Solving Imaginary Problems

Ah, to be a ten-year-old boy in the late fifties, when each September the folks in Detroit revealed, on one special night, on national television, the new models. Planned obsolescence was not only a brilliant business model – only pathetic fools would be driving last year’s stodgy Dodge – it was a great deal of fun. There would be big fins, and even more chrome in odd places, and bullet-shaped rear lights and glass warped in even odder ways. The cars were still all the same underneath – ladder frames and leaf springs and the same wheezing cast-iron engine from last year or the year before – but there would be fins. Young boys, at the dawn of the space age, with the first jet airliners in the sky above, didn’t care – and for Detroit, product differentiation was everything. Their new car wasn’t like anything else on the road, even if, underneath, it was exactly like everything else on the road. Appearance was everything, and young boys are suckers for the superficial.

Things are harder for automakers now. Cars are now made by welding pans and panels together without that heavy ladder frame. There’s no separate chassis to slap on any new sheet metal flight of fancy that comes to mind. That made it too expensive to be surprising each year – everything would have to be redone from the inside out – and even worse, evolving mileage and safety standards dictated certain aerodynamic shapes, and uniform bumper height and lighting standards didn’t help either. To meet those standards meant that every new car would soon look pretty much the same – a big pastel Tylenol capsule on wheels. And of course this year’s new model would look pretty much like last year’s. The changes became too subtle to be of much interest to ten-year-old boys.

That meant the marketing had to change. Product differentiation became a matter of more and more luxury and technology each year, new hidden features, and a matter of the aura that you, the customer, wanted to project. There are Mercedes people, and Jeep people, and everyone out here in Hollywood is supposed to be a Prius person, as a matter of social consciousness. New England college English professors are supposed to drive Volvos, and every lesbian activist drives a Subaru – everyone knows that. The cars don’t change much now, so manufacturers market a tradition and the make’s heritage now, as a set of attitudes about life. Real Men drive Ram Trucks. That’s a different sort of product differentiation.

That’s no fun, but planned obsolescence isn’t dead. The American economy runs on solving problems that don’t exist. American capitalism invents them. That’s where the money is. A few years ago television was flooded with ads for new pharmaceuticals that would end the suffering of those with “restless leg syndrome” – and then those ads mysteriously disappeared. There may have been no such thing, but there would always be something else – “dry-eye syndrome” or whatever. It’s the same with all advertising. Only pathetic fools would be caught wearing the wrong shoes. Nike started that. Think of Michael Jordan. Yeah, those old shoes are fine, but really…

Planned obsolescence is alive and well. Apple depends on it. That new iPhone is somehow necessary – no one knows why, but it is. That sort of thing keeps the economy humming.

That sort of thing isn’t transferable. The economy is one thing, but government is another. Government exists to solve real problems, which is why there are mileage and emissions standards for cars these days. Here in Los Angeles, in the fifties and sixties, the photochemical smog was killing people. Frank Sinatra said that was why he moved to Las Vegas – he was losing his voice. It was all the cars spewing hydrocarbons, but now Donald Trump is calling for the elimination of vehicle mileage and emissions standards – he told cheering autoworkers that he would “ensure that any regulations we have protect and defend your jobs, your factories.”

He invented an imaginary problem. “The assault on the American auto industry is over.”

There’s an assault? Who knew? He said the White House is “setting up a task force in every federal agency to identify and remove any regulation that undermines American auto production.” That assumes regulation undermines American auto production. Lee Iacocca once said that requiring all cars to have seat belts would end the auto industry in America. It didn’t. This problem may not exist, or there may be another problem – young people who, with Uber and whatnot, see no need to buy their own car, ever. What’s the point?

Still, California is fighting back hard – and Trump is laughing. He sells expensive things with his name on them that solve imaginary problems brought on by status insecurity. Everyone has that, and he’s a master at inventing imaginary problems – murderers and rapists and drug dealers pouring over our border, sent here by the Mexican government. California doesn’t stand a chance on what they see as a serious public health issue. Trump will end the assault on the American auto industry. He’ll be the hero. Californians will look like fools. He wins.

