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Death By Obamacare

18 Wednesday Jan 2017

Posted by pnoetx in Health Care

≈ 3 Comments

Tags

A. Barton Hinkle, ACA, Affordable Care Act, Avik Roy, Ben Shapiro, Cadillac Tax, Catastrophic Coverage, David Brooks, Harry Reid, Health Savings Accounts, HSAs, John C. Goodman, Medicaid Block Grants, Minimum Essential Coverage, Obamacare, Obamacare Repeal, Paul Ryan, Private Medicare, Refundable Tax Credit, Rep. Pete Sessions, Rep. Phil Roe, Rep. Tom Price, Repeal and Replace, Sen. Orin Hatch, Sen. Richard Burr, Universal Access

goverment_kills

People will die if we don’t repeal and replace Obamacare! That right, and I’ll tell you why: First, the “Affordable” Care Act (ACA) creates terrible incentives for physicians. Among other provisions, it has chopped reimbursement rates on Medicare and Medicaid. As a result, physicians are declining patients under those plans, exposing the “access” myth under Obamacare as one of several cruel deceptions. Second, “physician feedback” reports and hospital “performance scores” reward providers who avoid the sickest and neediest patients. Third, provisions of the ACA encourage the monopolization of health care delivery and consequently inflate costs. That makes it less likely that needy individuals will insure or seek care, especially given the high deductibles they face. And greater market concentration in health care delivery often means patients have nowhere to go when they are denied care. Fourth, Obamacare has increased the regulatory burden on providers, which invariably reduces the quality of care. Other ACA regulatory burdens placed on employers have forced them to reduce employees’ hours and new hiring in order to control costs. This has limited the number insured under employer plans, leaving them to grapple with the exchanges, or on government plans from which physicians feel stiffed, or to be uninsured. All of these developments lead to undesirable health care outcomes. And there is more.

The ACA Disaster

Obamacare was a complete sham and destined to fail from the start, but the law’s now certain demise is greeted with indignance by the economic illiterati of the left. There are many counts upon which the law has failed: almost 29 million remain uninsured; millions of others in the individual market lost the coverage and doctors they preferred; only a single insurance option is available on many exchanges; the individual mandate is widely-ignored; the exchanges are serving a sickly risk pool; insurance premia are skyrocketing; health care delivery has trended toward monopoly; low Medicaid reimbursement rates have reduced actual access to providers; negative employment effects have arisen as firms adjusted to the employer mandates; and the law has imposed stiff regulatory compliance costs on providers of health care. Obamacare is also a significant budget item, despite early claims to the contrary (also see here): according to the Congressional Budget Office (CBO), the law’s contribution to the federal budget deficit is expected to be almost $2 trillion over the next ten years. What a law! It’s many invasive tendrils are destroying the vitality of the health care and insurance sectors, and it must be eliminated.

There are better ways to achieve the goals originally put forward under the aegis of the ACA. Those who fear repeal either believe that the law will not be replaced, which is unlikely, or that the replacement plan will lead to the loss of health care coverage for a large number of individuals. My contention is that the ACA can be replaced with a plan that would correct its massive deficiencies without creating other death traps.

The single truthful claim that supporters of Obamacare can make is a reduction in the number of uninsured since its implementation, but the numbers reported are exaggerated. A typical quote is that 20 million have gained coverage, an estimate, but we’ll go with that. The link gives a rough but meaningful accounting. Most of the increase in the number of insured, about 13 million, came from expanded Medicaid enrollment. That could have been accomplished without the ACA, and most of those enrollees were already eligible for Medicaid before the ACA’s expansion in eligibility. Perhaps the law had some beneficial effects on the awareness of individuals who were previously eligible but unenrolled.

The quoted gains in the insured population also include several million who were forced off their previous coverage in the individual market by the ACA. These do not represent net increases in the insured population. There have also been gains among young adults who remained on their parents policies. And yes, there have been gains in coverage among those with pre-existing conditions, but this totals less than half a million even counting those already covered under state “high-risk pools”. Needless to say, outright repeal of the ACA without replacement would not lead to a 20 million increase in the uninsured population, as many have argued. With replacement, it is conceivable that losses in coverage could be zero or negative.

