Bits Blog: Do People Actually Shop on Phones? The Answer Is Decidedly Yes

In e-commerce, the mobile revolution is here.

In 2012, people spent $25 billion on purchases made from phones and tablets, an increase of 81 percent from the year before, according to eMarketer, which compiles data from 120 sources that track commerce.

That is still a minority of total e-commerce sales. Mobile accounted for just 11 percent of e-commerce and is expected to reach 15 percent this year. But eMarketer predicts that by 2016, mobile will be $87 billion, or a quarter of all e-commerce.

The shift is significant for a type of shopping riddled with challenges — like small screens that make it hard to view items and type. It reflects the consumers’ shift to doing everything from work to play on mobile devices.

“Particularly in the second half of the year and in the holiday season, there were signs that smartphones and tablets in particular had made much more progress than people had previously thought we would,” said Clark Fredricksen, vice president of communications at eMarketer.

And mobile shoppers spend a surprising amount when using these devices — an average of $329 per order when on tablets and $250 when on phones, eMarketer said.

Tablets in particular have significantly changed the way people shop. While in 2011, people spent more money making purchases from smartphones than from tablets, shopping on tablets surpassed phones last year: $13.9 billion was spent from tablets and $9.9 billion from phones.

People are more likely to use tablets while they are in a shopping mood, like lounging on the couch. And their bigger screens make shopping easier than it is on smartphones and in some cases easier than on computers, because shoppers can zoom in or drag items to their carts with their fingers.

For example, at Tea Collection, a children’s clothing retailer, just over a third of transactions now come from mobile devices. People are just as likely to buy from tablets as from computers, and some days more likely, but the conversion rate is lower on smartphones.

Leigh Rawdon, chief executive and co-founder of Tea Collection, said she was surprised at how quickly people have taken to shopping on mobile devices, and that she expects behavior to change yet again with the proliferation of smaller tablets like the iPad Mini that blur the line between phone and tablet.

Still, some retailers report that mobile commerce has not been as big as they expected.

“Many mobile storefronts have problems that make buying difficult,” Mr. Fredricksen said. “Even though sessions often start on smartphones, in the end consumers end up turning to computers or retail stores or even a tablet to seal the deal.”

Big e-commerce players that have poured resources into mobile shopping, like Amazon.com and eBay, are seeing significantly more mobile commerce than smaller shopping sites, Mr. Fredricksen said.

During the holidays, overall e-commerce sales on computers and mobile devices combined grew 14 percent to $42.3 billion, according to comScore. That was lower than expected. After a strong start around Thanksgiving, consumer spending shrank because of concerns about the fiscal crisis in Washington, comScore said.

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Would-Be Inauguration in Venezuela for Chávez

Ariana Cubillos/Associated Press

A woman walked past a wall plastered with election campaign posters of President Hugo Chávez of Venezuela in Caracas on Wednesday.

CARACAS, Venezuela — President Hugo Chávez’s supporters have not ruled out swearing him in from his hospital in Havana. His detractors are calling for government investigators to go check his pulse themselves. The justices whom Mr. Chávez’s allies have named to the Supreme Court have decided that he can continue to govern in absentia.

In a country that Mr. Chávez has dominated for so long, his health crisis and the decision to proceed on Thursday with a quasi-presidential inauguration that he is unable to attend are producing a stream of bizarre developments and national angst about who is in charge.

“Who’s governing Venezuela?” Julio Borges, an opposition member of the National Assembly, said during a noisy legislative debate this week on the biggest issue facing the country, overshadowing other urgent matters like pressures for a painful currency devaluation, stagnant oil production and chronic shortages of food and other staples on store shelves.

Mr. Chávez has long said, “I am the people,” a mantra that his supporters are invoking as they plan to don the sash the president would have worn had he been able to attend his inauguration, symbolically becoming presidents themselves.

“Anyone who has a sash, bring it along, because tomorrow the people will be invested as president of the republic, because the people are Chávez,” Diosdado Cabello, the president of the National Assembly, said Wednesday. “All of us here are Chávez, the people in the street are Chávez, the lady who cooks is Chávez, the comrade who works as a watchman is Chávez, the soldier is Chávez, the woman is Chávez, the farmer is Chávez, the worker is Chávez; we’re all Chávez.”

To no one’s surprise, the Supreme Court, full of Chávez loyalists, ruled on the eve of the ceremony that Mr. Chávez’s inauguration could be postponed and that his team of advisers could smoothly move, in his absence, from one term to the next.

The court declined to set a time limit for the swearing in, raising the possibility that the country’s deepening uncertainty could go on for weeks or months. And it did nothing to clear up the stubborn mystery of the president’s condition.

Luisa Estella Morales, the president of the Supreme Court, said Wednesday at a news conference that there was no need at this time for a delegation to go to Cuba and report back on the condition of Mr. Chávez, 58. Asked if the swearing in could occur in Havana, she said the time and place of the ceremony had not been determined.

 Ms. Morales said the Supreme Court’s ruling was meant to uphold the results of October’s presidential election.

“It’s one of the most important values that we should preserve as a constitutional court,” Ms. Morales said. “The sovereign Venezuelan people have expressed through their vote their desire to continue being governed by President Hugo Rafael Chávez Frías.”

