Obamacare’s Magical Thinkers

Not even the coolest president ever can conjure up a national medical regime for 300 million people.

By Mark Steyn

If you’re looking for an epitaph for the republic (and these days who isn’t?) try this — from August 2010 and TechCrunch’s delirious preview of Healthcare.gov:

“We were working in a very very nimble hyper-consumer-focused way,” explained Todd Park, the chief technology officer of the U.S. Department of Health and Human Services, “all fused in this kind of maelstrom of pizza, Mountain Dew, and all-nighters . . . and, you know, idealism. That kind of led to the magic that was produced.” 

Wow. Think of the magic that Madison, Hamilton, and the rest of those schlubs could have produced if they’d only had pizza and Mountain Dew and been willing to pull a few all-nighters at Philadelphia in 1787. Somewhere between the idealism and the curling slice of last night’s pepperoni, Macon Phillips, the administration’s director of new media, happened to come across a tweet by Edward Mullen of Jersey City in which he twitpiced his design for what a health-insurance exchange could look like. So Phillips printed it out to show his fellow administration officials: “Look, this is the sort of creativity that is out there,” he said. “One thing led to another and he left Jersey City to come to D.C. and helped push us through an information architectural process.”

Don’t you just love it! This is way cooler than the decline and fall of the Roman Empire: The only “architectural process” they had was crumbling viaducts. I think we can all agree that Barack Obama is hipper than all other government leaders anywhere, ever, combined. Unfortunately, the dogs bark and the pizza-delivery bike moves on, and, in the cold grey morning after of the grease-stained cardboard box with the rubberized cheese stuck to it, Obamacare wound up somewhat less hipper and, in fact, not even HIPAA — the unpersuasively groovy acronym for federally mandated medical privacy in America. Appearing before Congress on Thursday, the magicians of Obamacare eventually conceded that, on their supposedly HIPAA-compliant database, deep in the “information architectural process” is a teensy-weensy little bit of “source code” that reads, “You have no reasonable expectation of privacy regarding any communication of any data transmitted or stored on this information system.”

Democrat members of the House committee professed to be bewildered at why anyone would be either surprised or upset to discover that this information can be shared with anyone in the federal government, including a corrupt and diseased IRS that uses what confidential information it can acquire to torment perceived ideological enemies. And at a certain level the more blasé of the people’s representatives such as New Jersey’s Frank Pallone have a point: If Obama thinks nothing of tapping Angela Merkel’s cell phone (as she had cause to complain to him on Wednesday, in what was said to be a “cool” conversation, and not in the hepcat sense), why would he extend any greater privacy rights to your Auntie Mabel?

Incidentally, do you think we need a congressional oversight committee to look into the effectiveness of congressional oversight committees? Every time I’m stuck at Gate 37 and glance up at the 24/7 Wolf Blitzer channel there’s somebody testifying about something: Benghazi . . . Lois Lerner . . . Obamacare . . . No one gets fired, no agency gets closed, nothing changes.

The witness who coughed up the intriguing tidbit about Obamacare’s exemption from privacy protections was one Cheryl Campbell of something called CGI. This rang a vague bell with me. CGI is not a creative free spirit from Jersey City with an impressive mastery of Twitter, but a Canadian corporate behemoth. Indeed, CGI is so Canadian their name is French: Conseillers en Gestion et Informatique. Their most famous government project was for the Canadian Firearms Registry. The registry was estimated to cost in total $119 million, which would be offset by $117 million in fees. That’s a net cost of $2 million. Instead, by 2004 the CBC (Canada’s PBS) was reporting costs of some $2 billion — or a thousand times more expensive.

Yeah, yeah, I know, we’ve all had bathroom remodelers like that. But in this case the database had to register some 7 million long guns belonging to some two-and-a-half to three million Canadians. That works out to almost $300 per gun — or somewhat higher than the original estimate for processing a firearm registration of $4.60. Of those $300 gun registrations, Canada’s auditor general reported to parliament that much of the information was either duplicated or wrong in respect to basic information such as names and addresses.

Sound familiar?

Also, there was a 1-800 number, but it wasn’t any use.

Sound familiar?

So it was decided that the sclerotic database needed to be improved.

Sound familiar?

