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Archive for the ‘health care’ Category

The Empirical Record

 

The Census Bureau is changing its annual survey, making it difficult to measure the impact of the Affordable Care Act. As the NYT reports:

 

An internal Census Bureau document said that the new questionnaire included a ‘total revision to health insurance questions” and, in a test last year, produced lower estimates of the uninsured. Thus, officials said, it will be difficult to say how much of any change is attributable to the Affordable Care Act and how much to the use of a new survey instrument.’

And

The questionnaire traditionally used by the Census Bureau provides an “inflated estimate of the uninsured” and is prone to “measurement errors,” said a working paper by statisticians and demographers at the agency. In the test last year, the percentage of people without health insurance was 10.6 percent when interviewers used the new questionnaire, compared with 12.5 percent using the old version. Researchers said that they had found a similar pattern in the data for different age, race and ethnic groups.

So, just to get things straight…the old questionnaire was acceptable when it overstated the magnitude of the problem. It is abandoned following reform so that it will be difficult to assess the impact of the Affordable Care Act against the historical data set. As Frederick Fleet might have said: “Didn’t see that one coming.”

Update: For an interesting piece on disappearing data, read Robert Samuelson (“Give Us Back Our Statistical Data”) in WaPo.

 

 

 

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Extensions

For those who failed to sign up for Obamacare, the administration has provided a list of 17 ways you can get an extension. Apparently the extensions will be granted on the honor system (check a box, and we will trust you). If none of the justifications for extensions apply, you may only have to wait a few days. As HHS explains: “Categories that warrant special enrollment periods may be added in the future if other appropriate circumstances, as determined by CMS, become known.”

Megan McArdle tries to make sense of the latest delay given that it appears that total signups will be close to the Congressional Budget Office’s projections of 6 million. The most troubling scenario: the Young Invincibles are not signing up.

here’s the really worrying scenario: The demographics haven’t budged, or have only barely improved from earlier months. The White House knows that means that big premium increases are in the offing for 2015, and they’re hoping to head them off at least temporarily with this delay. Extending open enrollment, which is essentially what they’re doing, would then be a desperate play to get more young, healthy customers into the exchanges, and perhaps to make it a bit harder for insurers to raise rates. In some states, insurers have to file preliminary rate increases in May. And thanks to this latest extension, they won’t have final data to back up any requests for a premium hike.

David Nathan and Susan Levine (Politico) have provided a brief history of Obamacare delays for those who would like to see the latest adjustments in context.  One can only assume that this history will need to be revised in the near future.

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Keep and Fix

Jonathan Chait has an interesting piece on the “keep and fix” solution for Obamacare (New York Magazine).  One of the more interesting points: the parts of the Affordable Care Act that people like the most are also the parts that are least widely recognized as being part of Obamacare. Example: 81 percent have a favorable view of closing the Medicare “doughnut hole” (part of the prescription drug program in Medicare Part D). Yet only 46 percent know that it is part of the Affordable Care Act.

In contrast, the parts of the ACA that are the least popular are the most widely recognized features of the Act. Thus, 40 percent support the individual mandate and 74 percent recognize that it is part of Obamacare.

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Given the low level of awareness of what is in the ACA, when polls reveal that a large percentage of Americans want to  “fix” Obamacare, it can be interpreted as a desire to jettison the individual mandate. The problem, is clear:

A “keep and fix” solution that polls well, then, would probably involve eliminating the individual mandate and keeping everything else. But the reason the mandate is there is because it’s hard to make the other parts work without it.”

Chait concludes:

The public likes keeping the parts of Obamacare where they get money, and opposes the parts where they pay money. In other words, Obamacare, politically, is becoming like just about every other government program.

Any surprises here?

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Any Surprises?

With midterm elections approaching, the White House has again delayed some of the more unpopular portions of the Affordable Care Act. As the NYT reports, the announced delays go much further than the earlier reprieves,

“essentially stalling for two more years one of the central tenets of the much-debated law, which was supposed to eliminate what White House officials called substandard insurance and junk policies.

The extension could help Democrats in tight midterm election races because it may avoid the cancellation of policies that would otherwise have occurred at the height of the political campaign season this fall.”

As Megan McArdle (who predicted this outcome months ago) concludes:

This is President Obama’s signature legislative achievement, the program for which he will be remembered. And he doesn’t have the courage to defend it, even when he is no longer facing re-election. If he won’t stand up for the hard choices his law requires, he can’t think that anyone else will either.

A few quick questions:

  • Why should the Republican Congress waste anymore time voting to repeal Obamacare (number 50 occurred this week) when the President seems quite capable of repealing it on his own through executive action?
  • How much of a law can a president delay and rewrite before someone begins to suspect that he has no intention to “take care that the laws be faithfully executed”?
  • What will keep a future administration from adopting the same tactics to delay implementation (forever)? One assumes there will always be another election on the horizon.

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This week the Congressional Budget Office released The Budget and Economic Outlook: 2014-2024. From the press coverage, one would have guessed the report was either entitled Obamacare: the Job Killer that is Almost as Bad as Benghazi or Obamacare: Ending the “Job Lock” and Opening the Door to Leisure. In reality, the impact of the Affordable Care Act was only a small part of the report—largely restricted to the appendix—and arguably the least troublesome.

Here are a few highlights. I will quote from the CBO report, since most of the media coverage will only address the shiny objects connected to the Affordable Care Act (for an exception, see Ron Fournier’s piece in National Journal).

Economic Growth

  • “[T]he economy will grow at a solid pace in 2014 and for the next few years…Beyond 2017, CBO expects that economic growth will diminish to a pace that is well below the average seen over the past several decades. That projected slowdown mainly reflects long-term trends—particularly, slower growth in the labor force because of the aging of the population.” (p. 1)
  • “The unemployment rate is expected to edge down from 5.8 percent in 2017 to 5.5 percent in 2024.” (p. 5)

The Debt

  • “[T]he deficit is projected to decrease again in 2015—to $478 billion, or 2.6 percent of GDP. After that, however, deficits are projected to start rising—both in dollar terms and relative to the size of the economy— because revenues are expected to grow at roughly the same pace as GDP whereas spending is expected to grow more rapidly than GDP.” (p. 1)

The Consequences (p. 18)

  • “The nation’s net interest costs would be very high (after interest rates moved up to more typical levels) and rising.”
  • “National saving would be held down, leading to more borrowing from abroad and less domestic investment, which in turn would decrease income in the United States compared with what it would be otherwise.”
  • “Policymakers’ ability to use tax and spending policies to respond to unexpected challenges—such as economic downturns, natural disasters, or financial crises—would be constrained. As a result, unexpected events could have worse effects on the economy and people’s well-being than they would otherwise.”
  • “The likelihood of a fiscal crisis would be higher. During such a crisis, investors would lose so much confidence in the government’s ability to manage its budget that the government would be unable to borrow funds at affordable interest rates.”

