Private Health Insurers: Devils, Saints, or just Humans?

Congress is about to vote on one of the most consequential bills in American history, and proponents of the Obamacare bill refuse to present a real, fundamental analysis of the situation they're trying to address.

What are the problems, what are the goals, and what can we do to address the problems directly to achieve those goals? This kind of discussion is nowhere to be heard among Obamacare supporters. Even the President himself avoids it. Instead he simplistically states that there are 50 million uninsured in America, as if that were the problem. It's not - it's a symptom of the problem. Many problems, in fact. The correct questions to ask are: who are these 50-million uninsured, and why are they uninsured?

I've answered those questions previously. Suffice it to say that any plan that treats the symptom rather than the disease is doomed to failure. One of the big symptoms is that the costs of health care and insurance for that care are rising faster than the rate of inflation. The "diseases" causing this symptom can be divided into two overlapping categories: those concerning the insurance industry, and those concerning health-care providers (e.g. doctors, hospitals). In this post I address the former.

Private Health Insurers: Devils, Saints, or just Humans?

Democrats have suddenly re-branded their health bill "health insurance reform", rather than "health care reform". Nancy Pelosi has gone as far as to call insurance companies "villains". Liberals, Obama included, regularly lambaste the insurance industry for profiting from hard-working Americans' suffering - never mind the fact that insurance companies profit when their customers are healthy, and lose money when they get sick. So let's take a look at the insurance industry. Are their profits unreasonable? Are they milking their customers and benefiting from their suffering?

UnitedHealth Group, the country's biggest health insurance provider, has 70 million customers. In 2007, UnitedHealth made $4 billion in profit. That's a lot of money, but how much is that per customer? Or a better question: how much are consumers paying in their monthly premiums for UnitedHealth's big profits? The answer: ($4 billion) / (70 million * 12 months) = $5 per month.

That's right, Americans are paying $5 per month for their insurance companies' profits. Is a $5 monthly profit excessive, evil, and villainous? Let's say my individual insurance premium is $180 per month. If we completely wiped out all insurance company profits - i.e. transformed health insurance into a non-profit industry - my premium would only be lowered to $175 per month. And remember: that $5 provides all the incentive for these companies to exist and offer their services in the first place.

With this information any reasonable person can conclude that the "for-profit" insurance model is not one of our health care problems. But if only $5 of Americans' monthly premiums accounts for insurers' profits, how does the rest of the cost break down?

In the year 2000, administrative cost in the insurance industry was $256 per customer annually, or $21 per month. That number includes profits and other expenses that aren't really "administrative costs", such as taxes and health services provided directly by the company. So if my monthly premium was $180, removing all administrative costs - i.e. if the insurance company were to operate non-profit and at 100% efficiency - would lower it to $159. That $159 is essentially the per-person cost of the health care services used by all 200 million insured Americans. Health insurance reform can't touch that cost - unless they want to ration care.

Is $21 per month a reasonable amount to pay for the administration of an insurance policy? It's not wholly unreasonable, but I would prefer to pay less. The problem is, by 2005 that amount had ballooned to $38 - almost double! And that's still less than in government-run programs like Medicare, which had administrative costs of $32 per person in 2000 rising to $42 in 2005.

Why have administrative costs increased so rapidly, in both the public and private sector, and how do we fix it? High administrative costs are a sign of inefficiency. There is no uniform or sure-fire way to increase efficiency. Less paperwork, lower cost of doing business - including the cost of compliance with state regulations, higher worker productivity, better company organization - all these things could help, but the extent to which and the means of achieving these results will vary from company-to-company and institution-to-institution.

The interesting thing is, according to fundamental economics, a high degree of inefficiency should never manifest in an industry operating in a free market. Competition and the incentive to maximize profit should lead to improved efficiency over time. In light of this, one thing is clear: the insurance industry is not operating in a free market.

That the health industry is devoid of free market forces is widely-recognized, but ignored by Obamacare proponents. The lack of competition in health insurance, which is largely the fault of bad regulations at the state level, has caused that industry to bloat and swell with inefficiency. The rising cost of health insurance is not the fault of the insurance companies; it is human nature to become inefficient when the driving force for efficiency is removed. The same thing would, and does, happen to any company in any industry when competition is lacking.

