Barrett v. Obamacare

04 Sunday Oct 2020

Posted by in Health Insurance, Obamacare

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Obamacare’s survival has emerged as the democrats’ big talking point against Amy Coney Barrett’s nomination to the Supreme Court, especially since a case challenging the health care law is scheduled be heard by the Court on November 10th. I’m certainly no a fan of the Affordable Care Act (ACA, or Obamacare). It is anticompetitive and it is a regulatory and pricing nightmare. However, the chances it will be struck down in its entirety are slim to none, whether Barrett is confirmed or not.

The Case Before the Court

The case at hand is California v. Texas, in which 21 democrat state attorneys general appealed a decision by a lower court that the ACA’s individual mandate is unconstitutional. The case against the ACA was originally brought by 20 republican state attorneys general based on Congress’ earlier repeal of the “tax” levied on violations of the law’s individual mandate. With that repeal, the mandate itself became unenforceable because it effectively disqualified the mandate as a matter of congressional intent. More background on the case can be found here.

The reinterpretation of the ACA penalty as a tax was the key turning point in an earlier case, National Federation of Independent Business v. Sebelius, in which Chief Justice John Roberts’ deciding vote upheld the ACA’s individual mandate under Congress’ taxing power. Now, in California v. Texas, a District Court ruled for the plaintiffs that the entire ACA is unconstitutional, not just the individual mandate. Subsequently, however, an Appeals Court ruled only against the mandate. Thus, the case before the Supreme Court is primarily about the standing of the states that originally brought the suit and the status of the individual mandate. The case is unlikely to involve other components of the law, such as the list of minimum essential benefits and protections on pre-existing conditions.

Severability

The Appeals Court decision can be upheld by the Supreme Court without striking down the whole of the ACA. This rests on the doctrine of severability, which holds that a law’s unconstitutional provision(s) do not invalidate other provisions within the same law. The Court has often applied this doctrine in deference to the intent of legislation, to the extent that other parts of a law can stand on their own. Jonathan Adler, who has filed a brief with the Court in California v. Texas, writes that the individual mandate is clearly severable from the rest of the ACA:

“When part of a statute becomes unenforceable, a court usually must ask whether Congress would have preferred what remains of the statute to no statute at all. Typically, it is a court that renders a provision unenforceable, and the court must hypothesize what Congress would have intended in that scenario. Courts also will sometimes assess whether the statute functions without the provision— a proxy for legislative intent.

But this case is unusual. It presents no need for any of these difficult inquiries because Congress itself—not a court—eliminated enforcement of the provision in question and left the rest of the statute standing. So congressional intent is clear; it is embodied in the text and substance of the statutory amendment itself.”

Furthermore, contrary to the claims of the republican plaintiffs in the case, the ACA does not contain an inseverability clause. The Court is likely to invoke the severability doctrine, so Amy Coney Barrett’s (ACB’s) confirmation prior to the hearing would not lead to a ruling against the whole of Obamacare. The Court seems to like small steps.

What She Said

ACB has written that the Court’s original interpretation of the penalty for violating the mandate as a tax was flawed. Again, the argument was attributable to the opinion written by Chief Justice Roberts in NFIB v. Sebelius. The ACA never used the term “tax” in the context of an individual’s failure to comply with the mandate. Instead, it referred to the “penalty” multiple times. In the law’s original form, the clear legislative intent was to penalize certain behavior: failing to buy a product. ACB wrote the following of Roberts’ opinion in 2017:

“He construed the penalty imposed on those without health insurance as a tax, which permitted him to sustain the statute as a valid exercise of the taxing power. Had he treated the payment as the statute did—as a penalty—he would have had to invalidate the statute as lying beyond Congress’s commerce power. … One would be hard-pressed to find many originalists who think that a court should find a way to uphold a statute when determinate text points in the opposite direction.”

Recusal

Josh Blackman says ACB need not recuse herself from hearing California v. Texas. First, the case is not a reconsideration of NFIB because the “tax” no longer exists; second, the current challenge to the mandate does not hinge on the plausibility of Roberts’ opinion in that case; and finally, recusals at the Supreme Court typically require a higher bar than lower courts in order to avoid a short-handed Court. Jonathon Adler discusses a recent moot court on California v. Texas in which ACB participated, and he seems to agree that recusal is unnecessary.

So ACB said the penalty was a penalty, not a tax, but the penalty no longer exists in any case. Congress left the individual mandate with no enforcement mechanism, a clear signal of its intent to set the mandate aside. The severability of the mandate from the ACA, and the “tax vs. penalty” focus of ACB’s remarks on the NFIB decision, offer little rationale for the view that ACB would argue to overturn the entirety of the ACA in California vs. Texas.

Essential Benefits

ACB has had another beef with the ACA, however, which has to do with certain items on the list of minimum essential benefits mandated by the law. The purpose of the list was much like that of the individual mandate: to force payment by all parties to cross-subsidize those who desired certain benefits. The list included contraceptives, abortifacients, and sterilization, and the requirements applied to individual policies as well as plans offered by private organizations, including those having moral and religious objections to the use of these products or services. Those individuals would be forced to offer and pay for the objectionable benefits just the same. In 2012, ACB signed a statement that called the requirement an “assault on religious liberty and the rights of conscience“. That argument seems even more compelling with today’s availability of cheap contraceptives over-the-counter. But the point raised by ACB is now irrelevant: this summer, the Court ruled against the requirement on contraceptives, but the Court didn’t say the whole list is unconstitutional. That aside, the list of essential benefits impedes the objective of offering low-cost coverage to the broadest swath of the population, and it is one of the reasons for the astonishingly high deductibles on Obamacare health policies.