This sort of thing takes many forms:

President Trump signed a bill Monday that killed an Obama-era worker safety rule that required businesses competing for large federal contracts to disclose and correct serious safety and other labor law violations.

Earlier this month, the Senate voted to eliminate the Fair Pay and Safe Workplaces rule, which applied to contracts valued at $500,000 or more. Votes on the bill in both the House and Senate divided along party lines.

That made no sense to the woman Trump calls Pocahontas:

In a last-minute effort to fight for the rule earlier this month, Sen. Elizabeth Warren (D-Mass.) released a staff report that showed 66 of the federal government’s 100 largest contractors have at some point violated federal wage and hour laws. Since 2015, the report says, more than a third of the 100 largest OSHA penalties have been imposed on federal contractors.

Warren criticized the Republican-led effort during a speech on the Senate floor moments before the vote. “Instead of creating jobs or raising wages,” she said, “they’re trying to make it easier for companies that get big-time, taxpayer-funded government contracts to steal wages from their employees and injure their workers without admitting responsibility.”

Hours later, the bill passed.

That’s because it would create jobs and raise wages, somehow or other. It solved the problem of the government picking on contractors who steal wages from their employees and injure their workers without admitting responsibility – which some don’t see as a problem at all. Trump and the Republicans said it was. Those who invent the problem close the sale. Your “restless leg syndrome” will magically disappear.

That’s Trump, and NPR’s Danielle Kurtzleben covers the biggest imaginary problem at the moment:

President Trump is doing his best to put a good face on defeat in his party’s attempt to replace the Affordable Care Act, also known as Obamacare.

His strategy is simple: declare that the law is failing. And he is selling that message in his own distinctly Trumpian way: concocting it out of simple, bold words and then hammering that message home, over and over: Obamacare, in his words, will “explode.”

“The best thing we can do, politically speaking, is let Obamacare explode,” he said in the Oval Office on Friday after the GOP health care bill went down. “It’s exploding right now.”

Again on Twitter on Saturday, he repeated his case: “ObamaCare will explode and we will all get together and piece together a great healthcare plan for THE PEOPLE. Do not worry!”

Kurtzleben argues that Trump may be imagining that, because the exchanges are stable:

Supporters of the current health law received something of a boost last week with the Congressional Budget Office’s initial assessment of the Republicans’ bill. If the Affordable Care Act were kept in place, the CBO wrote, the exchanges wouldn’t explode at all.

The non-group market “would probably be stable in most areas under either current law or the [Republican] legislation,” the nonpartisan office wrote.

The CBO cites two reasons:

First, it said the law requiring people to buy insurance or pay a penalty works to bring people into the market, further stabilizing the customer base.

Second, and more importantly, a strong majority of people who buy insurance through the marketplaces get financial help from the government to pay their premiums, and those subsidies rise when premiums rise. So those people are likely to continue buying insurance through the marketplaces.

That’s working fine, because people are shielded from premium hikes:

Indeed, premiums have climbed substantially in some states’ exchanges, but PolitiFact found this week that “most people purchasing health care through the marketplace didn’t feel it.” (The fact-check organization was vetting former President Obama’s claim that most exchange enrollees “have experienced no average premium hike at all.”)

A study by the Kaiser Family Foundation shows that a 40-year-old who makes $30,000 could have paid the same $208 a month for an average marketplace health insurance policy in both 2016 and 2017, as long as they were willing to shop for the best price.

And there’s that one big thing:

Probably the biggest positive supporters of the Affordable Care Act point to is the fast-falling rate of people who don’t have health insurance. Before the ACA, more than 16 percent of the population was uninsured. Then in 2013, the first year that the Obamacare marketplaces went live, the uninsured rate fell to 13.3 percent, and then to 10.5 percent in 2015, and to 8.9 percent in the first half of 2016, the lowest ever.

