He affects people here the same way

"In D.C., Vilsack stresses 'ordinary people'"

-headline on page 1 story in today's Des Moines Register.

LAZY SUNDAY 'CRISIS OF ABUNDANCE' POST

Yes, I'm still reading Crisis of Abundance, Arnold Kling's smart little book on health care economics. I should be posting more, and I apologize to the (almost certainly hypothetical) readers that have been eagerly awaiting my next post. Today - chapters 3 and 4

DOLLARS AND DECISIONS

Health care economics are all about deciding how best to spend the limited pool of dollars available. This may seem obvious when you think about it, but many people probably don't. It's easy if you look at in extreme terms. For example, lets assume we have a billion dollars to spend. What if we could use it to save one life through an incredibly expensive but 100% effective medical treatment? What if that person was already 80 years old? What if we could instead spend the money ensuring sanitary drinking water for an entire developing country, saving thousands of lives that would otherwise be lost through cholera or dysentery? From this viewpoint, you'd almost certainly decide to let the one guy die and save the thousands.

In real life the decisions are a lot closer, and sometimes the answers aren't at all clear. These are the problems Dr. Kling engages in chapter 3 of Crisis of Abundance. He makes five "key points" at the start of this brief chapter and fills them in.

What I get out of the chapter:

• A lot of health care spending isn't clearly necessary or unnecessary; it instead falls into a gray area.
  

• In a perfect world, we could look at a given medical procedure and measure the probability it will help, and value of the benefit if it does work, against the cost of the treatment. In the real world, we can only know the costs for sure; few treatments are 100% effective, and the value of the benefit of the treatment, even if it were 100% effective, is often at best a rough guess.

All of this is complicated by the availability of different diagnostic procedures and treatments with different possibilities of success. The "best" diagnostic tool might be only 10% more effective than the next best, but it may cost 3 times as much. It's not so important if it's a difference between a $10 procedure and a $30 procedure, especially for a serious ailment, but it can make a big difference when you have a $5000 procedure.

Given these difficulties, it's not surprising that different doctors and patients come to different conclusions. Even for Medicare, which is fully paid for out of taxes, the results vary widely by regions. One statistic jumps out of chapter 3"

The proportion of patients seeing 10 or more physicians in the last six months of life ranges from a low of 17 percent to a high of 58 percent."

I don't think it means we have widespread random malpractice in the treatment of dying patients. It does mean that a lot of capable doctors and concerned patients are groping in the dark for answers.

NO PERFECT HEALTH CARE SYSTEM

What, then, should a health care system look like? Chapter four begins to look at this. No system can be perfect. He starts the chapter as follows (highlights are mine):

Any health care system must reflect a compromise of preferences. We cannot have a health care that is both accessible and affordable while insulating consumers from the cost.

It's a point that should be obvious to grown ups, but is often lost in the health care debates. You can can't have whatever you want whenever you want it for free. So we have to sacrifice some combination of accessibility, affordability, or cost. Which go over the side?

accessibility. In a world where we ditch accessibility, says Dr. Kling,

The solution would be to have government set a budget that limits the supply of health care services. Bureaucrats would set health care priorities. Inevitably, some consumers would be denied treatments that they seek.

Affordability. Maybe we could decide we want the best heath care possible, screw the cost. Is that a good idea? At some point it seems you run out of money.

Insulation. Here Dr. Kling hits an area that is one of my pet ideas: if "somebody else" is buying, you'll spend more. The lottery winner just walked in and is buying drinks for the house? You put down your bar scotch and order the Glenlivet.

The conclusion? Dr. Kling puts says that "insulation" goes over the side:

For an economist, it makes sense to sacrifice the principle of insulation to promote unfettered access and affordability. The principle of access unfettered by bureaucratic intrusion is consistent with consumer choice, free trade, and other concepts that economists hold dear. The principle of affordability also has an obvious economic appeal. However, the principle of insulation has little or no economic justification. In fact, I think that the task for economists, and for Chapter 5 of this book, is to explain the high cost and dubious benefits of catering to the principle of insulation.

So on to chapter 5 in the next post.

