Monday, October 28, 2013

Hasan Niyazi R.I.P.


I just heard that Hasan Niyazi, my friend and fellow Art history blogger, died suddenly over the weekend.  Hasan was from Australia and in the past three years, his blog, Three Pipe Problem (3PP), had become one of the most popular Art history blogs in the world. He was the son of Turkish Cypriots who had migrated to Australia when Hasan was a young boy. Like Raphael, his favorite painter, Hasan died tragically in the prime of life.

His passion was the art of the Italian Renaissance. He claimed that his interest in Art began at the age of nine when he found a copy of a book by famed art historian Erwin Panofsky. I wonder if it began on the island of Cyprus under the eyes of the goddess Aphrodite, the beloved deity of the island.

I first encountered Hasan when I commented on a blog post he had written for 3PP in July of 2010 on Giorgione’s “Tempest.” We had a spirited back and forth that showed that Hasan was willing to engage in debate but that he was also open to new ideas if they could be backed up with hard evidence. Even though he loved the art of the Renaissance, he had trained and worked in the sciences and believed that Art history should be subject to the same rules that governed the sciences.

Our first encounter led to many more. He helped me immeasurably not only with his research into favorite painters like Raphael but also with the technical aspects of blogging. He was a wizard of design and had a great flair for using images in his work. He willingly shared his knowledge with me, a web newcomer.

Eventually, he allowed me to publish some of my discoveries and reviews on his site. His site was growing by leaps and bounds and he gave me the opportunity to reach a much larger audience. It was not easy because he was a stern taskmaster and editor. We had many arguments and disagreements but I believe we both gained by the exchanges. When I sent him my interpretation of Titian’s  “Sacred and Profane Love,” he chided me for not discussing all the previous interpretations, and eventually decided to do that on his own. It was a great example of web-based cooperation.

Speaking of the Web, Hasan ended his last post with these words.

The future of art history and the internet is a very exciting prospect. This goes beyond the fact that more art historians and institutions are engaging online, but also expands to include an increased public participation and interest in learning about art and history outside of an institutional and pedagogical content. The web allows quality knowledge, and fascinating images and video to be accessible everywhere, and by everyone—hence the potential for art history online is essentially limitless.

As a small token, I would like to dedicate my most recent discovery to the memory of Hasan. One of his favorite paintings was Titian’s “Pastoral Concert.” Earlier this year I sent him an advance copy before I posted it on my own website and blog. He read it and very kindly spread the word among his friends and followers. I interpreted the painting as Titian’s homage to his friend Giorgione on his sudden and tragic death at the age of 33.

Goodbye, young friend. 


Tuesday, October 22, 2013

U.S. Health Care System

Despite the fact that the United States spends more money per capita on health care than any other country in the world, many critics argue that health care in this country is inferior to what can be found in many other developed countries, especially those with National health systems. These critics are also proponents of a sweeping conversion of health care in this country to a single-payer or national system.

Critics of the U.S. health care system point to statistics compiled by the World Health Organization (WHO) that rank the United States thirtieth in the world in life expectancy. The accompanying chart shows that in 2007 the average life expectancy in the United States was 78.06 years. Actually, that was not too far behind #1 France with an average life expectancy of 80.59. (click on the chart to enlarge)

I recently came across an excellent article* that attempted to put this statistic in perspective. The article was based on a book by Scott W. Atlas, entitled “In Excellent Health, Setting the Record Straight on America’s Health Care”, that argued that the U.S. health care system before Obamacare was “ the best system in the world.”

How could this be given the mortality statistics? Atlas argued that the WHO statistics were skewed by a number of factors, and that they should be taken with the proverbial grain of salt. The most important element in the low ranking of the U.S. mortality rate would appear to have no connection with health care at all. It is the extraordinarily high rate of murder and automobile accidents in the U. S.
“Murder and accidents account for the majority of deaths among young adults in the United States, and deaths at young ages substantially impact life expectancies.”
If murders and auto fatalities alone were factored out of the statistics, the U.S. would have the highest life expectancy in the world. Murders and automobile fatalities are serious but they are not a health care problem.