The government has been opaque for months, acknowledging that he suffered from a relapse of cancer in the pelvic area, but not specifying the type of cancer or detailing his prognosis.

The lack of information has left Venezuela tied in knots. Mr. Chávez has loomed so large for so long — with speeches that have lasted for hours, frequent Twitter posts and his outsized singing, ranting, poetry-reciting and foe-bashing personality — that his sudden silence has created a sizable vacuum.

“We don’t have a president,” lamented Estela Martínez, 63, a nurse who has supported Mr. Chávez throughout his 14 years in office. She said she was afraid that the public was not getting the full truth about the president’s condition and that there was far more shouting than clarity from political leaders. “Someone has to take the reins of the country.”

Henrique Capriles Radonski, the opposition candidate who lost to Mr. Chávez in October, criticized the Supreme Court’s decision endorsing a delay in the inauguration. “Institutions should not respond to the interests of a government,” he said.

The State Department in Washington, which has been cautious about getting involved in the contentious political back-and-forth, said Wednesday that it would be eager to improve relations with Venezuela, which have long been strained.

María Iguarán and María Eugenia Díaz contributed reporting.

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DealBook: S.E.C. Enforcement Chief, Robert Khuzami, Steps Down

Robert Khuzami, a former terrorism prosecutor who revamped the Securities and Exchange Commission’s enforcement unit after the financial crisis, is stepping down from the agency, ending a four-year tenure that included significant action against some of Wall Street’s largest firms.

After inheriting a mess in 2009, Mr. Khuzami reinvigorated the team, which was maligned for missing the warning signs of the financial crisis and Bernard L. Madoff’s Ponzi scheme. Mr. Khuzami, an imposing presence with a piercing stare, blew up the management ranks, fashioning specialized units to track complex corners of Wall Street and applied aggressive prosecutorial tactics to civil cases. In recent years, the enforcement division notched a record number of actions, many against banks at the center of the crisis.

“They know we’re out there, and we’re smarter and can cover more ground,” said Mr. Khuzami, who announced his departure to staff in an e-mail on Wednesday, said in an interview. He is set to depart in about two weeks.

Mr. Khuzami’s successor faces challenges. The enforcement unit must contend with the increasingly influential rapid-fire trading firms that, by some accounts, have introduced instability to the stock market.

The unit also faces lingering questions about its negotiating tactics. Some consumer advocates complain that the agency’s headline-grabbing settlements let Wall Street off the hook. Mr. Khuzami’s unit notably butted heads with a prominent federal judge in New York, Jed S. Rakoff, who in 2010 called the agency’s $150 million settlement with Bank of America over lax public disclosures “half-baked justice at best.”

Mr. Khuzami’s departure, part of a broader exodus from the S.E.C. following the resignation of chairwoman Mary L. Schapiro, raises further questions about the future of the unit. The move, at the very least, add to the gap in the S.E.C.’s roster.

The agency has witnessed a wave of turnover in recent weeks, with the head of trading and markets and the director of corporation finance both leaving. Elisse B. Walter, Ms. Schapiro’s replacement, named interim replacements for those spots.

But the enforcement division, officials say, could struggle under a provisional leader. The enforcement chief, they note, sets the tone for Wall Street oversight.

Ms. Walter is weighing a short list of candidates to replace Mr. Khuzami, according to people briefed on the matter. The list includes Mr. Khuzami’s current deputy, George Canellos, and the enforcement division’s chief litigation counsel, Matthew Martens.

With Mr. Khuzami gone, the field of contenders to replace Ms. Schapiro is also shifting. While President Obama awarded the job to Ms. Walter, a Democrat who became an S.E.C. commissioner in 2008, her term expires at the end of 2013.

Mr. Khuzami, a political independent described as alternately harsh and playful with his employees, built a loyal following among some enforcement division officials who hoped he would win the chairman post. He opted instead to position himself for a lucrative spot at a white shoe law firm.

“I don’t know what I’m doing next, but I loved the last four years and I’m sad it’s ending,” he said in the interview.

Mr. Khuzami, a Rochester native with a bohemian upbringing, followed an unlikely path to the S.E.C. His parents were ballroom dancers; his sister a
muralist. They jokingly refer to Mr. Khuzami as “the white sheep” of the family.

He put himself through school with odd jobs, as a dishwasher, bartender, overnight dockworker. After graduating from Boston University law school, he was hired as a junior lawyer at Cadwalader, Wickersham & Taft in New York.

Mr. Khuzami tried out for the United States Attorney’s office under Rudy Giuliani, but missed the cut. When the office eventually hired him in the early 1990s, he was assigned to terrorism prosecutions. The move led to a career defining case — the conviction of the so-called “Blind Sheik,” a Muslim leader tied the 1993 bombing of the World Trade Center. He later ran a securities task force.

But after more than a decade as a prosecutor, he departed for Deutsche Bank, where he eventually became general counsel of the firm’s American arm.

In 2009, he landed on Ms. Schapiro’s radar screen. She was searching for an aggressive personality to shake up the enforcement team, a demoralized group criticized for missing the warning signs of the crisis.

“It had to be someone who was a great prosecutor,” Ms. Schapiro said in an interview.

Their relationship began with an awkward meeting. Mr. Khuzami, having dressed in the dark to catch a pre-dawn plane to Washington, wore mismatched shoes with different colors. And at the end of the interview, without an explicit offer, he was unsure whether he won the position. Finally, after days of silence, Ms. Schapiro phoned him to ask: “Are you taking the job or not?”