Beyond 2024, things only get worse

  • “Although long-term budget projections are highly uncertain, the aging of the population and rising costs for health care would almost certainly push federal spending up significantly relative to GDP after 2024 if current laws remained in effect. Federal revenues also would continue to increase relative to GDP under cur- rent law, reaching significantly higher percentages of GDP than at any time in the nation’s history—but they would not keep pace with outlays. As a result, public debt would reach roughly 110 percent of GDP by 2038, CBO estimates, about equal to the percentage just after World War II. Such an upward path would ultimately be unsustainable.” (pp. 25-26)

Of course,  the core driver in these projections is the aging of the population.  Policymakers have the ability to reform key policies to reduce the long-term impact of the demographic shift, and the earlier these reforms are introduced, the less dramatic they need to be. But given the endless campaign and the struggle over the news cycle, who can even contemplate serious entitlement and tax reform.  It is far easier to focus on the shiny objects than to acknowledge the core message of the CBO’s report.

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My wife works in cancer support, and she told me this evening about a case of a British woman who wrote into one of the online groups with which she works. She had had limb salvage surgery for bone cancer, replacing her humerus with a titanium prosthetic bone (my wife had the same type of surgery years ago). But the surgery was botched and her shoulder dislocated. Since that time, she has been unable to get another surgery. My wife showed me a picture: the titanium prosthesis is NOW PROTRUDING FROM HER ARM through the skin. It’s horrible. She has had an appointment with a plastic surgeon for a year, but it keeps getting put off. And a plastic surgeon is not whom she needs at this point. “I don’t have the heart to tell her, but her arm can’t be saved,” my wife says. The woman has small children and is now in such pain she can no longer work. She doesn’t go to the media because she’s afraid of losing the appointment she does have.

Socialism kills, folks. And when it doesn’t kill, it amputates. More on the National Health Service here, here, and here.

P.S. When I write about the horrors of Britain’s NHS, I often get snarky comments about the bad state of American health care. Yes, the U.S. has a health care payment system problem, but our problem is roughly the opposite of Britain’s. We spend far too much on health care, but the overall quality and quantity of health care Americans receive is world-beating. Single-payer systems “solve” the overpayment problem by setting up a monopsony, but monopsonies have their own inefficiencies. A free market in health care would solve the overpayment problem without appreciably reducing quality, by relaxing medical licensing (increasing the supply of providers) and ending subsidies of excessively generous health insurance (giving customers an incentive to shop around on price).

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The debate over pre-PPACA (Obamacare) nongroup health insurance has heated up again recently, particularly on the issue of rescissions (cancellations of policies). John Goodman claims that before the PPACA, rescissions almost never happened except in cases of fraud.

Nevertheless, one problem with the nongroup market in many states was denial of applications for coverage from those who had prior health problems. Denial of coverage happened frequently even in states without onerous community rating provisions that gave health insurers a clear incentive to deny coverage to high risks. Why did health insurers choose to deny coverage altogether to these applicants rather than charge them a higher rate or offer more restricted coverage?

In some cases, government regulation was to blame. The “managed care” revolution of the 1990s introduced certain innovations designed to control health care costs, such as “elimination riders,” which would remove coverage from pre-existing conditions, and requirements to obtain referrals from primary-care physicians for access to specialist care. Managed care apparently worked to control health care costs, up to about 1-1.5% of U.S. GDP had it been allowed to take its long-run course. But it was unpopular, as constraints always are, and many states passed laws banning elimination riders and mandating direct specialist access.

Even without government regulation, however, social pressure caused the disappearance of some of these practices. On this point, there are two fascinating, complementary pieces of research: “The Death of Managed Care: A Regulatory Autopsy” by Mark Hall of Wake Forest University and “Risk Pooling and Regulation: Policy and Reality in Today’s Individual Health Insurance Market” by Mark Pauly of the Wharton School at the University of Pennsylvania and Bradley Herring of Emory University.

Hall investigates (more…)

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Whether one looks to the domestic or the international arena, it appears that little is working these days. Three issues I have been following:

1. The Affordable Care Act (formerly known as Obamacare): The difficulties in the ACA roll out persist and the circular firing squad continues to take aim at the guilty parties. Megan McArdle  adds a new dimension with her piece on “the illusion of omnicompetence” and Healthcare.gov. A fine quote:

The technocratic idea is that you put a bunch of smart, competent people in government — folks who really want the thing to work — and they’ll make it happen. But “smart, competent people” are not a generic quantity; they’re incredibly domain-specific. Most academics couldn’t run a lemonade stand. Most successful entrepreneurs wouldn’t be able to muster the monomaniacal devotion needed to get a Ph.D. Neither group produces many folks who can consistently generate readable, engaging writing on a deadline. And none of us would be able to win a campaign for Congress. Yet in my experience, the majority of people in these domains think that they could do everyone else’s job better, if they weren’t so busy with whatever it is they’re doing so well. It’s the illusion of omnicompetence, and in the case of HealthCare.gov, it seems to have been nearly fatal.

There are some useful lessons here on the limits of technocracy and planning more generally.

2. Our exit from Afghanistan: As the proud father of a Marine, I have particular interest in this story. I find it interesting that President Karzai is making more demands before accepting a long-term security arrangement. Absent an agreement, the US exits Afghanistan in 2014 with predictable results (you will likely get the same result regardless of when you exit). I am at a loss to understand (1) what makes Karzi believe he has a strong bargaining position, and (2) why we are not exiting Afghanistan immediately (other than the obvious: no president wants another “evacuation of Saigon” as part of his legacy).

3. Climate Change: If the negotiations over Afghanistan sound complicated, they pale in comparison to the attempts to find a path forward on climate change post-Kyoto. The 19th Conference of the Parties meeting of the UN Framework Convention on Climate Change in Warsaw generated little. As Alex Brown notes:

United Nations climate talks ended Saturday with a last-ditch agreement to set a timetable in the future to make goals that will hopefully one day comprise part of a future pact on climate change.

I can’t imagine that the 20th Conference of the Parties (next December in Peru) will resolve things.  Given the diversity of interests, the distribution of costs and benefits, the lack of powerful institutions, and the complexity of the underlying science, perhaps the best we can hope for is cooperation in adapting to a changing environment.

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Public policies can fail for a host of reasons. For example, policymakers may fail to understand the causality underlying the problems they wish to address or employ the wrong policy instruments. They may fail to understand the unintended consequences of policy or some of the critical trade-offs. They may design policies that will only succeed if a highly stylized set of assumptions hold. Even if they get the basic model right, there may be failures in implementation.  There are obviously significant concerns along all of these fronts with respect to the Affordable Care Act, but let us focus on implementation and more specifically, the rollout of the HealthCare.gov.

Amy Goldstein and Juliet Eilperin have a wonderful piece “HealthCare.gov: How political fear was pitted against technical needs.” (Washington Post).  The article provides an analysis of the implementation of the Affordable Car Act that explains some of the problems that have plagued HealthCare.gov. Here are some key insights (but I suggest you read the entire piece):

1. Implementation tasks were assigned to White House insiders with no experience. In the words of David Cutler (health advisor to Obama’s 2008 campaign): “They were running the biggest start-up in the world, and they didn’t have anyone who had run a start-up, or even run a business.”  Those in the administration that argued for turning implementation over to a healthcare czar were ignored in large part because the administration wanted to retain control.