But it proved impossible to “improve” CFIS (the Canadian Firearms Information System). So CGI was hired to create an entirely new CFIS II, which would operate alongside CFIS I until the old system could be scrapped. CFIS II was supposed to go operational on January 9, 2003, but the January date got postponed to June, and 2003 to 2004, and $81 million was thrown at it before a new Conservative government scrapped the fiasco in 2007. Last year, the government of Ontario canceled another CGI registry that never saw the light of day — just for one disease, diabetes, and costing a mere $46 million.

But there’s always America! “We continue to view U.S. federal government as a significant growth opportunity,” declared CGI’s chief exec, in what would also make a fine epitaph for the republic. Pizza and Mountain Dew isn’t very Montreal, and on the evidence of three years of missed deadlines in Ontario and the four-year overrun on the firearms database CGI don’t sound like they’re pulling that many all-nighters. Was the government of the United States aware that CGI had been fired by the government of Canada and the government of Ontario (and the government of New Brunswick)? Nobody’s saying. But I doubt it would make much difference. Asked by Mother Jones to explain why Obama the candidate uses the Internet so effectively but Obama the government is a bust, his 2008 tech maestro Clay Johnson put it this way: “The first person that you need in order to start a Web company would be a Web developer; the first person you need to start a government-contracting firm is an attorney.” The problem with Obamacare isn’t the website design, it’s the nature of government procurement in an unaccountable bureaucracy serving 300 million people.

Despite the best efforts of President Obama and doting tweeters in Jersey City, government isn’t groovy. The standard rap on Obamacare is that it’s turned America’s health system into the DMV. If only. I had cause to go to the DMV in Twin Mountain, N.H., the other day. In and out in ten minutes. Modest accommodations, a little down-at-heel, nothing cool about it at all. But it worked just fine. Friendly chap, no complaints. Government can do that at the town level, county level, even (more sparingly) at the state level.

But a national medical regime for 300 million people? Not in a First World country. And, when you’re mad enough to try it, the failure is not the insignificant enrollment numbers, but the vaporization of the existing health plans of 119,000 Pennsylvanians, 160,000 Californians, 300,000 Floridians, 800,000 in that tech tweeter’s New Jersey . . . That’s the magic that happens when you disdain the limits of prosaic, humdrum, just-about-functioning government. Perhaps things will get so bad the coolest president ever will no longer seem quite so hip. But, alas, you’ll have to wait three years for a hip replacement. That’s government health care for you.

Pic of the Day: 'The New Health Insurance Marketplace Is Open!*'

National Review's November cover.

'Toons of the Day: Reality Bites

http://tinyurl.com/nptzq92

No One Sabotaged Obamacare

Why those born in the late 1930s and 1940s are richer than those who came before — or after.

By Kevin Williamson

One of the great American assumptions — that while individuals and families may rise and fall, each generation will end up on average better off than the one that preceded it — has been the subject of much scrutiny in the past decade. Democrats and their affiliated would-be wealth redistributors have argued that the large income gains enjoyed by the highest-paid workers threaten the American dream of ever-upward generational mobility, while others have worried that the housing meltdown and the Great Recession, which inflicted serious damage on the net worths of many American families, now stand in the way of that dream. Deficit hawks, including yours truly, have long worried that the entitlement system, with its unsustainable wealth transfers from the relatively poor young to the relatively wealthy old, would eventually leave one generation — probably mine — on the hook, having paid a lifetime’s worth of payroll taxes to support a system of retirement benefits likely to fall apart before we’ve recouped what everybody keeps dishonestly insisting is an investment. It’s fashionable to hate the Baby Boomers, who are numerous and entitlement-loving, for the problem, but in fact they may be the first generation to feel the sting of the reversal.

A new paper from the Federal Reserve Bank of St. Louis, authored by William R. Emmons and Bryan J. Noeth of the Center for Household Financial Stability, finds that when it comes to lifetime wealth accumulation, it matters — quite a bit — which year you were born in, and that those born in the late 1930s through the 1940s not only did better than the generations that came before them but also are on track to do better than those born in the postwar era and after. “After controlling for a host of factors related to income and wealth, we find that cohorts born in the late 1930s and 1940s have experienced more favorable income and wealth trajectories over their life course than earlier or later-born cohorts. While it is too soon to know how cohorts born in recent decades will fare over their lifetimes, it appears that the median Baby Boomer (born in the 1950s and early 1960s) and median member of Generation X (born in the late 1960s and 1970s) are on track for lower income and wealth in older age than those born in the 1930s and 1940s, holding constant many factors other than when a person was born.”