Conclusion

The ACA has many flaws and has prompted a large number of legal challenges. It will continue to do so. Seven of those cases have already risen to the level of the Supreme Court, and there could be more. The ACA is a terrible law: it has driven up the cost of health insurance coverage through community rating and benefits mandates. It has driven up the cost of care through excessive regulatory measures and incentives for providers to consolidate. But while I am no fan of the law, the appointment of Amy Coney Barrett to the Court does not presage its complete overturn. That will almost certainly have to wait for legislation on a complete replacement for Obamacare, which doesn’t seem imminent.

You think he was pissed off?

01 Thursday Oct 2020

Posted by in Politics

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Many were put-off and even offended by President Trump’s aggressive approach to the first debate with Joe Biden on Tuesday. I’m not bothered except that he didn’t give Biden enough time to lose his way. This debate was tame compared to the standards set at the Lincoln-Douglas debates, which were full of insults, crude language, and racial epithets.

It was Joe Biden who began the unending series of interruptions on Tuesday. Biden interrupted Trump three times at that point, after which the moderator, Chris Wallace, declared “open discussion”. Go back and watch! So if you care, Biden started it. And Biden became rather abusive in his language as the debate wore on.

As to Trump’s pugilistic style, here is Sean Trende:

“… debates are usually staid affairs, pitched to politically knowledgeable elites who like to evaluate things on the merits. Trump’s debates are pitched to someone completely different. His behavior toward Clinton seemed bizarre and juvenile, and made for classic “SNL” fodder. It also apparently worked reasonably well; the townhall-style debate was one of his best received performances. So the interrupting and refusal to answer questions was off-putting for me, but I recognize that I’m not the target audience.”

Okay, fair enough, but Trump’s debate performance was more visceral than calculated. In fact, even members of his debate team were surprised: Chris Christie said it was “too hot”. Trump’s guns blaze because he’s pissed off, and he should be! Just to regard the countenance of the man across the stage was probably enough to infuriate Trump: Biden helped instigate the fraudulent investigation of General Michael Flynn (James Comey’s denial notwithstanding), Trump’s first national security advisor. Biden has repeatedly stooped to the same unfounded accusations of racism against the President that have been made by Democrats since Trump announced his first candidacy in 2015. This despite Biden’s own racial gaffes and affiliations with racists over the years. Biden was involved in a Ukrainian shakedown, admitting that he threatened the country’s President to have U.S. aid withheld if a Ukrainian prosecutor was not fired. That prosecutor was investigating the energy company Burisma, which just so happened to be paying a handsome retainer to Biden’s son, Hunter. Yet Trump was falsely accused of a similar transgression! Talk about the self-projections of Democrats! Trump has every reason to be pissed off, and to let it flow.

Biden represents the same Democrat party that has conspired to have Trump thrown out of office since before he was inaugurated. The same party has spread disinformation about collusion with Russians since before the 2016 election. The same party voted to impeach Trump in the House of Representatives on that fallacious basis. The same party promotes the idiotic suggestion that Trump “killed 200,000 people” with coronavirus; blames Trump for the economic malaise due to coronavirus lockdowns, then insists the economy must be shut down to end the pandemic; refuses to cooperate in passing a targeted coronavirus aid package; supports the violence perpetrated by Antifa and Black Lives Matter (“mostly peaceful protests”), with prominent democrats contributing to the payment of bail for arrested rioters; calls Trump a dictator for offering to help state and local leaders end the violent civil disorder; refuses to call-out the racism promoted by Antifa and BLM; promotes the Marxism and racism of critical race theory; and attacks his latest Supreme Court nominee on religious grounds. The Democrats also threaten to instigate one-party rule by packing the Supreme Court, ending the legislative filibuster, and admitting new states to the union and dividing old ones in order to create a permanent Democrat majority in Congress (but the Constitution prohibits DC from statehood). A one-party nation! And, of course, Democrats have pushed for universal mail-in ballots, with all the bedlam and challenges that is likely to bring to the electoral process.

Then we have the debate moderator, Chris Wallace. There was little doubt about Wallace’s sympathies. He interrupted Trump much more frequently than he interrupted Biden. He asked Trump whether he denounces white supremacist organizations, and Trump immediately said, “Of course.” Trump has denounced them, but Wallace thought it necessary to relitigate the matter. Wallace’s follow-up regarding the “Proud Boys” was misplaced, as the group might be nationalist, but it is not a white supremacist organization (their president is Afro-Cuban). Meanwhile, Wallace failed to ask Biden to denounce Antifa and BLM. Wallace failed to ask Biden about his son’s dealings with the mayor of Moscow and his Chinese clients. He also let Biden off the hook quite readily when he refused to give his opinion on court packing and eliminating the filibuster. Biden refused to answer… Wallace was like, “okay”!

If anything, my biggest frustration with Trump on Tuesday was his typical sloppy articulation of his policies and views. He seldom makes his best and most obvious supporting arguments. Whiff! Instead, what I hear often seems off-point and semi-coherent. Of course, I understand most of what he’s trying to get across, and so do many others when they’re not too busy self-projecting. So maybe Trump is a great communicator after all, despite his seeming lack of clarity.

