Author: bmagnus

Got Spam?

If you’ve got an email account, chances are you have received some spam — unsolicited commercial email — over the years. In fact, in February of 2004, over 90% of all email sent was spam. This figure is rising, despite the fact that the United States has a nice new anti-spamming law on the books. Indeed, over half of all spam is proudly made in the USA.

Of course it is an annoyance to delete all the unwanted offers for mortgages, debt consolidation, “herbal viagra”, and other stuff you don’t want. Of course office workers collectively spend many hours doing the same at work — time they could be spending doing actual work. Spam costs money by using bandwidth and storage space that could be used for much more important things. Nobody feels this more than ISPs, who unwillingly transmit gigabytes of spam each and every day.

Spam prevention as we know it usually relies on blacklists of servers known to send spam. This technique works acceptably for most users, but depends on a continually upgraded list combating continually moving spammers. An alternate technique, sometimes used alongside a blacklist, is the algorithmic approach. In this method, a smart program looks at your email, analyses it, compares it to known spam, and decides how likely it is to be spam. The program might take the liberty of routing suspected spam directly to your “deleted items” folder. This carries the risk of accidentally deleting something important.

Part of the problem is that spam is very cheap to send. All it takes is one person to submit a credit card number, and the day is profitable. Another part of the problem fighting spam is the anonymous nature of the internet. It’s easy to be nobody, or anybody. You might get spam with a “forged header” that makes it look like it came from somebody famous, somebody you know, maybe even from yourself.

The next wave of spam control, we are told, will be about identifying senders. This will make it possible to prosecute spammers who break the law. This will also open the door to charging spammers. A Microsoft solution to this problem is expected tomorrow.

The “caller ID” paradigm of spam prevention is doomed before it begins. First, the vast majority of them do not verify that someone is John Doe, they verify that someone is at John Doe’s computer. This same flaw plagued the much protested security features of the Pentium 3 chip some years ago. This distinction is critically important. Not only might somebody else be at the computer, the computer might be under the control of a virus. You knew viruses could use email to send themselves to all your contacts, but maybe you didn’t know that a virus can use your computer to send spam. In fact, some experts think as much as 30% of spam is sent by “zombie-bot” virus infected computers. There you have it, the reason most computer security experts consider spam and virus control related.

There is another reason that “being at your computer means being you” will not control spam. It doesn’t allow for the possibility that you might not be at your computer, sending mail from your email client. Anyone who uses a web-mail client, anybody who must use email remotely, anybody who uses the “send this link to a friend” feature of a website may find themselves shut out of a “caller ID” model of spam filtering. Although some sites that run web-based email services appear to be sensitive to that, most people forget that there are many reasons you and your computer are not the same thing.

There is one sure way to keep spam and viruses off your computer. Unplug it.

I have said before that “Insurance makes things cost more,” and that “Tort reform is not the same thing as damage caps.” These facts are still true, and you are welcome to see my arguments in the archives. Today, I would like to focus on the Medical Malpractice Crisis. In short, yes there is a crisis, no simply capping non-economic damages will not make it go away.

There is definitely a crisis, make no mistake. Malpractice insurance rates are going up by double-digit percentages — as much as 82% in one case — in many places. Because insurance is regulated at the state level, the actual figures vary wildly from state to state. Doctors are not in a position to pass their added expense on to their patients. In some states, things are worse than in others. According to the AMA, about 19 states (almost 40% of all states) are in “crisis.” The AMA prescription for the crisis is caps on non-economic damages. Republicans agree. Mostly, anyway.

There is anecdotal evidence that doctors in some areas are closing practices, limiting the scope of their practice, leaving the state, retiring early, or making do without malpractice insurance at all. According to these tales, there is a particular problem with specialists, such as Obstetricians and Neurosurgeons. This evidence may or may not stand up to objective scrutiny.

One thing many people do not understand is that the malpractice insurance your doctor carries has limits, just like your auto, renters, or homeowners insurance does. In many places, the standard policy has limits of $1 Million per incident and $3 Million per year. In theory, anything over those limits awarded to a plaintiff must be paid out of the doctor’s pocket. In real life, this is not really the case. Perhaps more defendants (such as the doctor’s partners or a nice deep-pocketed hospital) have their insurance tapped. Or rather than spend years in appeals, a settlement is reached.

But back to the million dollars. Let’s imagine that a 40 year old man in killed through medical negligence. First, lets look at the real damages. He made $50,000 last year, and planned to work until he was 65 (yes, that’s ambitious planning these days). That means if he worked 25 years for $50,000 — never got another raise — there are real damages of $1.25 Million before we even calculate the cost of his funeral. The insurance company has already reached the limits of what they will pay, regardless of what might be awarded for “pain and suffering.” In fact, it turns out that “only a handful” of cases exceed $1 Million verdicts. According to the National Practitioners Data Bank, the average payout of a doctor to a patient was $135,000. This figure likely averages in out-of-court settlements, which account for 96% of all cases.

To say that mega-verdicts have anything to do with rising malpractice rates is disingenuous. To say that capping non-economic damages will fix malpractice rates is doubly so. Non-economic damages account for 24% of the money spent on malpractice; more than any other single category, but not by much.

Critics who say that damage caps work normally point to California as their poster child. The truth is that California’s MICRA statute is just one part of an elaborate insurance reform and cost control scheme. It is furthermore worth noting that “California’s medical malpractice disputes are settled 23 percent faster.”