Other factors are almost as important in lowering life expectancy. The United States has a much higher rate of obesity than other developed countries and obesity reduces life spans by up to eight or ten years. Also, while smoking has dramatically decreased in the U. S., the residual effects of a long history of smoking in this country will continue to impact mortality statistics for years to come.

Finally, differences in record keeping also impact mortality statistics. Scott Atlas noted the more stringent reporting requirements in the U.S. compared to Europe in the matter of infant mortality figures.
“considering that roughly half of all U.S. infant mortality occurs in the first twenty four hours, the single criterion of omitting deaths within the first twenty four hours by many European nations generates their falsely superior infant mortality rates.”
Rather than blaming the U.S. for higher infant mortality rates, Atlas argued that,
“The United States health care system should be applauded for its efforts to save premature babies rather than write them off as stillborn, as many other countries do.”

A proper evaluation of the health care system in the U.S. should be based not on flawed mortality statistics but on actual medical care, especially the diagnosis and treatment of important diseases. Here are some facts that Atlas unearthed.

1. Prolonged wait times are commonly found in health systems with government controlled nationalized health insurance. Numerous countries with single payer systems had to create policies to address prolonged wait times, including Canada, England, Italy, Sweden, and Spain.

[I saw this myself  when I visited my cousins in Italy a few years ago. They had purchased individual insurance policies to pay for things or procedures not covered by the national system. For example, government doctors would routinely say that you could wait four months for a procedure, or visit them in their private office for the procedure in the next day or two if they would pay on their own, The above chart indicates that over 90% of people in Italy have purchased private insurance policies.]

2. In the United States, referring doctors book CT and MRI appointments within days. In other countries people wait. In 2010, the average wait time for a CT scan was 4 weeks and for an MRI 10 weeks. A 2011 study in the United Kingdom indicated thousands of people waited over six weeks for an MRI scan. With respect to breast cancer biopsies, another survey indicated that only 1% of U.S. patients waited three weeks or more while 44% of Canadian and 20% of U.K. patients waited that long.

3. No elective cardiac bypass patients in the United States were known to have waited more than three months, while 47% in Canada and 89% in the United Kingdom waited that long.

4. The United States tends to have the highest percentage of screenings for breast, cervical, prostate and colon cancer.

In conclusion, the availability of state of the art medical technology, timely access to specialists, the most effective screening, the shortest wait times for life changing surgeries, the newest, most effective drugs for more accurate, safer diagnosis and for the most advanced treatment are all superior in the United States.

In 2008 one study showed that up to 85000 patients sought in-patient treatment outside their home country, and 87% of them traveled to the United States.


*The article was written by Charles P. McQuaid, President and Chief Executive Officer of Columbia Wanger Asset Management. and appeared in the 2013 semiannual report of the Wanger International Fund. It was based on the book by Scott Adams mentioned above, as well as a book by Robert Ohsfeldt and John Schneider, "The Business of Health."

Monday, October 14, 2013

Affordable Care Act

One of the first things I learned when I went into the insurance business almost 40 years ago was that insurance was simply the prepayment of claims. It is paying in advance to cover some future bill or expense. It does not matter if it is life insurance, automobile insurance, or medical insurance. The same basic principle must apply. A policyholder pays monthly or annual premiums and these premiums are pooled with others to pay eventual claims. 

Medical insurance is no different. It only had its origins in the 1930s during the Great Depression. At that time hospitals and physicians were finding it increasingly difficult to collect from their patients, many of whom were out of work. As a result we had the birth of the “Blues.” Both Blue Cross and Blue Shield were products of the Depression. In short, people would enroll in these plans and pay a monthly or quarterly premium that over time would build up enough of a reserve to cover their future claims. This idea seemed to benefit everyone. Doctors and other health care providers would no longer have to go after their patients like collection agencies; and the patients would not have to come up with a large amount of cash to handle large, unexpected medical bills.