Biden says he “is” the Democrat Party. Then he has a lot to answer for. I’m glad Trump lit into him. No reasonable person can blame Trump for being pissed off. Hey, I’m pissed off, and you should be pissed off too, because Joe Biden and the Democrat Party is ready to subjugate you!

Atheism Cannot Disqualify for Public Office

26 Saturday Sep 2020

Posted by in Supreme Court

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Amy Coney Barrett makes a lousy target for personal attacks by the Left. Barrett is President Trump’s nominee for the Supreme Court vacancy following the death of Justice Ruth Bader Ginsburg. A fabricated scandal against Barrett would be much less credible than even the allegations made against Bret Kavanaugh at his confirmation hearings in 2018. So Democrats believe their best opportunity is to paint Barrett as a religious “crazy” who, if confirmed by the Senate, will allow her religious convictions to influence her opinions on the Court relative to issues such as abortion rights under Roe v. Wade.

Barrett has offered rejoinders to Senator Diane Feinstein’s comments (“The dogma lives loudly within you.“) at the hearings on Barrett’s appointment to the Federal Appeals Court in 2017. In particular, Barrett has noted that a religious test is unconstitutional as a criterion for public office, including judgeships. In fact, in another way, Barrett has demolished the claims made by leftists against the qualifications for the bench of those of deep faith. Her argument exposes the Leftist position as an absurdity.

The presumption is that someone having religious convictions has a certain set of moral principles that might be brought to bear on court decisions. We’re expected to believe that’s a danger unique to those of faith. Barrett notes that non-religious individuals, even atheists, have their own set of moral principles. By the same standard, should we not concern ourselves that an atheistic nominee might bring their moral principles to bear on court decisions? Or are we to believe those principles are somehow superior to those associated with religious convictions? That they should simply be overlooked, but not for those of religious faith? Rather, a fundamental requirement is whether a nominee understands and respects the difference between jurisprudence and legislating from the bench, a distinction that was sometimes lost on Ginsburg.

To assert that an atheist’s moral convictions are more objective than those of a religious individual is a flaw in logic and a horrific value judgement. I am not a particularly religious person, but I respect people of faith as well as the protections afforded to the free practice of religion by the First Amendment of the U.S. Constitution. It’s worth noting that those protections apply to atheists as well as religious sects. As Barrett’s position implies, to distrust the judicial judgement of a person of religious faith is as wrongheaded as to distrust the judicial judgement of a nominee devoid of religious faith.

Nominate and Confirm

23 Wednesday Sep 2020

Posted by in Supreme Court

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Many on the left practically cheered the passing of Antonin Scalia in 2016, a reaction I witnessed with disgust on my own social media feeds. Now, we should all mourn the death of Ruth Bader Ginsburg, but some of the same people seem almost comically furious with her for “choosing such a bad time to die”, just 46 days before the presidential election! Or, for refusing to step down during the Obama administration, when she could have been replaced with a much more youthful lefty jurist.

Of course, the Left is also furious that President Trump plans to nominate a candidate for Ginsburg’s vacancy on the Court, and that Republican leadership in the Senate plans to bring the nomination to a vote, perhaps before November 3rd.

Trump and the GOP majority are entitled to do that under the Constitution, and they should. Senator Ted Cruz explained the primary reason:

“Democrats and Joe Biden have made clear they intend to challenge this election. They intend to fight the legitimacy of the election. As you you know Hillary Clinton has told Joe Biden ‘under no circumstances should you concede, you should challenge this election.’ and we cannot have election day come and go with a 4-4 court. A 4-4 court that is equally divided cannot decide anything. And I think we risk a constitutional crisis if we do not have a nine-justice Supreme Court, particularly when there is such a risk of … a contested election.” 

This presidential election might be fraught with more procedural controversy than any before. The coronavirus, or its promoters in the media and the Democrat party, has spooked many voters into the belief that going to a polling place in-person on Election Day is too dangerous. This despite the fact that distancing and masks will be required, and the time it takes to complete a ballot does not require “prolonged exposure” to anyone. So now we face the prospect of mail-in balloting on an unprecedented scale, which is an invitation to manipulation and fraud. A couple of examples:

“… consider some of the suspect decisions already being made in various states that deliberately weaken ballot security. The Pennsylvania Supreme Court, for example, voted last week along party lines (the judges are elected) that county drop boxes, including unattended ones, could be used to collect votes. Gov. Tom Wolf, a Democrat, and his party supported the measure, which reached the court by lawsuits, thus avoiding GOP control of both legislative chambers. The decision obviously opens the door to potential fraud because ballots in unsecured drop boxes could be tampered with or stolen. 

New Jersey’s Democratic Gov. Phil Murphy also made some curious decisions. A Jersey friend sent me a mailer he received that was addressed only to ‘Residential Customer.’ Inside, a pamphlet from the county clerk in Bergen County said that a Murphy order ‘requires’ every county to mail a ballot to ‘every active registered voter.’ That raises the chances of thousands of unmarked ballots being stolen from the post office or front porches, practices not exactly unheard of in New Jersey.”

