Reason Foundation

The Real Causes of Rising Healthcare Costs

Posted on April 24, 2013, 5:23pm | Tom Clougherty

According to the Los Angeles Times:

U.S. healthcare spending grew 3.9% a year in 2009-2011, according to government data, the lowest growth rate since the government began tracking it in 1960, and down significantly from annual growth averaging 8.8% in 2001-2003.

That sounds like good news. But the article also cites research from the Kaiser Family Foundation that finds “economic factors related to the recession accounted for 77% of the reduced growth in national health care spending”. As a consequence, we should expect “more rapid growth as the economy strengthens”. Given that health care spending already stood at an estimated $2.8 trillion in 2012—nearly 18 percent of GDP—this is cause for concern.

Many health reform advocates believe the main driver of spiraling health costs is the absence of universal coverage, which results in uninsured patients “free riding” via costly emergency room visits, leaving the insured to foot the bill in form of higher premiums. And it’s true that this and other forms of legally mandated cross-subsidization (like Medicaid, Medicare, and community rating) make healthcare more costly than it would otherwise be for many Americans. But it certainly isn’t the main factor.

The real issue is that policymakers—despite their good intentions—have managed to design a health care market in which the supply of services is both unnecessarily constrained and inefficiently organized, while also doing their best to eliminate any effective checks on demand. Put those two things together and rising costs are an inevitable outcome.

Let’s start with the supply side. As John H. Cochrane points out in this excellent paper, there are plenty of examples in the corporate world of better products being provided more cheaply than they were ten or twenty years ago—think Southwest Airlines, Amazon, Toyota, or Wal-Mart:

These revolutions are not just about technology. In most of these cases, we see process innovation, reorganizing activities to deliver complex services at lower cost and with better and more uniform quality. This process efficiency is most glaringly absent in healthcare.

But why is health care provision still so fragmented, so lacking in consumer focus, and so far behind in computerization? Cochrane cites a lack of intense competition: “certificate of need” requirements severely restrict market entry in 36 states, and occupational licensing rules artificially constrain the supply of doctors while preventing nurses from offering competing, lower-cost treatment. Then there are rules that hold back the “corporatization of overall health service provision”, promote inefficient non-profit institutions that have little incentive to innovate, and block mergers and consolidations that could deliver greater economies of scale.

Cochrane’s solution is a commendable one: “Look for every limit on supply of health services, especially entry by new companies, and get rid of it.”

On the demand side, the problem is straightforward enough. The dominance of third-party payment and the prevalence of employer-provided health insurance—both of which are supported by regulation and the tax code—mean that patients and providers almost always have an incentive to maximize care, irrespective of cost. Patients do this because their up-front premium has already been paid and they want to extract as much value from it as possible. Providers do it because they want to earn as much fee-for-service income as they can. In the long run, this is not a sustainable model.

Ultimately then, the prospect of more rapidly rising health care spending serves as a timely reminder that US healthcare really does need a comprehensive overhaul. It’s just too bad that the reforms currently under way do so little to move things in a positive direction, and will likely make things worse, rather than better.

Where Swing States Stand in Implementing “ObamaCare” Exchanges

Posted on June 28, 2012, 4:20pm | Harris Kenny

This morning the U.S. Supreme court determined the Affordable Care Act (ACA), or “ObamaCare,” to be constitutional in National Federation of Independent Business v. Sebelius. The most widely discussed consequence of this ruling is that the federal government is allowed to require all Americans buy health insurance by 2014. One of the most significant aspects of this ruling for state governments is that the establishment of state-level health insurance exchanges will remain in place. Given other aspects of the ruling in regards to Medicaid, Rep. Phil Gingrey, R-Georgia, argues that more people will opt in to the exchanges to receive subsidized plans instead of receiving Medicaid, according to CNN.

State-level health insurance exchange implementation will come under increased scrutiny over the coming months following the ruling. This is especially true in swing states, which remain a focal point in the ongoing the Presidential campaign, especially because some states fought establishing exchanges until the Supreme Court ruled on the case.

Rather than reinvent the wheel, I’m going to excerpt research on where swing states stand in implementing the exchanges from an excellent Associated Press article published this morning. I determined the 11 swing, or toss up, states from Real Clear Politics’ electoral map. Information about the remaining 39 states is also detailed in the aforementioned Associated Press article.

Source: Where states stand on implementing health care law, Associated Press, June 28, 2012. http://hosted.ap.org/dynamic/stories/U/US_HEALTH_CARE_STATES_GLANCE.

How Rising Health Costs Will Hurt the Economy

Posted on March 27, 2012, 11:48am | Anthony Randazzo

Beyond just government spending on health care increasing in the coming decades, which is a rather hot topic this week, private health care costs are set to grow at an increasingly exponential rate in the coming years. This is not necessarily something new, as we've had rising health care costs for decades now. But what is going to be a challenge for the economy is that economic prosperity trends America had in the 20^th century were able to absorb these rising costs in a way we won't see in the next few years since those trends have flatlined.

Rising health costs are not new...

America has gone from spending $147 per capita on health care in 1960 to around $8,400 per capita in 2010 on health care. And as life expectancy has increased from 69 years to 78 years during that timeframe, the costs have picked up more rapidly. And that is not to mention that technological advances while more life saving have also been more costly.

But economic trendlines are flatlining...

Prior to 1960 we had a significant period of economic prosperity. Entrepreneurship and innovation and labor force expansion and education were all on the upswing in the early to mid part of the 20^th century. As a result, we were able to absorb inflating health care costs without it too dramatically hitting economic growth. However, all of those factors have flatlined at various points in the past few decades. And the trends are catching up to us. As a result, the increased costs over the next decade are going to have much more visible effects than in the past. Here are three examples:

1—Labor Market Participation: According to the most recent BLS data, there are actually more people outside the labor force today than there were a year ago when the unemployment rate was higher. If we were to add those who have stopped looking for a job in the past month to the labor data, the headline unemployment rate would go from 8.3% to about 9.6%, according to CBO projections. Unfortunately, this weak labor market participation is a long-term trend. The labor force stopped growing substantially in 1990, and today's labor force participation rate has actually declined to levels last seen in the early 1980s.

This is important because much of America's economic growth following World War II came with a substantial surge in labor market participation, particularly by women entering into the work force, going from 32.7% of the work force in 1948 to 58.1% in 2011. The baby boomer generation also helped fuel the economic boom. Larger labor pools enabled capital to be put to work more efficiently. Even if economic output continues to grow with all these workers on the sidelines, our output is dramatically lower than where it would be if we had more people working. A two-decade flatline in labor market participation that is declining means bad news for output in the coming years.

2—Education Results: At the same time that the labor force was expanding in the 20^th century, education gains were rapidly moving forward. From 1900 to 1970, high school graduation rates climbed from 6% of children to 80% of children. But since then we have flatlined, and even declined a bit in graduation rates. The number of high school grads relative to the population has fallen to 9.6%. Even with life expectancy and the baby boomers adding age to the overall population-this is a sign of substantial stagnation. Test scores in core subjects have also flatlined since the 1970s, according to a 2011 report from the National Center for Education Statistics. This may not appear to be a problem, but given the technological advances and teaching method advances since the 1970s, we should expect test scores to increase.