Replacement Bills

What are the likely features of an ACA replacement bill? There are as many as nine different proposals or bills introduced by republicans, including one from Rep. Tom Price, who has been nominated to serve as President-Elect Trump’s Secretary of Health and Human Services (HHS). Rep. Pete Sessions and Sen. Bill Cassidy have introduced a bill endorsed by economist John C. Goodman. Rep. Phil Roe introduced a bill just last week. Sen. Orin Hatch and Sen. Richard Burr have proposed health care legislation. House Speaker Paul Ryan has also proposed a plan that received muted praise from noted health-care expert Avik Roy. These plans have some commonalities. In broad strokes, the proposed legislative actions call for less regulation, greater choice in the design of health insurance policies, more patient-centered care, a shift to market orientation, efforts to equalize the tax treatment of insurance premia for employer and individually-sponsored plans, retention of the ACA’s continuance of family coverage for young adults, and tax credits to support universal availability of insurance coverage.

There are several ways in which an ACA replacement plan can reduce the cost of health care delivery and the cost of health care insurance. The low-hanging fruit, as it were, involves steps to reduce the regulatory burden on health care providers, eliminating the ACA’s Minimum Essential Coverage and Essential Heath Benefits requirements (and allowing wider choice of coverage types and levels), and allowing competition among insurers across state lines.

The reduction in costs and subsidies that can achieved by allowing simple catastrophic-only policies in both the individual and employer markets is obvious. These policies would have low premia and correspondingly high deductibles. Regular checkups and routine health maintenance would not be covered under such basic policies. Those benefits would be optional, along with others like mental health coverage, maternity and reproductive health. The basic policies would represent real insurance, not paid-in-advance services. It’s more difficult, however, to anticipate the magnitude of cost savings and efficiency gains from eliminating regulatory requirements, encouraging competition among providers, and legalizing interstate insurance competition. That means the total gain from “low-hanging fruit” is hard to quantify, but it is real. Here are comments by David Brooks in The New York Times on the promise of market-oriented reforms.

Several of the GOP plans seek to provide universal availability of health insurance coverage by allowing refundable tax credits on insurance costs combined with expanded availability of Health Savings Accounts (HSAs). These steps would help to equalize the tax benefits of health insurance across the employer and individual markets. This is a crucial step due to the historically damaging effects of employer-provided coverage, as noted by A. Barton Hinkle here. Several of the GOP plans would allow non-employers like church groups, fraternal and professional associations to offer coverage.

Here is Avik Roy on the handling of high-risk individuals under the Ryan plan:

“Obamacare-style guaranteed issue and community rating would be gone and replaced by high risk pools, guaranteed issue for continuously held coverage, and a default requirement that insurers had to price their plans for older enrollees no higher than 5 times how they price them for younger enrollees (a significant improvement from Obamacare’s stricter 3:1 ratio).“

Other proposals in some of the GOP plans involve reform of the FDA, more support for private Medicare plans, and a change in the federal portion of Medicaid funding to block grants to states (who actually manage the program). The latter will be the subject of a future post.

Opportunities and Minefields

The kinds of steps described above can lead to greater reductions in the number of uninsured, and at a lower cost, than Obamacare. However, many partisans are agitating to convince republicans that this is impossible. Here is Roy’s opinion (he refers to his 2014 book, Transcending Obamacare):

“… many would-be reformers have convinced themselves that no Republican replacement for Obamacare can cover as many Americans as Obamacare will. Put simply, this is flat-out wrong. As Transcending Obamacare showed, you absolutely can achieve universal coverage with less spending and less government intervention, because we spend way too much subsidizing health coverage for the wealthy, and because our government-driven employer-based health care system inflates wasteful spending across the board.“