Mr. Khuzami soon hatched a game plan for overhauling — some officials called it “dismantling” — the division.

He arrived in Washington with strategies imported from the U.S. attorney’s office. Mr. Khuzami pushed the S.E.C. to offer leniency for cooperating witnesses and to strike deferred-prosecution agreements to companies that promised to behave. The tools, he said, are “game changers” for unearthing fraud.

He also poached former prosecutors for his staff, including Lorin L. Reisner, Mr. Khuzami’s friend from the U.S. attorney’s office, who joined as the top deputy. Mr. Khuzami plucked other new hires from Wall Street, including traders and compliance officers. Adam Storch, then a 29-year-old Goldman Sachs vice president, became the unit’s first chief operating officer.

Under the new regime, the enforcement team eliminated a layer of management, moving senior lawyers onto the front lines of investigations. Mr. Khuzami mandated, for the first time, that all enforcement employees carry a Blackberry, holding them accountable beyond the 9-5 workday.

Mr. Khuzami also built specialties among his staff, a strategy he picked up at Deutsche Bank. He created an Office of Market Intelligence to analyze and triage tips and complaints from investors. He then opened five units that tracked some of the darkest corners of finance, focusing on structured products like derivatives, market abuse like insider trading and the secretive world of hedge fund returns.

“The changes were necessary and dramatic,” Ms. Schapiro said.

Mr. Khuzami introduced the broad outlines of reform in May 2009 at a retreat in Solomons Island, Maryland, an annual gathering of senior enforcement officials. “It’s time to get serious about change,” he said, according to attendees.

But the message provoked concerns among enforcement lawyers, who lined up at microphones to question the nuances of new procedures and complain about potential violations of their contracts. A few top officials, some who were widely respected, were about to be left sidelined under his regime.

“Everyone in the office was scared, but we also started working harder,” said Thomas Sporkin, who ran the Office of Market Intelligence until last year, when he departed the agency.

The group faced some growing pains, as it adjusted to Mr. Khuzami’s management style. He had a harsh streak and a knack for aggressively grilling lawyers about the nuances of enforcement cases, according to staff members. But they also recall a softer side. He invited employees to his family Christmas party, they say, and went to motorcycle safety school with Mr. Canellos.

As a motivational tool, he would often publicly perform for his staff. At a swearing in ceremony for new members, he quoted poetry from Gwendolyn Brooks. Mr. Khuzami also once donned a red wig to sing a version of the “Annie” theme song, “Tomorrow,” with lyrics twisted to fit the S.E.C., at an annual awards ceremony.

“Even though he scares the hell out of people,” one employee said, “you like him because he’s genuine.”

Mr. Khuzami’s tactics appeared to bear fruit. Under his tenure, the unit leveled more charges than in any comparable four-year period, including a record number of enforcement actions in 2011. They also mounted 150 actions against people and firms tied to the crisis.

Mr. Khuzami emphasized that the unit is now tracking bigger game. The agency has taken aim at billionaire hedge fund managers, including Philip Falcone, and filed complex cases involving collateralized debt obligations, a crackdown that ensnared some of the biggest names on Wall Street. At the urging of Mr. Khuzami and Mr. Reisner, the S.E.C. brought a landmark fraud case against Goldman Sachs, netting a record settlement in excess of $500 million.

“He’s really broadened the net,” said Mary Jo White, a white collar criminal defense lawyer at Debevoise who was Mr. Khuzami’s boss when she was the United States Attorney in Manhattan.

Some consumer advocates say the enforcement unit remains too timid. They complain that it opted not to charge Lehman Brothers executives and went soft on firms like Bank of America and Citigroup. Judge Rakoff refused to bless the $285 million Citigroup deal, calling the penalty “pocket change”
Critics also question why the S.E.C. sued only a handful of top executives who ran firms at the center of the credit crisis.

“If you’re rich and connected on Wall Street, then don’t worry about the S.E.C,” said Dennis Kelleher, the head of Better Markets, a nonprofit advocacy group critical of the financial industry.

Mr. Khuzami dismissed the grumbling, saying “the critics ought to take comfort in that we’re not reluctant to charge high-ranking individuals.” The agency, he noted, sued 65 senior executives involved in the crisis, including the leaders of Fannie Mae, Freddie Mac and most major mortgage companies that caused the housing bubble. The cases involving big banks, he said, lacked sufficient evidence implicating C.E.Os.

And despite their differences, even Mr. Rakoff credits Mr. Khuzami with a rapid turnaround of the enforcement division.

“Although, from our different perspectives, Rob Khuzami and I sharply disagree about some matters, overall I think he has done a terrific job,” Mr. Rakoff said. “Most important, he has restored a sense of pride and purpose to the S.E.C. enforcement division, and we are all the better for it.”

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Economic Scene: Health Care and Pursuit of Profit Make a Poor Mix

Thirty years ago, Bonnie Svarstad and Chester Bond of the School of Pharmacy at the University of Wisconsin-Madison discovered an interesting pattern in the use of sedatives at nursing homes in the south of the state.

Patients entering church-affiliated nonprofit homes were prescribed drugs roughly as often as those entering profit-making “proprietary” institutions. But patients in proprietary homes received, on average, more than four times the dose of patients at nonprofits.