Previous Crisis of Abundance posts (6!):

Expat comments on Crisis of Abundance Posts.
Premium medicine in action
C of A: "Three Health Care Narratives"
Crisis of Abundance: "Premium Medicine"
May 20, 2006
May 16, 2006

Hit me harder

"Civic leaders" are pushing an additional 1 cent sales tax for Polk, Dallas and Warren counties, according to the Des Moines Register:

Shoppers in Polk, Dallas and Warren counties would pay an extra penny per dollar on most things they buy as part of a plan by civic leaders to build more recreation trails and boost metro-area cultural attractions.

Supporters say a sales-tax increase to 7 percent would also give communities a new source of money to pay for law enforcement, libraries, street repairs and other services. That, they say, would result in lower property taxes.

Counties and cities have been asked to outline in writing how they would spend the money.

They'll need to convince folks that they are spending the money they have already wisely. I wonder if these folks will help with the campaign:


Ramona Cunningham and Senator Harkin at the dedication of CIETC Tom Harkin Learning Center.



Former CIETC Director, current Des Moines city councilman and self-proclaimed "rubber stamp" Tom Vlassis


Former CIETC Chairman and Des Moines City Council Member Archie Brooks

Legislators attempt to muster a Kelo-veto override session

Can the legislature reverse the veto of the eminent domain reform bill? It looks like they're going to try:

Republicans in the state legislature want to attempt to over-ride Democrat Governor Tom Vilsack's veto of a bill that would have limited city and county powers to seize private property for economic development projects.

House Speaker Christopher Rants, a Republican from Sioux City, is sending certified letters to all 100 members of the House, asking for their signature in support of such a move. "We understand that private property rights are one of the bedrock principles involved in the founding of this country," Rants says.

But while a big majority of the legislature's Democrats voted for the bill, they may not have the spine to stand up to their lame-duck leader:

But the effort is likely to fall short because Democratic leaders in the legislature say while a special session is "inevitable," they want to sit down and craft a new bill addressing some of the governor's concerns.

A primary victory tomorrow for Ed Fallon, a vocal supporter of the bill, would stiffen many a mushy spine. With no race for governor in the Republican primary, maybe some GOP property-rights fans will cross over for the day.

Expat comments on Crisis of Abundance Posts

I have finished chapters 3 and 4 of "Crisis of Abundance"; I will be preparing a post soon. Meanwhile, I will share comments from a reader who has experience with both the U.S. and U.K. health care systems and who has perceptive observations, which I am sharing with her permission. My reader is an old friend from college days who moved sometime ago to rural Scotland, and who renewed contact with me via stumbling on my work blog. The internet is a great thing. Her comments:

The topic of health care really gives food for thought. The US healthcare system is probably the one largest reason I will not be returning to the US to live. Not out of protest, but because I know how hard it will be to get insurance. We’re all still healthy, but the premiums, even for healthy people are crippling.

When I lived in Iowa City and was working at a small law firm, they couldn’t offer my health insurance. There were just two lawyers and the business couldn’t handle the burden. I had to get private health insurance for myself and the two boys. When I looked into it, I discovered that the premium each month for one adult and two healthy boys was larger than the rent on my house. I tried with higher deductibles, but the bottom line was, I couldn’t afford it. I was just an office worker and a single mother. With no child support coming from their father, it was all I could do to keep the rent paid, utilities, car insurance, food and clothing. There were times when the phone was off because the cash just wouldn’t stretch. I could have packed in the job. Then I would have had help with rent and state medical cover but that wasn’t my style. The point is, I am sure there are more working poor who are in the same boat. People who need to work but whose employers are small businesspeople.

Granted, I am not as dirt poor as I was 15 years ago but from what I gather, the situation isn’t improving. I’m just looking for some sort of solution in Crisis of Abundance. Yes, it’s terrible that doctors won’t just treat illnesses. They feel they must refer up the ladder either because they are afraid of being sued OR they know that they will make more money by referring to a more expensive specialist. Are specialists getting annoyed by all these referrals or do they just line up the patients and watch the cash roll in?