John C. Goodman discusses four “minefields” that republicans should avoid, the first of which seems obvious:

  1. Don’t repeal and delay: All indications are that congressional republicans have avoided this minefield, and Trump has stated that he won’t accept anything short of “simultaneous” repeal and replace.
  2. ACA revenue should not be “given away”: Goodman lists negotiated fee reductions from the AMA under the ACA, AARP’s agreement to Medicare cuts, and taxes on pharmaceutical companies, insurers, big labor and big business. Eliminating these sources of savings and tax revenue can be afforded only by reducing other costs. I’m dubious that the fee reductions and taxes haven’t had counterproductive effects, but point taken.
  3. Don’t impose a Cadillac tax: The Cadillac tax applies to expensive plans offered by employers. This point is an exception to #2 above, but Goodman says several GOP plans impose forms of Cadillac taxes despite widespread opposition.
  4. Don’t ignore employers: Here is Goodman on employers:

“Virtually all of the new government spending for private health insurance under Obamacare is going to what has become the most dysfunctional part of the healthcare system – the individual market. This is where premiums are spiraling and there is a race to the bottom on quality and access to care. Almost every Republican plan to replace Obamacare makes the same mistake. But why throw good money after bad?

Almost 30 million Americans are still uninsured (largely because the products in the Obamacare exchanges are so expensive and unattractive) and 85% of these live in a household with someone in the labor market. A tax credit that could be used by employers to help employees enroll in a group plan would give them access to lower premiums and better coverage.“

Goodman strongly endorses the replacement plan put forward by Rep. Pete Sessions and Sen. Bill Cassidy. It is the only GOP plan advanced thus far that avoids the four pitfalls identified by Goodman.

Markets Can Save Lives

My statement at the top of this piece might strike some as outrageous, but it is less outrageous than statements by Sen. Harry Reid and others that “people will die” if Obamacare is repealed. Of course, my assertion would be hard to defend unless conditioned on a replacement plan to improve access to quality care. But it is wrong to say that repeal will lead to incremental deaths without reference to a replacement plan. The claim that there is unlikely to be a replacement is disingenuous.

The usual defense of the ACA is grounded in the increased number of insureds it has achieved, combined with appeals to the expense of catastrophic health events. A weaker defense is the presumption that Obamacare codifies a “right” to health care. Even if we stipulate that such a right exists, there are better ways to accomplish the ends desired by the ACA’s proponents. The alternatives now under consideration are encouraging, as they are largely geared toward leveraging the efficiency of the market with less reliance on information-deficient government planners and rule-makers.

 

Fake News and Fake Virtue

28 Monday Nov 2016

Posted by pnoetx in Free Speech, Propaganda

≈ 2 Comments

Tags

A. Barton Hinkle, Censorship, Donald Trump, Dumb News, Edward Morrissey, Facebook, Fake News, Fidel Castro, Free Speech, Hamilton, Hate Speech, Mark Zuckerberg, Melissa Zimdars, Mike Pence, Noah Rothman, Propaganda, Roger Simon, Scott Shackford

hillary-clinton-tells-the-truth

Suddenly, since the election, “fake news” has become all the rage. Not that it’s a new phenomenon. All of us have come across it on social media. Most of us think we know it when we see it, and the recent election probably sensitized a great many of us to its cheap seduction. Some of it is satire, some is sincerely-held conspiracy theory, some is cooked-up, milli-penny click bait, and some of it is intended to drive an agenda.

Those forms of “fake news” are only the most obvious. I believe, for example, that the dangers of positively fake news are no greater than those posed by omission or demotion of news. It was rather obvious during the recent election campaign that news networks often ignored important stories that did not favor their own points of view. And since the death of the tyrant Fidel Castro, we’ve heard pronouncements that he was a “great leader” from a variety of sources who should know better; we’ve heard very little from them about his oppressive and murderous regime.