Writing about his colleagues’ research in his 1988 book “The Nonprofit Economy,” the economist Burton Weisbrod provided a straightforward explanation: “differences in the pursuit of profit.” Sedatives are cheap, Mr. Weisbrod noted. “Less expensive than, say, giving special attention to more active patients who need to be kept busy.”

This behavior was hardly surprising. Hospitals run for profit are also less likely than nonprofit and government-run institutions to offer services like home health care and psychiatric emergency care, which are not as profitable as open-heart surgery.

A shareholder might even applaud the creativity with which profit-seeking institutions go about seeking profit. But the consequences of this pursuit might not be so great for other stakeholders in the system — patients, for instance. One study found that patients’ mortality rates spiked when nonprofit hospitals switched to become profit-making, and their staff levels declined.

These profit-maximizing tactics point to a troubling conflict of interest that goes beyond the private delivery of health care. They raise a broader, more important question: How much should we rely on the private sector to satisfy broad social needs?

From health to pensions to education, the United States relies on private enterprise more than pretty much every other advanced, industrial nation to provide essential social services. The government pays Medicare Advantage plans to deliver health care to aging Americans. It provides a tax break to encourage employers to cover workers under 65.

Businesses devote almost 6 percent of the nation’s economic output to pay for health insurance for their employees. This amounts to nine times similar private spending on health benefits across the Organization for Economic Cooperation and Development, on average. Private plans cover more than a third of pension benefits. The average for 30 countries in the O.E.C.D. is just over one-fifth.

We let the private sector handle tasks other countries would never dream of moving outside the government’s purview. Consider bail bondsmen and their rugged sidekicks, the bounty hunters.

American TV audiences may reminisce fondly about Lee Majors in “The Fall Guy” chasing bad guys in a souped-up GMC truck — a cheap way to get felons to court. People in most other nations see them as an undue commercial intrusion into the criminal justice system that discriminates against the poor.

Our reliance on private enterprise to provide the most essential services stems, in part, from a more narrow understanding of our collective responsibility to provide social goods. Private American health care has stood out for decades among industrial nations, where public universal coverage has long been considered a right of citizenship. But our faith in private solutions also draws on an ingrained belief that big government serves too many disparate objectives and must cater to too many conflicting interests to deliver services fairly and effectively.

Our trust appears undeserved, however. Our track record suggests that handing over responsibility for social goals to private enterprise is providing us with social goods of lower quality, distributed more inequitably and at a higher cost than if government delivered or paid for them directly.

The government’s most expensive housing support program — it will cost about $140 billion this year — is a tax break for individuals to buy homes on the private market.

According to the Tax Policy Center, this break will benefit only 20 percent of mostly well-to-do taxpayers, and most economists agree that it does nothing to further its purported goal of increasing homeownership. Tax breaks for private pensions also mostly benefit the wealthy. And 401(k) plans are riskier and costlier to administer than Social Security.

From the high administrative costs incurred by health insurers to screen out sick patients to the array of expensive treatments prescribed by doctors who earn more money for every treatment they provide, our private health care industry provides perhaps the clearest illustration of how the profit motive can send incentives astray.

By many objective measures, the mostly private American system delivers worse value for money than every other in the developed world. We spend nearly 18 percent of the nation’s economic output on health care and still manage to leave tens of millions of Americans without adequate access to care.

Britain gets universal coverage for 10 percent of gross domestic product. Germany and France for 12 percent. What’s more, our free market for health services produces no better health than the public health care systems in other advanced nations. On some measures — infant mortality, for instance — it does much worse.

In a way, private delivery of health care misleads Americans about the financial burdens they must bear to lead an adequate existence. If they were to consider the additional private spending on health care as a form of tax — an indispensable cost to live a healthy life — the nation’s tax bill would rise to about 31 percent from 25 percent of the nation’s G.D.P. — much closer to the 34 percent average across the O.E.C.D.

A quarter of a century ago, a belief swept across America that we could reduce the ballooning costs of the government’s health care entitlements just by handing over their management to the private sector. Private companies would have a strong incentive to identify and wipe out wasteful treatment. They could encourage healthy lifestyles among beneficiaries, lowering use of costly care. Competition for government contracts would keep the overall price down.

We now know this didn’t work as advertised. Competition wasn’t as robust as hoped. Health maintenance organizations didn’t keep costs in check, and they spent heavily on administration and screening to enroll only the healthiest, most profitable beneficiaries.

One study of Medicare spending found that the program saved no money by relying on H.M.O.’s. Another found that moving Medicaid recipients into H.M.O.’s increased the average cost per beneficiary by 12 percent with no improvement in the quality of care for the poor. Two years ago, President Obama’s health care law cut almost $150 billion from Medicare simply by reducing payments to private plans that provide similar care to plain vanilla Medicare at a higher cost.

Today, again, entitlements are at the center of the national debate. Our elected officials are consumed by slashing a budget deficit that is expected to balloon over coming decades. With both Democrats and Republicans unwilling to raise taxes on the middle class, the discussion is quickly boiling down to how deeply entitlements must be cut.

We may want to broaden the debate. The relevant question is how best we can serve our social needs at the lowest possible cost. One answer is that we have a lot of room to do better. Improving the delivery of social services like health care and pensions may be possible without increasing the burden on American families, simply by removing the profit motive from the equation.

