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Trump Really Does Have a Plan That’s Better Than Obamacare

“If the Supreme Court rules that Obamacare is out,” President Donald Trump said last week, “we’ll have a plan that is far better than Obamacare.”

Democrats couldn’t believe their luck. They still were reeling from special counsel Robert Mueller’s finding that the Trump campaign neither conspired nor coordinated with Russian efforts to interfere in the 2016 elections.

Now the president was changing the subject from collusion (a suddenly awkward topic for Democrats) to health care (which helped them capture dozens of House seats last November).

Besides, the president really doesn’t have a plan that is far better than Obamacare, or any plan at all. Right?

Wrong.

A look at his fiscal year 2020 budget shows that the president has a plan to reduce costs and increase health care choices. His plan would achieve this by redirecting federal premium subsidies and Medicaid expansion money into grants to states. States would be required to use the money to establish consumer-centered programs that make health insurance affordable regardless of income or medical condition.

The president’s proposal is buttressed by a growing body of evidence that relaxing federal regulations and freeing the states to innovate makes health care more affordable for families and small businesses.

Ed Haislmaier and I last year published an analysis of waivers that have so far enabled seven states to significantly reduce individual health insurance premiums. These states fund “invisible high risk pools” and reinsurance arrangements largely by repurposing federal money that would otherwise have been spent on Obamacare premium subsidies, directing them instead to those in greatest medical need.

By financing care for those with the biggest medical bills, these states have substantially reduced premiums for individual policies. Before Maryland obtained its waiver, insurers in the state filed requests for 2019 premium hikes averaging 30 percent. After the federal government approved the waiver, final 2019 premiums averaged 13 percent lower than in 2018—a 43 percent swing.

Best of all, Maryland and the other waiver states have achieved these results without increasing federal spending or creating a new federally funded reinsurance program, as House Speaker Nancy Pelosi, D-Calif., has proposed to do.

State innovation also extends to Medicaid. Some states have sought waivers permitting them to establish work requirements designed to help Medicaid recipients escape poverty.

Arkansas, for example, last June began requiring nondisabled, childless, working-age adults to engage in 80 hours of work activity per month. The program defined “work activity” broadly to include seeking a job, training for work, studying for a GED, engaging in community service, and learning English.

More than 18,000 people—all nondisabled and aged 30-49—were dropped from the rolls between September and December for failing to meet these requirements. The overwhelming majority did not report any work-related activity. All became eligible to re-enroll in Medicaid on Jan. 1. Fewer than 2,000 have done so, suggesting that most either don’t value the benefit or now earn enough to render them ineligible for Medicaid.

Nonetheless, last week a federal judge ordered Arkansas to drop its Medicaid work requirement, a requirement that would likely improve lifetime earnings of Medicaid recipients.

Administration efforts to relax federal rules to benefit employees of small businesses also were nullified last week by a federal judge.

Most uninsured workers are employed by small firms, many of which can’t afford Obamacare coverage for their employees. The Labor Department rule allowed small firms to band together, including across state lines, giving them purchasing power comparable to that of big businesses.

study of association health plans that formed after the new rule took effect last September found that they offered comprehensive coverage at premium savings averaging 23%. The court ruling stopped that progress in its tracks.

Waivers and regulations that benefit consumers are susceptible to the whim of judges and bureaucrats, which is why Congress should act on the president’s proposal.

It closely parallels the Health Care Choices Proposal, the product of ongoing work by national and state think tanks, grassroots organizations, policy analysts, and others in the conservative community. A study by the Center for Health and the Economy, commissioned by The Heritage Foundation, found that the proposal would reduce premiums for individual health insurance by up to 32 percent and cover virtually the same number of people as under Obamacare.

It also would give consumers more freedom to choose the coverage they think best for themselves and their families. Unlike current law, states could include direct primary care; health-sharing ministries; short-term, limited-duration plans; and other arrangements among the options available through their programs.