These and other flatlining education trends mean less competitive American workers, slower adaptation to shifts in economic fundamentals, and exacerbated employment problems. Low-skill labor opportunities are shrinking every day due to automation, efficiency gains, and the capacity to outsource some manufacturing work. Workers of the future will have to be even better educated then the current generation to compete in a world of skilled labor.

3—Innovation and Entrepreneurship: The lifeblood of the American economic miracle has always been new businesses. But since peaking in 2006, employment in new businesses and registration of new businesses has seen substantial declines. Entrepreneurship was down nearly 25 percent in 2011 compared to 2006. And economist Tyler Cowen has laid out a strong case that innovation has been one the decline in America since the 1970s. This means that innovation and entrepreneurship have had correlated slow downs with the labor market expansion's stall out and the drop off in educational advances.

This means weak economic prospects in the near- to medium-term...

All of this suggests we should not be expecting the big GDP growth period often seen after recessions. We have had a recession, a financial crisis, a global fiscal crisis, a national debt crisis all hit at the same time that innovation, entrepreneurship, education, and labor trends have taken negative turns. And this is not to mention that America's major growth sectors are changing and it is going to take time to reorient the work force to the new growth sectors.

What kind impact will these trendline shifts cause?

To start with, having more GDP resources taken up by health care spending means less business investment, translating into fewer jobs.

• Based on current policies, the CBO has recently projected that mandatory government healthcare spending will rise from 10.4% of GDP in 2012 to 12.8% of GDP in 2020. 
• Private health care costs are also expected to rise at an increasing rate over the remaining years of the decade as the Centers for Medicare and Medicaid Services projected last summer average annual health spending to outpace growth in the overall economy and reach $4.6 trillion in national health spending by 2020, or 19.8 percent of GDP. 

The more that health care costs consume GDP, the less capital the economy will have to build on. That means lower economic growth from business expansion, and possible continued challenges for unemployment over the next decade-don't be looking for that 6% unemployment rate any time soon.

In tandem, those rising health care costs are going to limit innovation and entrepreneurship. As new business start-ups are the lifeblood of the economy, this means lower GDP growth, translating into higher federal budget deficits.

Furthermore, rising health costs also mean the household debt situation will deleverage slower, hurting housing, and by extension economic recovery.

Conclusion

The take away here is that the impact of rising health care costs will be much more acute in 2020 than in 1980-unless of course we see some unexpected innovation that is on the scale of the Internet emerge to power the economy forward. Many of the growth trends we relied on in the path are flatlining and the low-hanging fruit of innovation is disappearing, as Tyler Cowen would say.

The good news is that the nature of todays and the next decades' economic woes are transitional. Our economic sectors are shifting. Our education system is not breaking down so much as struggling to adjust to changes in economic fundamentals. And the America spirit will adapt. The question is when.

Reason-Rupe Poll: Americans Don't Think Health Care or Broccoli Mandates Are Constitutional

Posted on March 26, 2012, 9:01am

As the Supreme Court hears challenges to the Patient Protection and Affordable Care Act this week, a new Reason-Rupe poll of 1,200 adults finds 62 percent of Americans believe it is unconstitutional for Congress to mandate the purchase of health insurance, while 30 percent think requiring health insurance is constitutional.

Legal experts have suggested that if Congress has the power to require individuals to buy health care insurance, it may also mandate that Americans buy broccoli. The Reason-Rupe poll finds 87 percent of Americans believe Congress does not have the power to require the purchase of broccoli, while 8 percent say Congress can force you to buy vegetables.

Reason-Rupe finds 54 percent of Americans think the health care law will result in the rationing of health care services. Half of Americans have an unfavorable view of the health care law, while 32 percent have a favorable view of it. Similarly, 49 percent say the law should be repealed and 36 percent would let it stand.

When it comes to addressing their health care needs, just 23 percent of Americans trust the government. That’s less than half of the 50 percent who say they trust health insurance companies and considerably lower than the 84 percent who trust their doctors.

The Reason-Rupe poll results reveal some health care reforms that the American public would support. Over two-thirds, 69 percent, of Americans would like to be able to shop for health insurance in the same way they shop for auto insurance. And many are willing to move away from our existing system to do so: 48 percent of Americans would prefer to receive the money their employers spend on health care as part of their paycheck and then shop for their own health care plans. Forty-one percent would like to continue to get insurance through their employer.

If they were allowed to shop for health care plans across state lines, 43 percent of Americans say insurance premiums would go down and 23 percent believe they’d go up.

In thinking about the quality and cost of their own health care, 67 percent of Americans tell Reason-Rupe that public sector workers have better health care benefits than private sector workers. Twenty-two percent say the benefits are about the same, and 4 percent say private sector workers get better benefits than government workers.

With Rep. Paul Ryan’s budget plans back in the news, the Reason-Rupe poll also finds voters are open to changing the future of Medicare. For people not yet in the program and under the age of 55 right now, 65 percent of Americans favor changing Medicare into a program that would give recipients a credit that could be used to purchase private health insurance. Just 24 percent would oppose the change. If those modifications were made to Medicare, 34 percent of Americans think the quality of care would improve, 33 percent believe it would stay the same and 24 percent say it would worsen.

A majority of Americans, 52 percent, support the health care law’s provision that prevents insurance companies from denying coverage to those with pre-existing conditions. However that support collapses when trade-offs are presented. Only 37 percent would support the pre-existing conditions law if tax increases were needed to pay for it; just 38 percent would support it if it caused higher premiums; and 41 percent would support it if it caused longer wait times to see a doctor.

The Reason-Rupe poll also asked about organ donation. Most Americans, 55 percent, believe healthy adults under medical supervision should be allowed to sell their own organs. Thirty-four percent oppose the sale of organs.

Full Poll Online

The complete Reason-Rupe survey is online at http://reason.com/poll and here (.pdf).

This Reason-Rupe poll, conducted March 10-20, 2012, surveyed a random, national sample of 1,200 adults by telephone (704 on landlines, 496 on cell phones). The results have a margin of error of plus or minus 3 percentage points. The poll was conducted for Reason Foundation by NSON Opinion Strategy.

This is the latest in a series of Reason-Rupe public opinion surveys dedicated to exploring what Americans really think about government and major issues. This Reason Foundation project is made possible thanks to the generous support of the Arthur N. Rupe Foundation.

This is No Time to Go Soft on Medicaid Fraud

Posted on March 19, 2012, 8:38pm | Adrian Moore

New York has decided to soften their audits or medicaid fraud, make them less adversarial. Which is striking considering how much fraud their audit program has uncovered and and how much it has saved taxpayers--$1.5 billion in the first 4 years.

James Introne, Mr. Cuomo’s deputy secretary for health said “An audit need not be an adversarial enterprise. To the extent that an audit turns into an adversarial affair, it may not be conducted properly. An audit is successful when people agree.”

That may be true of audits attempting to identify opportunities, like recovery audits. But it is NOT true of fraud audits.  Everyone is innocent until proven guilty, but audits for fraud have to assume the perpetrators are trying to cover their tracks. So such audits have to be tough.  NY is essentially saying they'd be willing to led some fraudsters get away with it and give up some of that $1.5 billion recovered if it would make everyone more comfortable, less "adversarial." This when NY is has raised taxes and still has a $2 billion budget deficit.