2. Fear of the political opposition: “the project was hampered by the White House’s political sensitivity to Republican hatred of the law — sensitivity so intense that the president’s aides ordered that some work be slowed down or remain secret for fear of feeding the opposition.”  One example: administration officials refused to release diagrams (a.k.a. “concepts of operations”) to show the states how the federal exchange would function because “the diagrams were complex, and they feared that the Republicans might reprise a tactic from the 1990s of then-Sen. Bob Dole (R-Kan.), who mockingly brandished intricate charts created by a task force led by first lady Hillary Clinton.” In the end, “the White House quashed the diagrams, telling CMS, instead, to praise early work on those state exchanges that matched the hidden federal thinking.” This fear also led the administration to limit the dissemination of information to allies on Capitol Hill and to contractors.

3. Bureaucratic Fragmentation: “the work of designing the federal health exchange — and of helping states that wanted to build their own — became fragmented.” In the words of a former administration official:   “There wasn’t a person who said, ‘My job is the seamless implementation of the Affordable Care Act.’ ”  It appears that no one was responsible for integrating all of the decisions that had to be made in implementing this complex statute.

If the only problems facing the Affordable Care Act were tied to the technical features of HealthCare.gov website, advocates might look forward to a day in late November or December when things would be on track. But the problems identified in the Goldstein/Eilperin article seem emblematic of a larger culture that is finding a host of expressions in different policy arenas. To the extent that this is the case, the problems are likely to extend well beyond the rollout of the ACA (and beyond the ACA itself).

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Not just my brother. From SFGate:

They have been paying $7,200 a year for a bare-bones Kaiser Permanente health plan with a $5,000 per person annual deductible. “Kaiser told us the plan does not comply with Obamacare and the substitute will cost more than twice as much,” about $15,000 per year, she says.

This new plan, Kaiser’s cheapest offering for 2014, would consume about 25 percent of their after-tax income. The new plan still has a $5,000 deductible but provides coverage for things her current policy does not, such as maternity care, healthy child visits and coverage for dependents up to age 26. Proctor has no use for such coverage, since her son is 30.

So the Kaiser Family Foundation is recommending people try to reduce their incomes in order to qualify for subsidies:

“If they can adjust (their income), they should,” says Karen Pollitz, a senior fellow with the Kaiser Family Foundation. “It’s not cheating, it’s allowed.”

The PPACA apparently sets a marginal tax rate well in excess of 100% on incomes above 400% of the federal poverty line for those insured in the nongroup market, especially those who are older:

To get a subsidy, the couple’s modified adjusted gross income for 2014 income would need to fall below $62,040, which is 400 percent of poverty for a family of two. . . Proctor estimates that her 2014 household income will be $64,000, about $2,000 over the limit. If she and her husband could reduce their income to $62,000, they could get a tax subsidy of $1,207 per month to offset the purchase of health care on Covered California.

That would reduce the price of a Kaiser Permanente bronze-level plan, similar to the replacement policy she was quoted, to $94 per month from $1,302 per month. Instead of paying more than $15,000 per year, the couple would pay about $1,100.

Instead of a poverty trap, a lower-middle-income trap?

HT: Chris B.

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My Brother’s Obamacare Experience

My brother is individually insured in California. Here’s what’s he says about what will happen to his insurance plan:

More details on my forced insurance changes for 2014 (this is the complete summary provided by my insurer – I’m not cherry picking details):
Premiums: same.
Deductible: $3K -> 5K.
Doctor copay: $40->60.
Specialist copay: $40->70.
Urgent care: $40->120.
Lab: 100% coverage->70%.
Xray: 100% coverage -> 70%.
Emergency outpatient: $100->300
Outpatient surgery: 100% -> 70%
Inpatient hospitalization: 100% -> 70%
Generic drugs: $10->$19
Preferred brand drugs: N/A ->$50
Non-preferred brand drugs: N/A->$75
Acupuncture: N/A -> $60.

So basically, I get brand-name drug option and cheaper acupuncture in exchange for an extra $2k+ out of pocket when I lose my current plan and am forced to switch to this one. So much for “bending the cost curve” “your premiums will go down” and “if you like your plan, you can keep it” and other wild fantasies from the Organizer-In-Chief of the “reality-based community”.

Of course, some people lose and some people gain from Obamacare: that’s the whole idea. Dueling anecdotes about the law’s consequences don’t really tell us much about how much “society” will gain or lose. But the redistribution of wealth from the healthy to the sick that the law accomplishes also takes away many people’s freedom, and if you care about the freedom of the individual, every anecdote matters.

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Apparently, if anyone can make Americans love Obamacare, it’s Ted Cruz.

What?

Just look at the polls. There are brutal numbers for the GOP in a new Fox News poll, confirming numbers from an earlier Quinnipiac poll. Obama’s job approval is up, support for Obamacare is up (opposition running at just 47-45 in the Q poll), approval of Republicans in Congress has fallen yet further, and the generic ballot has tilted sharply in favor of Dems (9-point lead in the Q poll). Meanwhile, Americans blame Republicans more than Democrats for the shutdown (although the median voter opts for “both”).

The shutdown would never have happened without Ted Cruz’s quixotic campaign to defund Obamacare. “He pushed House Republicans into traffic and wandered away,” says Grover Norquist. By wasting time on that doomed quest due to his influence, House Republicans had no backup plan when the continuing budget resolution fell due. At this point, for reasons I discussed in a previous post, it is more likely that the Dems will get concessions from the GOP than the other way around.

How did we get here? Matt Welch accuses the Republican “wacko birds” of bad deadline management, and it’s hard to disagree. But there’s a reason for that bad deadline management, and it’s not actually incompetence so much as ideological intransigence. The new litmus test for conservatism became willingness to defund Obamacare. Tactical disagreements became ideological disagreements. If you didn’t want to waste time trying to defund Obamacare, you were at best a coward and more likely a “RINO,” according to hardline websites like RedState. As Avik Roy has noted,

The common view of Obamacare among conservatives goes something like this. Prior to 2010, America’s free-market health-care system was the envy of the world. Obamacare changed all that; it is a government takeover of our health-care system, of one-sixth of our economy, one that will turn America into a European-style welfare state. That is to say, Obamacare is an existential threat to the American way of life.

If this is your view of Obamacare, then of course it makes sense to shut down the government in order to attempt to defund the law. What’s the point of maintaining a Republican majority in the House in 2014, let alone seeking a majority in the Senate, if the end result is the destruction of the American way of life?

That view of Obamacare is, of course, dead wrong. It’s a mistaken law that moves the country in the wrong direction, but the regulatory framework for health care and health insurance in this country was already badly broken and in need of reform. But damn the facts and fix bayonets!

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As we all know, if a continuing resolution (or CR) is not passed by the end of the day on September 30, the government will shut down. Senator Ted Cruz (R-TX) has threatened to filibuster the House CR because if debate is suspended, the provisions defunding Obamacare will be eliminated via majority vote. If Senator Cruz is successful–or if he is not, and the House refuses to pass a revised CR–then the government will shut down. But ironically, this will have little impact on Obamacare. As Timothy Carney explains in the Washington Examiner:

But for the most part, no CR will fund Obamacare, even if Obama wrote it himself. You know what funds Obamacare? A bill called HR 3590, also known as the Affordable Care Act.