Those expanded choices would extend to low-income people. The proposal would require states to let those receiving assistance through the block grants, Medicaid, and other public assistance programs apply the value of their subsidy to the plan of their choice, instead of being herded into government-contracted health maintenance organizations.

Outside groups that helped develop the proposal, which is similar to the president’s, are looking to refine it by incorporating other Trump administration ideas like expansion of health savings accounts, health reimbursement arrangements, and association health plans. They’re also reviewing various administration ideas to reduce health care costs through choice and competition.

The president really does have “a plan that is far better than Obamacare.” Congress should get on board.

COMMENTARY BY

Doug Badger is a former White House and Senate policy adviser and is currently a senior fellow at the Galen Institute and a visiting fellow at The Heritage Foundation. Twitter: .

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Dear Readers:

Just two short years after the end of the Obama administration’s disastrous policies, America is once again thriving due to conservative solutions that have produced a historic surge in economic growth.

The Trump administration has embraced over 60 percent of The Heritage Foundation’s policy recommendations since his inauguration. But with the House now firmly within the grips of the progressive left, the victories may come to a screeching halt.

Why? Because they are determined more than ever to give the government more control over your lives. Restoring your liberty and embracing freedom is the best thing for you and the country.

President Donald Trump needs all of the allies he can find to push through the stone wall he now faces within this divided government. And the best way you can partner with him is by becoming a member of his greatest ally in Washington: The Heritage Foundation.

Will you activate your membership with a tax-deductible gift today?

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EDITORS NOTE: This Daily Signal column is republished with permission.

Why Is Trump Waging War on the Freedom Caucus? by Jeffrey A. Tucker

Why is Trump attacking the House Freedom Caucus? He has tweeted that “we must fight them.”

My first thought: this is inevitable. Destiny is unfolding before our eyes!

There is the obvious fact that the Freedom Caucus was the reason the GOP’s so-called replacement for Obamacare went down to defeat. They fought it for a solid reason: it would not have reduced premiums or deductibles, and it would not have increased access to a greater degree of choice in the health-insurance market.

These people knew this. How? Because there was not one word of that bill that enabled the health care industry to become more competitive. Competition is the standard by which reform must be judged. The core problem of Obamacare (among many) was that it froze the market in an artificial form and insulated it from competitive forces.At minimum, any reform must unfreeze the market. The proposed reform did not do that.

Bad Reform

That means the reform would not have been good for the American people. It would not have been good for the Republican Party. And then the chance for real reform – long promised by many people in the party – would have been gone.

Trump latched on to the proposal without understanding it. Or, other theories: he doesn’t care, he actually does favor universal coverage even if it is terrible, or he just wanted some pyrrhic victory even if it did nothing to improve the access.

The Freedom Caucus killed it. And I’m trying to think back in political history here, is there another time since World War Two that a pro-freedom faction of the Republican Party killed a bill pushed by the majority that pertained to such a large sector and dealt with such a hugely important program?

I can’t think of one.

What this signifies is extremely important. We might be seeing the emergence of a classically liberal faction within the GOP, one that is self consciously driven by an agenda that is centered on a clear goal: getting us closer to an ideal of a free society. The Caucus isn’t fully formed yet in an ideological sense, but its agenda is becoming less blurry by the day. (And please don’t call them the “hard right wing.”)The old GOP coalition included nationalists, militarists, free enterprisers, and social conservatives. The Trump takeover has strained it to the breaking point. Now the genuine believers in freedom are gaining a better understanding of themselves and what they must do.

For the first times in our lives! Even in our parents’ and grandparents’ lives!

The Larger Picture

Trump is obviously not a student of history or political philosophy, but he does embody a strain of thinking with a history that traces back in time. I discussed this in some detail here, here, and here, among many other places. The tradition of thought he inhabits stands in radical opposition to the liberal tradition. It always has. We just remain rather ignorant of this fact because the fascist tradition of thought has been dormant for many decades, and so is strangely unfamiliar to this generation of political observers.