One does feel a twinge of envy for those born in the late 1930s and 1940s, the so-called Silent Generation. (Silent until you mention entitlement reform, at which point they become the Generation That Will Not Shut Up.) Talk about great timing: too young to fight in the big war, but just old enough to be entering the work force during the great postwar boom. The dream of constant generational improvement did indeed hold — at least up until their time. This no doubt came as a surprise to many of them: Having been born and raised in the shadow of the Great Depression and wartime austerity, it must have been far from obvious to them that they would represent a high-water mark for generational prosperity.

When it comes to the thrifty ways of those who suffered through the Depression, folk economics is borne out by the data: By the end of World War II, the U.S. savings rate hit 25 percent, according to the Federal Reserve Bank of Kansas City. The children born during that era did not save quite so aggressively as their parents, but the savings rate from 1959 to 1984 totaled 11.2 percent of disposable income. From 1996 — the year our representative Generation Xer (me) finished college — through today, the savings rate ran barely more than half that: 6.1 percent. The rate in August of this year was 4.6 percent, which is down a bit from the August 2012 rate.

Savings is the key to personal and national financial stability, not only because it is the means through which wealth is accumulated over the course of one’s lifetime in order to fund retirement, but for other reasons as well. It provides a cushion against economic turbulence during one’s working years, for example by ensuring that if you lose your job you have the ability to sustain yourself while looking for a new one and the means to relocate for work, which is so often necessary. It means that you have the ability to take advantage of economic conditions, for example by buying a house when prices are low, with a substantial down payment that reduces your interest expenses. It means you can avoid high-interest propositions such as car loans and credit-card financing. Money makes money.

When we talk about savings, we usually talk about the benefit to the saver. That’s significant, but there’s another, arguably more significant benefit: Money saved is money invested, providing capital to an advanced techno-industrial economy that utterly depends on it. Investors create prosperity beyond that which they personally enjoy.

But let’s not come down too hard on the Generation Xers just yet. If your working years spanned 1957 to 1997, then your career covered an era in which real economic growth was almost 20 percent higher than it has been from 1996 to the present. If you happened to enter this vale of tears in 1973 and are proud to be the home of a Y chromosome, then you should be aware of the fact that, as Jeffrey Sachs calculates it, men’s incomes peaked before you had moved on to Gerber Graduates. (Household incomes have gone up because women work more and earn more than they did in the 1970s.) That stinks for Generation X, but it isn’t much better for the Baby Boomers, who were early in their careers when wages began to stagnate.

Members of the Silent Generation have weathered economic storms, notably the Great Recession, better than most, in no small part because they had more savings, less debt, and less of their net worth tied up in their homes. That may be because they are smarter and thriftier than we are (I am open to that possibility). It may also be because it was easier for them to save, to forgo debt, and to pay down their mortgages. Part of that is lucky timing: If you were 70 when the housing meltdown happened, there’s a good chance that your house was paid for and any losses you experienced were on-paper abstractions; if you were 30, chances are that the tanking value of your house was complicated by the fact that it was a leveraged asset. (Regardless of age, an important variable is whether you were dumb, e.g., if you took out a nothing-down variable-rate interest-only mortgage on a house you could not possibly afford because you believed that a house was a magical asset, the price of which moves only in one direction.)

In theory, older households should do worse during a severe economic downturn because asset prices are pro-cyclical, meaning that they rise when the economy is strong and decline when it is weak. But the authors of the St. Louis Fed paper found the opposite: “A key differentiating factor between young and old families is the overall strength and resilience of their income sources and balance sheets. Older families indeed were affected more severely when asset prices fell sharply, but many older families had diversified assets, low or no debt, sufficient liquid assets, and adequate net worth before the crisis in order to ride out what turned out to be a temporary downturn.”

A final piece of the puzzle is that entitlement overhang I mentioned above. For the Silent Generation, the New Deal and Great Society programs redistributing money from the relatively poor young to the relatively wealthy old have been a resounding success — call it the Great Deal — but one that is ultimately unsustainable. Today’s young people already are seeing diminishing rates of return on Social Security, and, as the authors of the St. Louis Fed paper argue, it is likely that those going into retirement now and in the future will see less redistribution in their favor than did members of the Silent Generation.