Obamacare funds Obamacare.

The reason is simple: most of the Affordable Care Act does not depend on annual appropriations. The House CR, in contrast, could defund Obamacare (“Notwithstanding any other provision of the law, no Federal funds shall be made available to carry out any of the provisions of the Patient Protection and Affordable Care Act”). All the House GOP needs to do is convince the Senate majority and President Obama to follow its lead.

So here are the possible outcomes in the next few days:

  1. The Senate strips the defunding language from the House CR, the House approves it, the government shutdown is avoided, and Obamacare is left untouched.
  2. Senator Cruz succeeds in mounting a filibuster, the debate on the CR is not suspended, the government shuts down temporarily, and Obamacare is left largely untouched.
  3. Senator Cruz fails, the Senate strips the defunding language, the House rejects it, the government shuts down temporarily, and Obamacare is left largely untouched.
  4. The Senate accepts the House CR and with the President’s approval, Obamacare is defunded.

Does anyone think that the last is a live option? If it is not—and recall: a government shutdown will not have a significant impact Obamacare—what is the larger strategy? Is this simply a means of throwing red meat to the rubes and preventing primary contests from the Right? Or, if you are Senator Cruz, are the goals to maximize face time on the Sunday talk shows, attract donations, and build a mailing list for the 2016 presidential race?

Any insights would be appreciated.

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On Tuesday, President Obama devoted 16 minutes to making the case for some unspecified action in Syria under conditions yet to be determined. After seeing the new CNN/ORC poll, one wonders whether it is time for a speech on the merits of the Affordable Care Act.  According to the poll (conducted September 6-8), 6 percent favor all of the ACA and another 33 percent favor most of the ACA. Combined, some 39 percent favor some or all of the ACA. In contrast, 37 percent oppose most of the ACA and another 20 percent oppose all of the ACA. A total of 57 percent oppose some or all of the ACA (4 percent had no opinion).  The trend in public opinion should be of some concern for advocates of the Affordable Care Act. In January 2013—nine short months ago—51 percent favored some or all of the ACA; 44 percent opposed some or all of the ACA. One might argue that this is simply a product of the ongoing GOP attacks on Obamacare in Congress. But given the low approval ratings for the Congress, I have my doubts.

More likely, as implementation approaches, people are facing greater uncertainty over a number of things, including (1) what their employers might do in response; (2) whether the costs of insurance will increase; (3) whether the coverage under their existing plans will change. While there has been a steady stream of assurances that things will only get better under Obamacare, there have also been ongoing stories regarding the difficulties in setting up the exchanges, whether certain insurance policies (e.g., high deductible, low premium plans) will be acceptable, and whether companies will respond strategically to the ACA by cutting their full time employees or changing benefits for part-time employees. (more…)

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John Bresnahan and Jake Sherman (Politico) report (unsurprisingly) that those who brought us the Affordable Care Act are scurrying to create exemptions for Capitol Hill. The big concern: the costs of insurance on the exchanges will lead to the rapid exodus of legislative aides—a policy-induced brain drain.

The talks — which involve Senate Majority Leader Harry Reid (D-Nev.), House Speaker John Boehner (R-Ohio), the Obama administration and other top lawmakers — are extraordinarily sensitive, with both sides acutely aware of the potential for political fallout from giving carve-outs from the hugely controversial law to 535 lawmakers and thousands of their aides.

They continue:

The problem stems from whether members and aides set to enter the exchanges would have their health insurance premiums subsidized by their employer — in this case, the federal government. If not, aides and lawmakers in both parties fear that staffers — especially low-paid junior aides — could be hit with thousands of dollars in new health care costs, prompting them to seek jobs elsewhere. Older, more senior staffers could also retire or jump to the private sector rather than face a big financial penalty. Plus, lawmakers — especially those with long careers in public service and smaller bank accounts — are also concerned about the hit to their own wallets.

Nancy Pelosi famously assured her audience “we have to pass the bill so that you can find out what is in it.” Now that lawmakers have found out what is in it, it appears they are not too pleased.  Or should we interpret their actions differently?

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A new public inquiry into abuses at the Mid Staffordshire National Health Service Trust’s hospital has found a years-long pattern of fatal mistakes and abuses. The report makes for damning reading. From the BBC report:

Years of abuse and neglect at the hospital led to the unnecessary deaths of hundreds of patients.

But inquiry chairman, Robert Francis QC, said the failings went right to the top of the health service.

While it is well-known the trust management ignored patients’ complaints, local GPs and MPs also failed to speak up for them, the inquiry said.

The local primary care trust and regional health authority were too quick to trust the hospital’s management and national regulators were not challenging enough.

Meanwhile, the Royal College of Nursing was highlighted for not doing enough to support its members who were trying to raise concerns.

The Department of Health was also criticised for being too “remote” and embarking on “counterproductive” reorganisations.

The report said the failings created a culture where the patient was not put first.

Specifically, the report cites 1200 “unnecessary deaths” due to poor care, without a single manager having been held responsible. But the United Kingdom keeps health care costs down!

Twitter hashtag “#welovethenhs” is again trending.

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That’s the subtitle of a new working paper from Peterson, Pandya, and Leblang. Here’s the abstract:

Skills are often occupation-specific, a fact missing from existing research on the political economy of immigration. Although analyses of survey data suggest broad support for skilled migration occupational licensing regulations persist as formidable barriers to skilled migrants’ labor market entry. Regulations ostensibly serve the public interest by certifying competence but are simultaneously rent-preserving entry barriers. We analyze both the sources of US states’ licensure requirements for international medical graduates (IMGs), and the effect of these regulations on migrant physicians’ choice of US state in which to work over the period 1973-2010. Analysis of original data shows that states with self-financing state medical licensing boards, which can more easily be captured by incumbent physicians, have more stringent IMG licensure requirements. Additionally, we find that states that require IMGs to complete longer periods of supervised training receive fewer migrants. Our empirical results are robust to controls for states’ physician labor market. This research identifies an overlooked dimension of international economic integration: implicit barriers to the cross-national mobility of human capital, and the public policy implications of such barriers.

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When Obamacare Really Kicks In

Most of the PPACA’s most controversial provisions were backloaded until after this election. Unless Romney wins the presidency and Republicans at least make it close enough in the Senate that they can pick off a moderate Democrat or two on a roll-call, these provisions will start to kick in next year. Avik Roy explains:

In [2013], a number of Obamacare’s tax increases will come into effect. The law will, among other things, raise taxes on investment income, itemized medical expenses, privately-sponsored retiree prescription-drug coverage, medical devices, and flexible spending accounts.

[...]

2014 is the critical year for Obamacare. It’s the year that the bulk of the law’s provisions go into effect. Notably, it’s the year that the law’s controversial individual mandate goes into effect, requiring most Americans to buy a government-sanctioned health insurance product…

In addition, 2014 is the year that Obamacare’s employer mandate begins to be enforced. That mandate requires all businesses with 50 or more workers to provide government-approved health insurance to all of their workers, or face steep fines…

2014 is also the year that Obamacare’s gusher of new spending kicks in, through its expansion of the Medicaid program and the institution of federally subsidized health insurance exchanges. Once these two programs are in place, it will become impossible to repeal Obamacare.

