Tuesday, September 15, 2009

The Pro Bono Health Care Solution

21stCentrist Medical Reform: Free Care, Tax-Free
As Congressional health care reform stalls and sputters, as angry accusations fly over aisles and airwaves, perhaps now is a good time to recall one reassuring fact:

At one time, we had a pro bono system in this country that worked.

My granddad, Dr. E. Victor Littauer, worked as an OB/GYN surgeon in Brooklyn from the 1920's through the 1960's. During all those years, especially during the Depression, he took on many patients who could not pay. All his colleagues did too... it was practically part of the medical ethic. But the pro bono system has vanished, done in by subsidized insurance, medicare and malpractice liability. No coincidence then that the loss of the pro bono system and its ability to treat the poor coincides with the rise of our current health care woes: millions of the poor and uninsured jamming emergency rooms; medical costs out of control on both personal and federal levels and everything in between.

To fix our current health care mess, the Obama administration proposes massive new programs, new public insurance, and enormous new federal spending. But the most effective, least intrusive fix for our health care woes may be simply to repair the traditional American pro bono system that once worked well. Much of our current problem would be greatly reduced if we could simply increase and regularize the supply of pro bono care for those who cannot pay.

In fact, we CAN do that. Increasing the supply of pro bono care is essentially a supply side problem, amenable to supply side solutions. If you want more of something, tax it less. So if you want doctors and other health care providers to supply care to those who cannot pay, then simply reduce their taxes to zero for doing so.

This would require a law providing that documented pro bono service to a qualified patient should reduce a doctor's taxes by the fair value amount a paying client would pay. (Current rules allow no deductions whatsoever for donated time.) The law should also include reasonable "good samaritan" liability protections for pro bono service, to make good deeds risk free. Together, these two simple reforms would create a Super Pro Bono system, capable of treating 100% of poor and uninsured patients for free for all primary, specialist and preventive care.

So if a doctor (or lab, clinic, drug company or other for-profit health care provider) pays a 30% tax rate (for illustration purposes) then if he treats 30 patients pro bono for every 100 paying a fee, his taxes go to zero. What is more, his after-tax income rises. To demonstrate and simplify the above scenario, let's assume the doctor gets $1 fee per patient, and he has a maximum capacity of 130 patients a year. If the doctor treats all 130 patients for a fee and pays 30% tax, his after tax income would be $91. But with 100 fee-paying patients and 30 pro bono, the doctor's after-tax income rises to $100, a 10% increase for the same amount of work -- while his taxes decrease to zero. That provides a powerful incentive to plan for a regularized provision of pro bono care to a very large population, if need be. Importantly, that includes pro bono primary and preventive care.

Such a Super Pro Bono system would thus be less expensive for taxpayers than the current system where the uninsured get the most expensive possible treatment at overwhelmed emergency rooms. It would take pressure off those emergency rooms, lowering hospital costs, bad debt expense and intergovernmental transfers to cover the costs of treating the uninsured. It will also be cheaper than proposed new programs which would entail shouldering massive new heath care taxes and insurance fees, paying providers to care for the poor, paying bureaucrats to shuffle mountains of insurance paperwork, and then taxing the providers and bureaucrats – a convoluted tax-spend-and-tax system with lots of overhead that makes little sense when cutting providers' taxes for pro bono service does it better in one step – without any of the insurance paperwork overhead. Super Pro Bono simplifies everything and cuts out layers of bureaucracy, government and overhead.

No Incentive To Over-Treat

One related benefit of such an approach it is attacks the core reason US health care costs have spiraled out of control: overuse of emergency rooms by the uninsured, plus system-wide over-treatment, driven again by medicare, insurance and liability considerations, all of which reward over-treatment and the practice of defensive medicine. By contrast, there would be no financial incentive to over-treat a pro bono patient, and no legal reason to practice defensive medicine with good liability protections for pro bono care. Without such distractions, most doctors are driven by a desire to improve their statistical outcomes, their batting average, if you will. Optimally treating more pro bono patients without over-treatment would improve a provider's stats. Good statistical outcomes (not defensive medicine or reimbursement considerations) will drive pro bono care norms system-wide, driving down over-treatment, and lowering costs across the entire health care system as treatment protocols follow best practice.