News as reported, and not reported, is often manipulated or mischaracterized to suit particular agendas. Reporters have their sources, and sources usually have agendas and stratagems in mind, which include rewarding reporters to get the coverage they desire. The manipulation even extends to news about science: grant-hungry and media-savvy members of the scientific community, and the pop-science community, know how to leverage it to their advantage.

Given the universal human capacity for bias, Roger Simon asks, only half in jest, whether all news is fake news. You can rely on so-called fact-checkers in an attempt to verify stories you find suspicious, but choose your fact checkers wisely because they are no better than the biases they bring to their duties. Let’s face it: facts are not always as clear-cut as we’d like. Simon makes his advisory on bias in reporting in the context of Mark Zuckerberg’s new-found passion to identify “fake news” and purveyors of “fake news”, and potentially to ban them from Facebook. No doubt his concern stems from accusations from angry Hillary Clinton supporters that Facebook failed to control the flow of “fake news” during the presidential campaign. He wants users to “flag” fake stories, but he knows that won’t always yield definitive conclusions. Simon quotes the Wall Street Journal:

“Facebook is turning to outside groups for help in fact-checking… It is also exploring a product that would label stories as false if they have been flagged as such by third-parties or users, and then show warnings to users who read or share the articles.

‘The problems here are complex, both technically and philosophically,’ [Zuckerberg] wrote. ‘We believe in giving people a voice, which means erring on the side of letting people share what they want whenever possible.’“

Well, that’s a relief! But what kind of chilling effect might be inflicted when the fact priests assign their marks? And what kind of fact-check/flagging escalation might be engendered among users? In the end, users and third-party “authorities” have biases. You can’t take any proscriptive action that will please them all. Better for hosts to keep their fingers off the scale, avoid censorship, and let users please themselves!

Zuckerberg should know better than to think that “facts” are always easily discerned, that “fake” news is solely the province of crank blogs and flakey “new media” organizations, or that “fake news” has any political affiliation. Consider the following examples offered by A. Barton Hinkle at Reason.com:

“The [New York] Times’ record for disseminating agitprop dates back at least to the early 1930s, when Walter Duranty won a Pulitzer for his reporting that denied the existence of famines in Soviet Russia—during a period when millions were dying of starvation.

More recently, The Times has given the nation the Jayson Blair fabrications—which it followed up with the infamous 2004 story, ‘Memos on Bush Are Fake But Accurate, Typist Says.’ It followed that up four years later with a story implying that GOP presidential candidate John McCain had had an affair with a lobbyist. (The lobbyist sued, and reached a settlement with the paper.)

Over the years other pillars of the media also have fallen on their faces. NBC News had to confess that it rigged GM trucks with incendiary devices for an explosive Dateline segment. The Washington Post gave up a Pulitzer after learning that Janet Cooke’s reporting about an 8-year-old heroin addict was false. In 1998 the Cincinnati Enquirer renounced its own series alleging dark doings by the Chiquita banana company. That same year, CNN retracted its story alleging ‘that the U.S. military used nerve gas in a mission to kill American defectors in Laos during the Vietnam War.’ The San Jose Mercury News had to denounce its own series alleging that the CIA was to blame for the crack cocaine epidemic. Rolling Stone just got hit with a big libel judgment for its now-retracted story about a rape at U.Va. And so on.“

Retractions are good, of course, but they aren’t always forthcoming, and they often receive little notice after the big splash of an initial report. The damage cannot be fully undone. Yet no one proposes to censor “the paper of record” or, with the exception of Fox News, the major television networks.