A Cause of Health Care Costs You Rarely Hear About

Posted on March 13, 2011, 5:58pm | Adrian Moore

I was talking about government run vs private health care with a Canadian friend the other night when, after listening for a bit, another friend chimed in that we were ignoring the doctor monopoly.  He was right.  In these discussion we typically forget that the medical profession has the oddest and strongest monopoly power in the private sector in the US.  Those who are already doctors have ironclad control over who else gets to be a doctor. Meaning they have more control over competition than any other industry I know of.  It doesn't take a rocket scientist, or a rock-star economist, to realize that limiting the supply of doctors might be why they make so much money, and why we pay so much money, for healthcare services.

Shirley Svorney has been writing about the economics of medical licensing for years.  Check out this podcast interview in which she discuss its pernicious effects.

L.A. Chamber of Commerce Calls for Pension, Health Care Benefits Reform

Posted on February 15, 2011, 11:19pm | Adam Summers

The City of Los Angeles is a microcosm of the State of California: a high-tax, high-regulation area with a poor business climate and ballooning pension and budget deficits. The city is facing a $350 million budget deficit next fiscal year, and its unfunded pension liability is officially estimated at $6.8 billion, although, given the optimistic nature of public pension actuarial assumptions, the actual deficit is almost certainly higher. The city's annual pension contributions are expected to nearly double in the next few years, from $653 million last year to $1.2 billion, and pension and health care costs for retired city employees are projected to consume approximately one-third of the city's general fund by 2015.

On the Los Angeles Area Chamber of Commerce's "The Business Perspective" blog, Chamber President and CEO Gary Toebben discussed the need for city employee retirement benefits reform and the unfairness of the current system.

Most residents and business taxpayers are surprised to find out that the City of Los Angeles offers 100 percent paid basic health care premiums for nearly all municipal workers, dependents, retirees and spouses or partners. For retirees alone, the cost to provide free, lifetime health insurance is $292 million a year and rising.

The issue is about employee benefits versus basic municipal services. It's also about fairness. Many city residents struggle to fund their own retirements and pay their own family's health care costs, yet they are providing city employees and retirees with a nearly 100 percent paid health insurance package. These benefits are fiscally unsustainable and blatantly unfair to millions of Angelenos.

Enacting reasonable reforms is not about punishing city workers nor is it union bashing. Far from it. It's about maintaining basic city services and bringing fiscal responsibility and equity to the entire city family — municipal workers, residents and businesses.

Greater cost-sharing for health care and pensions will save a large number of city jobs. While city employees will have to pay more for health care and retirement, this cost saving move will help bring an end to uncertainty around layoffs and furlough days. It's better to have a job with access to affordable health care than no job with zero health care coverage.

What's clear is that these reforms must take place at the bargaining table. Mayor Antonio Villaraigosa and City Council must collaborate on a strong push in negotiations with the Coalition of LA City Unions.  This push is necessary to save city services and the employees we currently have. Without it, the mayor and City Council will have no choice but to lay off more employees, enact more furloughs and cut the basic services that the taxpayers of Los Angeles expect and are paying for. Everyone in our city of 4 million residents loses under that scenario.

Unfortunately, the current L.A. pension reform proposals, including Measure G on the March 2011 ballot concerning potential changes to police and firefighter benefits, merely involve some minor tinkering with provisions of the current system, such as extending the retirement age a couple of years or offering a second tier of reduced benefits for new hires. But it is the entire defined-benefit retirement system that is unsustainable and susceptible to unaffordable future benefit increases, volatile annual city contribution requirements (due to a heavy reliance on pension fund investment performance), and manipulations or inaccuracies of pension fund actuarial assumptions.

These problems would be resolved by switching to a 401(k)-style defined-contribution retirement system with pay and benefits set comparable to those received in the private sector. In addition, Los Angeles should follow the example of San Francisco, San Diego, and Orange County and implement a requirement that voters must approve future public employee benefit increases. This would allow the taxpayers, who are the ones paying those government workers' salaries and benefits, to act as a final check against unreasonable benefit enhancements and unfair collusion among politicians and public employee labor unions.

» See also the Reason study, How California's Public Pension System Broke (and How to Fix It)

No, That is Not Evidence That Obamacare Has Created Jobs

Posted on January 21, 2011, 3:58pm | David Godow

In the wake of the House's vote to repeal Obamacare on Wednesday, a number of the President's cabinet advisors have struck back by touting the law's purported benefits. Secretary of Labor Hilda L. Solis released a brief statement following the vote, arguing that President Obama's health care reform has actually created jobs since its passage last March:

"The American people are looking to Washington for solutions to grow our economy and make America more competitive. Instead, Republicans in the House of Representatives have chosen to vote to repeal individuals' freedom, control and choice in health care decisions.

"Despite false and confusing rhetoric, the Affordable Care Act supports job growth. Since its passage, more than 1.1 million jobs have been created in the private sector. In fact, job growth has accelerated every quarter in 2010. The reforms included in the ACA will reduce the burden of health care costs on businesses, allowing them to be more competitive in the global market. These reforms will continue to support a stronger labor market and the broader recovery in 2011 and beyond. "

Repealing health reform represents a step backwards for our nation, at a critical time when we need to be focusing our energies on moving our economy and our nation forward."

So to support the claim that the Affordable Care Act (ACA, aka PPACA or Obamacare) supports job growth, Secretary Solis notes that job growth has accelerated since the measure's passage. This is certainly true. Still, perhaps one of the Labor Department's 1,262 talented economists can remind her that correlation does not equal causation. The fact that jobs were created after the bill was passed does not mean that it spurred job growth.

In reality, making a convincing argument that Obamacare created jobs last year is going to be an uphill struggle for the bill's proponents. We can at the very least be sure that it was not the law's passage that spurred last year's modest job growth. By the time the ACA was passed in March 2010, the economy's shift to job growth was already well underway - it started in November 2009. Moreover, the acceleration of job creation in 2010 follows improvement in a bunch of macroeconomic indicators that turned the corner to growth just a little before employment did (e.g. retail sales, personal consumption, corporate profits, business inventory/sales ratios, and any number of others). This was a job recovery due to economic fundamentals, and it's uncertain whether response to the ACA had anything to do with it.

Here's a graph showing year-over-year growth/decline in employment over the last three years by sector of the economy.  It's pretty plain that the inflection point in job growth was not after the passage of Obamacare in March 2010, but in mid/late 2009, when job loss slowed in most sectors, on the way to the first month of net job creation in November.

It's worth noting that job creation in the education and health services sector, which we might expect to spike in mid and late 2010, was actually slower last year than in 2008 (though faster than 2009). Interestingly, it's also the only major sector the BLS tracks that has created jobs every single month since the recession began.

None of this means that Obamacare didn't create any jobs. Perhaps it did. Perhaps we can credit it for every one of the jobs created since March 2010. But the simple fact that job creation has occurred since it was passed is not evidence that it had anything to do with health care. And there's a strong indication that the recovery in employment was due to a strengthening macroeconomy, not a health care deus ex machina.

Solis is certainly correct on one point: it's no fun to muddle through "false and confusing rhetoric" in the health care debate. Let's not add bad statistics to the mix.

Tax Exemption for Health Benefits On Its Last Legs?