The solution to this problem is not more state or federal control, as in Obamacare, because the monopoly of government also suffers from a lack of competitive forces. Rather, the solution requires a re-working of anti-competitive state regulations and a market-based approach to increase consumer choice and cost-based decision-making.

UPDATE: Health Insurance Industry Ranks 86th in Profit Margins

More Foreign Policy Dichotomy

On Drudge Report today, contrasting headlines:

US revokes visas for Honduran officials, and:

USA, British envoys attempting to open talks with Taliban.

So let me get this straight: the Obama administration is willing to open dialogue with the murderous Taliban, but is unwilling to speak with the constitutionally-legitimate, democratic government of Honduras.

Would someone from the press PLEASE ask Obama to explain this dichotomy?

Global Warming Update: Whistleblower Leaks Raw Temperature Data

In my recent post I examined the scientific evidence for global warming and found that there's no evidence at all. I pointed out that the so-called "global temperature" graphs purported to show a recent rapid rise in temperature are based on bad science, dubious data, and are wrought with almost infinite statistical uncertainty. Meanwhile, there is a wealth of consistent, reliable data from land-based and satellite measurements that show no warming trend. The data reveals the truth: global warming is not happening.

I also mentioned that those famous "global temperature" graphs were produced by climate activist scientists who have not disclosed the methods, calculations, or raw data used to generate those graphs. Steve McIntyre, the Canadian mathematician-turned-climate-researcher, editor of Climate Audit, co-winner of the 2007 Weblog Award for Best Science Blog, and exposer of the Michael Mann "hockey stick graph" fraud, has been filing Freedom of Information requests to the various government agency gatekeepers of raw climate data. So far he's been stonewalled; it appears governments are not willing to reveal raw data from the studies they've used to promote global warming. I wonder why this could be?

But there is hope. Just yesterday, a mole within the Hadley Climate Research Unit leaked their raw data. Note that the "global temperature" graph featured on the Hadley CRU homepage is one I outed as being totally bogus.

Now that the raw data is in McIntyre's hands, maybe an honest and open analysis will reveal the truth about temperature trends from this dataset. My guess: it will conform with the many consistent data sets and show there is no warming trend. McIntyre is continuing his efforts to acquire additional raw data through his FOI requests.

Obama's policy on Honduras threatens freedom and democracy in Latin America

Why doesn't the mainstream media take on Obama for his stance on Honduras? Is it because the reporters are ignorant of the situation? Or because they think the American people don't care about a small country that happens to be our near neighbor and ally? Or do they simply avoid criticizing Obama at all costs?

The Honduran crisis is almost a month old. That means Obama has had plenty of time to read the Constitution of Honduras and realize that what he has called a "coup" is really the legitimate government of Honduras defending the rule of law. Their Constitution explicitly demands that anyone who attempts what Zelaya did be removed from office and deported:

The Constitution of Honduras:

Article 239: No citizen that has already served as head of the Executive Branch can be President or Vice-President.

Whoever violates this law or proposes its reform, as well as those that support such violation directly or indirectly, will immediately cease in their functions and will be unable to hold any public office for a period of 10 years.

ARTICLE 42: Citizenship is forfeited by those who:

5. Incite, encourage or support the continuity or re-election of President of the Republic

Article 374: It cannot be reformed, under any circumstances, the previous article, this article, the Constitutional articles related to the form of government, the national territory, Presidential term-limits, the prohibition of a President to be re-elected, and the requirement and prohibitions on who can and cannot be President.

Zelaya attempted to do each of the things prohibited by Articles 239, 42, and 374:

• The term for President of Honduras is 4 years. Article 239 prohibits anyone who has served as President from running again. Zelaya attempted to remain President beyond his 4-year term. By this action, the Constitution says he must immediately resign the Presidency and be barred from any public office for 10 years.

• Zelaya desired to remain President beyond his 4-year term. He made this known publicly, which explictly violates Article 42, and by doing so Zelaya has forfeited his Honduran citizenship.

• Zelaya tried to hold a referrendum to extend the Presidential term limits so that he could hold the Presidency beyond the Constitutional 4-year term. The referrendum was barred by the Supreme Court, so he enlisted the help of Hugo Chavez, who printed the ballots in Venezuela and shipped them to Honduras. Zelaya's illegal referrendum violates Article 374, which explicitly prohibits reforming Presidential term limits.