Over here in the UK, the GP (general practitioner) or family doctor is the work horse of the National Health Service – NHS. They see the bulk of the pathology that comes in to the NHS. They will treat the problem then and there to the best of their ability. They have diabetic and asthma clinics a couple times a week to care for the patients with chronic and specific problems. At these clinics, practice nurses will be aiding in the bulk of the work. If there is a patient who requires more treatment than is provided by the local GP run health centre, either because the problem has gone beyond their capability OR the health problem has become more acute it is then that the patient is referred on to the hospital where the specialists practice their arts.

In my job as a pharmaceutical salesperson, I speak to GPs every day. I also speak to the hospital specialists. I know that most GPs will prefer to treat at the primary level. Specialists hate to get spurious referrals they feel it wastes their time when they get a patient through there door, referred from GP who really should have treated the patient himself. But for the most part, everybody gets taken care of. From my perspective as a former US resident, I think the system is brilliant. Naturally there are holes and problems as with all human run systems. Slick US style diagnostics are kept for the large teaching hospitals and centres in large cities. Shame for us folk out in the sticks but we’ll get to see them if our conditions warrant shipping us in to town.

I am reading your current thread with great interest and hope that in the end you will be throwing a ray of hope on the situation. If I ever move back to the US, I don’t want to be panicked about health care.

My correspondent notes a U.K. medical culture that seems to disfavor U.S.-style "premium care. I believe Mr. Kling would say it's just such cultural differences that make it impossible to transplant Britain's NHS over here. In a recent post on his blog, though, he suggests that it would be good for one state to try a single-payer system as a laboratory test of how single-payer might work in the U.S. medical culture:

Right now, single-payer represents a "grass is greener" model, where advocates are free to tell us how wonderful everything is in Canada, the UK, France, or wherever. I want to see a state in the United States implement it, with our culture and our technology. Then we can talk about how the system really works, instead of people's fantasies about how it works.

Any takers?

Previous Crisis of Abundance posts:

Premium medicine in action
C of A: "Three Health Care Narratives"
Crisis of Abundance: "Premium Medicine"

May 20, 2006
May 16, 2006

Archie Brooks still has a friend

He has trouble remembering whether he's dated the executive director of the agency whose board he chaired and whose salary he set, or how often, and for how long. He turned off the city emergency radio tower during the catastrophic 1993 floods in a petulant fit. He can't remember writing memos trying to stifle the CIETC whistleblowers.

Through it all, Des Moines city councilman Archie Brooks still has kept one friend: Governor Vilsack, who will veto the new emininent domain restrictions passed overwhelmingly (Senate 43-6 and the Iowa House 89-5) by the Iowa legislature. And Archie will be cool with that, given his past:

City Councilman Archie Brooks said he will propose action within the next month to move forward with eminent domain proceedings.

He said the $450,000 offer is far more than what the city will give Hamilton. The properties are valued at $206,000, up almost $70,000 since 2001, according to county records.

"We're not asking him to do anything else than what others have already done," Brooks said. "We're not going to let this die. We've got people standing in line to buy those buildings over there."

Yes, we can't take away the right of responsible guys like Archie to sieze property from the unworthy in favor of the worthy. How can we possibly have economic development without superior intellects like Archie directing the process? And it fits perfectly with the Vilsack (and Blouin) economic development philosophy of taxing existing businesses to lure and subsidize their competitors.

More here.

Premium medicine in action

The thesis of Arnold Kling's Crisis of Abundance is that America's taste for "premium medicine" is the key to the rise in health-care costs. When I started reading the book, I laid out my own guesses as to the cause. One of them was a tendency to demand the latest, most expensive technology for health care. A Wall Street Journal story today ($link) shows these theories work together.

The story says that demand is so strong for the newest mammography technology, digital screening, that some patients are foregoing the old-fashioned kind even when digital is unavailable:

Interest is growing in the digital version of the breast-cancer screening test, driven in part by a study last fall in the New England Journal of Medicine that said digital was better for some women. The findings quickly became a marketing tool for makers of digital-mammography machines and hospitals that have them. Sales of the machines have been rising, with one major manufacturer citing digital equipment as the driving force behind record second-quarter revenue.

But some hospitals and doctors are concerned that the advantages of digital are being overestimated and may be causing women to delay getting a mammogram until digital machines arrive in their area. Still only about 11% of the 8,800 U.S. mammography facilities are estimated to have digital.