E-mail: eporter@nytimes.com;

Twitter: @portereduardo

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Economic Scene: Health Care and Pursuit of Profit Make a Poor Mix

Thirty years ago, Bonnie Svarstad and Chester Bond of the School of Pharmacy at the University of Wisconsin-Madison discovered an interesting pattern in the use of sedatives at nursing homes in the south of the state.

Patients entering church-affiliated nonprofit homes were prescribed drugs roughly as often as those entering profit-making “proprietary” institutions. But patients in proprietary homes received, on average, more than four times the dose of patients at nonprofits.

Writing about his colleagues’ research in his 1988 book “The Nonprofit Economy,” the economist Burton Weisbrod provided a straightforward explanation: “differences in the pursuit of profit.” Sedatives are cheap, Mr. Weisbrod noted. “Less expensive than, say, giving special attention to more active patients who need to be kept busy.”

This behavior was hardly surprising. Hospitals run for profit are also less likely than nonprofit and government-run institutions to offer services like home health care and psychiatric emergency care, which are not as profitable as open-heart surgery.

A shareholder might even applaud the creativity with which profit-seeking institutions go about seeking profit. But the consequences of this pursuit might not be so great for other stakeholders in the system — patients, for instance. One study found that patients’ mortality rates spiked when nonprofit hospitals switched to become profit-making, and their staff levels declined.

These profit-maximizing tactics point to a troubling conflict of interest that goes beyond the private delivery of health care. They raise a broader, more important question: How much should we rely on the private sector to satisfy broad social needs?

From health to pensions to education, the United States relies on private enterprise more than pretty much every other advanced, industrial nation to provide essential social services. The government pays Medicare Advantage plans to deliver health care to aging Americans. It provides a tax break to encourage employers to cover workers under 65.

Businesses devote almost 6 percent of the nation’s economic output to pay for health insurance for their employees. This amounts to nine times similar private spending on health benefits across the Organization for Economic Cooperation and Development, on average. Private plans cover more than a third of pension benefits. The average for 30 countries in the O.E.C.D. is just over one-fifth.

We let the private sector handle tasks other countries would never dream of moving outside the government’s purview. Consider bail bondsmen and their rugged sidekicks, the bounty hunters.

American TV audiences may reminisce fondly about Lee Majors in “The Fall Guy” chasing bad guys in a souped-up GMC truck — a cheap way to get felons to court. People in most other nations see them as an undue commercial intrusion into the criminal justice system that discriminates against the poor.

Our reliance on private enterprise to provide the most essential services stems, in part, from a more narrow understanding of our collective responsibility to provide social goods. Private American health care has stood out for decades among industrial nations, where public universal coverage has long been considered a right of citizenship. But our faith in private solutions also draws on an ingrained belief that big government serves too many disparate objectives and must cater to too many conflicting interests to deliver services fairly and effectively.

Our trust appears undeserved, however. Our track record suggests that handing over responsibility for social goals to private enterprise is providing us with social goods of lower quality, distributed more inequitably and at a higher cost than if government delivered or paid for them directly.

The government’s most expensive housing support program — it will cost about $140 billion this year — is a tax break for individuals to buy homes on the private market.

According to the Tax Policy Center, this break will benefit only 20 percent of mostly well-to-do taxpayers, and most economists agree that it does nothing to further its purported goal of increasing homeownership. Tax breaks for private pensions also mostly benefit the wealthy. And 401(k) plans are riskier and costlier to administer than Social Security.

From the high administrative costs incurred by health insurers to screen out sick patients to the array of expensive treatments prescribed by doctors who earn more money for every treatment they provide, our private health care industry provides perhaps the clearest illustration of how the profit motive can send incentives astray.

By many objective measures, the mostly private American system delivers worse value for money than every other in the developed world. We spend nearly 18 percent of the nation’s economic output on health care and still manage to leave tens of millions of Americans without adequate access to care.

Britain gets universal coverage for 10 percent of gross domestic product. Germany and France for 12 percent. What’s more, our free market for health services produces no better health than the public health care systems in other advanced nations. On some measures — infant mortality, for instance — it does much worse.

In a way, private delivery of health care misleads Americans about the financial burdens they must bear to lead an adequate existence. If they were to consider the additional private spending on health care as a form of tax — an indispensable cost to live a healthy life — the nation’s tax bill would rise to about 31 percent from 25 percent of the nation’s G.D.P. — much closer to the 34 percent average across the O.E.C.D.

A quarter of a century ago, a belief swept across America that we could reduce the ballooning costs of the government’s health care entitlements just by handing over their management to the private sector. Private companies would have a strong incentive to identify and wipe out wasteful treatment. They could encourage healthy lifestyles among beneficiaries, lowering use of costly care. Competition for government contracts would keep the overall price down.

We now know this didn’t work as advertised. Competition wasn’t as robust as hoped. Health maintenance organizations didn’t keep costs in check, and they spent heavily on administration and screening to enroll only the healthiest, most profitable beneficiaries.

One study of Medicare spending found that the program saved no money by relying on H.M.O.’s. Another found that moving Medicaid recipients into H.M.O.’s increased the average cost per beneficiary by 12 percent with no improvement in the quality of care for the poor. Two years ago, President Obama’s health care law cut almost $150 billion from Medicare simply by reducing payments to private plans that provide similar care to plain vanilla Medicare at a higher cost.