So there you have it. The Constitution of Honduras demands that, for his actions, Zelaya be removed as President and stripped of his Honduran citizenship. That's exactly what happened: Zelaya was removed from office and exiled.

Yet the AP is still supporting Obama's assertion that this carrying-out of Constitutional law was a "coup". In addition, so-called Latin America expert Vicki Gass says "Constitutional order and rule of law have to be restored", meaning reinstating Zelaya as President. How the AP could cite an "expert" who hasn't even read the Honduran Constitution is beyond me.

Obama's decision to support a man who attempted to usurp his country's Constitution and instill himself as a perpetual dictator is the most outrageous and shameful American foreign policy I have ever witnessed. I would expect this from the U.N. and Europe, but I'd hoped that even under Obama America was still a nation that stood for freedom in the world. It's sad to be proven wrong in such spectacular fashion.

The Data Reveals the Truth: Global Warming is Not Happening

With the cap-and-trade bill making its way through Congress, I think it's time to express my opinion on the subject of climate change and global warming. I am not an expert in the field, but I am a scientist and the points I make are scientifically valid and correct to the best of my knowledge.

The debate over global warming can be distilled to two basic questions:

(1) Is the earth undergoing an unusual period of warming? and,

(2) Is the warming caused by the man-caused increase in atmospheric CO2 concentration (and if so, what can we do about it)?

In this post I address the first question: is the planet warming? Even many “skeptics” say that it is. You can google “climate change” and find graphs showing a sharp warming trend in recent years, and easily convince yourself that global warming is real. A scientist, however, must consider not only these graphs, but how they were constructed – the raw data, the methodology – to determine their validity.

I have done so, and I've concluded that global warming is NOT happening. Or more accurately, there is no reliable evidence that it is happening. The figures and "facts" used to demonstrate global warming are unreliable and the analyses invalid, while the voluminous reliable data show that the warming trend claimed by global warming proponents does not exist.

The bogus "hockey stick" graph

First let's start with the famous “hockey stick” graph. There are several versions of this graph, produced by different climatology groups, and they show the same thing: from the year 1000 until about 1900 the “global temperature” has varied mildly up and down, but from 1900 onward it skyrockets (hence the term “hockey stick”).


This graph, constructed mostly by Michael E. Mann, has been so criticized and discredited for its bad methodology and mathematics that it is now considered totally bogus and bordering on scientific malpractice. In fact, Mann's statistical algorithm has been shown to produce that “hockey stick” shape even when fed random data. Any conclusions based on this or similar graphs should be discarded.

The impossible task of calculating "global temperature"

Now that the issue of the "hockey stick" graph is out of the way, let's address a real scientific problem. How does one calculate the average "global temperature"?

The reality is that it is so difficult to determine the average temperature of an entire planet that it's reasonable to say there is no such thing. Of course scientists try to calculate it anyway and this is done through several means, which can be divided into two categories: direct measurements, typically limited to modern times, and temperature reconstructions, for hundreds to thousands or millions of years ago. For this post I will limit the discussion to modern direct measurements.

Bogus "global temperature" calculations

Throughout modern history humans have recorded the temperature of the air where we live. Since the late 1800s this has been done in an organized fashion, with standardized equipment set up in meteorological monitoring stations around the world. This continues to today, and the recordings are now assembled in a centralized database.

The problem is that the meteorological stations cover only a tiny fraction of the global land surface. To extrapolate an average temperature for the entire planet from this sparse and sporadic data requires generous assumptions and mathematical calculations which, to my knowledge, have only been publicly described in a qualitative way. Nevertheless, some scientists have used this data, and found that their calculated "global temperature" has been rising rapidly in recent years:



The above “global temperature” graph was originally produced by Dr. James Hansen. Dr. Hansen runs NASA GISS, and is responsible for nearly every graph and study cited by global warming proponents. He is also a famous climate activist who argues that CEOs of fossil fuel companies should be put on trial for "high crimes against humanity and nature". He is the same Dr. Hansen who, along with actress Daryl Hannah and 30 other climate activists, was arrested in June 2009 in a protest at a coal mining facility in West Virginia. His strange behavior and climate activism should not necessarily disqualify his research, but it is clear he is not following the impartiality and professionalism that should be expected of respectable scientists.