Already a number of lawsuits have been filed in various states over absentee ballots. There have been missed deadlines, disputes over whether certain candidates should appear on those ballots, invalidated pre-filled applications for ballots, and an incorrect mailer sent by the U.S. Postal Service to voters nationwide regarding absentee ballots. Let’s face it: for all the earlier denials by Democrats that the mail-in ballot process was not subject to gaming or fraud, neither side trusts the other. There will be many more disputes as ballots are counted before and after Election Day.

It’s reasonable to expect that a few cases might rise to the level of the U.S. Supreme Count before election tallies are final in some states, as in the Florida recount in the Bush vs. Gore election of 2000. A 4 – 4 tie on the Court would leave lower, state-court rulings in place that could decide the outcome of a federal election. That’s not how the process is intended to work. Needless to say, that’s another reason why Democrats oppose a Trump nominee prior to the election. There’s no doubt they’d push forward with their own nominee were the shoe on the other foot, however, just as Republicans opposed the confirmation of Merrick Garland in 2016.

So who’s a hypocrite? Republicans who said that they wouldn’t confirm or even conduct a confirmation process in an election year, as in 2016, certainly qualify (Lindsey Graham, among others). It must have seemed expedient to stay so at the time, but it was foolish. And Democrats who now protest after insisting in 2016 (and before) that a Supreme Court vacancy should be filled by the sitting president, even in an election year, also qualify (Chuck Schumer, Barack Obama, Hillary Clinton, and Joe Biden, among others). Here’s what some top progressive legal minds were saying in 2016: It’s a duty and obligation for the president to nominate and for the Senate to undertake a confirmation process!!

Here’s the key issue: The president has the authority to nominate Supreme Court justices any time during his term. If the Senate confirms, then a new justice is seated. If the Senate chooses not to confirm, the vacancy remains. That’s how it works. There have been 29 vacancies on the Court in election years, and in 22 of those cases the sitting president sent a nomination to the Senate. As Justice Ginsburg said in 2016:

“There’s nothing in the Constitution that says the president stops being the president in his last year.”

Her purported wish on her death bed, that her replacement would be chosen by a new president, was not hypocritical. It was a wish, not a legal opinion. It was just as “political” as the contradictory statements made by the politicians, however.

Ginsburg also said it’s the Senate’s job to take up a vote, which the Republicans refused to do in 2016. That was their prerogative, however, and the decision does not bind anyone in the current circumstance.

Mitch McConnell is right:

“In the last midterm election before Justice Scalia’s death in 2016, Americans elected a Republican Senate majority because we pledged to check and balance the last days of a lame-duck president’s second term. We kept our promise. Since the 1880s, no Senate has confirmed an opposite-party president’s Supreme Court nominee in a presidential election year. By contrast, Americans reelected our majority in 2016 and expanded it in 2018 because we pledged to work with President Trump and support his agenda, particularly his outstanding appointments to the federal judiciary. Once again, we will keep our promise. President Trump’s nominee will receive a vote on the floor of the United States Senate.”  

Democrats have promised to “pack the Court” by adding seats to the bench for new, ideologically-preferred justices if a Trump nominee is confirmed, among other threats. They should heed the caution of moderates who know how dangerous that may be. The mere threat gives Republicans reason to pack the Court themselves, when they can, which might be as soon as January. Moreover, nothing could do more to undermine confidence in the Court. RBG herself had the following to say about Court packing:

“Well, if anything, it would make the court appear partisan. It would be that one side saying, ‘when we’re in power, it was only to enlarge the number of judges so we will have more people who will vote the way we want them to…’ So I am not at all in favor of that solution to what I see as a temporary situation.”

Well, of course the Court is divided along certain ideological lines, and to some extent those differences break along dimensions of legal philosophy, such as originalism vs. a “living Constitution”, or judicial activism. That’s not to say that the Court is always partisan, however. The process of nominating and confirming justices should not be as partisan as it has become in the last 25 years (see the last link). Let’s not make it worse.

Trump will nominate an able jurist. Senators should meet and independently assess that individual’s legal qualifications and temperament. My expectation is they will vote to confirm, and I hope that vote takes place without rancor.

Note: Thanks to the Washington Free Beacon for the wonderful meme at the top of this post.

Virus Visuals and Non-Pharmaceutical Interventions

19 Saturday Sep 2020

Posted by in Government Failure, Pandemic

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There are a bunch of nice graphs below summarizing the course of the coronavirus (C19) pandemic in different countries, as well as their policy responses. The charts are courtesy of Kyle Lamb, who has been an unlikely (in my mind…) but forceful voice regarding the pandemic over the past few months. I’m sorry if the resolution in some of the charts is poor, but I hope you can click on them for a better view.

The data reported in the charts goes through September 12. The first few charts below are “mirror charts”: they show newly diagnosed C19 cases by day on top, right-side up; on the bottom of each chart are C19-attributed deaths, but the vertical axis is inverted to create the “mirror effect”. The scales on the bottom are heavily stretched compared to the top (deaths are much smaller than cases), and the scales for different countries aren’t comparable. The patterns are informative nevertheless, and I’ll provide per capita deaths separately.

Let’s start with the U.S., where the early part of the pandemic in the spring was quite deadly, while the second, geographically distinct “wave” of the pandemic was less deadly. It looks bad, but the high number of deaths in the spring was partly a consequence of mismanagement by a few prominent government officials in the Northeast, most glaringly Governor Andrew Cuomo of New York. The full pattern for the U.S. combines different waves in different regions. The overall outcome to-date is 622 deaths per million of population.