Edward Morrissey, writing at The Week, notes that the Trump election represented such a total breakdown in the accepted political wisdom that the identification of scapegoats was inevitable:

“Over the past week, the consensus Unified Theory from the media is this: Blame fake news. This explanation started with BuzzFeed’s analysis of Facebook over the past three months, which claimed that the top 20 best-performing ‘fake news’ articles got more engagement than the top 20 ‘mainstream news’ stories. …

There are also serious problems with the evidence BuzzFeed presents. As Timothy Carney points out at the Washington Examiner, the “real news” that Silverman uses for comparison are, in many cases, opinion pieces from liberal columnists. The top ‘real’ stories — which BuzzFeed presented in a graphic to compare against the top ‘fake’ stories — consist of four anti-Trump opinion pieces and a racy exposé of Melania Trump’s nude modeling from two decades ago.“

In Reason, Scott Shackford considers a proposed list of “fake news” sources compiled by a communications professor. Shackford says:

“… [Professor] Zimdars’ list is awful. It includes not just fake or parody sites; it includes sites with heavily ideological slants like Breitbart, LewRockwell.com, Liberty Unyielding, and Red State. These are not “fake news” sites. They are blogs that—much like Reason—have a mix of opinion and news content designed to advance a particular point of view. Red State has linked to pieces from Reason on multiple occasions, and years ago I wrote a guest commentary for Breitbart attempting to make a conservative case to support gay marriage recognition.“

Warren Meyer rightfully identifies the “fake news” outrage as an exercise in idealogical speech suppression, much like the left’s cavalier use of the term “hate speech”:

“The reason it is such a dangerous term for free speech is that there is no useful definition of hate speech, meaning that in practice it often comes to mean, ‘confrontational speech that I disagree with.’“

Worries about “fake” news are one thing, but perhaps we should be just as concerned about the “scourge of dumb news“, and the way it often supplants emphasis on more serious developments. Did the fracas over the Hamilton cast’s treatment of Mike Pence distract the media, and the public, from stories about Donald Trump’s potential conflicts of interest around the globe, which broke at about the same time? Here are some other examples of “dumb” news offered by Noah Rothman, the author of the last link:

“Colin Kaepernick, the Black Lives Matter movement, college-age adults devolving into their childlike selves, or pretentious celebrities politicizing otherwise apolitical events; for the right, these and other similar stories masquerade as and suffice for intellectual stimulation and political engagement. The left is similarly plagued by mock controversies. The faces printed on American currency notes, minority representation in film adaptations of comic books, and astrophysicists insensitive enough to announce feats of human engineering while wearing shirts with cartoon depictions of scantily clad women on them. This isn’t politics but, for many, it’s close enough.“

Okay, so what? We all choose news sources we prefer or discern to be reliable, interesting, or entertaining, and that’s wonderful. No one should presume to question the degree to which news and entertainment ought to intersect. I do not want protection from “fake news”, “dumb news”, or any news source that I prefer, least of all from the government. After all, if there is any entity that might wish to “control the narrative” it’s the government, or anyone who stands to gain from it’s power to coerce.

Statists and Stasis: The Dismal Solutions of Anti-Capitalists

26 Wednesday Aug 2015

Posted by pnoetx in Capitalism, Markets, Socialism, Tyranny

≈ Leave a comment

Tags

A. Barton Hinkle, Administered Prices, Anti-Capitalism, Asymmetric Information, Bernie Sanders, central planning, Chris Edwards, Coercive Power, Coyote Blog, Dead Weight Loss, External Effects, Foundation for Economic Education, Fred Foldvary, Jonathan Newman, Mercatus Center, Progressivism, Reason, Robert P. Murphy, Socially useless, Statism and Stasis, The Freeman, Warren Meyer

Thought Hanging

The anti-capitalist Left is quick to condemn private businesses of unfair practices and even unethical behavior. In their estimation, certain prices are not just and profits are somehow undeserved rewards to private property, risk-taking and entrepreneurial sweat. They somehow imagine that meeting market demands is an easy matter, or worse, that market demands are not “socially useful”. Few have ever attempted to run a business, or if they have, they were unsuccessful and resent it. They also cannot grasp the social function served by private markets, to which we owe our standard of living and much of our culture.