Today, again, entitlements are at the center of the national debate. Our elected officials are consumed by slashing a budget deficit that is expected to balloon over coming decades. With both Democrats and Republicans unwilling to raise taxes on the middle class, the discussion is quickly boiling down to how deeply entitlements must be cut.

We may want to broaden the debate. The relevant question is how best we can serve our social needs at the lowest possible cost. One answer is that we have a lot of room to do better. Improving the delivery of social services like health care and pensions may be possible without increasing the burden on American families, simply by removing the profit motive from the equation.

E-mail: eporter@nytimes.com;

Twitter: @portereduardo

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Private Manning of WikiLeaks Case Must Face Charges

Mark Wilson/Getty Images

Pfc. Bradley Manning, a former Army intelligence analyst, on Tuesday. His court-martial is scheduled to begin on March 6.

FORT MEADE, Md. — A military judge on Tuesday declined to dismiss charges against Pfc. Bradley E. Manning, a former Army intelligence analyst accused of providing archives of military and diplomatic documents to the antisecrecy group WikiLeaks, despite complaints by his defense team that he had been mistreated while being held at the Marines’ brig at Quantico, Va.

But the judge, Col. Denise Lind, ruled that brig officials had improperly kept Private Manning on stricter conditions, including procedures designed to prevent potentially suicidal detainees from injuring themselves, for excessive periods. As a remedy, she granted Private Manning 112 days of credit against any eventual prison sentence.

That amounted to little more than a symbolic victory for Private Manning, whose supporters had rallied around claims that he had been tortured at Quantico. Prosecutors are pursuing charges, including aiding the enemy and violating the Espionage Act, that could result in a life sentence if he is convicted. His court-martial is scheduled to begin on March 6.

The ruling by Colonel Lind came after a long pretrial hearing last month that amounted to a miniature trial over whether military officials had subjected Private Manning to unlawfully harsh conditions over the roughly eight months he spent at Quantico in 2010 and 2011. His defense team had asked for the charges to be dismissed or for 10-for-1 credit for time served for the bulk of his time in Quantico, which could have shaved around seven years from any eventual prison term.

But Colonel Lind, who spent nearly two hours reading her opinion in a small courtroom on Tuesday afternoon, found for the government on most of the disputed facts. She recounted in great detail Private Manning’s sometimes erratic behavior and mental problems both before and after his arrest in Iraq in 2010, including suicidal gestures and comments that she said made his captors legitimately fear that he was dwelling on suicide and biding his time until an opportunity arose.

“There was no intent to punish the accused by anyone in the Marine Corps brig staff or chain of command,” she said. “The intent was to make sure the accused was safe, did not hurt himself and was available for the trial.”

Still, Colonel Lind found that some steps brig officials had taken were excessive. The government had already conceded that Private Manning should not have been kept on the strictest status, “suicide risk,” on two occasions totaling seven days, after a brig medical official said that status was no longer necessary. She agreed, awarding one day of credit for each of those days.

She also said that it eventually became excessive and effectively punitive for brig officials to keep him on “prevention of injury” status — a category that did not require a doctor’s assent — for a 75-day period starting in November 2010, when his behavior had been stable for a lengthy period, and ending when he had an anxiety attack.

And she also awarded 20 days’ credit for a period beginning in April 2011 until he was transferred from Quantico later that month, when brig officials kept him on an extra-strict version of “prevention of injury” status. That included removing his underwear nightly after a comment he had laughingly made to a guard in early March that he could kill himself with its elastic band if he wanted.

Finally, she awarded him 10 days’ credit for a period in which brig officials allowed him just 20 minutes of exercise a day instead of the full hour other prisoners were granted.

Colonel Lind’s opinion also at one point discussed events reported in two articles in The New York Times in March 2011, recounting the removal of Private Manning’s clothing at night: a reaction, it is now clear, to his comment about killing himself with his underwear.

The first article said Private Manning had stood naked during inspection one morning in early March and cited his lawyer, David E. Coombs, as saying his client had been “forced” to do so. But Judge Lind portrayed the event as more ambiguous than an order: Private Manning, lacking clothes, had covered himself with a blanket, and a guard asked if that was how he stood at attention. He reacted by dropping the blanket.

The second article, published the next day, cited a Marine brig spokesman as saying that Private Manning would be required to stand outside his cell under similar conditions each morning. But starting the next day, she found, guards began giving Private Manning his clothing back each morning before inspection, and she said there was no evidence he had stood outside his cell rather than inside it.

Also on Tuesday, the judge began hearing arguments on a pair of motions by prosecutors seeking to restrict the ability of Private Manning’s defense team to call witnesses and introduce other testimony related to his motivation and whether the documents were overclassified.

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Target to Match Some Rivals' Online Prices Year-Round

(Reuters) - Target Corp said on Tuesday it will match on a year-round basis the prices found on the websites of key rivals Amazon.com Inc, Best Buy Co Inc, Wal-Mart Stores Inc and Toys R Us, its latest tactic to hold onto shoppers focused on price.

The move extends an online price-matching program that Target introduced over the holiday season and which was supposed to last only from November 1 to December 16. It also comes after Target last week reported flat sales growth in December at stores open at least a year.