The story says:

The advice from doctors: Don't wait, especially if you are in one of the groups for whom digital has no demonstrated advantages. The study found that digital was better at detecting cancer only for premenopausal women, those under 50 years old, or those who have dense breasts. The majority of women who get mammograms are over 50, and looking at the 40,000 women in the study as a whole, the new technology was found to be no better than film overall.

Crisis of Abundance says

"An important characteristic of premium medicine is that many procedures have a low probability of affecting the outcome. In fact, often the procedures do not even affect the treatment plan."

Digital mammography seems an apt illustration of this point. It is more effective for only a minority of patients, and the treatment for a cancer discovered digitally doesn't differ from that discovered on film. Yet as it is the latest technology, and in short supply, the digital technology will cost more. It's an illustration of "premium medicine" that could have come right out of C of A. And, as C of A notes, spending on imaging services is growing twice as fast as health spending as a whole.

Maybe somebody will disprove the premium medicine explanation for high health costs, but it sure seems to me to explain a lot.

C of A: "Three Health Care Narratives"

Arnold Kling's "Crisis of Abundance" reads much faster than I am blogging it. Books continue to have a few clear advantage over newer technologies - portability and no bootup time. I read most of the second chapter during a half-hour piano lesson (the 2nd-graders, not mine). But setting my thoughts down on computer - that's harder to squeeze in.

Mr. Kling's first chapter talks about "premium medicine," the expensive tendency to use more specialists and more technology in healthcare. The second chapter stacks up the "premium medicine" theory of the rise of health care against what he considers the two other prominent explanations:

-a failure of private health insurance, and
-price gouging.

It's sad that anybody would take the idea of "price gouging" seriously anymore, but there it is. I won't spend any time on Mr. Kling's concise debunking of that nonsense.

The theory that private health insurance doesn't work is a more serious possibility. Mr. Kling summarizes it:

This narrative suggests that the main reason there are people without health insurance is that the risk pool has broken down. People who believe that they are healthy will opt out of insurance. People who are particularly sick will be rejected by insurance companies."

The theory of insurance failure does make sense, unlike the price-gouging narrative. As insurance companies exist to make money, why wouldn't they try to eliminate high-risk customers?

C of A addresses this by looking at data. The U.S. really has two parallel health insurance systems: private insurance for those under 65 and Medicare for the old folks. If private health insurance was the cause of high health costs, one would expect that health costs for Medicare receipients would reflect this, adjusted for the age of the receipient base. Mr. Kling concludes that Medicare doesn't work any better than private insurance at keeping costs down. He supports this by comparing U.S. costs and practices with countries with national heath insurance for all ages.

This makes sense, but it glosses over some issues with private insurance - it can be difficult to buy outside of a group, and there is adverse selection caused by healthy young people who save money by going without. I think regulations that prevent a free national market for health insurance are largely responsible for the problems of buying individual policies, but I am at a loss as to how to deal with those who voluntarily go uninsured. Is it a widespread problem? Does it really affect insurance prices? And how many people who say they "can't" get insurance really mean they "can't" get it at the price that they want to pay?

Handy C of A statistic:

As a line item of our national health care accounts, health insurane administration accounts for about 1 percent of GDP, out of total health care spending of 15 percent of GDP.

Crisis of Abundance: "Premium Medicine"

As a fitting sideline of my glamorous and thrill-filled life as a tax accountant, I am blogging my reading of "Crisis of Abundance," Arnold Kling's new book on health care economics.

Mr. Kling identifies "premium medicine" as the culprit for the continuing increase in healthcare costs. "Premium" medicine describes the routine use of high-tech diagnostic tools and specialists in everyday health care. While the book lays out statistics on this, it hit home best for me when he explained it in terms of one patient's odyssey in dealing with an eye inflammation. He discusses how the "Quixote's" inflammation would have probably been treated 30 years ago:

In this case, the patient might have been sent home with an antibiotic and perhaps a prescription for Prednisone, a steroid used to reduce inflammation. There would have been nothing else to do. In 1975, computerized medical imaging technology was new and exotic, with limited applications.