What alternatives do these deep thinkers suggest? A socialist utopia? Jonathan Newman discusses the many practical problems presented by socialism and why it always fails to achieve success comparable to societies that rely on free markets. Newman’s treatment covers the inability of administered pricing to convey accurate information and effective incentives, the waste induced by queuing, neglect of comparative advantage, waste induced by production quotas, retarded innovation and technological development, and a deeply embedded stasis in the face of changing conditions. Little wonder that poverty is a consequence.

Warren Meyer at Coyote Blog has written of the stasis seemingly promoted by the progressives. They are quite protective of the status quo. Ironically, and quite rightly, Meyer calls them “deeply conservative”, too conservative to accept the dynamism of a capitalistic society. From Meyer:

“Progressives want comfort and certainty. They want to lock things down the way they are. They want to know that such and such job will be there tomorrow and next decade, and will always pay at least X amount. Which is why, in the end, progressives are all statists, because only a government with totalitarian powers can bring the order and certainty and control of individual decision-making that they crave..

Progressive elements in this country have always tried to freeze commerce, to lock this country’s economy down in its then-current patterns. Progressives in the late 19th century were terrified the American economy was shifting from agriculture to industry. They wanted to stop this, to cement in place patterns where 80-90% of Americans worked on farms.“

Freezing the diffusion of technology and often the state of technology itself is a consequence of socialist policy. And technology may well be the enemy of the Left in another sense: An interesting twist is provided by Fred Foldvary of the Mercatus Center in “Government Intervention Is Becoming Obsolete“. He writes that technology is undermining all of the usual economic rationales for intervention: asymmetric information, external effects, public goods, and monopoly. The article is brief, but he refers the reader to more extensive treatments.

A good example of socialism’s perverse appeal is the rhetoric of Senator Bernie Sanders, now a candidate for the Democrat Presidential nomination. Sanders has criticized the “the dizzying (and socially useless) number of products in the deodorant category….” At Reason.com, A. Barton Hinkle wondered what Sanders might consider the appropriate number of deodorant choices in our society. Would he wish to dictate a limited number as a matter of policy? And what other “socially useless” choices might he choose to limit in his failure to grasp that these choices reflect the incredible health and vibrancy of a market economy. Here’s Hinkle:

“… central planners think they can allocate economic resources better than the unguided hand of individual free choice. Like any good scientific experiment, this one is easily replicated, and has been time and again. See, for example, Venezuela, which has now run out of toilet paper, tampons, and other basic necessities because some people there think they should make all the choices for other people. And yet for many, the repeated lesson still has not sunk in. In an unintentionally hilarious essay about Cuba not so long ago, one writer noted that “the people are hungry here. There are severe food shortages. I do not understand why a tropical island would lack fruits and vegetables . . . and my only assumption is that maybe they have to export it all.”

Never forget that government can only pursue policy objectives via coercive power. I don’t think socialists have forgotten at all. Without the power to coerce, nothing proposed or done by the state can be accomplished and enforced. This is the course that progressive, anti-capitalists must follow to achieve their collectivist vision. But Chris Edwards reminds us that “Coercion Is Bad Economics” with the following points about government:

  • When it “uses coercion, its actions are based on guesswork.“
  • Its “actions often destroy value because they [arbitrarily] create winners and losers.“
  • Its “activities fail to create value because the funding comes from a compulsory source: taxes.”
  • Its “programs often fail to generate value because the taxes to support them create “deadweight losses” or economic damage.“

By arranging voluntary, mutually beneficial trades, market forces avoid all of these problems. As Robert P Murphy explains in The Freeman, “Capitalists Have a Better Plan“.

The anti-capitalists do not hesitate to saddle private businesses with confiscatory tax and regulatory burdens in the name of their own vision of society. Want to live in a bleak world of decline? Then here’s your prescription, courtesy of the anti-capitalist Left: regulate heavily, monitor transactions, impose wage and price controls, dismantle markets, tax at punitive levels, confiscate property, censor “offensive” speech, extend dependence on the state, absorb private savings and crowd out private investment with government borrowing, and inflate the money stock. Smells like a crappy “utopia”.

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