Health Care and the Election

Three of the main issues in this election concern health care: the Covid-19 virus, Obama Care, and Roe v. Wade.

The health industry, particularly doctors’ groups and hospitals, has been remarkable quiet about the Covid crisis.  Only a few academics and government officials have been outspoken.  Local news shows often have individual doctors advising people to wear masks, but the AMA, hospital owners such as the Hospital Corporation of America, or insurance companies such as Aetna, have been quiet.  The exception has been the pharmaceutical companies, because they stand to make tons of money from a Covid vaccine.  They have mainly sung their own praises, rather than work on a strategy for dealing with the Covid-19 crisis.  In fact, the health industry has been reluctant to criticize Trump, because he has been good for their profits, leaving the criticism mainly to the media and some academic pundits. 

The talk about “Obama Care” in this election illustrates how bad the American health care industry has become.  While the political debate is focused on health insurance costs and availability, the real issue has been the inability or unwillingness of the health care industry to care for the American population.  For sure, certain sectors of the population have good care, but the population as a whole is not well served. 

The main problem with the American health care system is its focus on money rather than wellness.  Doctors make money when people get sick; they don’t make money if people stay well.  Therefore, their focus is on treating an acute ailment, rather than on keeping people healthy.  In addition, because of the obsession with money, poor people cannot get treatment for their acute illnesses, much less for care that would keep them well.  Obama Care is basically a way to get treatment for some poor people while keeping doctors very rich.  Doctors have tended to deal with Covid-19 as acutely sick patients to be threated individually rather than as a public health crisis to be dealt with by focusing on keeping people well, just as they treat people for a broken leg or a heart attack, rather than focus on wellness to keep people out of their offices or hospitals.   

Roe v. Wade, the abortion case, is a medical issue because it is a medical procedure.  It is an image problem for some doctors with some people, because they perceive doctors who perform abortions as murders, and being a member of a profession that includes a number of murderers tends to sully the reputations of all the members of that profession, at least with those who avidly oppose abortion. 

The fact that three of the main issues in this election are about health care indicates the depth of the problem for the industry in the US. Health care is a misnomer.  There is no care or love in the health “care” system.  It’s about money.  Many doctors start out performing real health “care” working in emergency rooms or small private practices, but they graduate to high paying specialties or lucrative private practices, and it is these well paid doctors who lead the industry publicly and politically.  They look out for their financial interests. 

Biodiversity Convention COP

 I saw Hank Paulson on Bloomberg TV talking about a report his foundation has done for the 15^th Conference of the Parties of the Biodiversity Convention.  A press release about the report can be found here, and the report itself can be found here. 

At the State Department in the 1992, I was the deputy director of the office of Environment, Health, and Conservation in the Bureau of Oceans, Environment, and Science (OES/EHC).  My boss, Eleanor Savage, spent about a year in Nairobi, Kenya, as the senior US representative negotiating the Biodiversity Convention.  The Convention was one of the three main agreements that were to be adopted at a big UN conference in Rio de Janeiro, the United Nations Convention on Environment and Development (UNCED), held June 3-14, 1992.  The other agreements were the Framework Convention on Climate Change (UNFCCC) and the UN Convention to Combat Desertification. 

President George H.W. Bush (Bush I) attended the conference.  As planning began for it, President Bush said that the Republicans would not let him sign two environmental agreements; he had to choose between the Biodiversity Convention and the Climate Change Convention.  He felt that the climate convention was the most important; so, he could not sign the Biodiversity Convention.  The main opposition to the Biodiversity Convention was led by the office of Vice President Quayle, particularly his chief of staff, the conservative pundit William Kristol. 

The Assistant Secretary for the OES Bureau was Buff Bohlen, a member of the famous Bohlen family. His uncle, Chip Bohlen, was Ambassador to the Soviet Union, among other countries.  Chip’s daughter, Avis, also became an ambassador.  Buff (E.U. Curtis) Bohlen had been president of the World Wildlife Fund before he was named assistant secretary.  In that capacity he had been one of the principal architects of the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES), and preservation of wildlife was his main personal concern, which meant that he very much wanted the United States to sign the Biodiversity Convention, but political pressure on the President from Republicans like Kristol meant that we would not sign it.  I remember the disappointment on his face at a staff meeting when it became clear that there was no way to reverse the decision not to sign it.  

Although the US did not sign the convention, many other countries did; there are now has 196 parties to it.  Every country that is a member of the UN has ratified the treaty, except the US.  It is now about to hold its 15^th Conference of the Parties in Kunming, China, for which the Paulson Institute has prepared its report. 

Fed Market Manipulations

 It is unclear to me what the long term effect will be of the Fed’s huge role in the financial markets, not just for the pandemic, but since the 2008 great recession.  Interest rates have been close to zero despite stock and real estate markets that have been on fire.  Part of the reason may have been the Fed’s program of buying all kinds of bonds. 

When people want to buy bonds, interest rates stay low.  Governments or companies do not have to offer higher rates to entice investors to buy the bonds.  If it is hard to sell bonds, then borrowers have to offer higher interest rates to persuade buyers to buy.  If the bond market is unattractive to ordinary bond buyers, but the Fed steps in to buy at any price, the Fed keeps rates lower than they would be in a free market. 

What happens if these bonds go bad?  The Fed currently holds about $7 trillion in assets.  Presumably most of these are US government bonds.  While the Fed’s ability to purchase assets is unlimited, its ability to sell assets is limited by the amount of assets it holds.  If those assets become worthless, the Fed’s ability to sell them becomes more and more limited.  The Fed sells assets to fight inflation and keep interest rates low.  Currently there is no need to do this, since interest rates are zero. 

At some point, however, the dollar could threaten to become worthless.  Currently the dollar is the main international currency, which means that the US and other countries borrow in dollars.  China holds an enormous amount of US dollars.  According to MarketWatch, China holds $1.2 trillion of US debt; Japan holds $1 trillion, Brazil and Ireland hold $300 billion each, while other countries hold lesser amounts.  If the dollar became worthless, i.e., its value dropped precipitously against the yuan and the yen, the US would have to start paying much more for imports and perhaps pay in other currencies, such as the Euro.  More expensive imports would be inflationary, creating pressure on the Fed to sell assets that are becoming worthless. 

Although this scenario seems unlikely at the moment, with inflation at zero and the economy doing well, it is not out of the question for future.  The Fed should be thinking about how to unwind its huge asset holdings. The last time the US faced a debt problem like this, during World War II, it issued savings bonds and encouraged patriotic Americans to buy them, basically to finance the war effort.  It is not clear that most Americans are patriotic enough to do that again, especially if there is no threat of a physical, military invasion. 

In particular, black Americans do not like America.  They expect the government to give them money.  They are not interested in giving money to the government so that the country can survive.  Blacks probably won’t buy savings bonds, like white Americans did during World War II.  So, the government and the Fed would have to find some other mechanism to help the United States survive a different kind of economic calamity.  For now, we’ll just hope it doesn’t come, and that the government can just keep throwing money into the air for whoever can catch it first, probably Wall Street tycoons.