Posted on November 30, 2010, 9:10am | David Godow

Though it's uncertain whether the next Congress will enact meaningful budget reform, there's reason to believe that once sacrosanct tax benefits could soon be canceled in the name of deficit-trimming. Yesterday, the AP spread the word that a deal to axe the tax-exempt status of employment-based health insurance benefits may be possible.  This would make employers' contributions to their insurance plans count as taxable income for employees, cutting off a much beloved subsidy and potentially bringing the federal government over $100 billion in previously foregone income taxes.

The exemption has come under fire from budget reformers not only for its direct cost to the government, but for the way it may actually increase health care costs for the general population. By not taxing employer-provided health insurance benefits  in the same way as wages, it effectively subsidizes those benefits. As a result, eligible taxpayers face less than the full cost of their insurance, encouraging them to demand more generous benefits than they could afford themselves. Higher demand, of course, fuels higher prices for health care. Thus, while the exemption might make health care more affordable for certain families, it likely also contributes to the more general rise in health care costs bemoaned by politicians on both sides of the aisle.

It's also uncertain whether the benefits of the subsidy are even concentrated among those who can least afford health care. As this report by the Health Policy Consensus Group notes, the rich enjoy a greater share of the subsidy since they "demand the most expensive health coverage and medical treatments." Those who don't receive health insurance through their employer because, say, they are low-wage hourly workers, see no benefit whatsoever.

There's no doubt that the health benefit tax exemption is popular - and why shouldn't it be? It subsidizes  a product many consider vital. But policymakers shouldn't allow that to obscure the toll it takes on our fragile budget, nor the fact that it may actually increase health care costs in the aggregate. That policymakers have started tacitly acknowledging the exemption's problems is encouraging - let's hope the prognosis stays good.

Addendum: As a reader noted, this post could be read as an endorsement of revoking the tax exemption on health insurance benefits without an accompanying reduction in marginal income tax rates - i.e., simply a tax hike. Certainly any tax hike that results from eliminating tax expenditures should be matched with a reduction in marginal rates, making sure the overall outcome is revene neutral.

Arizona Voters Support Health Care Freedom; Reject Affirmative Action, Card Check and more

Posted on November 3, 2010, 1:12am | Leonard Gilroy

A few interesting results thus far from Arizona's slate of ballot measures:

• Proposition 106: By a 55-44 margin, Arizona voters thumbed their noses at federal health care reform by passing the Arizona Health Insurance Reform Amendment. This constitutional amendment prohibits any rules or regulations forcing state residents to participate in a health-care system (read: ObamaCare) and protecting their right to pay for private health insurance. Missouri voters passed a similar initiative earlier this year, as did Oklahoma voters tonight.
• Proposition 107: By a 60-40 margin, Arizonans passed this constitutional ban on affirmative action programs in government employment, public education and contracting. Nebraska passed a similar amendment in 2008, while Colorado voters shot one down that same year.
• Proposition 109: Over 56% of voters rejected a proposed constitutional amendment that would have made hunting, fishing and harvesting wildlife a constitutional right and thwart future ballot measures to limit the right of Arizona residents to hunt and fish.
• Proposition 113: Arizonans obviously are not keen on the card-check unionization sought by President Obama and labor unions, judging by their 61-39% vote in favor of the Save Our Secret Ballot Amendment. The constitutional amendment guarantees workers the right to a secret-ballot vote on any proposal to unionize. Consider it a pre-emptive strike against the Employee Free Choice Act, or at least an obstacle.
• Proposition 203: Arizona's latest salvo at a medical marijuana law looks like it will come down to the wire, hovering around 50-50 with votes still being counted.

Interestingly, Arizona voters also blew at least a $500 million hole into the state budget overnight by rejecting Props 301 and 302, which would have transferred voter-established land conservation and early education funds to the general fund to help balance the budget deficit. Neither measure garnered more than 30 percent support. After several years of budget turmoil, things aren't going to be looking up here anytime soon.

Top 20 California Bills to Veto List Released

Posted on September 16, 2010, 1:12pm | Adam Summers

California State Senator Mimi Walters (R-Laguna Niguel), Assemblyman Chuck DeVore (R-Irvine), and FlashReport publisher Jon Fleischman have compiled a list of the top 20 bills that are most deserving of Gov. Arnold Schwarzenegger's veto. While the state is grappling with yet another staggering deficit of $19 billion, and most lawmakers appear to be in no hurry to plug the gap and produce a budget that is already two and a half months late, many in the legislature have nonetheless found the time to pass a number of harmful, ill-advised, and just plain frivolous bills. As Walters, DeVore, and Fleischman note,

When we go through hundreds and hundreds of bills to find the ones that we consider to be the most egregious, harmful or inappropriate, is our hope and expectation that a Republican Governor would veto all of them, frankly.  Remember, we're talking about the worst bills.  If the Governor signs any of the bills listed below, it is bad news for the people of California...  This is the fifth and final time we will be publishing this column during Governor Schwarzenegger's tenure...  He's hoping that the last go around we see him use his veto pen twenty times!

Below are a few highlights from the list.

Health Care

SB 900 (Alquist) and AB 1602 (John Perez) – (nearly identical to SB 900) – Prematurely enacts Obamacare provisions with overly broad and expansive governance and guidelines without oversight for the state health benefit exchange, which could lead to unnecessary cost increases and limited choice for employers.

AB 1825 (De La Torre) – Requires all individual health insurance plans to include maternity care – even those for men.  A Republican analysis estimates that this will cause nearly 10,000 Californians to lose coverage due to increased cost.

Nanny State

SB 880 (Yee) – Requires skiers/snowboarders under the age of 18 to wear an approved helmet and imposes a $25 fine for failure to do so.  Who will write the tickets?  For instance, do we really want or expect the Mammoth Lakes Police Department to assign officers to the slopes to enforce this law?

Taxes & Fees

AB 2032 (Davis) – From the Department of Redundancy Department—Requires underage actors, artists and other entertainers to pay a new fee, which the agency collecting the fee states is required to defray the costs of collecting the fee.

AB 2398 (John Perez), aka the “Carpet Product Stewardship Act,” imposes a $0.05 per square yard tax on carpets sold in California through 2013 (after which, the cost will likely climb) to fund a carpet recycling program.  Interestingly, California’s biggest carpet recycling company, Los Angeles Fiber Co., is in the district of the bill’s sponsor, Assembly Speaker Perez.
 
"Global Warming"

AB 1405 (De Leon) – Directs 10% of the fees generated by AB 32, estimated at nearly $1.3 billion, to an unaccountable bureaucracy with the intention being that the spending be directed at areas impacted by climate change.  Given that there is no adverse health impact to CO2 emissions, this bill is simply yet another attempt to take money from one group and give it to another under the guise of government power.

Anti-Business and Jobs

SB 933 (Oropeza) – Will eliminate thousands of Californian jobs by vastly increasing costs to small businesses for debit card transactions. The bill prohibits retailers from collecting fees for debit transactions, despite the fact that these cost businesses much higher transaction fees than credit cards.

SB 1272 (Wolk) – Creates a seven-year sunset for all future tax incentives for employers in California, as well as various other onerous requirements, leading to more uncertainty in the tax code which discourages investment in California.