In 2014, Obamacare guts the laws related to consumer-driven health plans, by capping deductibles in the small-group market at $2,000 for individuals and $4,000 for families, down from $6,050 and $12,100 today…

Also, in 2014, Obamacare will force insurers covering small businesses and individuals to cover a set of “essential health benefits” defined by the Secretary of Health and Human Services…

In addition, the law will impose a tax on health insurance premiums, though labor unions and government-sponsored plans are exempted from the tax.

More here.

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…Judging from the the post-debate health care stocks performance. Of course, the assumption would have to be that the GOP both retains the House and takes the Senate, also unlikely.

Context: I’ve had debates with people who say that Romney would quickly go back on that promise once elected, but I just don’t see it. He’s not going to veto a GOP Congress-led bill to repeal the PPACA.

HT: Reason.com

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Even though I disagree with much of its interpretation, I admire Jonathan Gruber’s pre-PPACA research on health insurance markets. He’s one of the most forthright and clear-headed advocates of government takeover of health insurance that I know. However, his recent defense of the law in The New Republic indulges some pretty blatant economic fallacies:

But what few realize is that, by expanding insurance coverage, the law will also increase economic activity. These newly insured individuals will demand more medical care than when they were uninsured. And while it takes many years to train a family physician or nurse practitioner, it doesn’t take much time to train the assistants and technicians (and related support staff) who can fill much of this need. In many cases, these are precisely the sort of medium-skill jobs that our economy desperately needs—and that the health care sector has already been providing, even during the recession.

Gruber surely knows better than to attribute economic growth over the long term to “demand.” All increase in wealth ultimately comes from growth in productivity and exchange, not “demand.” Whether increasing demand for health care will increase aggregate demand and short-run return to equilibrium — as opposed to redistributing spending from other sectors — is another question, but Gruber doesn’t even attempt to answer it. And the amount of jobs in the economy is a function of cyclical and structural factors. Redistributing jobs from other parts of the economy to health care does not mean more wealth or a higher standard of living for Americans. These are basic, 101-level errors.

When attacking critics of the PPACA, Gruber switches to supply-side arguments. Thus:

There is now a large body of literature examining the impact of tax changes on the highest income taxpayers. This literature finds that those taxpayers will avoid some of those taxes by re-categorizing their incomes in ways that minimize taxes. But there is no evidence that they will actually work less hard, invest less, or do anything which reduces their “real contribution” to the economy.

All of a sudden the fiscal contractionary effect of the tax increase doesn’t matter. Can we just call it even on the demand-side claims – as the PPACA will probably neither increase nor decrease the deficit very significantly – and focus on the supply side? The real justification for the PPACA, if there is one, is that it makes health insurance markets more efficient. There’s simply no denying that it imposes some distortions on the rest of the economy to achieve this goal, and Gruber himself seems to acknowledge this toward the end, although he insists the cost will be small.

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A common libertarian and conservative response to questions about how beneficiaries of government programs will carry on after the removal of their subsidies is that charity should take care of them. This answer is often overly glib, even when combined with the observation that a lower burden of taxation might foster more giving (charity is already tax-deductible after all). Charity will always be insufficient to meet basic human needs, and in the absence of government programs, some people will fall through the cracks. (In the presence of government programs, some people will fall through the cracks.)

This aspect of charity is a feature, not a bug. Charity suffers from the same problem that government welfare programs do: the Samaritan’s Dilemma, as economists call it. The more you help those in need, the more need there will be, because people’s behaviors will change as they come to expect assistance. To the extent that libertarians and conservatives oppose welfare programs because of “dependency” issues, they must also oppose charity for the same reason. Of course, charity is superior to government programs in at least two respects: lower administrative expenditures and, more importantly, greater respect for the moral autonomy of the donor. To the extent that we can reduce extreme human deprivation, many of us will think it worthwhile to do so even if it somewhat reduces the productive efforts of those less deprived, whether through charity or through government assistance. Nevertheless, it is possible for charity to be excessive.

To see the point, consider the argument I made that libertarianism does not preclude mandatory health insurance for children. (more…)

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Mike Munger, Duke political scientist and sometime Libertarian Party of North Carolina gubernatorial candidate, explains his support for single-payer health insurance:

I would prefer personal responsibility, and a competitive market in health care. Modeled after the very successful, constantly cheaper, constantly better quality, service in Lasik surgery and other “elective” surgeries. If someone, anyone, would even consider going in that direction, that would be fine.

Insurance would be for major problems, big surgeries, accidents. You might have an annual deductible of $5k or more. Doctors would advertise prices (yes, PRICES) of standard surgeries.

Does any of that sound familiar? I didn’t think so. Instead, we have something really bad. Single payer would be better than what we have. Single payer is also better than ACA, by the way, which is why I am not happy about the decision yesterday.

What we have is this…

Click through for the rest. I’m not persuaded by the claim that single-payer is better than what we have now, but I think it might be better than what the PPACA sets up. The fact is that in unregulated states (no community rating or guaranteed issue, elimination riders permitted, low mandated benefits), health insurance is pretty cheap for healthy people, and states are increasingly experimenting with allowing nurse practitioners and dental hygienists to practice independently, making less than half of their respective top-level professional equivalents and presumably passing along the savings to us. The problem is that in unregulated states, unhealthy people can’t get coverage. At all. There are tools that insurance companies can use to make coverage reasonably achievable even for the unhealthy, like elimination riders, but there is strong social pressure against their use. As a result, insurance companies would rather deny coverage to a high risk than offer coverage with exclusions. It looks bad to people to do the second. It makes no sense, but it’s a good case study of how social pressure can influence markets just as much as law and policy. And yes, mandated ER care is a problem, but uncompensated ER care is something around $50 billion a year – not a huge enough number to be driving cost inflation. Finally, the employer health insurance deduction probably means that the employed are over-insured, but the fact is that people want low-deductible, expensive, gold-plated health insurance. Some of the rise in health care costs is being driven by the market. People are willing to pay high prices even for a very small marginal benefit in treatment technology. Single-payer would probably drive down costs, at the expense of a small amount of quality – but people put tremendous value on that small amount of quality, and thus the welfare losses would stand to be huge.

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First, for most Americans the amount due will be far less than the price of insurance, and, by statute, it can never be more. It may often be a reasonable financial decision to make the payment rather than purchase insurance . . .

Indeed, it is estimated that four million people each year will choose to pay the IRS rather than buy insurance. See Congressional Budget Office, supra, at 71. We would expect Congress to be troubled by that prospect if such conduct were unlawful. That Congress apparently regards such extensive failure to comply with the mandate as tolerable suggests that Congress did not think it was creating four million outlaws. It suggests instead that the shared responsibility payment merely imposes a tax citizens may lawfully choose to pay in lieu of buying health insurance.

So the tax is acceptable, in part, because it is trivial.

Imagine, for the sake of argument, you accept the basic position that it is the state’s responsibility to provide universal health care coverage.