Then we have charts for (deaths/mil in parens): the UK (628), Italy (591), Spain (653), France (467), Germany (114), the Netherlands (364), and Switzerland (240), which all have had second waves in cases, of but hardly any noticeable second wave in deaths, at least not yet:

And finally, we have Sweden (576), which had many deaths during the first wave, but very few now. Overall, to-date, Sweden has faired better than the U.S., Spain, the UK, and Italy — not to mention Belgium (870), for which I don’t have mirror charts.

There are several points to make about the charts:

First, the so-called second wave this summer has not been as deadly as the virus was in the spring. The U.S. is not an exception in that regard, though it did have more C19 deaths than the other countries. The count of U.S. deaths in the summer was partly due to C19 false positives under a much heavier testing regime, as well as “death laundering” by public health authorities that looks suspiciously like a politicization of the attribution process: C19 deaths over the summer have been well in excess of what would be expected from C19 hospitalizations and ICU admissions. It’s also evident that deaths are being reallocated to C19 from other natural causes, as this chart from The Ethical Skeptic shows (compare the bright line for 2020 to the (very) dim but tightly clustered baselines from prior years):

Second, most of the charts for Europe (not Sweden) show a late summer escalation in cases, though cases in Spain and Germany appear to have crested already. If an uptrend in deaths is to follow, it should become noticeable soon. Thus far, the wave certainly looks less threatening. 

Finally, it’s noteworthy that Sweden’s early experience, which was plagued by mismanagement of the virus’ threat to the nursing home population, later transitioned to a dramatic fading of cases and deaths. There has been no late summer wave in Sweden as we’ve seen elsewhere. This despite Sweden’s far less stringent non-pharmaceutical interventions (NPIs). Sweden’s deaths per million of population are now less than in the US, the UK, Italy, Spain, and Belgium, and most of those differences are growing.

All of the other countries discussed above have had far more stringent lockdown policies than Sweden, and at far greater economic cost. The following charts show some cross-country comparisons of an Oxford University index of NPI stringency over time. It combines a number of different dimensions of NPIs, such as mask mandates, restrictions on public gatherings, and school closures. The first chart below shows the U.S. and the UK contrasted with Sweden. The other countries discussed above are shown in separate charts that follow. 

In the U.S., there has been tremendous variation across states in terms of stringency due to the federalist approach required by the U.S. Constitution, but overall, the Oxford measure for the U.S. has been broadly similar to the UK over time, with the largest departures from one another at the start of the pandemic.   

   

The stringency of NPIs over the full pandemic depends on their day-by-day strength as well as their duration at various levels. One could measure stringency indices and deaths at various points in time and produce all kinds of conflicting results as to the efficacy of NPIs. On the whole, however, these charts suggest that stringent NPIs hold no particular advantage except perhaps as a way to temporarily avoid overwhelming the health care system. Even the original “flatten the curve” argument acknowledged that the virus could not be avoided indefinitely at a reasonable cost via NPIs, especially in an otherwise free society.

Note that most of these countries eased their NPIs after the initial wave in the spring, but several remained far more stringent than Sweden’s policies. That did not prevent the second wave of cases, though again, those were far less deadly.

As Jacob Sullum writes, and what is increasingly clear to honest observers: lockdowns tend to be ineffective and even destructive over lengthy periods.

A working paper from the National Bureau of Economic Research finds that four different “stylized facts” about the growth in C19 deaths are consistent across countries and states having different policy responses to the virus. The authors say:

“… failing to account for these four stylized facts may result in overstating the importance of policy mandated [non-pharmaceutical interventions] for shaping the progression of this deadly pandemic.“

Here’s Bill Blain’s discussion of the inefficacy of lockdowns. And here is Donald Luskin’s summary of his firm’s research that appeared in the WSJ, which likewise casts extreme doubt on the wisdom of stringent NPIs.

The virus is far from gone, but this summer’s wave has been much more docile in both Europe and the U.S. There are reasons to think that subsequent waves will be dampened in many areas via the cumulative immunity gained from exposure thus far, not to mention improvements in treatment and knowledge regarding prophylaxis such as Vitamin D supplements. Government authorities and their public health advisors should dispense with the pretense that stringent NPIs can mitigate the impact of the virus at a reasonable cost. These measures are constitutionally flawed, impinge on basic freedoms, and look increasingly like government failure. Risk mitigation should be practiced by those who are either vulnerable or fearful, but for most people, particularly children and people of working age, those risks no longer appear to be much worse than a bad year for influenza.  