However, to avoid excessive or frivolous claims that raise the cost for everyone, most medical insurance policies included deductibles or co-insurance to reduce or eliminate small claims. This was right out of Insurance 101 since actuaries were well aware that the most cost effective strategy was to make the patient bear part of the cost out of pocket.

However, the use of medical insurance to cover future health care costs only took off after World War II. The war had finally taken the country out of the Depression and the economy was booming. In a major change the Federal Government allowed corporations to purchase group medical insurance plans for their employees. Employers were not required to provide health insurance but the government altered the tax code to provide a great incentive.

Unlike other forms of compensation the cost of the medical insurance would not be considered taxable income to the employee. This was important especially to high salaried employees at a time when the highest tax rate was 70%. In other words, employees covered under such a group insurance plan could now have most of their medical expenses paid with tax-free income. It was a no-brainer. Instead of giving all employees a $1000 taxable salary increase, the employer could give them a $1000 tax-free benefit that would cover future health related costs.

The employer sponsored plans were incredibly attractive to all concerned and sparked a veritable revolution in health care in this country. Employers could deduct the cost of their plans as an ordinary business expense while employees could rely on their pre-tax medical insurance plan to cover major medical expenses. Since these were group insurance plans all employees had to be covered even if they had pre-existing medical conditions. Increasingly these group insurance plans came to dominate the market.
Nevertheless, the basic principle of insurance still governed these group plans. They all involved a pre-payment of claims most often through automatic payroll deductions.

This system of corporate sponsored insurance worked remarkably well for the great majority of Americans for many years. There were obvious problems, however, that needed to be fixed. People would lose their coverage when they lost or changed their jobs. Self-employed people did not ordinarily have access to these plans. Unemployed workers would eventually lose their coverage. People with pre-existing medical problems would find it almost impossible to get coverage on their own.

Attempts had been made to deal with these problems but critics of the system still insisted that over 30 million people were without medical insurance. Even if that number was accurate it would be wrong to say that all those people lacked access to medical care. One of the problems with the system was that so many people refused to purchase medical insurance and just went to local hospital ER for even ordinary care.

Instead of trying to fix the problems in the old system, proponents of the Affordable Care Act (Obamacare) sought to overhaul the entire health care system in this country. Now instead of getting a tax break for providing employees with medical insurance, employers would be forced to provide such insurance or pay a penalty. Even though the Obama administration has arbitrarily extended the corporate mandate for a year, some employers have already chosen to drop their plans.

More importantly, it is clear that almost half the country will qualify for a partial or full subsidy from the government in order to purchase their medical insurance. Not only is this incredibly complex and difficult to administer, but it is also open to fraud. Nevertheless, under the ACA a very large percentage of Americans will not have to pay premiums for their medical insurance. No matter what you call it, this is no longer insurance but welfare.

How is the government that is already over 17 Trillion dollars in debt going to pay insurance premiums for almost half the people in this country? Will it just print more money, or will it have to raise the taxes on the other half. Despite these subsidies it would appear that most of the un-insured will not be able to navigate the red tape necessary to enroll, or even be willing to enroll. 

In the next year it would not surprise me if more people lose medical insurance than sign up for Obamacare.


Monday, October 7, 2013

Government Bureaucracy


My biggest objection to the Affordable Care Act (Obamacare) is not the sleazy way it was railroaded through Congress, or the crazy Supreme Court decision that allowed it to pass as a tax when President Obama had repeatedly said that the purchase mandate was not a tax. From the beginning I have believed that the whole thing was unworkable and that implementation would be a logistical nightmare.

It’s not just the snafus and computer glitches that have plagued the recent opening of the health care exchanges. I cannot imagine that the government will be able to enroll more than 30 million people in these exchanges even when more than half of them will receive premium subsidies.