So let us be clear: this manner of thinking that celebrates the nation-state, believes in great collectives on the move, panics about the demographic genocide of a race, rails against the “other” invading our shores, puts all hope in a powerful executive, and otherwise believes not in freedom but rather in compliance, loyalty, and hero worship – this manner of thinking has always and everywhere included liberals (or libertarians) as part of the enemy to be destroyed.

And why is this? Liberalism to them represents “rootless cosmopolitanism,” in the old Nazi phrase. They are willing to do business with anyone, move anywhere, and imagine that the good life of peace and prosperity is more than enough to aspire to in order to achieve the best of all possible worlds. They don’t believe that war is ennobling and heroic, but rather bloody and destructive. They are in awe of the creation of wealth out of simple exchanges and small innovations. They are champions of the old bourgeois spirit.To the liberal mind, the goal of life is to live well in peace and experience social and financial gain, with ever more alleviation of life’s pains and sufferings. Here is magic. Here is beauty. Here is true heroism.

The alt-right mind will have none of this. They want the clash, the war, the struggle against the enemy, big theaters of epic battles that pit great collectives against each other. If you want a hilarious caricature of this life outlook, no one does it better than Roderick Spode.

Natural Enemies

This is why these two groups can never get along politically. They desire different things. It has always and everywhere been true that when the strongmen of the right-Hegelian mindset gain control, they target the liberals for destruction. Liberals become the enemy that must be crushed.

And so it is that a mere few months into the presidency of this odd figure that the Freedom Caucus has emerged as a leading opposition. They will back him where they can but will otherwise adhere to the great principle of freedom. When their interests diverge, the Freedom Caucus will go the other way. It is not loyalty but freedom that drives them. It is not party but principle that makes them do what they do.To any aspiring despot, such views are intolerable, as bad as the reliable left-wing opposition.

Listen, I’m all for working with anyone to achieve freedom. When Trump is right (as he is on environmental regulation, capital gains taxes, and some other issues), he deserves to be backed. When he is wrong, he deserves to be opposed. This is not about partisanship. It is about obtaining freer lives.

But let us not languish in naïvete. The mindset of the right-wing Hegelian is not at all the same as a descendant of the legacy of Adam Smith. They know it. We need to know it too.

Jeffrey A. Tucker

Jeffrey A. Tucker

Jeffrey Tucker is Director of Content for the Foundation for Economic Education. He is also Chief Liberty Officer and founder of Liberty.me, Distinguished Honorary Member of Mises Brazil, research fellow at the Acton Institute, policy adviser of the Heartland Institute, founder of the CryptoCurrency Conference, member of the editorial board of the Molinari Review, an advisor to the blockchain application builder Factom, and author of five books. He has written 150 introductions to books and many thousands of articles appearing in the scholarly and popular press.

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No, the Rest of the World Doesn’t Use ‘Single Payer’ by Eli Lehrer

There’s plenty of reason for free marketers to be skeptical of proposals, like the ones emanating from Democratic presidential candidate Bernie Sanders and hinted at by Republican Donald Trump, that would create a single-payer healthcare coverage system in the United States.

But, if only because these proposals have resonance with the public, they’re certainly worth debating. A rational debate depends on getting the facts straight and there’s one fact that both left and right often get wrong: “single payer” healthcare of the sort Bernie Sanders proposes isn’t universal in the developed world and the US system isn’t particularly free-market by the standards of peer nations.

Although definitions vary slightly, a single payer healthcare system is one where a single entity — a government-run insurance plan — pays all bills for a variety of medical care, and private payment for these same services is more-or-less banned.

Among the G-7 countries, only one nation, Canada, actually maintains such a system. One other, Italy, has a pretty similar system but allows much more private payment, and, because of the low standards of public hospitals, nearly everyone who can afford private insurance carries it.