Proponents of damage caps prefer that you not look at Nevada. In 2002, they passed damage caps. That year, 7 doctors came to Las Vegas to practice medicine, an area that sees 5000 new residents every month. Despite passing damage caps, malpractice rates have still risen double-digits for 2004. Further reforms of the reform propose limiting lawyers fees, telling the jury when insurance paid for treatment (that would be “most of the time”), allowing payment of verdicts over time, and some shuffling of percentage of liability. I am at a loss for how most of this stuff is supposed to help. It is ironic that Nevada’s Senator Harry Reid is co-sponsoring a bill to bring damage caps to the nation.

One of the problems with Nevada’s reforms is that it abolished a medical review panel. Before, many cases could be dismissed as frivolous by a panel of actual doctors — whom one must assume are competent and impartial. Not surprisingly, the number of malpractice suits has risen. Now, everybody is entitled to his day in court, and this is costing everyone a lot of money. It can cost tens of thousands of dollars just to get to the point where a judge can decide to dismiss a frivolous suit, or take a clearly uninvolved party out of a suit.

Oh, and those legal fees are usually paid by the malpractice insurance carrier. It might take only one frivolous and quickly dismissed case against a family practitioner to obliterate the premium he paid. For reference, in West Virginia 29% of malpractice cases were dismissed in the last decade. Nationally, 70% of cases are closed with no money changing hands — except of course among the lawyers.

As if that is not bad enough, it turns out that the majority of malpractice complaints are against 1-5% of doctors. The figure varies by state. Some of this may well be “personality issues,” but the fact remains that as much as 80% of malpractice claims could be eliminated by getting “Dr. Nick” the heck out of the hospital.

Getting the malpractice crisis in hand will really impact health care costs by less than 1% according to the Congressional Budget Office. Others say that reduced “defensive medicine” such as unnecessary tests will help bring costs down. However, it may very soon impact the availability of healthcare in general. That would be bad. Here are some options we might consider instead of liability caps:

Insurance reform. Insurance needs to be reformed in many ways, all across the nation. We can start with re-mutualizing insurance companies (so no money is funneled off as profits), or setting up state insurance pools for high-risk groups.

Medical malpractice review boards. These impartial medical/legal experts would be the equivalent of a grand jury, determining whether there is sufficient evidence for a malpractice case to make it to trial. If they see the same doctor over and over, they should have the authority to open an investigation into his competence. For that matter, if they dismiss cases by the same lawyer over and over, they should turn him over to the local Bar Association for review.

More arbitration, fewer trials. Utah is considering this approach. There are pros and cons, of course, but it will be interesting to see how it works out.

Remember, sometimes bad things happen. Not everything has to be somebody’s fault. Does it?

On the lighter side, I thought you would enjoy this image.

Perhaps you remember about a month ago, when the World Health Organization came out with guidelines for tackling what is turning out to be a global obesity epidemic. They said nothing less radical than too much sugar is bad for humans. Representatives of the Bush Administration quickly objected to this (emphasis mine): “The Bush administration, which receives millions in funding from the sugar industry, argues there is little robust evidence to show that drinking sugary drinks or eating too much sugar is a direct cause of obesity. It particularly opposes a recommendation that just 10 per cent of people’s energy intake should come from added sugar. The US has a 25 per cent guideline. Thompson’s representative… will be Bill Steiger, godson of George Bush Sr. He will argue there is no evidence that selling junk food to children increases overweight. [sic]”

The sugar industry has become a political linebacker, set to tackle any politician or scientist that dares speak ill of it, let alone attempt to rein it in. This means they have a two-front war for profits to wage.

The dietary front is only half the story. I have said before that every weight loss diet that works involves drastically if not completely eliminating refined sugars from your life, in the context of reducing total calories. Other experts agree that too much sugar, including too much corn syrup, is not good for you. Even the most rabid of high-carb low-fat proponents must concede this point. However, to listen to this commentator, sugar is great for you: the article is long on out of context quotes such as “Yes, even our “children benefit from eating some sugar,” says Ellyn Satter, a childhood weight specialist and clinical therapist…” and not-cited research by unknown researchers who “have found that added sugars and sodas – like other high-calorie, low-nutrient dense foods – are unrelated to weight. Consumption is high among all kids. In fact, the skinniest teens actually drink the most sodas, and the fattest drink the most sugar-free ones.” Did you notice that even her cited expert said “some” sugar is beneficial? I smell an agenda.

The other battlefront for Big Sugar is world trade, where they are in the process of winning two big skirmishes. The Central American Free Trade Agreement (CAFTA) is only going to allow 110,000 additional tons of sugar to be imported tariff free into the United States in return for opening Central American markets to American rice. Doesn’t sound like much of a free trade agreement, does it?

The other Big Win for Big Sugar is in a trade pact with Australia. Now, please keep in mind that Australian sugar producers are not faring as well as their American cousins. Last month the Australians made it clear that if the Americans wanted a Free Trade deal, it would have to include sugar. American Big Sugar made it clear that it had better not. Alas, the article is premium content, but The Economist had this to say in their February 14, 2004 print issue:

The deal has once again underscored the clout of the American sugar lobby — scattered across America from the powerful interests of Florida, a key electoral state for Mr. Bush in November, to the beet growers of North Dakota. The industry and its executives are among the biggest donors to congressmen and to the president. The sugar quotas they favour mean Americans pay around three times the world-market price. The inclusion of tiny concessions to cane growers in five Central American countries, in the recently negotiated Central American Free Trade Agreement, is one reason why that pack is guaranteed a rocky ride through Congress.

Not only does Big Sugar effectively own enough congressmen to possibly scuttle an international trade deal, they are doing everything in their power to suck money out of your wallet.