Much of that decline is because many low-income people became eligible for Medicaid under the Obamacare expansion of that program. The rest are people who bought insurance through those exchanges.

That has had knock-on effects throughout the health care industry. Most notably, hospitals are losing less money, because they don’t have to treat as many people in emergency rooms who don’t pay their bills. The American Hospital Association says that uncompensated care dropped from 6.1 percent of their expenses in 2012 to 4.2 percent in 2015.

There is no problem, except for this:

As more companies have pulled out of the exchanges, Americans are left with fewer choices in their coverage. In many parts of the country, as Trump and his fellow Republicans often point out, enrollees in the insurance exchanges have only one choice of insurer.

An analysis by the Kaiser Family Foundation found that five states – Alabama, Alaska, Oklahoma, South Carolina and Wyoming – have only one insurance company selling policies on the Obamacare exchanges.

And the share of the population that has three or more companies to choose from fell from 85 percent in 2016 to 57 percent this year.

The uncertainty over the future of the Affordable Care Act exchanges has likely made this situation worse. Insurers have to decide in the next few weeks whether to offer policies on the federal and state exchanges for 2018. Humana has already announced it intends to leave the exchanges altogether.

And this:

While it’s true that many Americans in the exchanges – 64 percent, according to PolitiFact – haven’t seen their out-of-pocket spending on premiums rise, around one-third did. Those premium hikes were steep in some states, such as Arizona, which saw its average premiums more than double. And for those who were shielded from rising premiums by subsidies, the government picked up that much more of the bill…

And premiums aren’t the extent of health care spending. For most people, out-of-pocket costs such as deductibles and co-payments have also risen. The average deductible for workers getting individual insurance through their employers was $1,478 last year. That’s up by 49 percent over five years. That helps counterbalance the slower growth in premiums.

Obamacare, even if it’s not dying, needs work, but there’s one thing it can’t fix:

The U.S. spends much more on health care than other countries do – more than $9,400 per capita per year, as of 2016, compared to around $3,800 for other developed countries. That’s not caused by the Affordable Care Act – this was a problem before the bill was passed.

There’s no fixing that, but Paul Krugman offered Republicans some advice for how to improve Obamacare with this:

One important answer would be to spend a bit more money. Obamacare has turned out to be remarkably cheap; the Congressional Budget Office now projects its cost to be about a third lower than it originally expected, around 0.7 percent of GDP. In fact, it’s probably too cheap. A report from the nonpartisan Urban Institute argues that the ACA is “essentially underfunded,” and would work much better – in particular, it could offer policies with much lower deductibles – if it provided somewhat more generous subsidies. The report’s recommendations would cost around 0.2 percent of GDP; or to put it another way, would be around half as expensive as the tax cuts for the wealthy Republicans just tried and failed to ram through as part of Trumpcare.

Krugman is an economist, so that’s a little dry, but Ezra Klein suggests that Republicans look at the real problem here:

Let’s state the obvious: Republicans will not hear “spend a bit more money” as friendly advice when it comes to Obamacare. But to an extent I don’t think they appreciate, “spend a bit more money” is necessary for their health care goals too.

It seems no one is facing the facts:

Republicans in particular, but Americans in general, are confounded by an unusual dynamic in health policy: The health care systems that spend the least rely on government the most. This is difficult for Americans to understand because anti-government rhetoric takes as a given that government services cost more – we’ve all heard the stories of Pentagon procurement gone awry, or some agency somewhere spending absurd sums on pencil trays.

But in health care, the cheapest, highest-performing systems all do the same thing – they let government set prices centrally. That’s true in the UK’s absurdly inexpensive, and fully socialized, health care system; but it’s also true in the Singaporean system, which conservatives often hold up as a model.

Hell, it’s even true in the American system! Medicare and Medicaid pay much less for health services than private insurers. That’s one reason Obamacare relied so heavily on the Medicaid expansion – Democrats couldn’t afford to subsidize private insurance for everyone who needed it, and so they turned to the cheaper insurance Medicaid offered. Even now, the part of Obamacare that needs more money is the part based on conservative ideas – the regulated marketplaces where people buy private insurance.

