An Inconvenient Half-Truth

Al Gore's documentary and associated book, A Inconvenient Truth, has been the subject of intense controversy and has stood up quite well to the attacks. But, nothing is perfect and here's one example discussed this week in the Global Warming Debate.

From the book (page 196): "If Greenland melted or broke up and slipped into the sea--or if half of Greenland and half of Antarctica melted or broke up and slipped into the sea, sea levels worldwide would increase by between 18 and 20 feet." This is a true statement and if it happened the World Trade Center Memorial would be under water.

The assertion, however, begs the question of (1) how likely is a sea-level rise of 18 to 20 feet and (2) how likely would such a sea level rise result from the melting of the ice sheets in Greenland or Antarctica? The Intergovernmental Panel on Climate Change (IPCC) has the answer buried in its reports.

Sea-level rise (SLR) is forecast to increase by about one-half foot every 100 years. In other words, sea level is expected to rise by 20 feet in the year 6000. What are the most likely sources of SLR?

This graphic is a little more difficult to explain since there are different measurements from two periods (Blue=1961-2003 and Brown=1993-2003). The important point to notice is that for either period, thermal expansion and glacier melt are the two most important sources of SLR. The melting of Greenland and Antarctica, given the error bars, provides almost a zero contribution.

This is not to say that we should not be concerned about the Greenland ice sheet or that there might not be a tipping point where the rate of melting gets accelerated. It's just that it's pretty far off in the future.

Fixing the Fed

Christopher Dodd, D-CN and chair of the Senate banking committee, introduced a 1,136 page plan to overhaul regulations for banks and other financial institutions. There are many obviously needed new regulations proposed in the bill (control of derivatives, consumer protections, controlling systemic risk, etc.) but what caught my attention was the provision that takes banking regulation away from the Federal Reserve. This step should be thought about very carefully and I haven't seen any blog traffic but expect to see a lot of discussion soon.

The mission of the Federal Reserve has changed over time (read the history here), but one of the original founding objectives was control of the money supply. The US Treasury controls how much money is printed but the banks control the extension of credit (effectively creating money) and the Federal Reserve controls bank reserves (the source of credit). On the one hand, the Fed needs a very good understanding and control over what banks are doing if it wants to control the money supply. On the other hand, the Fed is just another bank, the central bank. Since it operates independently, it begs the question of "who regulates the regulator"? I guess this is the point of Ron Paul's, R-TX, bill and book ("End the Fed").

We seem to be at an historical conjuncture where the Fed is loosing political support for its mission. It would be useful, before acting, to reflect on the financial history of the late 20th century, re-read Hyman Minsky's "Stabilizing an Unstable Economy" and have a very open public discussion about financial regulation and the role of the Federal Reserve. It would also be useful to think about how fast we want the US economy to grow and how much of the growth should be the result of financial manipulation. Slower growth and less financial manipulation would lead to fewer housing and stock market bubbles and lower CO2 emissions. Unfortunately, politicians are hooked on growth and they will ultimately decide the fate of the Fed.

Sick Around the World

Last night PBS Frontline replayed "Sick Around the World: Can the U.S. learn anything from the rest of the world about how to run a health care system?" I've seen it twice now and have been struck each time by a number of points: (1) there seems to be general agreement that ending the fee-for-service system (essentially, paying physicians a fixed yearly salary) will control prices for physicians services, (2) mandating health insurance, eliminating underwriting and, here's the tough one, making insurance companies nonprofit organizations, solves the coverage problem, (3) fixing drug prices (in Switzerland) did not reduce innovation (although Swiss drug firms still had the lucrative US market), and (4) setting limits on prices for medical technology (e.g., CAT scanners) led to the development of lower-cost technology (Japan). These four steps, if they could be implemented in the US (a big "if"), would effectively control health care costs.