As someone who worked in the insurance business for over 35 years, I know how difficult it was to get people to pay for something that they disliked even when they acknowledge that they needed it. Very few people like to pay for any kind of insurance. It’s like taking bad tasting medicine. Although a basic amount of auto insurance is mandatory in most states, here is Connecticut we still have to add uninsured motorist coverage to our policies. Driving without insurance is against the law but many still take the chance.

To overcome such reluctance insurance companies strongly encourage automatic pay plans where payments are automatically deducted from checking accounts. Anything is better than waiting for customers to mail in payments. The government learned this many years ago when it required employers to withhold taxes and Social Security payments from paychecks.

However, it’s not just a question of payment. I suspect that a large portion of the eligible population will not, for various reasons, even bother to sign up. They will either not want to, not know how, or just be turned off by the red tape. This group will even include those who do not have to pay. After all, in the past it was very easy to just go to the local hospital emergency room when you were sick. You could never be turned away.

It’s true that those who fail to sign up will have to pay a penalty but how is that mandate to be enforced? Will it be a payroll deduction or a deduction from a Social Security disability check? Will the government reduce someone’s unemployment check?

Thinking about these administrative problems brought to mind my first and only experience as a government employee. In our first of marriage my wife and I decided that I would go back to graduate school to complete my course work for a PhD in history. She was a nurse and would be the breadwinner. I was able to complete my course work in a year. By that time she was pregnant and I had to get a job. Fortunately, I had taken and passed the US Civil Service exam and just at the right moment I received a notice offering me a position as management analysis intern with the Federal Aviation Agency at New York’s Idlewild airport. President Kennedy had been assassinated the year before but the airport’s name had not as yet been changed to JFK.

I interviewed and was hired. I was a lowly GS 5. The FAA was a large organization with a huge responsibility but the management analysis office at the airport was a small operation. There was the chief who had his own private office and then three senior analysts of varying grades. Our desks were all in a row and I was assigned one right by the door. We were a diverse crew and resembled one of those World War Ii movies where the crew of the plane or ship was made up of different ethnic groups. The three analysts were all educated and middle class—one was Italian, one Jewish and the other Black. Of course, there were few female analysts then but there were two young expert secretaries, who in those days were still called secretaries.

I was a management intern totally lacking in knowledge or experience of either aviation or management. Back in the 1960s management analysis was a somewhat new thing and the government was just beginning to follow private industry in adopting it. At the time management analysis was looked down upon by people who were actually doing the real work. The whole field was also held up to ridicule by comic authors and filmmakers who liked to make a mockery of the so-called time and motion studies done to improve workplace efficiency. Anyone who remembers Lucille Ball (I Love Lucy) at the assembly line in the chocolate factory will know what I mean.

In the beginning I remember that I spent most of my time reading aviation magazines. There was no formal orientation program. Eventually, I must have been given some low level assignments and responsibilities but only remember one. In 1964/5 President Lyndon Johnson launched a much heralded government efficiency program. He took the lead by personally shutting off light bulbs in the White House. More seriously, he insisted that all government agencies cut back on paperwork. Since this was impossible, he took the drastic step of forbidding the purchase of any new filing cabinets. This would force all departments to reevaluate what they really needed to file, and also clean out unnecessary files. For example, the FAA was required to file papers detailing every take off and landing at even the smallest airports. It would not surprise me it these documents from the dawn of aviation history might still be in some repository.

Anyway FAA management analysis offices all over the country had to implement these new filing regulations.  We sent out manuals, directives, and detailed instructions to all field offices and mandated that they comply. Now field offices were the places where the vitally important work of the FAA was done. I recall one trip to a massive flight control center where Air Traffic Controllers (mostly ex-military pilots) were intently watching the blips on the primitive radar screens that often seemed perilously close to one another. It was a fatiguing and nerve-wracking job and I wouldn’t have done it for a million dollars. The safety of thousands of air travelers was in their hands.