What to make of this? The first is a point that legions of policymakers and politicians fail to — or simply refuse to — acknowledge, which is that the immediate postwar era was a unique period in our economic history shaped by the fact that most of the world’s surviving industrial capacity was located in the United States, while most of Europe and Asia were struggling to recover from the ravages of the war. The United States was responsible for about 60 percent of the world’s manufacturing output in those years and 61 percent of the economic output of what are now the OECD countries.

The second point is that it pays to live like a member of the Silent Generation, even if you have less in the way of resources to do so. Beyond date of birth, their income and wealth correlates strongly not only with obvious factors such as education but also with being married — and, interestingly enough, with having more than the average number of children. They are responsible investors with diversified holdings, relatively little debt, and sufficient cash on hand. They are (and have been) unlikely to have a car loan or credit-card debt that is large relative to their income or wealth.

The difference now is that if you want to be the beneficiary of a wealth transfer from the young to the old, it’s going to have to be from the young you to the old you via savings and investment, because the government of these United States already has indentured your future to pay for past indulgences.

'Toons of the Day: The Blame Game

http://tinyurl.com/le4xthf

Chart of the Day: Obamacare Exchange Has More Lines of Code Than Apple’s OSX, Windows XP, Facebook, Linux, And Google Chrome...COMBINED!

h/t Alex Marchant via Weasel Zippers

The Rise and Fall of France

By Milton Ezrati

FRANCE’s ECONOMY is not just doing badly. It is in profound decline. The slide has proceeded far enough now that businesspeople and politicians across the Continent increasingly refer to France as the “sick man of Europe”—quite a distinction at a moment when Greece, Portugal, Spain and Italy share the hospital ward. For decades, European Union structures were strong enough to allow Paris to ignore the country’s economic shortcomings. No longer. Unless Paris reforms its economic policies and practices, it could have a disastrous effect. Further economic woes may undermine the Franco-German cooperation on which the EU has relied, confronting the union with either dissolution or, more likely, an increasingly Germanic future.

 

Though recent economic reports show some slight improvement in the French economy, the underlying picture is nothing if not bleak. A monthly uptick in industrial production this spring prompted President François Hollande to declare the recession over. He was wrong. To be sure, he can now point, if he wishes, to a modest spring expansion in France’s gross domestic product (GDP). He would do well, however, to resist declaring victory over a few data points. His optimistic response to seeming industrial strength was quickly rebutted by subsequent indicators of renewed decline. He should have known that the preponderance of economic evidence remains grim and is unlikely to change anytime soon.

More than one thousand factories have closed in France since 2009. And not a week goes by without another announcement of relocations to Eastern Europe or Asia. Rates of new business formation today remain 13.3 percent lower than at the end of 2009, while business failures are 7 percent higher. The pace of home sales, though it seems to have stopped declining, shows no sign of improvement and remains 16 percent below 2008 levels. Residential real-estate prices continue to decline. Unemployment rolls have grown without interruption, recently averaging some 10.5 percent of the nation’s workforce. Youth unemployment averages over 26 percent. Real wages in France, having stagnated for some time, have declined for the last four consecutive quarters. The country’s balance of international payments continues to sink deeper into the red, with the shortfall of exports to imports almost doubling in just the past year to almost 3 percent of GDP. Government finances, too, continue in deficit, far exceeding the EU’s mandated maximum of 3 percent of the economy. Budget shortfalls over the years have brought public debt outstanding to fully 90 percent of France’s GDP.

French authorities mostly have either denied the situation’s severity or blamed it on Germany’s push for budget austerity throughout the euro zone. There is no shortage of critical remarks to make about the German approach, but it can hardly explain France’s economic problems. France, after all, hardly has imposed much austerity. It has promised to do so but otherwise has asked of itself none of the sharp government spending cuts evident elsewhere in Europe’s periphery. On the contrary, French government spending has continued to grow, rising almost 4 percent during the last two years. Government in France now constitutes some 57 percent of the entire economy, well above the euro zone’s average. Meanwhile, Paris recently sidestepped the need for more strictures, receiving permission from the EU bureaucracy to continue wider budget deficits than EU rules allow until 2015 at the earliest. Nor can French officials honestly blame German austerity when their nation’s economic slide has beginnings long before the current crisis or Berlin’s response to it. France, quite simply, has been underperforming the rest of Europe for over a decade.