However, I was also struck by the cultural differences between the other capitalist democracies (United Kingdom, Japan, Germany, Taiwan, and Switzerland) compared to the US. There is a clear agreement in these countries (even among conservatives, it seems) that health care is a basic right, something that every citizen should have regardless of income. In the US brand of capitalist democracy, health care is still a commodity. Without a change of philosophy in the US, there can't really be a change in policy.

Divide-and-Conquer in Health Care

After struggling with health care reform since the passage of Medicare in 1965, the US House of Representatives passed H.R. 3962, the Affordable Health Care for America Act. The fate of H.R.3962 is unclear. At least for Senator Lindsey Graham, R-SC, the bill was "dead on arrival to the Senate." What, if anything, might get through the US Senate and be eventually resolved in conference committee?

If you just look at H.R. 3962's rock-solid provisions, health insurance reform has to top the list. Eliminating underwriting and cancellation when the policy holder becomes sick (makes a claim) would be a major step forward. Providing subsidies for the poor seems like a necessary part of insurance reform but it creates another set of marginal tax rates that differ from the marginal tax rates on income. When you think about the interest groups that support H.R. 3962 (AARP, AMA, AHA, AJA, PhRMA, etc.), any proposed reform beyond health insurance will have a difficult time in the Senate.

Comprehensive health care reform would have to provide universal coverage and deal with controlling why health care costs so much in the US. A study by the International Federation of Health Plans and other research shows that prices of hospital visits, physician visits, routine procedures, and laboratory tests are all much higher in the US than in other countries. To this list, we might as well add tort reform to keep Republicans on board. Notice that the list of cost drivers pretty much matches the list of interest groups that support H.R. 3962 (the America Hospital Association, the American Medical Association, the Pharmaceutical Manufacturers Association, the American Justice Association, etc.). The bill doesn't address these cost drivers.

The major problem with comprehensive health reform is taking on all the interest groups at once as was attempted in 1993 during the Clinton administration. A divide-and-conquer strategy would make a lot more sense. There seems to be wide-spread support for taking on the Health Insurance Industry. Let's make sure that health insurance reform gets passed. Then, lets take on the remaining interest groups one at a time. It will be slower but it's probably the only realistic approach to comprehensive health care reform.

A Global Warming Denial Based on Vapor

One commonly heard argument in the Global Warming Debate is that since water vapor makes up the largest greenhouse gas (GHG), CO2 emissions can't be having that much effect on global temperature. Water vapor is the most important GHG, but focusing on this fact ignores the difference between forcings and feedback.

Fossil fuel emissions, a forcing, kicks off a positive feedback loop involving water vapor. Atmospheric CO2 increases temperature (since CO2 is a GHG) which increases the saturation capacity of the atmosphere which increases water vapor which in turn increases temperature. What is less clear is the effect of increases in water vapor on cloud formation. Clouds are water droplets and the formation of those droplets and the level they form in the atmosphere determine whether clouds have a positive or negative effect on temperature. The effect is called the Iris hypothesis and it is currently being tested by climate scientists, with mixed results. The formation and effect of clouds is poorly understood and presents a challenge for current Global Circulation Models (GCMs) used to make climate change predictions. This doesn't mean the GCMs are wrong (a subject for a later post) just incomplete.

How the Health Care Free Market Works

Although I'm guessing here (its not evident from their Common Sense Health Care Reforms), Republicans probably favor a free market for health insurance. What would that be like and how would it work? Here's an example from the Midwest. A woman from Bethel, MN was shocked to learn while her husband was lying in the intensive care unit of an Arizona hospital, that she had no health coverage even though she had a health insurance card. She had been duped.

Dubious health insurance plans are spreading across the US according to the Coalition Against Insurance Fraud. The Minnesota Attorney General has reportedly sued two out-of-state insurance companies and ten more investigations are under way. This is the current free market for health care and this is how an expanded free market would work under Republican plans.

Actually, we've been here before. Prior to the Flexner Report that reformed health care in 1910, we had a free market for health care. Anyone could hang a shingle out, practice medicine and dispense snake oil. The US has already seen the unregulated free market for health care. Let's not go back there.