Trump’s Payroll Tax Ploy

15 Tuesday Sep 2020

Posted by in Fiscal policy, Taxes

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President Trump’s memorandum to Treasury Secretary Steve Mnuchin on payroll tax deferral is bad economic policy, but it might ultimately prove useful as a political weapon. The memo, released in August, instructed the Treasury to allow employers to suspend withholding of the employee’s share of FICA taxes (6.2%) until the end of the year, but it does not forgive the taxes. Only Congress (with the President’s signature) can eliminate the tax obligation. There are several reasons I don’t like it:

  1. Assuming the tax obligation is forgiven, it would provide some relief to those who are already employed (and earning less than $4,000 every two weeks), but not to the unemployed. Thus, as relief from coronavirus-induced job losses, this doesn’t cut it.
  2. It does not reduce the cost of hiring, as would a permanent reduction in the employer’s share, so it does not improve hiring incentives.
  3. The deferral creates uncertainty: will the tax bill be forgiven? If not, will the employee be on the hook? Or the employer? What if an employee leaves the company having received a deferral?
  4. The measure will not be an effective stimulus to spending. It is not an addition to workers’ permanent income since it is a temporary “holiday”. Income perceived as temporary adds little to consumer spending. And it doesn’t constitute a temporary tax break unless employers participate (see below), and even then only if Trump is re-elected and if Congress agrees to forgive the tax.
  5. Trump suggested that the tax will be forgiven if he is re-elected. It’s a rather unsavory proposition: create an immediate tax benefit paired with a matching future obligation with forgiveness contingent upon re-election!
  6. Long-term funding of Social Security is already problematic. Adding a payroll tax holiday on top of that, assuming the taxes are forgiven, only aggravates the situation. Yes, I can imagine various “long-game” reform proposals that might attempt to leverage such a break, but I consider that highly unlikely.

It’s no surprise that a number of large employers are not participating in the tax deferral. such as CVS, JP Morgan Chase, UPS, Home Depot, and Wells Fargo.

Small employers have an even bigger problem to the extent that they lack sophisticated accounting systems to handle such deferrals. Here’s Warren Meyers’ take on the payroll tax suspension:

“We have 400 employees today, but since we are a summer seasonal business we will have fewer than 100 in January. If there is a catch-up repayment in January (meaning Congress chooses not to forgive the taxes altogether), most of my employees who would need to repay the tax will be gone. Do you think the government is just going to say, ‘oh well, I guess we lost that money’? Hah! You don’t know how the government works with tax liens. My guess is that for every employee no longer on the payroll for whom back employment taxes need to be collected, the government is going to say our company is responsible for those payments instead. We could be out hundreds of thousands of extra dollars. President Biden will just say, ‘well I guess you should not have participated in a Trump program.’

So this is the vise we are in: Either we participate in the program, and risk paying a fortune in extra taxes at some future date, or we don’t participate, and have every employee screaming at us for deducting payroll taxes when President Trump told them they did not have to pay it anymore. And what happens if Congress does come along later and forgive the taxes, what kind of jerk am I for not allowing my employees to benefit from the tax break?

A payroll tax rollback was considered for the Republican stimulus packages that failed in Congress this summer, but that provision was said to be “negotiable”. In any case, nothing passed. Surely Trump’s economic advisors know that the economics of the payroll tax memo are lousy, even if Trump doesn’t get it.

I can’t decide whether the whole thing is Machiavellian or just a goof. Perhaps Trump is so eager to be seen as a tax cutter that he is willing to gloss over the distinction between a tax cut and a deferral. If the taxes owed are not forgiven, it won’t be on his watch. And Trump might believe he can weaponize the payroll tax deferral against obstinate Democrats in Congress as well as Joe Biden. Maybe he can.

False Positives, False Cases, False Deaths

14 Monday Sep 2020

Posted by in Coronavirus, Pandemic

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The tremendous increase in testing for COVID-19 (C19) this summer was associated with an increase in cases. Most of these tests were so-called PCR tests with samples collected via deep nasal swabs. More testing did not fully explain the increased case load, but false positives (FPs) still accounted for a substantial share. That’s especially true in light of the decline in positivity rates, which reflected a decline in the actual prevalence of active infections. FPs also account for a substantial share of the deaths attributed to COVID, which are obviously cases of false attribution. If a test for C19 is positive, it will be listed on the death certificate.  

COVID Case Inflation

The exaggeration of confirmed cases due to FPs is more substantial as the prevalence of active infection declines. That’s because the share of true positives in the tested population declines, while the share of false positives must rise due to the greater share of uninfected individuals in the population.

Now, as the contagion is waning in former hot spots, there is a danger that FPs create the impression of persistence in the case counts. That’s costly not just for those incorrectly diagnosed, but also in terms of medical resources, for communities subject to excessive public intervention, such as inappropriate lockdowns, and in terms of the fear promoted by these inaccuracies.

FPs are extremely disruptive when testing is relied upon in critical situations such as health care staffing, or even among sports teams. For example, at the University of Arizona, out of 25 positive tests on September 3, only 10 were confirmed as positives in later tests. The NFL has also had its share of false positives. 

Lax Testing Standards

There is evidence that testing standards under CDC guidance are so broad that a large number of inactive, non-infectious cases are being flagged as positives (see the chart above for the intuition, as well as the graphic at the bottom of this post). The tests sometimes amount to a coin flip when it comes to evaluating positives; some of the positives might even come from non-novel coronaviruses such as the common cold! This paper by Andrew N. Cohen, Bruce Kessel, & Michael G. Milgroom – CKM) questions the guidance of public health authorities on testing more generally. From the abstract (my emphasis):

“Unlike previous epidemics, in addressing COVID-19 nearly all international health organizations and national health ministries have treated a single positive result from a PCR-based test as confirmation of infection, even in asymptomatic persons without any history of exposure. …  positive results in asymptomatic individuals that haven’t been confirmed by a second test should be considered suspect.”