Frivolous Spending and Lawsuits

AB 424 (Torres) – This bill spends nearly $4 million over the next three years to educate the public on the uses of the 911 system.

See the full list here.

Mercatus: Federal Income Taxes Would Have to More Than Double to Maintain Medicare, Social Security Benefits

Posted on July 31, 2010, 10:36pm | Adam Summers

Here is a sobering chart from the Mercatus Center at George Mason University. Mercatus Center Senior Research Fellow and Reason magazine contributor Veronique de Rugy (see an archive of her Reason articles here) used Congressional Budget Office data to calculate the hike in federal income tax rates that will be required to maintain the increasingly costly Social Security, Medicare, and Medicaid entitlement programs at current benefit levels.

According to de Rugy,

Even for the lowest tax bracket, annual federal income taxes will have to more than double to pay for current levels of Medicare, Medicaid and Social Security spending. These massive tax increases will be necessary in spite of the recently legislated changes to the healthcare system, which CBO has determined will increase costs over the next 20 years and will have indeterminate budget effects into the future.

In 2010, Medicare and Medicaid will cost a projected 5.0 percent of GDP and Social Security will cost a projected 4.8 percent of GDP. Combined, that is just under 10 percent of GDP. By 2020, the combined cost of these three programs is already projected to grow to 11.4 percent of GDP; extrapolating forward at constant growth rates, their cost will be at about 14.4 percent of GDP by 2030. To put this in context, total federal spending has averaged 18.5% of GDP over the last 40 years.

While things like "bridge to nowhere" earmarks grab a lot of the headlines—and, indeed, these are maddening abuses of taxpayer dollars—they represent only a minuscule portion of the federal budget. To truly make any headway in cutting the size and scope of the federal government down to a more reasonable, fiscally manageable, and individual freedom-friendly level, there must be serious reform of the entitlement programs, which make up the bulk of the budget (especially if you take out defense spending). Clearly, we are on an unsustainable trajectory and it is time to start asking fundamental questions like why government intrusions into the health care industry have led to higher costs, fewer choices for consumers, and oftentimes poorer quality of care; whether retirement planning should really be under government purview; or why individuals cannot at least opt out of the Social Security system and handle their own retirement investments and plans.

Louisiana Legislature Considering Anti-Privatization Bills, Part 2: Psychiatric Hospital Edition

Posted on May 28, 2010, 2:07pm | Leonard Gilroy

My post last Friday was the first in a review of several anti-privatization bills currently in discussion in the Louisiana state legislature, and today's installment brings us to House Bill 1443. This bill is actually a variation on the same theme as the last one, but this time allowing multiple legislative subcommittees to veto privatization contracts related to mental health facilities and services. And for many of the same reasons I outlined in that post—which I won't restate here for brevity—this would be terrible procurement policy.

For context, see this recent article on the bill in The Advocate. Reading the proposed statutory language, it seems apparent to me that this is a state jobs preservation bill first and foremost, and one that comes in the midst of an enormous fiscal crisis, to boot. Unfortunately, state legislators don't tend to respond well to pending state employee layoffs in their district, so you might say this is a NIMBY reaction along the "we should cut state spending, so long as it's not in my district" line of thinking. However, it's important to remember that state psychiatric hospitals exist to provide quality care to individuals suffering from severe mental illness, not to be a government jobs program.

There's an unfortunate déjà vu with a similar situation that played out in Florida last year, in which a few state legislators convinced their colleagues to squash a proposal to privatize a north Florida psychiatric hospital in their district, with the outright aim of protecting state jobs. This was a huge missed opportunity, as my colleague Anthony Randazzo and I discussed at length here.

The reality is that privatization can save the state money while also ensuring higher quality care for patients. For over a decade, Florida has successfully privatized a number of state psychiatric hospitals and correctional mental health services, dramatically improving patient care and outcomes while innovating to drive costs down. Louisiana's current Health and Human Services Secretary Alan Levine, a key privatization proponent, knows Florida's successes firsthand-in fact, he actually led them for several years while serving in the administration of former Governor Jeb Bush.

South Florida State Hospital (SFSH)-the first state psychiatric hospital privatized in Florida in the late 1990s offers an excellent example. The aging Pembroke Pines facility had never been accredited in its 50-year history and was facing a major class action lawsuit concerning patient abuse and abysmal conditions when it was privatized. Within 10 months of receiving the contract, the private operator was able to get the existing facility accredited and the lawsuit dismissed, while at the same time financing and building a new, modern facility to replace it. No state capital dollars were involved, and the state will own the new facility when the debt is retired.

The results speak for themselves. Since privatization, the hospital has dramatically reduced waiting lists for patient admissions, reduced the average patient stay from eight years to less than one year, and nearly eliminated the use of seclusion and restraint to manage patient behavior. SFSH also recently rolled out the first electronic health records system in a Florida psychiatric hospital. Significantly, the contractor paid to develop this cutting-edge system itself-recognizing the operational improvements it would facilitate-even though such improvements immediately become property of the state.

Those rightfully concerned with the quality of patient care in privatized psychiatric facilities should understand that privately-operated hospitals typically receive more monitoring and oversight than those run by governments. For example, after privatization, SFSH and all of Florida's other privately-operated state psychiatric facilities have become accredited by the Joint Commission, a national, nonprofit health care accreditation organization that reviews the quality of public and private hospitals. By contrast, no state-run facility in Florida has received this respected seal of approval.

The Florida Statewide Advocacy Council-a human rights advocacy group that initially opposed the SFSH privatization-noted its turnaround, unanimously passing a resolution in 2003 supporting further privatization of Florida's psychiatric facilities. Policymakers paid attention as well and subsequently privatized several additional forensic psychiatric hospitals, as well as several prison mental health programs.

Cost savings through privatization have also been impressive.

• The Florida Department of Children and Families reported in 2007 that the average cost per bed in privately operated state psychiatric facilities was as much as 15% lower than at the state-run facilities.
• These results were confirmed more recently in February 2010, when the Florida Legislature's Office of Program Policy Analysis and Government Accountability (OPPAGA) issued a report finding that the private civil hospital's quality of care was similar to the two state employee run facilities, however the cost of the private hospital was 6 to 14% less per bed.  The disparities in cost and quality had been larger but Florida's state employee run hospitals have improved considerably since competition was introduced and the partnership began in 1998.

Indeed, introducing privatization into one facility seems to have had a positive effect on the performance of its peers-a predictable result of competition.

Louisiana could expect similar results if they were to engage in well-structured, competitive procurement processes. That would become a lot more difficult if the legislature were to add several more layers of hurdles at the end of a procurement, driving up risks and costs for the private sector and reducing competition at the margin. Why bother trying to compete on a procurement in Louisiana if the legislature can render your time and money expended in the process entirely moot at the very end-and on a political whim, even! Why not compete for projects in other states instead, where there's less political risk? 

Privately-run psychiatric facilities have a proven track record of providing high quality patient care, and they can often do it at a lower cost, innovating through more efficient business practices that offer better care for less money. Louisiana legislators should not sacrifice patients' well-being and fiscal responsibility to retain politically favored jobs on the state's payroll.

Health Care Reform to Bend the Cost Curve Down? Medicare Actuary Says No.