In contrast, in 2005, over the course of a few days Quixote was given a computed tomography scan, referred to a specialist, sent to a different hospital, referred to a specialty clinic, seen by a battery of specialists there, and given yet another CT scan. Ultimately, however, she was sent home, as she might have been 30 years ago, with an antibiotic, Prednisone, and no firm diagnosis.

I hadn't given much thought to this aspect of health costs - the way that even relatively routine health problems are made more expensive by the application of specialists and technology. I had always thought that was more of an issue for emergencies and life-threatening illnesses. Doctors aren't cheap to start with, and specialists probably tend to cost more. Add two CT scans, "a battery of specialists," a second hospital and a special clinic, and you've got one expensive eye inflammation.

It's an interesting problem. This shows that the application of expertise and technology doesn't necessarily change the treatment or the result. Yet in some cases it does - the MRI for the backache patient that identifies an unsuspected cancer in time, for example. I look forward to seeing what suggestions. Mr. Kling has for this.

Prior bookblogging of Crisis of Abundance:

May 20, 2006
May 16, 2006

Bookblogging "Crisis of Abundance"

I see Arnold Kling has somehow noticed that I am reading his book. Ok, no pressure!

In my ideal world, I would be able to linger over books in a comfy chair at a coffeeshop with a good free wifi connection. In real life I read in stolen snatches of five or ten minutes between helping with dinner, helping with (or "encouraging") homework, rebuilding the home computer network after the catastrophic server failure, herding the boys (8 and 14) to bed, or conspiring with my wife against the boys. I squeeze in bookblogging where I can. So, I apologize to Mr. Kling and any other readers for my posts being so sporadic.

Fortunately "Crisis of Abundance" is written in the much same lucid prose style as Mr. Kling's Econlog, so reading it in snatches works.

The introductory chapter is a roadmap to the rest of the book. I find it helpful to see where the book is going and what the themes will be. The overview begins:

Chapter 1, "The Rise of Premium Medicine," shows that the primary driver of the crisis in health care finance is the evoloution of the practice of medicine. Over the past few decades, medical care has become more specialized and capital intensive.

Premium medicine consists of

• Frequent referrals to specialists
• Extensive use of high-tech diagnostic procedures
• increased number and variety of surgeries

In my initial post on this bookblogging project I laid out my thoughts and prejudices on healthcare economics so I could see how they were confirmed or challenged by this book. As I identify heavy use of "the latest technology" as one of the drivers of health costs, I feel smug. I read a little further, though, and the smugness goes away. My opening thoughts leave out a huge factor old folks. That should have been obvious to me, having seen end-of-life chronic health issues with my father-in-law's long decline with Parkinsons and health problems.

I'm now into the chapter on premium medicine, which I will cover more in my next post. I like the book. As strange as it sounds to say this about a book on health care economics, it's a quick read, so far.

LOCATIONS FOR EARTHPARK NARROWED DOWN

Des Moines: May 17, 2008. At a press conference on the south bank of the Raccoon River, David Oman today announced that the EarthPark project will be located in one of four Iowa Communities: River City, Buxton, Sevastopol or Lithograph City.

The project was forced to find a new home when four towns dropped out of the race for the $180 million project. Grinnell dropped out when Grinnell College refused to allocate $25 million of its $1 billion endowment to finance the project, or to buy a letter of credit for the remaining $975 million to cover projected operational losses. Riverside was disqualified when Captain Kirk was unable to attend a fundraiser. Tiffin said its reported involvement was a typographical error, and Pella officials said that the inability to combine the project with the Bos Landen golf course and a space elevator made it impractical. Another candidate town, Kendallville, rejected a $25 million bond issue for the project in a citywide referendum, 12-5.

The project was earlier rejected by larger communities, including Des Moines, Coralville and Dubuque.

Reporters asked David Oman whether the fact that none of the towns still in the running for the project actually exist might hamper the project.

"I resent the implications of that question," retorted Oman. "River City is one of the finest Iowa towns ever used in a work of fiction. If you don't love Music Man, you don't love Iowa."

One reporter noted that two of the towns on the list, Buxton and Lithograph City, are ghost towns that have had no residents for at least 50 years. Oman said "that shows how important the EarthPark is to the economic development of these fine communities." Project boosters say the $155 million project will draw a million visitors a year and generate $131 million in economic activity in any community, no matter how desolate, godforsaken, or imaginary.