Look at the above figure in detail. It traces the “global temperature” from 1880 to today using a single line. The green “error bars” on the graph are not really error bars – they don't reflect uncertainty in the “global temperature” calculation, but “account only for incomplete spatial sampling of data”. I've already mentioned the impossibility of calculating an average “global temperature”, but even without that understanding any honest scientist could point out that this graph is absurd. The number of meteorological stations and the fraction of global area covered have changed dramatically from 1880 to today. Therefore any comparison of global averages necessarily draws from vastly different data sets from year to year. Despite the best efforts of the researchers, this will skew the averages over time. The construction of this graph is an interesting exercise for curiosity's sake, but it cannot be relied upon to draw conclusions about global climate.

To further demonstrate this point, take a look at this video, which shows how the temperature network has grown since the 1890s, and then dwindled in modern times:



Every scientist knows that when half the data points are thrown out it is bound to skew the results.

Furthermore, as I mentioned earlier, the raw station data must be thoroughly processed and manipulated to yield an average "global temperature". NOAA has published the temperature difference between the raw data and the processed numbers used in their climate figures. The result is their "adjusted" data shows an additional 0.5 degree (F) temperature increase over the past 5 decades that is not present in the raw data:

Reliable temperature measurements show no warming

The only reliable and scientifically accurate way to determine temperature trends is to limit our analysis to consistent data sets. By this I mean temperature measurements made using a single reliable method, at a single location or over a consistently-well-covered region of the globe, for an extended period of time. It just so happens that many such data sets exist, and they offer no evidence of global warming.

The most reliable and consistent temperature record in existence uses a single measurement method over a very large contiguous area and length of time: the meteorological record of the United States of America. I have downloaded the data and plotted it with no modification:


As you can see, there is no warming trend in the United States. This fact is well-known, but global warming proponents claim it is an anomaly – that for reasons unknown the USA is not experiencing global warming. Is it a coincidence that the single most reliable temperature record in the world shows no warming and is discounted as an unexplainable anomaly, while the dubious and scientifically-invalid calculation of “global temperature” shows warming and is heralded as fact? (Also note that the USA graph includes the artificial 0.5-degree warming that, as shown above, NOAA added to the raw data.)

If the lack of warming in the USA temperature record is really an anomaly, then what about other consistent temperature records from around the world?

Graphs of individual temperature stations from around the world are available online. I have downloaded data from 18 stations at random. The areas sampled include eastern, western, and northern Canada, Alaska, the Arctic, the Antarctic, Australia, Europe, Greenland, Iceland, Egypt, northern and sub-Saharan Africa, and South America. I limited my sampling to mostly stations in rural areas (to avoid the urban "heat island" effect), and those with uninterrupted data extending back most of a century. An example is shown below: data from Anchorage, Alaska, and Reykjavik, Iceland. The complete set is available here.

Not one shows a dramatic warming trend. In not one location are today's temperatures unusually warm. This is a small sample of the total number of stations, but what is the probability that 18 stations selected at random would show no evidence of warming if a dramatic warming trend really exists? Or is it more likely that, as I have argued, the graphs of "global temperature" are bogus and global warming is not really happening?

The ice caps are not melting

Direct temperature measurements are not the only consistent means of determining global climate trends. Global warming proponents often claim that the melting of the polar ice caps is strong evidence for global warming. Amazingly, global sea ice data from NOAA proves just the opposite: the ice caps are not melting and global warming is not happening.

It is true that Arctic ice has been shrinking in recent years, but Antarctic ice is growing - at the same rate. The total sea ice coverage of the planet has remained unchanged ever since satellite measurements began in 1979, as depicted by the red "anomaly" line in the above graph hovering around zero. The fact that Arctic ice is melting while Antarctic is growing is a sign of shifting weather patterns, not of global warming.