The problem: to the extent that the tax is trivial, it will be ineffective. That is, it would be quite rational—as recognized by Roberts—for an individual to pay a small tax and avoid large premiums.  It would be rational, once again, to do this up to the moment when one would require serious medical attention, at which point the ACA limits the amount that can be charged for entry into the system and prohibits discrimination based on pre-existing conditions.

The ACA—by design or by accident—seemed to neglect this issue.

Another point: while one might have little concern over those who make a rational decision not to purchase insurance, one might have a far different response to those who want insurance but simply do not have the wherewithal to purchase it. These were the folks who might have been covered by the expansion of Medicaid. Now that states cannot be punished for refusing to extend Medicaid as required under the ACA, I am assuming many (most) states will not provide additional coverage.

Yes, the Court upheld the ACA. But was it really more than a short-term victory for those who believe that the state has an obligation to provide universal health care coverage?

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The Supreme Court’s decision to uphold the Affordable Care Act (don’t call it “Obamacare”!) gives me a great sigh of relief. Although I was one of those who thought it well-nigh impossible to be overturned when the lawsuits were initially filed, over the last several months I began to think that there was actually a chance it could happen. I must say I am enormously relieved that the ACA will remain the law of the land.

The primary reason for my relief is that my health care bills are big, and getting bigger. And as I age, I expect they will continue to go up, as I will need various tests, procedures, medications, and so on. These are expensive! And I really believe that I have been having to pay too high a proportion of those costs myself. I do not ask to get sick, so why should I have to shoulder the entire burden of the costs of my illnesses?

The so-called individual mandate is absolutely necessary to the functioning of ACA. Remember, “affordable” is the first word in its name—and affordability could not be accomplished if younger and healthier people were not required to pay for insurance that they would not use. We assume they will consume less in health benefits than they will pay, which means that the remainder will go to pay for people like me who are the reverse—consuming more than we pay for. Without the individual mandate, many of those younger and healthier people would simply have not bought insurance, because they (selfishly) would have seen it as a bad bargain; but that would have meant that there would not be the funds to pay for others’ health care.

Now, however, they will be required to pay, which means I, like millions of others like me, won’t have to pay as much for my own care. That does mean, I concede, that we are effectively using others to serve our own ends. By not allowing those younger and healthier people the chance to give or withhold their voluntary consent, a Kantian might say we are violating their rational autonomy, their moral agency, their ‘personhood’—using them merely as a means to our own ends, thus violating the Categorical Imperative of morality. But that is far too extreme and restrictive a standard. Sometimes social justice requires violating others’ “rational autonomy” just a bit, especially when others benefit so much from it.

Now it is true that among those younger and healthier who will now be paying for my and others’ health care benefits are my own children. And because they are my children, I do worry about the financial burden that is now placed on them to pay the trillions of dollars this will cost (in addition, of course, to the trillions of dollars in national debt we already have that will also be their burden). But they are still young enough that they don’t really notice it at the moment. And, in any case, I have sacrificed a lot for them, so why shouldn’t they sacrifice for me? Plus, they have been irritating me recently anyway, so I’m not exactly inclined to “put the children first,” if you know what I mean. When it comes time for them to pay these bills, let them figure out a way to do it. Maybe they can put it off on their children.

A perhaps surprising benefit of the ACA is that it makes me care much more about my fellow Americans, especially those younger and healthier ones. I may not care about them as so-called rationally autonomous moral agents, but now I do very much care about them as laborers generating the wealth that will fund my health care. They need to keep working, and I am really concerned about their ability, and willingness, to do so. So I will be thinking about them a lot, and I will be most interested to make sure that Secretary Sibelius adopts appropriate measures to ensure that their willingness to keep working hard does not flag.

This, then, is a great day for our social democracy. The nineteenth-century economist Frédéric Bastiat once wrote that under any government, there are only three possibilities: (1) the few plunder the many, (2) everybody plunders everybody, and (3) nobody plunders anybody. Although Bastiat argued for option (3), that was a pretty extreme position. It wasn’t very practical, and it was also extremely limiting as to what the government could do. The ACA is more like option (1), which, for those of us among the “few,” is clearly the best option.

As it happens, just this week my family and I have been struggling with some relatively difficult health care decisions. Cost was one large part of our considerations. Thanks to President Obama and the ACA, however, cost will soon be a much smaller factor in the health care decisions we make. Also, soon we won’t have to worry about difficult decisions like which tests or procedures to have, or which medications to take. Not only will the costs be borne by others, but the hard decisions will be made by others too. I don’t know who those “others” will be, but another underappreciated aspect of the ACA is that it doesn’t matter—I don’t have to know who they are. Just as long as it’s not me!

If you are my age or older, then, I hope you will join me in celebrating this day. If you are younger, I hope you will come to appreciate how important you are to me and those like me. We need you, now more than ever! The ACA will now give you a chance to really do your patriotic and moral duty. Remember, sacrifice is always involved when doing one’s duty. So if you find your patriotism wavering in the future, just keep in mind that you are doing your part to keep America strong!

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Harvard economist Ed Glaeser weighs in on federal mandates in general:

Although I am open to having state governments require more health coverage, I fear a federal government with too much power to control individual behavior. The track record of federal interventions in managing markets suggests a strong case for limiting that power.

The question of bestowing appropriate power on the federal government depends not on the health-care issue alone, but on whether you think — on the whole — that the U.S. government does good things when it heavily regulates behavior. The 1942 case that is often cited as a precedent for health care, Wickard v. Filburn, provides the perfect example of why I fear this control….

There are many reasons to leave control over markets, such as health care, to state governments. States have tougher budget constraints, which discipline spending. States can adapt to local tastes, so Massachusetts can have more intervention than Texas. If people don’t like a state’s rules, they can always move elsewhere. Local experiments provide the evidence that can lead to real progress.

I’m not against all health-care mandates, but the history of federal overreach is worrisome, and I’d be happier if the Supreme Court decides that the law limits this ability to manage markets.

I don’t agree with everything in the article, and it’s unclear whether he favors a federal “tax penalty” on the uninsured to replace the “mandate,” or whether this is also something he prefers state governments do, but it’s refreshing to see a clear and sensible articulation for a more thoroughly federalist construction of the Constitution.

(For my part, tomorrow’s decision is ho-hum unless the whole bill is struck down. Community rating, guaranteed issue, rate review (price controls), Medicaid expansion, and the associated tax increases are all a bigger deal for the economy than the individual mandate.)

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Policy wonks and pundits are waiting in anticipation for tomorrow’s decision on the Affordable Care Act (I know it was one of the first things that crossed my mind this morning as I prepared for the day).  Although social scientists may not be too good at making predictions, I think most of us could  have long ago written the talking points for both sides of the dispute with great accuracy. But what of the public at large? Will the decision factor into their decisions in November? Will the Democrats and Republicans be able to use tomorrow’s decision effectively as a rallying point? I have my doubts.

The newly released NBC/WSJ poll has several questions on the SCOTUS and the Affordable Care Act.

From what you have heard about Barack Obama’s health care plan that was passed by Congress and signed into law by the President in 2010, do you think his plan is a good idea or a bad idea? If you do not have an opinion either way, please just say so.