"I think this is largely symbolic, it's akin to removing the Kindle from their stores," said Wells Fargo analyst Matt Nemer, referring to Target's decision to stop selling Amazon's tablet devices last year.

In November, Chief Executive Gregg Steinhafel said Target was not seeing a lot of price-match activity in its stores.

"It's not likely to have a huge impact on financials or customer behavior," said Nemer, who noted that customers are not likely to go to Target's guest services desk for a refund for just a small difference in price.

Also, much of what Target sells, such as apparel and accessories, is exclusive to the store, so there would be no comparable prices from competitors.

But Target will now also match prices year-round from its own website in its stores.

Nemer called that "a really important step," saying it removes confusion for customers who sometimes see different prices for products such as televisions in stores and online.

While shopping online has grown rapidly in recent years, it still represents a small fraction of overall shopping in the United States. Target's policy of matching online prices differs from policies at several chains, which match only printed advertised prices for items sold at stores.

Target said that throughout the year it will match the price when a customer buys an eligible item at one of its stores and finds the same item at a lower price in the following week's Target circular or in a local competitor's printed ad. It will also match the price if the customer finds the same item at a lower price within a week on Target's website or the websites of Amazon, Walmart, Best Buy and Toys R Us.

Amazon says it offers competitive prices and does not offer price matching when an item's price drops after a customer buys it, with the exception of televisions. Walmart matches the prices of print ads from competitors and said it has no plans to change its policy. Walmart also says it checks the prices of 30,000 items at competing chains each week to make sure it has the lowest prices.

Best Buy matches the price from a local competitor's store, a local Best Buy store or its own web site. Toys R Us matches in-store prices and certain online prices.

Shares of Target were down 60 cents at $60.70 in afternoon trading on the New York Stock Exchange.

(Reporting By Jessica Wohl in Chicago and Phil Wahba in New York; Editing by Alden Bentley and John Wallace)

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Health Spending Growth Stays Low for 3rd Straight Year

WASHINGTON — National health spending climbed to $2.7 trillion in 2011, or an average of $8,700 for every person in the country, but as a share of the economy, it remained stable for the third consecutive year, the Obama administration said Monday.

The rate of increase in health spending, 3.9 percent in 2011, was the same as in 2009 and 2010 — the lowest annual rates recorded in the 52 years the government has been collecting such data.

Federal officials could not say for sure whether the low growth in health spending represented the start of a trend or reflected the continuing effects of the recession, which crimped the economy from December 2007 to June 2009.

Kathleen Sebelius, the secretary of health and human services, said that “the statistics show how the Affordable Care Act is already making a difference,” saving money for consumers. But a report issued by the Centers for Medicare and Medicaid Services, in her department, said that the law had so far had “no discernible impact” on overall health spending.

Although some provisions of the law have taken effect, the report said, “their influence on overall health spending through 2011 was minimal.”

The recession increased unemployment, reduced the number of people with private health insurance, lowered household income and assets and therefore tended to slow health spending, said Micah B. Hartman, a statistician at the Centers for Medicare and Medicaid Services.

In the report, federal officials said that total national spending on prescription drugs and doctors’ services grew faster in 2011 than in the year before, but that spending on hospital care grew more slowly.

Medicaid spending likewise grew less quickly in 2011 than in the prior year, as states struggled with budget problems. But Medicare spending grew more rapidly, because of an increase in “the volume and intensity” of doctors’ services and a one-time increase in Medicare payments to skilled nursing homes, said the report, published in the journal Health Affairs.

National health spending grew at roughly the same pace as the overall economy, without adjusting for inflation, so its share of the economy stayed the same, at 17.9 percent in 2011, where it has been since 2009. By contrast, health spending accounted for just 13.8 percent of the economy in 2000.

Health spending grew more than 5 percent each year from 1961 to 2007. It rose at double-digit rates in some years, including every year from 1966 to 1984 and from 1988 to 1990.

The report did not forecast the effects of the new health care law on future spending. Some provisions of the law, including subsidized insurance for millions of Americans, could increase spending, officials said. But the law also trims Medicare payments to many health care providers and authorizes experiments to slow the growth of health spending.

“The jury is still out whether all the innovations we’re testing will have much impact,” said Richard S. Foster, who supervised the preparation of the report as chief actuary of the Medicare agency. “I am optimistic. There’s a lot of potential. More and more health care providers understand that the future cannot be like the past, in which health spending almost always grew faster than the gross domestic product.”

Evidence of the new emphasis can be seen in a series of articles published in The Archives of Internal Medicine, now known as JAMA Internal Medicine, under the title “Less Is More.” The series highlights cases in which “the overuse of medical care may result in harm and in which less care is likely to result in better health.”

Total spending for doctors’ services rose 3.6 percent in 2011, to $436 billion, while spending for hospital care increased 4.3 percent, to $850.6 billion.

Spending on prescription drugs at retail stores reached $263 billion in 2011, up 2.9 percent from 2010, when growth was just four-tenths of 1 percent. The latest increase was still well below the average increase of 7.8 percent a year from 2000 to 2010.

Federal officials said the increase in 2011 resulted partly from rapid growth in prices for brand-name drugs.