Japan maintains a government-run healthcare plan, but it has so many gaps that most families find a need to carry private insurance to cover things like cancer-treatment related costs the public system excludes.

Germany, like the United States, has an employer-state hybrid system with heavy regulation of insurance companies.

France has a “dominant payer” system, where one quasi-governmental entity (CNAMTS) pays many bills, but about 90 percent of the population maintains private coverage as well, and most people pay something out of pocket each year.

The United Kingdom, finally, directly administers almost all medical personnel and facilities through a single governmental entity in each of the home countries. This is a “single provider” system.

Except in the United Kingdom, furthermore, there are significant numbers of people in all of these countries who report problems paying for needed medical care. This percentage is higher in the United States and Germany, intermediate in France, and lower in Canada. The UK only achieves its apparently enviable results because of long waiting lists for many procedures and health care rationing systems that are pretty close to the fictional “death panels” some conservatives claimed were part of Obamacare.

The American system as it exists isn’t unusually free market either. The German, French, and Japanese systems — where consumers much more frequently shop around for insurance plans they like rather than having the government or an employer chose — offer more consumer choices than most Americans enjoy. Even though taxpayers pick up a very large portion of the bills, the French practice of publically providing the prices of medical procedures makes that system feel a lot more like a free market than anything most Americans see day-to-day.

There are lots of valid criticisms of the United States’ healthcare system. The difficulty the poor or uninsured sometimes have in getting needed medical care is one of them. Some problems of the US health care system stem from lifestyle and cultural factors that organization and payment mechanisms can’t impact. But the lack of a single-payer system in the United States isn’t unusual in the slightest nor is the system we have particularly free-market.

Any debate should start by acknowledging both of those facts.

Eli LehrerEli Lehrer

Eli Lehrer is president and co-founder of the R Street Institute, a free-market think tank.

Muslim migrant infectious diseases more deadly than terrorism?

Those refugees with latent tuberculosis are admitted to the U.S. and some who are being treated for active tuberculosis may also gain entry.

We have an entire category here at RRW on refugee and immigrant health (286 previous posts!) and I’ve maintained for years that health problems coming into the US with refugees and the cost of treating the myriad diseases and chronic conditions could ultimately be more significant to your community than a terrorist attack might be.

TB photo

That said, here is an informative article (hat tip: Joanne) from The Journal of Family Practice a few years ago which goes over the issues facing the medical community as we ‘welcome’ over 100,000 refugees and asylum seekers to America each year.

Pay special attention to the sections on Tuberculosis and HIV (there is no longer a bar to admission for HIV/AIDS and refugees are no longer even tested for it in advance of admission).  Other big medical issues include intestinal parasites and hepatitis.  And, of course mental health.

In 2012 we posted a film describing how refugees with active TB were being prepared for entry into the U.S., here.

Here is how the Journal of Family Practice article opens:

Refugees arrive in the United States with complex medical issues, including illnesses rarely seen here, mental health concerns, and chronic conditions such as diabetes and hypertension.

I encourage all of you working in ‘pockets of resistance’ to be sure to do your homework on health issues, including mental health issues.  According to Anastasia Brown of the US Conference of Catholic Bishops, 75% of Iraqis entering the US have mental illness. See Journal of Migration and Human Security report, here.

The Centers for Disease Control also has important information on its website, here.

And, in the past we have noted that both Texas and Minnesota health departments have lots of good information about refugee health on their websites, and I expect some other states do as well.  If your state health department does not report on refugee medical problems that is something you should be advocating for where you live.

Again, see our ‘Health issues’ category by clicking here.

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One-Third of Obamacare Co-Ops Shut Down by Charles Hughes

Hundreds of thousands people will lose their insurance plans as a raft of health insurance cooperatives (CO-OPs) created by the Affordable Care Act will cease operations.