Satellite temperature measurements show no warming

There is one more consistent data set: global satellite temperature measurements. Since 1979 a series of satellites in orbit have been monitoring global temperatures. The satellite data provide probably the best estimate of global atmospheric temperature trends. I have downloaded the satellite data directly from the source and plotted it below:

Where is the dramatic warming trend? The satellite data looks nothing at all like Hansen's "global temperature" graphs. It is clear from the above plot that any evidence of warming is inconclusive at best, and there is a slight cooling trend since the temperature peak in 1998. (Note: the two large spikes in the TLS data are the result of volcanic eruptions.)

Conclusion: Global warming is NOT happening

Several reliable, consistent data sets show no evidence of warming. The evidence in favor of global warming comes from heavily-processed and manipulated, scientifically-unreliable figures made by scientists-turned-climate-activists. As an objective scientist or observer, which data would you trust? The answer is clear: global warming does not exist.

In a following post I will address a different question: is the idea that man-made CO2 emissions can cause global warming a valid scientific theory?

Saddam misled the world about WMDs out of fear of Iran

FBI Interviews: Hussein Lied About WMD Out of Fear of Iran

This is old news. I've known for ages that Saddam deliberately misled the world about WMDs as a bluff to prevent Iran from invading. So why is this finally being reported by the MSM? Well, the elections are over, so now it's ok to release info that would (partially) vindicate the people who voted for the Iraq war. At least, that's my guess.

U.N. General Assembly Demands Restoration of Honduras' Ousted President

U.N. General Assembly Demands Restoration of Honduras' Ousted President

Of course they do. Most world leaders, apparently Obama included, have dictatorial aspirations themselves. Therefore it is not their motivation to defend freedom and liberty and the rule of law, but to defend one of their own.

What happened to the days when the USA stood for freedom?

When thousands of protesters in Iran stand up for freedom and democracy and some get slaughtered in the streets, Obama won't pick sides lest he be seen as "meddling".

Yet when the democratically-elected government of Honduras acts in defense of their Constitution and ousts a dictator from the Presidency, Obama comes out in full support of the dictator and accuses the Honduran Congress and Supreme Court of staging an illegal coup.

How is the arrest of a dictator who attempted to violate the Constitution and usurp the authority of the citizens and Congress a "coup"? How is it "meddling" to support people who are fighting and dying for freedom?

Why does the United States support a leftist dictator - an enemy of freedom and friend of Hugo Chavez - in Honduras, but refuses to stand against another dictator - a sworn enemy of the United States, our allies, and freedom - in Iran?

Why is nobody asking these questions of President Obama?

Another climate theory debunked

Another climate change theory down the drain: Earth's 140 million-year climate cycle is not caused by the sun's passing through the spiral arms of the Milky Way. The reason for this long-term climate cycle remains a mystery.

Coincidentally, I was listening to Coast to Coast AM the other night and the guest was talking about this climate cycle and all the crazy things that will happen to us the next time the sun is aligned with the galactic center. I think he was promoting his new book. Talk about bad timing.

Frog deformities not caused by pollution or global warming after all

For years - heck, I was taught this in school - we have been led to believe that frogs are ultra-sensitive to environmental change, and that the prevalence of frogs around the world being born with deformities such as missing limbs is a sign of pending environmental catastrophe.

This claim has now been found to be totally bogus. From the BBC:

The deformed frogs are actually victims of the predatory habits of dragonfly nymphs, which eat the legs of tadpoles.

So, is there an environmental catastrophe looming around the corner? If you think so, you need evidence, and the list of evidence that conforms to this assertion is growing smaller by the day.

A new phase of ice

From the physics arXiv blog: scientists have discovered "ice XV". Well, at least it's not "ice-nine"...

Statistics reveal high likelihood of fraud in Iran election

At New Scientist, an article on a statistical analysis of the Iranian presidential election. It turns out that initial reports of fraud -- i.e. that Ahmadinejad's numbers remained almost constant as the vote was counted -- don't stand up to statistical muster. In fact, such consistency is the statistically likely result given the way the votes were counted.

However, there is much more interesting and convincing statistical evidence of fraud in the election. Opposition candidate Karroubi's numbers violate Benford's Law, which states that for numbers in real-life data, the leading digit follows a specific pattern. For example, the leading digit is 1 about one third of the time. Numbers from three of the other candidates follow Benford's law, but Karroubi has an unexpectedly large number of vote counts beginning with 7. The likelihood of this happening in fair data is only 0.7%, indicating that Karroubi's numbers were tampered with.