One reporter noted that Sevastopol is a defunct town on the south bank of the Raccoon River that was incorporated into Des Moines over 100 years ago. The state legislature would have to approve the separation of Sevastopol from Des Moines, and, said the reporter, "monkeys will fly out of my butt first."

Oman replied that EarthPark booster Ted Townsend has connections with the Iowa Great Ape Trust, and that work on the flying monkeys is expected to be completed by Earth Day, 2010.

A legislative change has made it possible to move the project into these communities, according to Oman. "Senator Grassley inserted the words 'real or imagined' into last year's budget reconciliation bill authorizing additional funds for EarthPark. This gives us much-needed flexibility to get this project underway."

BOOKBLOGGING: "CRISIS OF ABUNDANCE"

I'm going to try to "liveblog" Arnold Kling's new book "Crisis of Abundance: Rethinking How We Pay For Health Care." Dr. Kling is the scary-smart co-proprietor of the Econlog blog and a former Federal Reserve Economist.

In my prior experiment in bookblogging I read "Chasing Daylight," a memoir of a prominent accountant's battle with terminal brain cancer. I just read and blogged my impressions as I went.

I'm going to do this a little differently. I will write down my current views of the U.S. healthcare system before I start. As I read I will try to note items that confirm or contradict my current opinions, and whether and how my views change.

WHERE I START: MY CURRENT VIEWS ON THE U.S. HEALTH SYSTEM

I am perplexed by the rising cost of health insurance and health care, yet I am aware that the health care we get is better than it ever has been. I see several big, related issues in health care:

1. Why is health care so expensive, and why does the cost go up so fast?

I think this comes from a combination of causes. The tax-favored status of health insurance is part of the problem. The tax law encourages employers to compensate workers in health care instead of cash. This has led to systems where employees are largely insulated from the costs of their health care. An 300-lb employee who goes home and eats Cheetos, drinks beer and smokes cigarettes in front of the television pays the same for health insurance as a 160-lb marathoner in the next cubicle.

The prevalence of low insurance deductibles and co-pays also makes it easy to run up larger bills. Why not, if the insurance company covers it? If people were spending their own money, they'd likely spend less of it.

The medical malpractice legal system increases health care costs, both directly by siphoning cash off to second-guessing plaintiffs lawyers and by encouraging doctors to run extra tests to cover their butts.

Finally, health care is about life and death. If spending a few more bucks will extend life, ease pain, or improve quality of life, people will spend them. If it's the insurance company paying the bills, they'll spend quicker. They will also opt for expensive new technology. The latest technology is often the most expensive. That's why the fancy stereo stores will have $10,000 home theater systems that will be available at Best Buy in five years for maybe $800. Most people sensibly opt for Best Buy. But when the latest technology gives you continued existence, rather than higher fidelity sound reproduction, everybody wants the high-end product.

2. What, if anything, should be done to moderate health costs?

If I were the Tax King, I would strike all health care benefits from the tax law, and I would persuade the Health King to eliminate all coverage mandates and allow insurance companies to market whatever policies they care to offer nationwide on the internet. As the job doesn't seem to be open, I have to accept that the tax law is likely to be involved. I would limit tax benefits to high-deductible plans and expand health savings accounts to allow people to build a nest egg to fund health insurance reserves. I might even have a refundable credit for contributions to HSAs by low-income taxpayers, if we get rid of all other personal credits.

It seems clear that additional government involvement isn't the answer. Canada, with its waiting lists, substandard facilities and doctor shortages, testifies to that.

3. How does health insurance fit into the health care system?

Beats me. One possibility is to require everyone to buy health insurance, just like they do with car insurance. This bothers me; I could be damaged financially if somebody hits my car, but it's no money out of my pocket if somebody else needs back surgery. Should he be required to be prudent and buy insurance anyway?

In any case, "insurance" doesn't mean that Blue Cross pays all your health bills, to me. It means a plan that covers unexpected big bills that would otherwise be financially painful or ruinous. Ruin means different things for different people, but few will be ruined by going out of pocket for $1,000 per year, and many find even $5,000 per year to be about the difference between trim package for their new SUV. Also, a larger deductible will largely come back to the insured through lower premiums.