  • Good idea: 35%
  • Bad idea: 41%
  • Do not have an opinion: 22%
  • Not sure: 2%

I am not certain how the Obama administration will spin a defeat at the Supreme Court (should it be handed a defeat). The obvious take is to present the Supremes as activist and counter-majoritarian. But in a world where only 35 percent think the Affordable Care Act was a “good idea,” will this spin have much traction outside of the 35 percent, who are likely already strong supporters of a second term?

If the Supreme Court rules that the health care law is unconstitutional meaning that it will not be implemented would you be pleased, disappointed, or would you have mixed feelings about it?

  • Very pleased: 27%
  • Somewhat pleased: 10%
  • Somewhat disappointed: 5%
  • Very disappointed: 17%
  • Mixed feelings: 39%
  • Not sure : 2%

Once again, how do you frame a defeat? 37 percent would be pleased, 22 percent would be disappointed, and those who would be pleased appear far more passionate about the issue. But overall, “mixed feelings” carry the day.

Now, if the Supreme Court rules that the part of the health care law called the individual mandate, that requires everyone to either have or buy health insurance is unconstitutional and will not be implemented, do you think this will help you and your family, hurt you and your family, or not make much difference either way?

  • Help: 18%
  • Hurt: 25%
  • Not make difference: 55%
  • Not sure: 2%

This may be the most interesting result. The vast majority of Americans get their healthcare through employers, Medicare or Medicaid. They are already covered and, as a result, they may feel that they don’t really have a dog in the fight when it comes to the personal mandate.

Bottom line: although those with hard positions will praise or curse the outcome, for most voters, I assume the response will be: Meh!

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Libertarians have generally opposed government mandates to participate in commerce on moral, economic, and constitutional grounds. Certainly, a federal government mandate to buy private health insurance contradicts standard libertarian understandings of the right to property and self-determination and the ability of individuals to decide for themselves their need for insurance (and concomitant skepticism of paternalist justifications for government involvement in health insurance), and runs afoul of textualist interpretations of the U.S. Constitution. A state government mandate would not violate the Constitution, but libertarians would nevertheless still tend to oppose it on the moral and economic grounds already cited.

However, there is one type of insurance mandate to which standard libertarian objections fall short. This is not to say, by any means, that all libertarians would support it, merely that opposition would have to find grounding in contingent, disputable facts. The mandate to which I refer is a requirement that (more…)

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Indian Superbugs

As a followup on my libertarian case for prescription laws, I note this recent story on Indian superbugs that are totally antibiotic-resistant:

India’s $12.4 billion pharmaceutical industry manufactures almost a third of the world’s antibiotics, and people use them so liberally that relatively benign and beneficial bacteria are becoming drug immune in a pool of resistance that thwarts even high-powered antibiotics, the so-called remedies of last resort.

So this is not just a domestic problem, but an international one. Drug-resistant bacteria are now spreading across the globe. Soon we may re-enter the dark age when “[t]hings as common as strep throat or a child’s scratched knee could once again kill,” in the words of WHO chief Margaret Chan. If the Indian government is not going to regulate antibiotics on its own initiative, other governments need to impose sanctions on it in order to force it to do so.

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When X is Not-X

There have been some wonderful pieces written in the past few weeks trying to make sense of the President’s claim that a SCOTUS decision to overturn the Affordable Care Act would be unprecedented. Of course, the pieces often proceed as follows

  1. The President stated X
  2. The President obviously knows not-X
  3.  Therefore X must have a deeper meaning and significance

The newest installment—and one that may come the closest to providing an accurate interpretation—is written by Jonathan Cohn i(n today’s New Republic).  As you will recall, the Solicitor General made reference to Lochner and Chief Justice Roberts responded by reminding the government’s attorney that the decision involved state regulation rather than federal regulation. Deploying the approach presented above, we can conclude that either (1) the SG was incompetent or (2) the appeal to Lochner had a deeper meaning that must be discerned. Obviously, (1) could not be true.

After a rather enjoyable discussion, Cohn concludes:

But I’m pretty sure both Obama and his administration’s lawyer were saying something different, and broader, when they invoked Lochner: By invalidating the Affordable Care Act, the Supreme Court would be resurrecting a vision of constitutionally limited government that, quite rightly, went out of fashion a long time ago.

Any thoughts?

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Those of you who followed Grover’s link and read the transcript (or even better, heard the audio) of yesterday’s Supreme Court hearing may find the following quote entertaining (h/t Politico). The Source: White House Counsel Kathryn Ruemmler.

“Mr. Verrilli is an extraordinarily talented advocate who possesses a sharp mind, keen judgment, and unquestionable integrity. He ably and skillfully represented the United States before the Supreme Court yesterday, and we have every confidence that he will continue to do so.”

I know that this is a little outside of Ms Ruemmler’s portfolio, but I wonder if she could recommend a solar panel company that I might invest in? I’ve heard good things about this company named Solyndra.

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This proposal in the UK to tax “fatties” highlights once again how once government gets deeply involved in funding health care, the pressures to control people’s lifestyles become significant. This is the same argument we hear from supporters of sky-high cigarette taxes, smoking bans, seat-belt and helmet laws, ad nauseam. “We all pay for it.” If only we didn’t.

More on the public health scam.

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Chart of the Day

ppaca & employment

My only problem with the chart is its title. I don’t think a simple bivariate correlation is enough to establish causality. But it’s a suggestive piece of evidence, since both regime uncertainty and the employer mandate associated with the PPACA are plausibly related to slowing job growth.

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The Seattle Times, Slate, and other outlets have run interesting stories in the last couple of days discussing a new initiative that will appear on this November’s ballot in San Francisco–and hold onto your privates, gentlemen: It would ban circumcision for all minors (under age 18), rendering it a misdemeanor punishable by up to one year in jail or a $1,000 fine. It would contain no religious exemptions. While this is just a ballot initiative–not yet an approved ordinance–the mere threat of its enactment (and the fact that its supporters managed to get over 7,000 signatures) bothers my libertarian soul.

Media reports obsess about the First Amendment implications of such an ordinance, though honestly, since the Supreme Court’s decision in Employment Division v. Smith (1990), any state or local law of “general applicability” that burdens the free exercise of religion will be subject only to low-level rationality review (federal actions are subject to more rigorous review under the Religious Freedom Restoration Act). Since the supporters of the proposed circumcision ban claim that circumcision is a form of “genital mutilation” that is painful and unnecessary, it would seem to sail easily over the “rational basis” hurdle.

So frankly, I’m not all that interested in the First Amendment implications, though Smith is an intriguing case worthy of reconsideration. Instead, I’m struck by the lack of attention given to the individual liberty (substantive due process) implications of San Francisco’s proposed circumcision ban. I had thought it long settled that parents have a broad (though admittedly not limitless), presumptive liberty to raise their children as they see fit. Circumcision may indeed be painful to an infant, but is it any more so than piercing a little girl’s ears? Or tattooing your child? In either case, there is temporary pain and an extremely low risk of serious harm. In both cases, the procedure is undertaken to satisfy the parents’ own cultural or aesthetic preferences.

Supporters of the ban try to analogize circumcision to female genital mutilation, but I’m just not buying it. Female genital mutilation involves cutting out the clitoris, rendering the girl disfigured and permanently unable to have a normal, healthy sexual life. Circumcision obviously has no such long-term effects, as the 80 percent of U.S. men who’ve undergone the procedure can attest. Moreover, circumcision may actually have health benefits for some– it has been considered a way to lower the risk of AIDS in African communities ravaged by that disease.

