’t act swiftly and boldly, we could see a much deeper economic downturn that could lead to double digit unemployment and the American Dream slipping further and further out of reach. …we can’t just fall into the old Washington habit of throwing money at the problem. We must make strategic investments that will serve as a down payment on our long-term economic future. We must demand vigorous oversight and strict accountability for achieving results. And we must restore fiscal responsibility and make the tough choices so that as the economy recovers, the deficit starts to come down. That is how we will achieve the number one goal of my plan—which is to create three million new jobs, more than eighty percent of them in the private sector.