Just last week, CO-OPs in Oregon, Colorado, Tennessee and Kentucky announced that they would be winding down operations due to lower than expected enrollment and solvency concerns (although the one in Colorado issuing the state over the shutdown order). They join four other CO-OPs that have announced that they would be closing their doors.

In total, only 15 out of the 23 CO-OPs created by the law remain. These closures reveal how ill-advised this aspect of the ACA was both in terms of lost money and the turmoil for the people who enrolled in them. The eight that have failed have received almost $1 billion in loans, and overall CO-OPs received loans totaling $2.4 billion that might never get paid back.

In addition, roughly 400,000 people will lose their plans.

Proponents of the CO-OPs believed that they would be able to offer lower premiums than for-profit insurers because they did not have the same profit motive, but even non-profit insurers cannot operate at a financial loss indefinitely.

When they were created, these CO-OPs had no customers, no experience in setting premiums, no networks and limited capital. The government tried to subsidize the early period of uncertainty by disbursing loans to help with startup and solvency issues, and money from other provisions like risk corridors would dampen losses in the initial years.

Lower than expected payments from the risk corridors have exacerbated the issues facing some of these CO-OPs, who were counting on substantial payments to stay afloat. But this is hardly the only factor contributing to their struggles, some of them the product of other government policies like delaying employer mandate penalties and giving states the option to allow transitional policies through 2017.

Some of these later developments could not have been anticipated, but many analysts, including Cato scholars, were skeptical about the prospects of CO-OPs from the beginning.  Even some ACA supporters recognized the flaws inherent in the CO-OP design: Paul Krugman derided them as a “sham” and in a 2009 interview Professor Timothy Jost said could not see how a CO-OP “does anything to control costs.”

There have been multiple warning signs that many CO-OPs were in trouble.  Earlier this year The Centers for Medicare and Medicaid Services sent letters to 11 CO-OPs placing them on “enhanced oversight” due to financial concerns, and a 2014 report from the HHS Office of Inspector General found that “most of the 23 CO-OPs we reviewed had not met their initial program enrollment and profitability projections,” and that the government “had not established guidance or criteria to assess whether a CO-OP was viable or sustainable.”

These CO-OPs were not a good idea at inception and were always going to face many obstacles to success.  Multiple changes to the law since they were established have exacerbated these problems, and already struggling CO-OPs have folded. Competition is indeed vital in health insurance markets, but the CO-OPs were a bad way to try to foster this competition.

With these closures, billions of taxpayer dollars could be lost and hundreds of thousands of people will discover that the “if you like your plan, you can keep it” promise does not apply to them.

This post first appeared at Cato.org.

A Deadly Caution: How the FDA’s Precautionary Principle Is Killing Patients by Alexander Tabarrok

I have long argued that the FDA has an incentive to delay the introduction of new drugs because approving a bad drug (Type I error) has more severe consequences for the FDA than does failing to approve a good drug (Type II error).

In the former case, at least some victims are identifiable and the New York Times writes stories about them and how they died because the FDA failed. In the latter case, when the FDA fails to approve a good drug, people die but the bodies are buried in an invisible graveyard.

In an excellent new paper (also here), Vahid Montazerhodjat and Andrew Lo use a Bayesian analysis to model the optimal tradeoff in clinical trials between sample size, Type I and Type II error.

Failing to approve a good drug is more costly, for example, the more severe the disease. Thus, for a very serious disease, we might be willing to accept a greater Type I error in return for a lower Type II error. The number of people with the disease also matters. Holding severity constant, for example, the more people with the disease the more you want to increase sample size to reduce Type I error. All of these variables interact.

In an innovation, the authors use the US Burden of Disease Study to find the number of deaths and the disability severity caused by each major disease. Using this data, they estimate the costs of failing to approve a good drug. Similarly, using data on the costs of adverse medical treatment, they estimate the cost of approving a bad drug.

Putting all this together the authors find that the FDA is often dramatically too conservative:

We show that the current standards of drug-approval are weighted more on avoiding a Type I error (approving ineffective therapies) rather than a Type II error (rejecting effective therapies).