One foreseeable objection may be that the tax incentives of Super Pro Bono would not influence non-profit health care providers and hospitals to provide more pro bono care. But this challenge could be overcome by extending Super Pro Bono tax incentives to insurance companies that provide pro bono catastrophic medical insurance to those who cannot pay. Following the same after-tax logic illustrated above for doctors, medical insurance companies could similarly reduce their taxes to zero and increase after-tax profits by providing free insurance to the poor. That way direct pro bono service from doctors and other for profit providers would cover primary, specialist and preventive care for the poor, while pro bono insurance would cover hospitalization and catastrophic care.

Under the traditional American pro bono system, those who could afford to pay were really covering costs for those who could not. Super Pro Bono repairs and builds on that American tradition, and is a good private alternative to public insurance, which would inevitably require more and more taxpayer subsidy, and (many fear) more rules, rationing and long waits for needed medical care.

But Super Pro Bono is not a panacea. For the rest of us, steps still need to be taken to reform US medical insurance, a protected, subsidized semi-monopoly that is too expensive and delivers low customer satisfaction. The Obama administrations plans to open up interstate competition among insurance providers is a good start here, as are calls to make private insurance coops more widely available. Even so, Super Pro Bono repairs some of the fundamental distortions that have thrown our medical system off balance, and would be a good starting point for health care reform.

Monday, September 14, 2009

Supply Side Environmentalism Goes Public!

Here is a video of the first public discussion of Supply Side Environmentalism, as applied to current concerns about global warming and energy diversification.  The talk took place last month in Canada at a fascinating annual conference of international think tanks convened by the Atlas Economic Research Foundation.

The crowd in the video is predominantly free market libertarians, so I pitched the talk that way, emphasizing that clean energy tax cuts is a great way to get environmentally concerned progressives and liberals to appreciate tax cuts. Were I to address progressives or liberals, I would rather emphasize that my approach is a great way to get tax cut loving libertarians and conservatives to do and care more about the environment. *Ah-hem.*  In any event, my clear intent is to bridge the gap between left and right on this issue, and whichever group does that first, will take the center and the lead.

The Q&A begins at the 50 minute mark, and has some interesting remarks.

Saturday, September 12, 2009

What is a 21st Centrist?

Well, me for starters...

But more generally, we're shooting for something a bit more interesting here than just some blowhard holding opinions ranging from middle of the road to undecided. No, that won't do. Rather let's define a 21st Centrist as anyone who seeks to heal the most basic rift of our time, the left-right divide... largely by crafting new solutions, through balance and understanding, that blend the concerns and core principles of both right and left.

Sounds like a tough job? There is hope. For originally, those concerns were joined. Once, long ago, Liberalism, Libertarianism and Conservatism emerged as offspring of a single grand movement: 19th Century Liberalism, the great consensus opposing the twin tyrannies of monarchy and slavery, and as a result responsible for the founding of most modern constitutional democracies. Proof of the shared roots of left and right is found in shared heroes: our founding fathers, Thomas Paine, John Stuart Mill, Abraham Lincoln, the early abolitionists such as Thomas Clarkson, William Wilberforce and Frederick Douglass, and so on. Heroes of both right and left, all.

But 19th C. Liberalism broke apart even as it triumphed, with right and left preferring respectively either the principle of liberty or that of social justice. Many now consider that division immutable, eternal... the lopsided pendulum swings of unbalanced governance so part of our landscape that it is beyond our power to change. But really, this epic donnybrook is only a blip in human history, as liable to mutate, vanish or evolve as anything else. Left and right may fight like cats and dogs now, and we think of them as poles apart, but in fact they are intellectual cousins, mere inches apart in the wider scale of human politics. This rift can and should be healed by balancing and rejoining these two key principles, liberty and social justice, now unbalanced and separated by 20th Century ideologies.

The Centrist Tradition

Centrism is sometimes given a bad name by folks who call themselves centrists, but either are really only pragmatists and deal makers, or are undecided, or perhaps have no guiding principles at all.