False Positive Math

When I wrote about “The Scourge of False Positives” in July. I noted that a test specificity of 95% implies that 5% of uninfected individuals will falsely test positive. Unfortunately, that still produces a huge number of FPs when testing is broad. That’s NOT a good reason to avoid broad testing; it just means that positive tests should be confirmed by another test. (In this case, two tests with the same specificity reduce a 5% false positive rate to 0.25%. That’s why fast, cheap tests are necessary for confirmation.

Again, exaggerated case counts due to FP’s become more severe as a contagion wanes. That’s because FPs become an increasingly large share of positive test results and overstate the persistence of the virus. If active infections fall to 1% of 750,000 daily tests, or 7,500 true cases, the 5% specificity implies 37,125 FPs: true positives would be only 17% of positive cases. Much worse than a coin flip! And again, which cases are infectious?

How Bad Are FPs, Really?

This recent research, also authored by CKM, explains the reasons why FPs are usually an issue in the real world, despite the tests’ reportedly perfect reactivity to anything other than the virus’ genetic fragments. CKM find that the median FP rate in their sample of “tests of tests” was 2.3%. That means 23 out of every 1,000 uninfected people tested will test positive.

If that seems small to you, suppose the true prevalence of active infection in a population is 4%. If 1,000,000 people are tested and there are no false negatives (unlikely), then 40,000 infected people will be identified by the test. However, another 22,000 uninfected people will also test positive ((1,000,000 – 40,000 infected) x 0.023). That means the number of positive tests will be inflated by 55%. They’ll all receive some form of treatment or ordered into quarantine. Expanded Testing and FPs This summer, the volume of daily tests increased from about 150,000 a day in early April to more than 750,000 a day in July. That’s a 400% increase, but the true prevalence of active infection in the expanded test population during the summer was almost certainly lower than in the spring. Suppose active infections fell from 10% of the test population in the spring to 5% in the summer. That means the daily number of “true positives” would have risen from 15,000 to 35,000 in the expanded test population (and again I assume no false negatives for simplicity). The number of FPs, however, would have risen from 3,105 to 16,445. Therefore, FPs would have accounted for 40% of the increase in “confirmed” cases between spring and summer.

False COVID Deaths

FPs are also inflating COVID death counts. PCR tests are routinely given at hospital admission for any cause, and even after sudden death, especially as the availability of tests increased late in the spring. This subset of the tested population will certainly have its share of FPs. If such a patient dies, regardless of underlying cause, it might well be attributed to COVID-19 as it will still appear on the death certificate. The same has occurred in the case of traffic fatalities, suicides, and other sudden deaths.

Antibody Tests

The FP problem also plagues tests of seroprevalence, which determine whether an individual has had the virus or is cross-protected against the virus by antibodies acquired via non-novel coronavirus infections. The consequences of these antibody FPs can be serious as well, because it means a positive test might not ensure immunity. As the exposed share of the population increases, however, the FP share of antibody tests is diminished.

Conclusion

As long as testing is required, dealing with FPs (and false negatives, of course) requires repeated testing, as CKM state unequivocally. And the tests must be fast to be of any use. The current testing regime must be overhauled to prevent false positives from costly impositions on the lives of uninfected patients, consuming unnecessary medical resources, making unrealistic assessments of cases and deaths, and unnecessary suspensions of normal human social activity and liberty.

Union Control, Shuttered Schools, COVID Risk

07 Monday Sep 2020

Posted by in Coronavirus, Education, Unions

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Public schools are closed in favor of virtual classrooms in some areas. Elsewhere, however, schools have physically reopened to the children of willing parents. It should be no surprise that the varying strength of teachers’ unions has a lot to do with these decisions. One cannot claim that the pattern of closures is a response to varying levels of COVID risk, as there is no geographic association between the closures and COVID cases or deaths. The shame of it is that closures compromise learning and also have destructive effects on local labor markets and the ability of parents to earn incomes.

That unions play this role, often decisively, is shown in a new paper entitled “Are School Reopening Decisions Related to Union Influence?“, by Corey DeAngelis and Christos Makridis (HT: Tyler Cowen). The authors examine the fall reopening decisions of 835 school districts and find that “… districts in locations with stronger teachers’ unions are less likely to reopen in person…“. The authors test four different measures of union strength with similar findings. They also rule out potential confounding influences like voting patterns.

Shall we defend the unions for protecting their members from excessive risk? Well, another important finding reported by the authors won’t surprise anyone having the least familiarity with data on C19 risks:

“We also do not find evidence to suggest that measures of COVID-19 risk are correlated with school reopening decisions.”

Few children catch the virus and children are not effective at transmitting C19 to their peers, teachers, and parents. Furthermore, schools closed to in-person learning are not located in areas at elevated risk relative to those remaining open.

The role of teachers’ unions in school reopening decisions is a textbook case of the inadvisability of unionized public employees. Most obviously, it is in their interests to encourage greater funding and taxes. This is but one of many dimensions of the political agendas that teachers’ unions may advance, and to which member dues are put. These are not always representative of members’ views, which is especially problematic in states without right-to-work laws.

The very nature of public service means that the work of public employees (or its absence) has profound external influences on the community at large. The unions are not shy about using this power as leverage in negotiations. Thus, teachers’ unions often act as adversaries not only to taxpayers, but to parents, children, and the business community.