I think the the real issue with health insurance is...

4. How should we deal with health care for the poor?

If a middle-income person chooses not to buy health insurance and gets hammered with big bills, he pays the consequences of taking a risk with his eyes open; that's his problem. If a poor person is bankrupted by health costs because there was no affordable insurance available, that seems like a different matter. But what is "affordable," and how much should people be expected to pay? And if they can't pay, who picks up the tab? It doesn't grow on trees. Maybe the current system, where it gets picked up indirectly through higher costs on those who can pay, is the worst system except for all the others.

My opinions come from my experience as an employer, a tax practitioner, and a heath care buyer. Many smart people know a lot more about health economics than I do, and I'm sure Arnold Kling is one of them. I look forward to seeing what he has to say.

MAYTAG, RIP

To nobody's surprise, Whirlpool announced yesterday that the Maytag production plant and headquarters in Newton will be closing. A sad story.

Whirlpool left in spite of the Governor's best efforts to bribe them to stay:

An incentives package, including state money for job training, tax incentives and the promise of a new state-of-the-art factory, couldn't sway company officials from announcing it would shut down operations in Newton beginning this year.

Gov. Tom Vilsack called the state's offer the largest incentives package offered in Iowa. Details of that plan, which could have cost Iowa as much as $95 million, included:

- Building the company a high-tech factory at a cost of $50 million to $75 million. The state would have leased it to the company.

- More than $20 million to retrain Maytag employees to work for Whirlpool.

- Tax and energy incentives that were being ironed out.

The governor's office and state Department of Economic Development declined to provide specific details, saying state officials remained in negotiations with Whirlpool in hopes of keeping other Iowa Maytag facilities open.

"He all but gave them the keys to the state," said Rep. Paul Bell, a Democrat from Newton.

Why? Because they still couldn't make money:

It was (Maytag's) inability to keep up with the times, to renovate, to update, to keep up with the updated equipment," Bell said, noting that a Whirlpool plant in Ohio could churn out five machines in the time it took Newton to make one.

I saw comments on one blog saying that the closing showed the wisdom of Senator Harkin and Rep. Boswell's attempt to block the deal via antitrust law. This, of course, is nonsense. The most that the politicians would have accomplished is to destroy millions of dollars of Maytag shareholder value by blocking the sale to the high bidder. Politicians couldn't have made the plant five times more efficient. The inefficiency - not the Whirlpool purchase - doomed the plant.

Bribes and ethanol pipe dreams won't build Iowa's economy. A low-rate, simple tax system won't do it by itself, but it is a necessary first step. Unfortunately, nobody running for governor seems interested in that.

Separated at birth?

State 29 posted a picture of presidential candidate Mitt Romney.



He reminds me of someone, somehow...



Mitt Romney is Ranger Gord!

WELL, PORK IS BIG IN IOWA

Our two distinguished Senators have voted to give Trent Lott $700 million to tear-up and rebuild a brand-new railroad - as part of "emergency" hurricane relief efforts.

But at least Senator Tom is willing to cut Ramona Cunningham's salary, now that she's already fired. Way to go, Senator; I always like an excuse to post my favorite Tom Harkin photo.



Ramona Cunningham and Senator Harkin at the dedication of the Harkin Learning Center at CIETC headquarters.

FILL YOUR TANK WITH TAX CREDITS

Congressman Nussle has a five point plan to pander for farm votes lead us to energy independence. It consists of one absurd regulatory mandate and four ineffectual tax credits.

While this foolish attempt to overcome the law of supply and demand isn't that unusual, it's worse to see it from a prominent Republican, who is supposed to know better.

Perhaps politicians who treat us like adults can never win, but it would be nice to see one try. A grown-up approach to energy problems would say something like this:

• The increase in worldwide energy demand has outstripped our supples. That means prices go up. Supply and demand - like gravity, it just works.
  

• The government has made it worse by mandating different blends of gasoline accross the country. Ethanol mandates are part of this problem (as Senator Frist, to his credit, noted yesterday). This fragments the market and leads to higher prices.
  


• Ethanol is to energy efficiency what CIETC is to good government.

• More nuclear plants and more refineries are needed. Government and lawyers will make sure they don't happen.