But principled centrism – grounded in a common sense appreciation of balance, moderation and the middle way – is itself a conservative, compassionate tradition with a long lineage stretching back to the balance of the Tao, to the middle way of Buddha and Aristotle, to the moderation of Confucius, Jesus Christ, the Stoics and more recent conservative philosophers such as Edmund Burke. It is the core strategic principle of sophisticated martial arts such as Tai Chi or Aikido, which emphasize the power of moving from ones center, of instinctually perceiving and controlling the center of any system of flowing forces. It is the principle that allows surfers to surf, to balance and ride upon complex forces much bigger than themselves (with zero government assistance or intervention, I might add).

Lastly, it is the principle behind most successful conflict resolution, where a skilled mediator will help the warring parties work things out through a process rooted in balance, moderation and the quest for a middle way.

A Matter of Principle

That last example comes to mind, because, as a trained mediator, I have had the opportunity to resolved a few conflicts. At some point, in nearly every mediation, at least one of the parties will push back from the table and declare, "No, I'm not budging. It is a matter of principle!" Well, one thing you learn when you mediate conflicts is that everyone has a principle. And often, both parties are right, and their principles are equally valid. Sadly, good, just and right principles can often conflict. But it is not right that one valid principle should necessarily run rough shod over another valid principle. Finding a balanced middle way that preserves both principles is the best outcome, but incredibly tricky, and more of an art than a science.

This is exactly the situation we find ourselves in with left and right in America. Like stubborn parties to a mediation, both sides have their principles, and they are sticking to them, by gum! Yes, both have good, virtuous principles. But each proposes solutions that really only satisfies their own concerns. And both are running out of ideas.

Right now, there is no center to American politics. There is only an increasingly polarized right and left, with a void in between. But that is the way it usually is at the start of any mediation. Mediators know the void is good. It creates a vacuum pressure, drawing the parties in. It creates a space that allows room to maneuver and find new solutions. The void and the current stagnation are a signal that a new consensus is possible, that better solutions may be found by incorporating the concerns and principles of all sides.

On a practical level, that means that right and left will need to agree on NEW solutions that take each other's concerns seriously. But why should they do that? Because whomever advances this first – Libertarians, Conservatives or Liberals – will take control of the center of American political thought, and lead the nation and possibly the world into a new era of consensus. Doing so will also lead to a renaissance of new policy ideas, as wonks stretch their minds to incorporate the other side's point of view. That will mean more grants, more media attention, a broader political base – all good things. So what is the alternative? Stagnation, intellectual bankruptcy, irrelevance.

Where Are The New Ideas?

Actually, the dearth of new ideas on right or left (with a few notable exceptions) is rather shocking. The left peaked in mid-century, with Keynes, FDR's New Deal, the Great Society, and the civil rights and anti-war movements, but seemed exhausted thereafter. During the 1970's and '80's, free market thinkers fueled the Reagan revolution with bold new ideas and approaches at an astonishing clip: these included neo-conservatism, two major schools of economics (monetarist and supply side), school choice, "broken windows" policing strategy, SDI, new strategies of superpower confrontation and engagement, the economic empowerment ideas of Hernando de Soto, the think tank and student journalism movements, and so on. But now, I am hard pressed to name a single new idea of equal stature from right or left in the last fifteen years.

Perhaps the greatest movement in recent years has been the advent of infotainment and the rise of political clowns on both sides: Coulter, Franken, Limbaugh, Moore, Stewart, Maher, Colbert, Jib-Jab, etc. That, it seems to me, is a sure sign of intellectual stagnation and exhaustion... however witty they may be.

So, when you read this blog, expect unexpected new ideas and heretical-but-delicious left-right blender-thinks. For instance, why not use supply side tax cuts to reduce global warming and produce abundant clean energy? Why not provide reliable free health care for the poor, without big government programs or new cost to the taxpayer, by repairing and supercharging the old pro bono system with fair value tax deductions for service? These are the kind of new ideas we need. Ideas that incorporate both liberty AND justice.

For all.

Do you have a 21st Centrist proposal? Let me know through the comments feature, and if it fits, I will post it.

BTW, 21st Centrist is an evolution of my old blog, The Green Energy Tax Cuts Betablog, where you can find information about the application of supply side economics to environmentalism.