Posted on April 23, 2010, 10:17am | Leonard Gilroy

Hopefully Americans will find this news item today to be a "big #!&$%#* deal," though I suspect few will be surprised that the federal government has sold them yet another bill of goods. Medicare's chief actuary, Richard Foster, released a report yesterday throwing chilly cold water on the President's claims that the new health care reform law will bend the cost curve down. From the Associated Press:

President Barack Obama's health care overhaul law is getting a mixed verdict in the first comprehensive look by neutral experts: More Americans will be covered, but costs are also going up.
Economic experts at the Health and Human Services Department concluded in a report issued Thursday that the health care remake will achieve Obama's aim of expanding health insurance — adding 34 million to the coverage rolls.

But the analysis also found that the law falls short of the president's twin goal of controlling runaway costs, raising projected spending by about 1 percent over 10 years. That increase could get bigger, since Medicare cuts in the law may be unrealistic and unsustainable, the report warned. [...]

In particular, concerns about Medicare could become a major political liability in the midterm elections. The report projected that Medicare cuts could drive about 15 percent of hospitals and other institutional providers into the red, "possibly jeopardizing access" to care for seniors. [...]

The report acknowledged that some of the cost-control measures in the bill — Medicare cuts, a tax on high-cost insurance and a commission to seek ongoing Medicare savings — could help reduce the rate of cost increases beyond 2020. But it held out little hope for progress in the first decade.

"During 2010-2019, however, these effects would be outweighed by the increased costs associated with the expansions of health insurance coverage," wrote Richard S. Foster, Medicare's chief actuary. "Also, the longer-term viability of the Medicare ... reductions is doubtful." Foster's office is responsible for long-range costs estimates.

The report's most sober assessments concerned Medicare. In addition to flagging provider cuts as potentially unsustainable, the report projected that reductions in payments to private Medicare Advantage plans would trigger an exodus from the popular alternative. Enrollment would plummet by about 50 percent. Seniors leaving the private plans would still have health insurance under traditional Medicare, but many might face higher out-of-pocket costs.

In another flashing yellow light, the report warned that a new voluntary long-term care insurance program created under the law faces "a very serious risk" of insolvency.

Politico has the full report here. And remember that since the expanded coverage doesn't kick in until FY2014, the actuary's cost analysis only captures 6 years of the costs of expanded coverage for the 10 year period. Makes one wonder what a projection for FY2014-23 would look like.

Non-Violent Resistance to ObamaCare

Posted on March 26, 2010, 11:36am | Shikha Dalmia

ObamaCare this week was signed, sealed and delivered to the American people. The question is what now? Should Americans simply sit back and accept its panoply of Big Government provisions like the individual and employer mandates, taxes, regulations, what have you? In my latest Forbes column, I say: No. Americans should take inspiration from Gandhi to bring down the coercive state apparatus that ObamaCare is erecting. I note:

By some estimates, Uncle Sam will need to hire an additional 17,000 IRS agents or so just to enforce the coverage mandate. But even if a few million Americans simultaneously refuse to abide by it, they could easily overwhelm the system. Self-rule or swaraj, Gandhi said, requires a collective understanding of the immense capacity of citizens to "regulate and control" the coercive apparatus of the state through mass nonviolent resistance.

President Obama and his fellow Democrats are counting on this resistance petering out. That could happen. But it will be a lot easier for opponents to maintain this zeal in the age of social networking. Facebook already has numerous groups with millions of members demanding the repeal of ObamaCare. It won't be impossible to mobilize enough of them when the denouement arrives.

After all, this issue is not just about the fate of an industry. It is about maintaining control over basic decisions about one's own life and health. The stakes are too high to let ObamaCare stand.

Read the whole thing here.

Health-Care Reform Attacks Federalism

Posted on March 22, 2010, 11:13am | Samuel Staley

Federalism is one of the bedrock principles of American governance. I wonder how many Congressman really understood how the health-care reform plan passed by Congress on Sunday really was a direct challenge to Federalism.

Federalism is the governing principle by which the national government has certain rights and responsibilities and state governments have independent rights and responsibilities. The two governments are not subservient to the other; they act as independent governments and sovereign to themselves. They are also not "partners".

Federalism was so important, the Bill of Rights--a nonnegotiable set of Amendments added to the Constitution in order for it to be passed--included the 10th Amendement which says that any rights and duties not given to the Federal government in the U.S. Constitution are reserved for state government.

The health-care reform plan, according to the White House summary, undermines the core governing principle of Federalism in several ways, not the least of which is treating states as if they are, at best, junior partners with the Federal government, or, at worst, little more than wards of the Federal government. The health-care reform legislation will mandate that states provide certain levels of benefits to medicaid patients, force them to expand Medicad eligbility, require them to create and regulate insurance exchanges for low-income households, require them to "monitor and remediate high-risk billing activity" for prescription drugs, require state insurance "authorities to conduct annual rate reviews, backed by the oversight of the [U.S. Department of Health and Human Services] Secretary."

States already recieve 40 percent of their Medicaid funding from the federal government. So this reform is simply reinforcing a broader trend toward a unitary system of government, with the national government setting goals and objectives and lower levels of government carrying them out.

Unfortunately, this is really all part of a progressive vision to change the way America governs itself. The U.S. Constitution, by dividing power to protect liberty, is an antiquated governing system that gets in the way of doing what's right--like federalize health care. The priority of government is implementing goals hashed out in the national legislature.

Some states, most notably Viriginia, are taking this challenge head on. The state passed legislation prohibiting the federal government from mandating that Viriginia citizens buy health insurance. I hope they are successful, nothing less than the continued viability of American Federalism depends on it.

Dr. Obama's Idea of Change

Posted on March 22, 2010, 10:41am | Shikha Dalmia

Courtesy John Goodman at the National Center for Policy Analysis, here is the change you can look forward to under ObamaCare:

ObamaCare's Other Nemesis: Undocumented Workers

Posted on March 11, 2010, 8:53pm | Shikha Dalmia

The so-called Stupak amendment concerning federal funding of abortion has commanded all the attention of bean-counters on ObamaCare. Michael Barone this morning in the Wall Street Journal does some fine-toothed analysis showing that the Senate abortion language - if not fixed to the liking of Stupak and his cohort in the House -- would cost ObamaCare enough votes to make it a dead letter in the House. 

But another equally big issue that has commanded no attention and could cost the Senate bill as many - if not more - votes in the House is the immigration issue.

First, some background: The Senate bill bans undocumented aliens from buying coverage from the proposed government-created insurance exchange, even with their own money. This will essentially mean that these workers will be completely frozen out of the health care market - public or private, given that non-exchange-based insurance plans will become prohibitively expensive if not driven out of the market altogether under ObamaCare. Far from providing universal coverage, ObamaCare will become a vehicle to permanently deny coverage to about six million uninsured.

Indeed, at the same time then that government will tell Americans how they must spend their money, thanks to the individual mandate, it will tell undocumented aliens how they can't spend theirs. "Government intrusiveness combined with government discrimination is not a formula for social justice," I wrote in a recent Forbes column. "The government hasn't claimed the authority to selectively withhold access to public facilities since the Jim Crow era."