On a broader level, I’m bothered by the fact that–particularly in an ultra-progressive city like San Francisco–there’s a decent degree of support for nanny-state restrictions on individual liberty, particularly when it relates (at least tangentially) to an individual’s choice of something so fundamental–”deeply rooted” in our history and tradition–as to what medical or aesthetic procedures to undergo. I know we are talking about minors here, but again–parents are presumptively allowed to make medical and aesthetic decisions for their children all the time. But then again, progressives are just as aggressive about nanny-state intrusions into individual liberty as conservatives, when it suits their agenda–witness progressive-supported bans on foie gras in California beginning in 2012 and the FDA’s recent decision to revoke approval of Avastin as a treatment for breast cancer.

Would love to hear others’ thoughts.

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 European commentators on US healthcare are often misguided in their description of the American system as a ‘free market’ model – when that system involves significant levels of government regulation and funding. Equally, American commentators are often misguided in their accounts of ‘socialist’ healthcare in Europe. Europe contains a diversity of healthcare systems. Some, such as Switzerland are based predominantly on private insurance while others such as Germany and France combine elements of public and private funding and supply. The one European healthcare system that might genuinely be described as socialist is that of the United Kingdom. In the UK system of compulsory ‘free’ health provision, competition and the price system have been almost entirely eliminated from the patient-provider relationship, and even co-payment schemes which allow citizens to ‘top-up’ public funding with their own savings of the sort that are widespread in continental Europe, are prohibited.

 Both European and American citizens have got much to fear from any move away from their current ‘mixed’ systems to anything approaching the UK model. The following extract comes from a report by an independent ombudsman charged with examining the quality of care for the elderly under the UK’s ‘National Health Service’. Having catalogued an appalling number of cases where patients were regularly starved of food and pain-killers, she concludes in the following vein:

 “The findings of my investigations reveal an attitude- both personal and institutional-which fails to recognise the humanity and individuality of the people concerned and to respond to them with sensitivity, compassion and professionalism.

 The reasonable expectation that an older person or their family may have of dignified, pain-free end of life care in clean surroundings in hospital is not being fulfilled. Instead, these accounts present a picture of NHS provision that is failing to meet even the most basic standards of care.”

 This parlous state of affairs, it should be noted, follows a ten year period which has seen real expenditure on health care in the UK more than double. Where, one might ask, will Michael Moore choose to spend his retirement?

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Having read Judge Vinson’s decision, available here, I must recommend it. It is a relatively brief 78 pages and, at times, the discussion is quite lively. Will the Supremes agree with Vinson on the unconstitutionality of the individual mandate and the question of severability? Only time will tell.

One passage (not central to the decision) led me to reflect on James Buchanan’s essay “Afraid to Be Free: Dependency as Desideratum.” Public Choice, 124 (2005): 19-31. The decision notes:

the defendants emphasized during oral argument that it is not just the “economic decision” itself that renders the failure to buy insurance activity; rather, it is that decision coupled with the fact that the uninsured are guaranteed access to medical care in hospital emergency rooms as a “backstop,” the use of which can and does shift costs onto third parties. The defendants thus refer to the failure to buy health insurance as a “financing decision.” However, this is essentially true of any and all forms of insurance. It could just as easily be said that people without burial, life, supplemental income, credit, mortgage guaranty, business interruption, or disability insurance have made the exact same or similar economic and financing decisions based on their expectation that they will not incur a particular risk at a particular point in time; or that if they do, it is more beneficial for them to self-insure and try to meet their obligations out-of-pocket, but always with the benefit of “backstops” provided by law, including bankruptcy protection and other government-funded financial assistance and services. (p. 54)

Let’s turn to Buchanan:

Almost subconsciously, those scientists-scholars-academicians who have tried to look at the “big picture” have assumed that, other things being equal, persons want to be at liberty to make their own choices, to be free from coercion by others, including indirect coercion through means of persuasion. They have failed to emphasize sufficiently, and to examine the implications of, the fact that liberty carries with it responsibility. And it seems evident that many persons do not want to shoulder the final responsibility for their own actions. Many persons are, indeed, afraid to be free (p. 23).

Isn’t this a big part of the problem? Individuals want to liberty to purchase (or not purchase) health insurance. At the same time, they want to be certain that they will not be forced to bear the responsibility for the negative consequences of their decisions. The implicit guarantee creates problems of moral hazard.

Let us assume for the sake of argument that we continue direct provision of insurance or health care for those who are indigent. What of those who freely choose to remain without insurance?

I would argue that any individual should be at liberty to purchase health insurance (or not) as he or she see’s fit. But the decision should not be made with the expectation that the government (or its surrogates) will be there to make certain that one will not be forced to bear the consequences of his or her decisions. If medical service providers (including emergency rooms) were free to refuse service to the uninsured—and acted accordingly—and if the voluntarily uninsured could not rely on bankruptcy protection for the bills they incurred, I imagine the number of uninsured would drop significantly.

It is sometimes said that nothing is more dangerous than an implicit guarantee (most recent evidence: Fannie Mae and Freddie Mac). In health care, one wonders how much the elimination of the implicit guarantee would affect the decisions of those with sufficient means who knew that absent insurance, medical emergencies would carry catastrophic consequences? What would happen if we eliminated the “backstops” and got the incentives right?

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Avik Roy has an interesting piece in National Review on how conservatives (really, free-marketeers) should approach the policy and politics of health care in the age of PPACA. I largely agree with his policy prescriptions, somewhat vaguely stated as they are:

First, Republicans must foster a truly free market for health insurance by eliminating the differing tax treatment of employer-sponsored and individually purchased insurance. Second, Republicans must make dramatic improvements to Medicaid, using Mitch Daniels’s impressive reforms in Indiana as a template. Third, Republicans must move Medicare onto a sustainable path that puts financial control in the hands of seniors themselves rather than central planners.

I would also argue for repealing state-level health insurance mandates, but that is properly the role of state governments. (As noted in this blog, allowing purchase of health insurance under other states’ laws would achieve more or less the same end.)

Roy’s analysis of the political situation is insightful. Republicans and conservative Democrats are very unlikely to achieve a filibuster-proof majority after the 2012 elections. Therefore, repeal of PPACA will have to be passed through reconciliation. But since the CBO scored PPACA as reducing the deficit, a simple repeal cannot pass through reconciliation.Thus, whether they like it or not, Republicans will have to take on new spending cuts to any repeal.

And this on the presidential race is spot on:

This means that influential Republican activists must — must — coalesce around the most electable Republican presidential candidate who can articulate conservative health-care principles. This is no time for single-issue small-ball or personal score-settling. A GOP nominee who passes all the litmus tests but can’t win in November would only succeed in making Obamacare permanent. One who can win but isn’t capable of pushing for real health-care reform wouldn’t be much better.

The first criterion rules out Palin and Gingrich (and let’s be honest, Paul and Johnson too). The second rules out Huckabee and Romney. Who’s left? Mitch Daniels?

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