For example, the standard Type I error of 2.5% is too conservative for clinical trials of therapies for pancreatic cancer — a disease with a 5-year survival rate of 1% for stage IV patients (American Cancer Society estimate, last updated 3 February 2013).

The BDA-optimal size for these clinical trials is 27.9%, reflecting the fact that, for these desperate patients, the cost of trying an ineffective drug is considerably less than the cost of not trying an effective one.

(The authors also find that the FDA is occasionally a little too aggressive, but these errors are much smaller: for example, the authors find that for prostate cancer therapies the optimal significance level is 1.2% compared to a standard rule of 2.5%.)

The result is important especially because, in a number of respects, the authors underestimate the costs of FDA conservatism.

Most importantly, the authors are optimizing at the clinical trial stage assuming that the supply of drugs available to be tested is fixed. Larger trials, however, are more expensive, and the greater the expense of FDA trials, the fewer new drugs will be developed. Thus, a conservative FDA reduces the flow of new drugs to be tested.

In a sense, failing to approve a good drug has two costs: the opportunity cost oflives that could have been saved and the cost of reducing the incentive to invest in R&D.

In contrast, approving a bad drug, while still an error, at least has the advantage of helping to incentivize R&D (similarly, a subsidy to research incentivizes R&D in a sense mostly by covering the costs of failed ventures).

The Montazerhodjat and Lo framework is also static: there is one test and then the story ends.

In reality, drug approval has an interesting asymmetric dynamic. When a drug is approved for sale, testing doesn’t stop but moves into another stage, a combination of observational testing and sometimes more RCTs — this, after all, is how adverse events are discovered. Thus, Type I errors are corrected.

On the other hand, for a drug that isn’t approved, the story does end. With rare exceptions, Type II errors are never corrected.

The Montazerhodjat and Lo framework could be interpreted as the reduced form of this dynamic process, but it’s better to think about the dynamism explicitly because it suggests that approval can come in a range for forms — for example, approval with a black label warning, approval with evidence grading, and so forth. As these procedures tend to reduce the costs of Type I errors, they tend to increase the costs of FDA conservatism.

Montazerhodjat and Lo also don’t examine the implications of heterogeneity of preferences or diseases morbidity and mortality. Some people, for example, are severely disabled by diseases that on average aren’t very severe — the optimal tradeoff for these patients will be different than for the average patient. One size doesn’t fit all.

In the standard framework, it’s tough luck for these patients. But if the non-FDA reviewing apparatus (patients/physicians/hospitals/HMOs/USP/Consumer Reports, and so forth) works relatively well — and this is debatable, but my work on off-label prescribing suggests that it does — this weighs heavily in favor of relatively large samples but low thresholds for approval.

What the FDA is really providing is information, and we don’t need product bans to convey information. Thus, heterogeneity (plus a reasonable effective post-testing choice process) mediates in favor of a Consumer Reports model for the FDA.

The bottom line, however, is that even without taking into account these further points, Montazerhodjat and Lo find that the FDA is far too conservative, especially for severe diseases. FDA regulations may appear to be creating safe and effective drugs, but they are also creating a deadly caution.

Hat tip: David Balan.

A version of this post first appeared at the Marginal Revolution blog.

Alex Tabarrok
Alex Tabarrok

Alex Tabarrok is a professor of economics at George Mason University. He blogs at Marginal Revolution with Tyler Cowen.

U.S. Veterans Administration: Still “Dysfunctional” with “Unaccountability at Every Level”

veritas logoJames O’Keefe, founder of Project Veritas, reports:

It has been over a year since the truth about the VA’s abysmal and unacceptable practices were thrust to the forefront of American politics, and yet there has been no discernible change in this bureaucratic nightmare. Our nation’s veterans deserve so much more and this continued mistreatment of our nation’s heroes is a troubling trend that shows no signs of any, let alone imminent, improvement.