Needless to say the House Hispanic Caucus - which controls 20+ votes - doesn't like this one bit. It has all along opposed the Senate exchange ban. And now The Hill is reporting that many members of the caucus told President Obama today that they can't vote for the Senate bill so long as it contains the ban. Notes The Hill:

Since last fall, Congressional Hispanic Caucus (CHC) members have kept quiet, at least publicly, about their objections to the immigration provisions in the Senate bill.

But Hispanic Democrats say they haven't moved from their stance that they will not vote for a healthcare bill containing the Senate's prohibitions.

They claim that while it may be politically popular in some parts of the country to ban illegal immigrants from using their own money to buy coverage, it is not good policy. Illegal immigrants will, one way or another, need medical attention in the United States, and it would be cheaper and more humane to provide them coverage if they pay for it. Otherwise, they will seek treatments in the nation's emergency rooms, effectively increasing medical costs.

"I don't think the landscape has changed dramatically from where it was before," Becerra said.

Every CHC member voted for the House bill last November.

On Wednesday, members of the CHC privately acknowledged they've told their leaders that anyone who is assuming they've backed away from their position is in for a rude awakening.

"The [Hispanic] Caucus didn't want to raise it as an issue too early," one Hispanic Democrat said Wednesday. "But it's real. It's a problem."

Those alarm bells have apparently been heard. CHC Chairwoman Nydia Velázquez (D-N.Y.) said she and others have, on behalf of two dozen Hispanic Democrats, been in discussions with Speaker Nancy Pelosi (D-Calif.) and other leaders about how to resolve the matter.

"And we will continue having discussions," Velazquez said.

However, it is unlikely that the Senate will be able to change the immigration provisions under reconciliation rules. And even if it is deemed possible, there may not be enough support in either chamber of Congress to do it.

Not every member of the CHC would stand in the way of healthcare over the immigration issue. As a House leader, it would be unlikely for Becerra to vote against the president's signature domestic policy priority. And centrist Rep. Henry Cuellar (D-Texas) said the Senate language is "not a deal-killer" for him.

If even half of the Hispanic caucus flips, ObamaCare will be toast - Stupak or no Stupak.

Post Script: Jennifer Ngandu of the National Council of La Raza, an immigration advocacy outfit that is following this issue closely, whom I spoke to last week said that one way the caucus could be persuaded to vote for the Senate bill would be if it had reason to believe that the ban would be removed during reconciliation. But for that to happen, the Congressional Budget Office would have to score the ban so that it could then officially become a budgetary matter. That, however, she said was not very likely.

The ObamaCare Summit and the Republican Response

Posted on February 25, 2010, 10:06am | Shikha Dalmia

So what should Republicans do at the ObamaCare summit today? Karl Rove says this morning in the Wall Street Journal that they should not let President Obama get away with his habitual prevarications on the issue. That's good advice. But, ultimately, Republicans will have to do more if they want to be taken seriously on the issue. They will have to be constructive. And even though bipartisanship is over-rated, they can use it to hoist President Obama on his own petard by countering his phony bipartisan summit with one of their own that is genuinely  bipartisan. Obama has already put his Big Government solutions on the table. Their summit should consider five progressive and five conservative ideas that will do the opposite: Move the country in the direction of patient-powered, market based reforms that will control costs and thereby shrink the rolls of the uninsured.

In my latest Forbest column,  A Bipartisan Solution to ObamaCare, I outline these ideas.

How is the Bay State's Experiment with Universal Coverage Working Out?

Posted on January 18, 2010, 6:31pm | Shikha Dalmia

The big story coming out of Massachusetts that has everyone (at least in my household of two) glued to the TV with popcorn and coke in hand is the Brown vs. Coakley Senate race tomorrow. If Republican Brown pulls an upset, snatching victory from the jaws of defeat, all bets are off when it comes to health care "reform." He will deprive Democrats of their crucial 60-vote majority in the Senate, forcing them to resort to all kinds of politically risky shenanigans to push their bills through.

But here is another interesting story concerning Massachusetts. Remember Jon Gruber? He's the highly respected MIT economist who had been shilling for the Obama administration's health care plan without revealing that he had received hundreds of thousands of dollars from the administration in consultancy fee to help craft the very plan he was shilling for. He challenged insurance industry claims that premiums would rise sharply under ObamaCare -- criticizing an industry report, performed by the prestigious research outfit PricewaterhouseCoopers, on grounds that it had failed to take into account: (a) government subsidies for moderate-income Americans that would lower their out-of-pocket premiums and (b) how lower administrative overheads that would result from the creation of a government-run insurance exchange would lower premiums.

Gruber was also a big supporter of Massachusetts' universal coverage program. Well now Gruber's former MIT student and collaborator, Aaron Yelowitz, has just co-authored a study with CATO Institute's Michael Cannon drawing lessons from the Massachusetts' universal coverage experiment for the rest of the country. They find:

• Official estimates overstate the coverage gains under the Massachusetts law by roughly 50 percent. 

• The actual coverage gains may be lower still, because uninsured residents appear to be concealing their lack of insurance rather than admit to breaking the law. 

• Public programs crowded out private insurance among low-income children and adults.   

• Self-reported health improved for some, but fell for others. 

• Young adults appear to be avoiding Massachusetts as a result of the law 

The study also finds that leading estimates understate the cost of the Massachusetts law by at least one third. 

The authors conclude: "Our results hold important lessons for the legislation moving through Congress. As in Massachusetts, there has been no effort to estimate the cost of the private health insurance mandates that legislation would impose on individuals and employers. The costs may therefore be far greater than legislators and voters believe, while the benefits may be smaller than the conventional wisdom about Massachusetts suggests."

What says you, Mr. Gruber?

ObamaCare: First They Came for the Undocumented Aliens!

Posted on January 18, 2010, 5:40pm | Shikha Dalmia

In my latest Forbes column I argue that the progressive left is serious neither about universal coverage nor about civil liberties. If it were, if wouldn't settle for the travesty in the Senate health care bill that would disbar undocumented aliens -- er, illegal immigrants! -- from buying coverage from the proposed exchange with their OWN money. What's the rationale for the ban? Because, otherwise, they will indirectly benefit from taxpayer aid used in creating and running the exchange. But by this logic, I note:

should we, then, post sentries on federal highways to shoo off undocumented workers? Position guards outside pharmacies to bar them from buying FDA-approved drugs? Dispatch marshals to stop electricity generated by public utilities from flowing into undocumented households? What's really driving the exchange ban is not concern for American taxpayers, since allowing people access on their own dime won't necessarily add to the nation's health care bill.

But that's not the worst of it. The worst is that:

At the same time the government tells Americans how they must spend their money, thanks to the individual mandate, it will tell undocumented aliens where they can't spend theirs. Government intrusiveness combined with government discrimination is not a formula for social justice....

...if universal coverage advocates accept the exchange ban, a sizable portion of the uninsured won't just remain unhelped, they'll be seriously harmed by being permanently locked out of the health care market.

The government hasn't claimed the authority to selectively withhold access to public facilities since the Jim Crow era. But at least then it wasn't using it for any high-minded purpose. This ban will institutionalize inequality in the name of greater equality. Is this a deal that progressives really want to cut?

Poor Dr. King. He must be spinning in his grave.

Read the whole thing here.

