Serious steps toward National Health Care

The Wall Street Journal is upset, though I am glad. These are good moves:

Democratic Stealth Care – WSJ.com
Initially designed for children of working-poor families, this new Super-Schip will be double in size, and even kids whose parents make $65,000 a year will be eligible. The program will also now cover pregnant women and automatically enroll their new arrivals. The Congressional Budget Office estimates 2.4 million individuals will drop their private coverage for the public program.

Still, it’s the “stimulus” that has proven the real gift horse — a behemoth that has allowed Democrats to speed up the takeover of health care under cover of an economic crisis. They initially claimed, for instance, the “stimulus” would provide Medicaid money to states struggling to pay existing bills. What in fact it does is dramatically expand the number of Americans who qualify for Medicaid.

Under “stimulus,” Medicaid is now on offer not to just poor Americans, but Americans who have lost their jobs. And not just Americans who have lost their jobs, but their spouses and their children. And not Americans who recently lost their jobs, but those who lost jobs, say, early last year. And not just Americans who already lost their jobs, but those who will lose their jobs up to 2011. The federal government is graciously footing the whole bill. The legislation also forbids states to apply income tests in most cases.

House Democrat Henry Waxman was so thrilled by this blowout, it was left to Republicans to remind him that the very banking millionaires he dragged to the Hill last year for a grilling would now qualify for government aid. His response? A GOP proposal to limit subsidies to Americans with incomes under $1 million was accepted during markup, but had disappeared by final passage. In this new health-care nirvana, even the rich are welcome. CBO estimates? An additional 1.2 million on the federal Medicaid dime in 2009.

The “stimulus” also hijacks Cobra, a program that lets the unemployed retain access to their former company health benefits — usually for about 18 months. The new stimulus permits any former employee over the age of 55 to keep using Cobra right up until they qualify for Medicare at age 65. And here’s the kicker: Whereas employees were previously responsible for paying their health premiums while on Cobra, now the feds will pay 65%. CBO estimates? Seven million Americans will have the feds mostly pay their insurance bills in 2009.

If Barack Obama can use the financial crisis to bring about a better national health care system, I will be very impressed. I wish him well!

A Word on Quants

Those who have criticized ‘quants’ for causing the financial crisis should read “The world’s largest hedge fund is a fraud” (PDF, hat-tip to Wikipedia) by Harry Markopolos. The first two paragrpahs:

I am the original source for the information presented herein having first presented my rationale, both verbally and in writing, to the SEC’s Boston office in May, 1999 before any public information doubting Madoff Investment Securities, LLC appeared in the press. There was no whistleblower or insider involved in compiling this report. I used the Mosaic Theory to assemble my set of obserations. My observations were collected first-hand by listening to fund of fund investors talk about their investments in a hedge fund run by Madoff INvestment Securities, LLC, a SEC registered firm. I have also spoken to the heads of various Wall Street equity derivative trading desks and every single one of the senior mangers I spoke with told me that Bernie Madoff was a fraud. Of course, no one wants to take undue career risk by sticking their head up and saying the emperor isn’t wearing any clothes but…

I am a derivatives expert and have traded or assisted int eh trading of several billion $US in options strategiesfor hedge funds and institutional clients. I have experience managing split-strike conversion prodcuts both using index options and using individual stock options, both with and without index puts. Very few people in the world have the mathematical background needed to manage these types of products but I am one of them. I have outlined a detailed set of Red Flags that make me very suspicious that Bernie Madoff’s returns aren’t real and, if they are real, then they would almost certainly have to be generated by front-running customer order flor from the broker-dealer arm of Madoff Investment Securities. LL.

Markopolis’ leter (which was written in 2005) shows quantitative evalulation in fine form, providing converging evidence to demonstrate that some claims can not be. Indeed, “mosaic theory” looks an awful lot like mxied-methods convergent-validity research.

Blaming ‘quants’ for the financial collapse is like blaming ‘accountants’ for Enron’s collapse. If you pay people to do something other than be wise, you increase how often they are foolish.

Indeed, the greatest ponzi scheme in history was not caused by quantitative methods, but old fashioned affinity fraud where a member of a community tricks other members of the same community through trust.