Do public school administrators and elected school board members belong on the list of union adversaries as well? Perhaps: the unions have bullied school districts and have made them less attractive as educational institutions in a cost-benefit sense. In the present case, the unions have successfully lobbied for ongoing payments of income and benefits to their members despite the degraded effectiveness of on-line instruction for many K-12 students. Meanwhile, many parents are learning to exercise choice in the matter by abandoning public schools in favor of private alternatives.

Not News: Infections and Long-Term Complications

06 Sunday Sep 2020

Posted by in Coronavirus, Health Care

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At 15 years of age I was diagnosed as a Type I diabetic — 49 years ago. I had a genetic predisposition, but I’ve been told by several endocrinologists over the years that an “event” likely triggered the antibody response for which I was predisposed. The event was, in all probability, a viral or bacterial infection. The autoimmune response to that infection attacked the islet cells in my pancreas and destroyed my body’s ability to produce insulin. I’ve been dependent on external delivery of insulin ever since. Life goes on.

I relate this information to emphasize that it is not “novel” for a virus to trigger long-term “complications”. Recently, certain media factions have been shrieking about the long-term complications that might be triggered by the coronavirus (C19) even in those with otherwise light symptoms. Those are unfortunate, but again, this aspect of viral and bacterial infection is not uncommon.

We know, for example, that bacterial and viral infections often trigger autoimmune diseases like diabetes. Other examples are chronic fatigue syndrome, fibromyalgia, rheumatoid conditions, celiac disease, Graves’ disease, Guillain-Barré syndrome, Sjogren’s Syndrome, multiple sclerosis, and many others.

One condition that’s been cited as an especially dangerous complication of C19 is myocarditis, or inflammation of the heart muscle. This has been invoked as a reason to cancel sports competitions, for example. (See here for a denial of one rather hyperbolic claim regarding this condition.) Myocarditis has a long history as a side effect of influenza. Most people recover with no long-term complications, and others manage to live with it and remain productive. While C19 is “novel”, infection-induced myocarditis is not.

If you catch a virus or a bacterial infection, you might experience other complications with varying severity. Get used to the idea. It’s an unfortunate fact of life.

COVID Immunity, Herd By Herd

01 Tuesday Sep 2020

Posted by in Coronavirus, Herd Immunity

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Too many public health authorities remain in denial, but epidemiologists are increasingly convinced that heterogeneity implies a coronavirus herd immunity threshold (HIT) that is greatly reduced from traditional models and estimates. HIT is the share of the population that must be infected before the contagion begins to recede (and the transmission ratio R falls below one). Traditional models, based on three classes of individuals (Susceptibles, Infectives, and Recovered – SIR), predict a HIT of 60% or more. However, models that incorporate variation in susceptibility, transmissibility, and occupational or social behavior reduce the HIT substantially. Many of these more nuanced models show that the HIT could be in a range of just 15% to 25%. If that is the case, many regions are already there!

For background, I refer you to the first post I wrote about heterogeneity in late March, more detailed thoughts from early May, examples and more information on the literature later in May. I’ve referenced it repeatedly in other posts since then. And now, more than five months later, even the slow kids at the New York Times have noticed. The gist of it: if not everyone is equally susceptible, for example, a smaller share of the population needs to be “immunized via infection” to taper the spread of the virus.

Some supporting evidence appears in the charts below, courtesy of Kyle Lamb on Twitter. The first chart shows a seven-day average of C19 cases per million of population for ten states that reached an estimated 10% antibodies. These antibodies confer at least short-term immunity against C19. Most of these states saw cases/m climb at least through the day when the 10% level was reached, though Rhode Island appears to have been an exception.

The second chart shows the seven-day average of cases/m in the same states starting seven days after the 10% immunity level was reached. I’d prefer to see the days in the interim as well, but the changes in trend are still noteworthy. All of these states except Louisiana had a downturn in the seven-day average of new cases within a few weeks of breaching the 10% infection level (Louisiana had distinct and non-coincident outbreaks in different parts of the state). These striking similarities suggest that things turned as the infection level reached 15% or more, consistent with many of the epidemiological models incorporating heterogeneity.

Next, take a look at the states in which C19 surged most severely this summer. The new cases are not moving averages, so the charts are not quite comparable to those above. However, the peaks seem to occur prior to the breach of the 15% infection level.

Speculation about early herd immunity has been going on for several months with respect to various countries and even more “micro” settings such as cruise ships and military vessels, where populations are completely isolated. Early on, this “early” herd immunity was discussed under the aegis of “immunological dark matter”, but we know now that T-cell immunity has played an important role. In any case, anti-body expression (or seroprevalence) at around 20% has been linked to reversals in C19 cases and deaths in several countries. As Yinon Weiss notes, New York City and Stockholm were both C19 hotspots in the spring, both have seen deaths decline to low levels, and they have little in common in terms of public health policy. London as well. The one thing they share are similar levels of seroprevalence.

An important qualification is that herd immunity is not relevant at high levels of aggregation. That is, herd immunity won’t be achieved simultaneously in all regions. The New York City metro area might have reached its HIT in April, but Florida (or perhaps only Miami) might have reached a HIT in July. Many areas of the Midwest probably still aren’t there.

In the absence of a new mutation of C19, the final proof of herd immunity in many of the former hotspots will be in the fall and winter. We should expect at least a few cases in those areas, but if there are more intense contagions, they should be confined to areas that have not yet seen a level of seroprevalence near 15%.