ObamaCare: The Immortal Revolution

Posted on January 13, 2010, 10:28am | Shikha Dalmia

In my latest Forbes column, I argue that ObamaCare is not the end of our health care battles -- it is the beginning. The bill that's currently in the works will usher even fiercer confrontations--not only on health care but on constitutional matters of governance as well--that will make the current battle look like the political equivalent of a spit-ball fight.

The constitutional battles will arise because netroots activists will try and reinstate the public option or government insurance that is now all but dead.

The biggest impediment to their ambition--as the current health care battle has made clear--isn't going to be evil Republicans or the venal insurance industry, but America's system of checks and balances. In particular, the Senate filibuster ...

But it can't be abolished without a bruising political battle. To the extent that most laws involve an expansion of government power, scrapping it will inevitably empower the government against its citizens. What's more, a president--a minority of one--will be able to override Congress with a stroke of his pen. But even 49 senators won't be able to stop him from ramming his agenda through their chamber.

And the health care battles will arise because what Congress is doing right now amonts to a de facto nationalization of our health care system.

Such systems always and everywhere face a contest between competing interests trying to capture scarce medical dollars. If, say, women with breast cancer shame political authorities into approving expensive cancer-fighting drugs, men launch their own campaign to shift medical dollars to prostate cancer treatment. Patients who lack the political savvy or represent disfavored causes--obesity, smokers, homosexuality--inevitably get relegated to second class medical status. If money poses an unfair obstacle for patients in a market-based system as progressives allege, can they with a straight face claim that the political establishment doesn't pose a far bigger obstacle in a government-run system?

Read the whole thing here.

No "A" on Health Care for Obama

Posted on January 12, 2010, 9:07am | Shikha Dalmia

Obama's health care marks have reached an all-time low, according to a new CBS News poll, something that is helping to drag down his overall approval rating. According to the CBS story:

Just 36 percent of Americans approve of Mr. Obama's handling of health care, according to the poll, conducted from Jan. 6 - 10. Fifty-four percent disapprove. In December of last year, 42 percent of Americans approved of the president's handling of health care, and 47 percent approved in October.

About six in 10 Americans continue to disapprove of how both Democrats and Republicans in Congress are handling health care reform: 57 percent disapprove of how Democrats are handling the issue, while 61 percent disapprove of how Republicans are handling it.

Approval among each party's own supporters is also low. Just 48 percent of Democrats approve of how Democrats in Congress are handling health care, while only 43 percent of Republicans approve of how their party in Congress is handling the issue.

Moreover, there is little consensus that the reforms under consideration represent the right approach. Only about one in five Americans thinks the reforms strike the right balance when it comes to expanding coverage, controlling costs and regulating insurance companies.

The public is divided on whether the reforms go too far or not far enough in providing health coverage to as many Americans as possible, and about four in 10 think the reforms do not do enough to lower costs or regulate insurance companies.

Overall, the survey reflects good sense on the part of the voters. But anyone who seriously believes that the Dems aren't regulating insurance companies enough obviously hasn't braved through the 2,000-page monstrosity. The regulatory boot on these companies' neck is going to be so heavy (they are going to have to: include a lavish set of benefits in their "basic" coverage package at controlled prices; cover pre-existing conditions; give money back to policy holders if their administrative costs exceed 10% of revenues) that as Nancy Pelosi recently remarked, they will beg Congress for a public option instead.

Is the Healthcare Bill Unconstitutional?

Posted on December 28, 2009, 1:01pm | Adrian Moore

University of Chicago's Richard Epstein meticulously argues that it is.  He concludes:

The health of the American people should not be held hostage to such unwise legislation. The Senate should reject the Reid Bill because of the unsustainability of the statutory scheme regulating health-insurance markets. But there is also little doubt that its central arrangements are unconstitutional, and will face serious legal challenge for years to come. Rather than embarking on a fundamentally flawed course of action, sure to spark litigation, the Senate should start over with other reforms that go in the opposite direction: simplify the system so that market forces can increase both quality and access in ways that no system of government mandates can hope to do. Deregulation is a word that has been forgotten in the current debate. It should be returned to center stage.

There is another way.

The Left Wakes Up to the Evils of the Individual Mandate -- Finally!

Posted on December 17, 2009, 10:50am | Shikha Dalmia

Ok - am I engaging in the fallacy of post hoc ergo propter hoc or is the left really listening to us finally? I have written column after column pointing out the perversity of the central plank on which ObamaCare is built: the individual mandate. It would force Americans to either buy health coverage or face fines or jail time. Since often the fines would be lower than the cost of coverage, thousands - perhaps millions - of Americans would simply pay them for the privilege of remaining uninsured. Or become criminals. I even coined a term for this health care approach back in 2008 when Hillary first proposed it: TonySopranoCare.

And in my latest Forbes column this Wednesday about the Medicare buy-in provision in the now-dead ReidCare bill, I asked this question of our leftist comrades. (The buy-in provision pretended to give near-seniors more options to purchase health care by opening up Medicare to the 55-64-year-old cohort):

Come 2011, when the individual mandate will kick in--if Democrats succeed--the uninsured working poor in the 55-to-64 age group would have had to fork over a whopping 50% to 70% of their income to buy into Medicare. Sen. Reid planned to help these folks with subsidies ... by 2014. But what were they supposed to live on until then? His good intentions? How could he and his comrades in good conscience believe it is right to force people to buy coverage now--under threat of fines or jail, mind you--while leaving any relief to the vagaries of politics years from now?

If Americans are dying due to lack of insurance, as Ezra Klein, the writer who called Lieberman a mass murderer, believes they are, can Klein imagine how many more would be driven to starvation, ruin and possible death if ReidCare confiscated a big chunk of their wages every year in order to achieve universal coverage? An individual mandate is bad enough. But an individual mandate that doesn't come with help attached--how can they possibly accept that?

Last night, Democratic National Committee Chairman Howard Dean went on MSNBC and urged his fellow Democrats to defeat the Senate health care bill. Why? Listen:

You're going to be forced to buy health insurance from a company that is going to take on average of 27% of your money ... and there is no choice about that. If you don't buy that insurance you are going to get a fine.

Later in the day, the successor organization to Dean's 2004 presidential campaign, Democracy for America noted:

That [the individual mandate] section of the law requires every single American buy health insurance or break the law and face penalties and fines. So, the bill doesn't actually "cover" 30 million more Americans - instead it makes them criminals if they don't buy insurance from the same companies that got us into this mess.

Ok -- so that last part is wrong. It is not the insurance companies per se but government mandates that drove out small companies from the market leaving a few giants to rule the roost that drove us into this mess. That may be too much nuance for DOA, but -- oh! oh! -- listen to Markos Moulitsas, the founder of one of the largest liberal blogs:

My take is that it's unconscionable to force people to buy a product from a private insurer that enjoys sanctioned monopoly status. It'd be like forcing everyone to attend baseball games, but instead of watching the Yankees, they were forced to watch the Kansas City Royals. Or Washington Nationals. It would effectively be a tax - and a huge one - paid directly to a private industry. Without any mechanisms to control costs, this is yet another bailout for yet another reviled industry.

Amen!

Should we start sending all our netroots comrades a free subscription to Reason magazine? But the real question is that will this 11th hour awakening by the left to the dangers of this monster  -- otherwise called health care reform -- that they are creating doom it?

Fingers crossed.