Watch Project Veritas’ latest undercover video below showing that after more than a year of significant public outcry over incredibly long wait times, which in numerous cases resulted in the deaths of veterans, the VA is still failing to meet the basic needs of our veterans. Project Veritas investigative journalists captured on hidden camera a host of VA doctors, staffers, and one top official speaking about the many problems that persist at the VA despite official claims to the contrary.

Among the outspoken was Dr. Kristoffel Dumon, a general surgeon for the VA in Philadelphia, who told a Project Veritas undercover journalist that the VA has a “culture of unaccountability at every level.”

In this latest Project Veritas video, VA Undersecretary and Brigadier General Allison Hickey was captured on hidden camera saying that once veterans enter “the appeals process all bets are off, the only solution to that is changing the law or more people.”

A Project Veritas journalist also spoke with Scott Westguard, a VA contractor, who said on hidden camera that “it’s messed up, it’s dysfunctional, it’s incapable of getting the job done because people are there simply picking up the paycheck. There’s no accountability.”

Project Veritas also caught up with Dr. Raul Zambrano, a VA Medical Officer in the VISN & Network Office, who stated that: “we’re way below water in terms of the ability to supply, to meet the requests that’s demanded.”

It’s been 16 months since we learned of the waiting time scandal at the VA. In our last video covering the VA scandal, we identified that 22 of our nation’s heroes were dying by their own hands each day, as opposed to on the battlefield. Our first VA video has already been used to brief Congressmenabout overprescribing dangerous medications to veterans at a recent hearing on Capitol Hill.

In this video, we reveal some of the key underlying flaws within the VA which clearly make the system seem absolutely broken. Our veterans clearly deserve better.

RELATED VIDEO: A Veteran Seeking Help From a VA Office Received a Response No Veteran Should Ever Hear [+video]

The Chart that Could Undo the Healthcare System: Skyrocketing costs are being driven by bureaucracy

For a larger view click on the image.

This chart looks remarkably similar to a chart that tracks the growth of the administrative class in higher education. And that’s no accident. As the physician who shared the chart writes:

[The chart] outlines the growth of administrators in healthcare compared to physicians over the last forty years. And, it includes an overlay of America’s healthcare spending over that same time. Take a look at the yellow color. A picture is worth a thousand words, isn’t it?

You see, when you have that much administration, what you really have is a bunch of meetings. Lots of folks carrying their coffee from place to place. They are meeting about more policies, more protocols to satisfy government-created nonsense. But, this type of thing in healthcare isn’t fixing things. It’s not moving the needle.

What moves things is innovation.

Innovation, indeed. But it’s not easy to innovate in stagnant, hyper-regulated, captured sectors.

In Tyler Cowen’s 2011 book the Great Stagnation, he argued that the areas that were stagnating the most are education, healthcare, and government. Writing about Cowen’s book in his Wall Street Journal blog, Kelly Evans says:

A particular challenge we confront is that our progress as a society — chiefly, in extending and improving lives — is now at a point in which it appears to be undercutting our potential for further advancement. Part of this, Mr. Cowen observes, stems from well-meaning efforts to do more with education, government, and health care that instead seem to have backfired and left us with noncompetitive institutions closer to failing us than to serving us well.

With respect to healthcare, this chart gives us an indication of why these efforts are backfiring: The more an industry becomes like a regulated utility, the more administrators are required to enforce the regulations and administer the programs. And they, as well as the programs they administer, are expensive. All manner of distortions follow, and the costs of healthcare go up proportionally.

There also seems to be perverse incentives associated with subsidy: The more resources you dump in, the more expensive that industry becomes. You might shift the costs around on unsuspecting groups (like taxpayers), but in almost every case we see premium hikes and tuition increases in both of these industries, despite (or rather because of) the truckloads of federal largesse.

But they will have to stop at some point — one way or the other.