At the EPA, science takes a back seat to political agendas

Michelle Malkin points out the farce that is "climate change" research at the EPA:

The Competitive Enterprise Institute has obtained internal EPA e-mails that show the agency willfully and recklessly disregarded scientific data that undermined the bureaucracy’s global warming zealotry.
This information is especially relevant as Congress rushes to pass the cap-and-trade nightmare on Friday.

This is a common occurrence in the scientific community: research findings that could jeopardize future funding or objectives are suppressed, either passively or actively. For example, if the government is giving out billions in research grants to study the effects of global warming, it's a sure bet that researchers who want to receive those grants will not publish works contradicting current global warming theory. In this way certain research findings or scientific opinions are passively suppressed.

Even worse, if an agency has direct political interest in the outcome of research studies -- for example findings which could be used as justification to give EPA administrators additional regulatory powers -- contrary research findings may be actively suppressed. This is what's been going on at the EPA with regards to climate change, as these internal emails reveal.

Update: The story reaches the Washington Examiner.

Why is electronic record-keeping practiced everywhere except in health care?

At Technology Review (via Instapundit), Andy Kessler discusses the medical industry's vested interest in inefficiency. Kessler points out that just about every other industry has switched to electronic records without the need for government involvement, but the medical industry has not. The question is why?

Conservatives tend to drone on about patient privacy, but I don't think that's a real issue. For example, I don't wake up every day worrying that the mountains of private data credit card companies have on me will somehow lead to a violation of my privacy.

Kessler partially identifies the true reason we don't already have electronic medical records: such records would expose the massive number of medically unnecessary tests, procedures, treatments, and outright fraud that goes on every day at our nation's hospitals. As Kessler puts it:

In those medical records lie the ugly truth about the business of medicine: sickness is profitable. The greater the number of treatments, procedures, and hospital stays, the larger the profit. There is little incentive for doctors and hospitals to identify or reduce wasteful spending in medicine.

However, Kessler misses the underlying truth, the driving force that makes this fraud possible and sustainable. Every industry has a profit incentive to get its customers to pay for unnecessary things. The reason other industries can't sustain that practice is simple: basic free-market forces. In other industries, consumers make purchases with their own money, and therefore they make choices based on cost.

Here's an analogy:

If two contractors can do an equally-good job repairing my roof, but Contractor A can do it at half the cost, and Contractor B tells me I also need to repair my chimney but Contractor A says that's a bunch of hooey - I'll go with Contractor A because I'll save money and I won't pay for unnecessary work.

However, if somebody else - say, an insurance company, or the government - comes along and tells me that they'll pay for all the roof work a contractor says needs to be done, all of a sudden the reasons I had to choose Contractor A disappear. I'll go with Contractor B, because I don't care how much it costs anymore - the money's not coming out of my pocket - and who cares if the chimney really needs fixing, I might as well get it done anyway because someone else is paying for it.

The lack of free-market competition - consumers making individual choices about where to spend their own money - is the disease that has allowed the medical industry to grow out-of-control with bloat, inefficiency, and fraud. The lack of electronic records is just a symptom of that. Forcing electronic records upon the industry is probably a good thing overall, but it will do nothing to cure the disease, and our health care woes will continue.

Obama botches science, makes Bush look like a Ph.D.

Via Gateway Pundit, Obama talking about his cap-and-trade proposal:

PRES. OBAMA: “At a time of great fiscal challenges, this legislation is paid for by the polluters who currently emit the dangerous carbon emissions that contaminate the water we drink and pollute the air we breathe.” (President Obama, Press Conference, Washington, D.C., 6/23/09)

I suppose he's referring to all our carbonated beverages that are "contaminated" by this "dangerous" CO2, and that our own lungs are a grave health risk for exposing us to this CO2 "pollution" as we breathe.

If Bush had said this, the media would say he's distorting science for his own political agenda. It's far worse than "nucular", the simple mispronunciation interpreted by liberals as a sign that Bush was an idiot. What do you think are the odds that they'll make similar remarks about Obama for his blatant display of scientific ignorance?