That means that Paul Ryan and his crew have it backwards:

If conservatives are going to be the last best hope for unregulated prices in the health care sector, they need to accept that the health care system they’re building will actually be pretty expensive. It might be better, and it might be freer, and it might be more patient-centered, but it’s not going to be cheaper.

So let government set prices centrally, and forget all that crap about Death Panels and rationing care:

In the most stringent systems, like the UK’s, there are worthwhile treatments the government simply refuses to cover, and so patients have to pay for them out-of-pocket. This is an unacceptable abrogation of freedom – we don’t need government telling us what treatments we can and can’t buy.

This is true, but it’s less of a difference with our system than people realize. We ration care, too – we just do so by letting individuals who can’t afford it go without it. This rationing by price is a particularly brutal form of rationing, and it is one reason there’s such persistent political pressure to have the US government ensure access to medical care. It turns out that being free to not be able to afford lifesaving treatments is not a freedom Americans value very highly.

That may be what has trapped these guys:

Republicans have failed to resolve these tensions in their own health care ideas. They say they want to build a generous health care system around private insurance – the most expensive form of insurance – but they also don’t want to spend much money on it. So far, they have tended to try to resolve that dispute by cutting back on the “generous” and “insurance” parts.

This is more or less what the American Health Care Act attempted. But as Republicans learned, Americans don’t want a health care system where 50 million people go uninsured and the remainder struggle with higher deductibles and sparer coverage. This rules out the AHCA, but I think it also rules out the catastrophic-care-only systems that are popular with conservative health thinkers. If Republicans want a more free market system, they are going to have to make peace with the public’s desire for health care that actually is useful when they get sick.

That means that it comes down to this:

A health care system that aligns with conservative principles and actually provides decent, affordable coverage to Americans will be a very expensive system. They need to decide if that’s worth it.

If it isn’t, then Republicans should focus on tax reform, and make peace with the idea that America, like every other country, is going to move toward a system that saves money by turning more and more of the health care system over to the government. If it is, then they need to accept they’re going to have to spend more money, whether through Obamacare or something else.

That’s why they blew it this time around:

The truth is the AHCA’s problems were fundamentally problems of money. There’s no reason that age-based tax credits, health savings accounts, and a more flexible Medicaid system have to lead to massive coverage losses. You could easily have imagined a version of the AHCA with subsidies sufficient to cover everyone – including Medicaid enrollees – with usable private insurance. That would’ve led to a much more free market system than we have now. But that legislation would have cost even more than Obamacare.

This is the problem Republicans face. America can build a free market health system, or it can build a cheap health system, but it can’t build both.

There’s another way to put that. They were trying to solve an imaginary problem – the horror of Obamacare – which they kind of made up. There was no need for a shiny new model with big tail fins and lots of freedom chrome everywhere. The 1959 Chevy with its dramatic arched horizontal tail fins was snazzy, but the frumpy ’58 Chevy in the driveway was running just fine. It just needed a little work. Planned obsolescence was always a scam.

About Alan

The editor is a former systems manager for a large California-based HMO, and a former senior systems manager for Northrop, Hughes-Raytheon, Computer Sciences Corporation, Perot Systems and other such organizations. One position was managing the financial and payroll systems for a large hospital chain. And somewhere in there was a two-year stint in Canada running the systems shop at a General Motors locomotive factory - in London, Ontario. That explains Canadian matters scattered through these pages. Otherwise, think large-scale HR, payroll, financial and manufacturing systems. A résumé is available if you wish. The editor has a graduate degree in Eighteenth-Century British Literature from Duke University where he was a National Woodrow Wilson Fellow, and taught English and music in upstate New York in the seventies, and then in the early eighties moved to California and left teaching. The editor currently resides in Hollywood California, a block north of the Sunset Strip.
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