Prices for specialty drugs, typically prescribed by medical specialists for chronic conditions, have increased at double-digit rates in recent years, the government said. In addition, spending on new brand-name drugs — those brought to market in the previous two years — more than doubled from 2010 to 2011, driven by an increase in the number of new medicines.

“In 2011,” the report said, “spending for private health insurance premiums increased 3.8 percent, as did spending for benefits. Out-of-pocket spending by consumers increased 2.8 percent in 2011, accelerating from 2.1 percent in 2010 but still slower than the average annual growth rate of 4.7 percent” from 2002 to 2008.

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Health Spending Growth Stays Low for 3rd Straight Year

WASHINGTON — National health spending climbed to $2.7 trillion in 2011, or an average of $8,700 for every person in the country, but as a share of the economy, it remained stable for the third consecutive year, the Obama administration said Monday.

The rate of increase in health spending, 3.9 percent in 2011, was the same as in 2009 and 2010 — the lowest annual rates recorded in the 52 years the government has been collecting such data.

Federal officials could not say for sure whether the low growth in health spending represented the start of a trend or reflected the continuing effects of the recession, which crimped the economy from December 2007 to June 2009.

Kathleen Sebelius, the secretary of health and human services, said that “the statistics show how the Affordable Care Act is already making a difference,” saving money for consumers. But a report issued by the Centers for Medicare and Medicaid Services, in her department, said that the law had so far had “no discernible impact” on overall health spending.

Although some provisions of the law have taken effect, the report said, “their influence on overall health spending through 2011 was minimal.”

The recession increased unemployment, reduced the number of people with private health insurance, lowered household income and assets and therefore tended to slow health spending, said Micah B. Hartman, a statistician at the Centers for Medicare and Medicaid Services.

In the report, federal officials said that total national spending on prescription drugs and doctors’ services grew faster in 2011 than in the year before, but that spending on hospital care grew more slowly.

Medicaid spending likewise grew less quickly in 2011 than in the prior year, as states struggled with budget problems. But Medicare spending grew more rapidly, because of an increase in “the volume and intensity” of doctors’ services and a one-time increase in Medicare payments to skilled nursing homes, said the report, published in the journal Health Affairs.

National health spending grew at roughly the same pace as the overall economy, without adjusting for inflation, so its share of the economy stayed the same, at 17.9 percent in 2011, where it has been since 2009. By contrast, health spending accounted for just 13.8 percent of the economy in 2000.

Health spending grew more than 5 percent each year from 1961 to 2007. It rose at double-digit rates in some years, including every year from 1966 to 1984 and from 1988 to 1990.

The report did not forecast the effects of the new health care law on future spending. Some provisions of the law, including subsidized insurance for millions of Americans, could increase spending, officials said. But the law also trims Medicare payments to many health care providers and authorizes experiments to slow the growth of health spending.

“The jury is still out whether all the innovations we’re testing will have much impact,” said Richard S. Foster, who supervised the preparation of the report as chief actuary of the Medicare agency. “I am optimistic. There’s a lot of potential. More and more health care providers understand that the future cannot be like the past, in which health spending almost always grew faster than the gross domestic product.”

Evidence of the new emphasis can be seen in a series of articles published in The Archives of Internal Medicine, now known as JAMA Internal Medicine, under the title “Less Is More.” The series highlights cases in which “the overuse of medical care may result in harm and in which less care is likely to result in better health.”

Total spending for doctors’ services rose 3.6 percent in 2011, to $436 billion, while spending for hospital care increased 4.3 percent, to $850.6 billion.

Spending on prescription drugs at retail stores reached $263 billion in 2011, up 2.9 percent from 2010, when growth was just four-tenths of 1 percent. The latest increase was still well below the average increase of 7.8 percent a year from 2000 to 2010.

Federal officials said the increase in 2011 resulted partly from rapid growth in prices for brand-name drugs.

Prices for specialty drugs, typically prescribed by medical specialists for chronic conditions, have increased at double-digit rates in recent years, the government said. In addition, spending on new brand-name drugs — those brought to market in the previous two years — more than doubled from 2010 to 2011, driven by an increase in the number of new medicines.

“In 2011,” the report said, “spending for private health insurance premiums increased 3.8 percent, as did spending for benefits. Out-of-pocket spending by consumers increased 2.8 percent in 2011, accelerating from 2.1 percent in 2010 but still slower than the average annual growth rate of 4.7 percent” from 2002 to 2008.

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Gadgetwise Blog: A Waterproof Hearing Aid From Siemens

A lot of people who are hearing impaired would be more active if they weren’t afraid of damaging delicate hearing aids that don’t like the humidity of gyms or the dousings of jet skis.

Responding to this issue, Siemens has introduced what it says is the first waterproof hearing aid, capable of working as deep as three feet under water.

Called the Aquaris, the device can also be connected to a Bluetooth remote, called the Minitek, that streams audio to the earpieces, so a person could listen to music from a Bluetooth music player when swimming, for instance. Or an accessory microphone can be worn by someone whom you need to pay close attention to in a noisy room.

A survey by Siemens found that of 500 hearing aid owners, 17 percent restricted their activity to avoid damaging their hearing aids. That is particularly hard on groups like hearing-impaired children and people who work at jobs where there is dust or grime, like farmers or steel workers.

The Aquaris is available through audiologists nationwide, and is priced at around $2,500, per ear, although that number varies based on the cost of the custom fitting.

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