It is this longer-term erosion that speaks to France’s economic failure. Germany offers a useful counterpoint. Whereas ten years ago the French economy rivaled Germany’s, today France produces only half the value added. French exports, having fallen more than 20 percent since 2005, are lower today than anytime during the last twenty years. In contrast, Germany has enjoyed an export surge in the past few years, pushing the country up from recession lows to its all-time high. France has even begun to trail Europe’s troubled periphery. While it has 10 percent fewer exporting firms than it had thirteen years ago, troubled Italy has 8.7 percent more. France’s share of global exports has fallen from 7 percent in 1999 to only 3 percent today. During this time, its share of the euro zone’s exports has fallen from 17 percent to merely 12 percent. Real per capita incomes in France have grown at barely half Germany’s rate, while profits in French industry have fallen from highs approaching 9 percent of GDP to barely over 6 percent today, only half the euro zone’s average and hardly sufficient for French industry to finance itself.

 

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Why The ObamaCare Crash Is So Embarrassing For Liberals

By Chris Stirewalt

A belief in science and technology is as central to liberalism as spiritual faith is on the right. That’s not to say that there aren’t lots of religious liberals, but just that the devotion to “progress” is the central aim of the political movement for more than a century.

How crushing, then, that the most liberal president of all time would oversee the most notable technological failure by the federal government, perhaps ever. The disastrous launch of the Web site and telephone banks for President Obama’s new health-insurance entitlement program is laughable at best, terrifying at worst and no matter what, astonishingly incompetent.

Obama, whose campaigns were praised endlessly for tech savvy and who revels in being the first high-tech president, has overseen a massive tech botch. This understandably infuriates liberals who plumped for their president and his law on the grounds that government was up to the task and that Obama could deliver a brighter, sleeker, faster and more affordable future for health care. As it turned out, he couldn’t even oversee a Web launch.

Some Republicans, not content to endure just their party’s current reversals, are imagining future defeats. Some on the right are saying ObamaCare’s failure to launch is really a trap intended to create a single-payer insurance system; that the “fix” will be to socialize all health insurance.

Not really.

Liberals certainly believe that the president’s public-private partnership on subsidized insurance will be a gateway to a European-style system. At the time of passage, the left wingers consoled themselves in the belief that the failings in the larger program of ObamaCare – scarcity of care, unaffordable private coverage, mass dumping of employee coverage etc. – would be remedied by a future (Democratic) president and Congress.

Obama himself wanted a “public option” but had to retreat in the face of opposition from Clinton Democrats in the Senate. His compromise plan, which included the individual mandate much hated on the left and much assailed by him in his primary campaign, would have to be an interim step before the next interim step.

Obama, whose campaigns were praised endlessly for tech savvy and who revels in being the first high-tech president, has overseen a massive tech botch.

But eventually, with millions more dependent on the government for health insurance and the existing system in tatters, we’d all have to go Canadian. A law born of crisis would precipitate a future crisis that could be exploited to reach the left’s ultimate objective. A tricky loop-de-loop, yes, but that thinking helped Nancy Pelosi cajole her restive conference to swallow a more moderate Senate plan.

But you don’t get to Ottawa by way of a hideously embarrassing launch. Hundreds of billions of dollars and three years spent making something done with simplicity and grace every day by the private sector is not how you expand government’s role. Liberals most of all wanted the launch to go smoothly. You can’t have a new entitlement if there aren’t enough beneficiaries.

We are still at the point where it would be far cheaper and easier to simply provide direct subsidies, via tax credits, to the relatively narrow demographic band of those folks who want insurance but can’t afford it because of pre-existing conditions. The demolition of the current system is underway but of all the alternatives to the president’s plan on offer, a bigger, more centralized plan would hardly be the frontrunner.

It becomes increasingly clear that Team Obama returned to ramming speed and proceeded with launch even when the boys from IT said that they were heading for disaster. One assumes that it was anger at Republican efforts to retard the law that drove the president’s men to jump forward. The fact that the White House so blithely addressed the possibility of delaying the individual mandate suggests that the launch was more politics than practicality.

Obama is, as usual, in reaction mode, talking about a “tech surge” and the like. But the damage done to his program and the Democratic claim that government is a credible custodian of more Americans’ health insurance is already obvious. And it’s going to get worse.