But in our office we were concerned about files and filing cabinets. One day one of the field offices called up and virtually begged us to go out to his office and help him figure out how he should implement all these new directives. We couldn’t be bothered. It was his job. Just read the manual. The last thing we would want to do was to visit a field office or actually try to implement one of our own directives.

My experience with the FAA has stayed with me for over 50 years, and makes me sympathize today with all those doctors who, while holding the fates of thousands of patients in their hands, must deal with the administrative nightmare that is Obamacare.

At the end of my first year I got an offer to teach at a small college in Connecticut. When I told the bureau chief that I would be leaving, he expressed regret and told me that he was considering a promotion for me for a job well done.


Tuesday, October 1, 2013

Spending Caps

After maxing out his credit card at 17 Trillion dollars, President Obama wants to crash through the cap and increase his credit limit by trillions more. He sounds like a petulant adolescent who spends his weekly allowance almost immediately and then asks for more. Actually he demands more and reviles and insults the very people he needs to get what he wants. Rather than negotiate he resorts to bullying.

This is the same Barack Obama who as a young Senator opposed President Bush’s attempt to raise the debt ceiling when it was only half what it is now. In less than five years in office President Obama has doubled the national debt. What has been the result? What have we gained from all his attempts to stimulate and grow the economy?

Over the weekend Bridgeport’s hometown newspaper, the Connecticut Post, published figures on the city’s continuing economic plight. A front-page headline indicated that 1 in 7 children in the state of Connecticut live under the official poverty line. Bridgeport has been among the hardest hit. According to US Census figures 38% of Bridgeport’s children now live below the poverty line, compared to 28% back in 2008.

One must always take these figures with a grain of salt but it would appear that things have certainly gotten worse in Bridgeport during the Obama presidency. Bridgeport is a virtually one-party city controlled for years by the Democrat leadership. Three years ago its overwhelming Democrat vote enabled a Democrat governor to be elected by the narrowest of margins. Nevertheless, neither a Democrat President, Governor, nor Mayor, has been able to get Bridgeport rolling.

The paper even printed a chart showing that median income in Bridgeport had declined dramatically during the past four years. In 2012 “median” household income in Bridgeport was $37500, down 14% from over $43000 in 2008. Median income is not average income. When the Census Bureau says median income, it just means that half of the households in that area make over the median, while the other half make less.

In other words, half the households in Bridgeport in 2012 made over $37500 in 2012. Although other cities in Connecticut are doing better, all are off their 2008 highs. The Governor’s hometown of Stamford has a median income of $75000 but it is still 10% off its 2008 figure. The median income of the entire state of Connecticut was $67000 last year, but that is only 92% of its 2008 figure. Guess which city has the highest median income in the whole US? It’s not New York or Los Angeles. Census figures show that in Washington DC 50% of the households make more than $86000 per year.

No wonder that city is out of touch with the rest of America. The Census figures show that during his first administration, the President’s attempts to stimulate the economy have driven large segments of the population towards poverty. Household incomes are down all over the country but the President can only suggest borrowing more money, and then taxing people more to pay for it.

Maybe the President could take a lesson from the world of sports. The aging New York Yankees failed to make the playoffs this year for the first time in years. At the beginning of the season their payroll was over 228 million but some of their aging stars broke down this year and they were passed by younger, hungrier teams. In fact, small market teams Cleveland, Tampa, and Oakland made the playoffs but their combined payrolls were less than the Yankees.

Now the Yankees are going to have to find a way to get under the salary cap next year while at the same time meeting the incredible demands of Robinson Cano, their star infielder, for a 10 year contract worth over 300 million. If the Yankees exceed the payroll cap next year, they will have to pay a huge penalty. If President Obama exceeds his budget cap this year, we will have to pay the penalty.