• Higher prices are how we encourage people to develop and bring to market new sources of energy. They aren't part of a conspiracy.

No adults are on the horizon.

TOM HARKIN, MEET SAM MACK

The CIETC scandal just gets better. It even has caused one of Iowa's U.S. Senators to have a Sam Mack moment.

Sam Mack played basketball at Iowa State University. His ISU career hit a bump when he held up a Burger King in Ames. As he held a gun on the clerk, he was standing next to... an ISU basketball team poster featuring Sam Mack. Legend has it that the clerk asked "Sam, what are you doing?" To which he was reputed to have responded, "I'm not me!"

THE SCANDAL IN BRIEF

Maybe Senator Tom Harkin can sympathize. Central Iowa is agog at the story of the pay and benefits Ramona Cunningham and two other dedicated public servants of the Central Iowa Employment Training Consortium, a publicly funded jobs training agency. Ms. Cunningham's pay package featured annual compensation north of $350,000 per year and three months paid vacation; two other executives also had $300,000+ pay packages. The board of directors, featuring several Polk County Democratic stalwarts and union leaders, never reviewed or appoved the packages; in fact, they apparently never discussed the pay of the executives. Now criminal investigations are underway, heads are rolling and everyone is scrambling for cover.

Senator Harkin was asked about the scandal. He just had no memory of meeting Ramona Cunningham. He could have refreshed his memory with a visit to the agency website:


Ramona Cunningham and Senator Harkin at the dedication of the Harkin Learning Center at CIETC headquarters.

I'm not me!

The Des Moines Register explains:

Harkin obtained $1.4 million in federal money to "create a model employment center that provides expanded services to individuals with disabilities," according to a press release from Harkin's office in 2004. The center was named in Harkin's honor.

To be clear, there's no indication that Senator Harkin knew what was going on at CIETC. It's also clear that lots of people are going to want to forget ever meeting Ms. Cunningham.

Other coverage: SEX, MONEY AND DUMPSTERS.

The Best-paying agency you've never heard of

THE BEST-PAYING AGENCY YOU'VE NEVER HEARD OF

While I have taken my shots at The Des Moines Register, in the last few days they are showing what a local paper can do at its best. They have exposed an incredible web of mismanagement, at best, at a jobs-training agency that I have never heard of, but whose board is a who's who of the Polk County political establishment.

The first story tells of how the top three executives of the "Central Iowa Employment Training Consortium" get over $300,000 in annual salary. The boss, Ramona Cunningham, also gets three months paid time-off per year. All salaries are set by long-time Des Moines political fixture Archie Brooks. Nice work if you can get it. Today's story tells how the CIETC landed an extra $200,000 on the last day of the fiscal year in a "special one-day offer" from the state.

If it weren't high tax season, I'd have a field day with this, but in the meantime visit their web site with their inadvertently-hilarious board meeting minutes - it's tremendous stuff. Like this:

II.Board Officer Nominations

There was a discussion of the fantastic job Archie Brooks has done as chair, and how well the officers work as a team. It was also noted that, with all the changes in appropriations and administration, this is not a good time to change leadership. Motion by Max Worthington to retain the current slate of officers for another year, seconded by Dan Albritton, motion Carried.

If newspapers are to survive the internet era, this is how they will do it. Local newsgathering is an area that the newspapers can still do better than anyone else, when they set their minds to it.

Guest-hosting this week

I am filling in for the next few days at the Chequer board of Nights and Days group blog while one of their bloggers is on vacation. It will mostly be tax policy stuff like at the work blog, seeing what time of year it is, but with fewer constraints. I'm excited that I'll get to inflict my thoughts on a new audience.

I tried to post to the 50265 blog this morning, but the photo upload failed. I hope Blogger soon gets rid of the gremlins that have plagued it. I know it's free, but I hate losing the time spent on a failed post. I may move the operation to the dormant Kristans.org. site after tax season.

50265 problems

Fans of the 50265 Blog: I haven't taken it down. Blogger is buggered for some reason. I hope they figure it out; apparently they have a bad "filer," whatever that is.

Fans of Joesaysso: sorry the posting has been nonexistent. Tax season and all that. I've things to say, just not enough time to say it right now.