The US healthcare system has become something of a Frankenstein monster, with pieces stitched together ad hoc by regulators and special interests. The ACA seems to have ignored most of what really needed fixing and doubled down on the worst aspects of our system. Price transparency, affordability, innovation and competitive entrepreneurship have all gotten worse, not better. And the beast has grown to take over more than 17 percent of GDP.

(And if you think 17 percent is about right, consider that in Singapore healthcare takes up less than 3 percent of GDP.)

The trouble with any further healthcare reform is that a massive coalition of special interests in multiple sectors has formed as a husk around the entire industry — a care-tel, if you will — and they will be very difficult to dislodge.

Max Borders

Max Borders is the editor of the Freeman and director of content for FEE. He is also co-founder of the event experience Voice & Exit and author of Superwealth: Why we should stop worrying about the gap between rich and poor.

The White House is Lying About Climate Change and Health

Let us begin with the understanding that there is no connection between the climate and health. The climate is something measured in decades and centuries, so what happened in the last century has nothing to do with whether you are sneezing today.

The weather surely can help generate health problems. For example in the northeastern states, the Lyme disease season is beginning. Between 1992 and 2010 reported cases of Lyme disease doubled to nearly 23,000 according to the Centers for Disease Control and Prevention, but CDC officials believe the actual number of those infected may have been three times that number.

Lyme disease is transmitted by deer ticks and since these tiny insects will hitch a ride on birds, squirrels, mice and small animals as well, even if you live in an area without deer, the possibility of being bitten by a deer tick is just as likely. This increases for people who love gardening or outdoor recreational activities such as hiking and camping. Children, too, are particularly susceptible.

The fact that Lyme disease shows up in the Spring simply tells you that the warm weather facilitates the tick population. The weather has always been tied the mating habits and activities of various species, but that does not mean that is constitutes a massive threat to everyone’s health.

That’s not the way the White House sees it. On April 7 the administration made it official. It announced that it is “committed to combating the health impacts of climate change and protecting the health of future generations.”

Since the climate changes over extended periods of time, not just month to month, one has to wonder what “health impacts” the White House has in mind. The last Little Ice Age lasted from around 1300 to 1850. It was cold all over Europe and North America. Does the White House propose that it can “protect” us from a new one? If so, that’s absurd.

Let us understand, too, that there has always been what the White House announcement calls “extreme weather events.” Notice the change from “climate” to “weather”? Among the events identified are “severe droughts and wildfires to more powerful hurricanes and record heat waves…” Has there been a time when such weather-related events have not occurred? In fact, there are times when they don’t. For example, there hasn’t been a single Category 3-5 hurricane hit the U.S. mainland since 2005!

The White House has launched a massive brainwashing effort using many elements of the federal government to frighten Americans using the “climate” and the “weather.” How deceptive is it?

One example is sufficient. The President has claimed that climate change was the cause of one of his daughter’s asthma. In its announcement, it claimed that “In the past three decades, the percentage of Americans with asthma has more than doubled and climate change is putting these individuals and many other vulnerable populations at greater risk of landing in the hospital.”

Here’s what the Asthma and Allergy Foundation of America has to say about the various causes of asthma:

“Since asthma has a genetic origin and is a disease you are born with, passed down from generation to generation, the question isn’t really ‘what causes asthma’, but rather ‘what causes asthma symptoms to appear?’ People with asthma have inflamed airways which are super-sensitive to thinks which do not bother other people.”

What the Asthma and Allergy Foundation of America is telling us is that there is no direct connection between either the climate or the weather and the illness called asthma.

Those who suffer this disease however can be affected by a range of triggers such as irritants in the air, pollens, molds, and even cockroach droppings. Infections such as colds, flu, and sore throats are among the leading triggers for asthma attacks in children.

The facts, the truth, were no deterrent to the April 7th White House twelve-page announcement of all the things it intends to do to brainwash Americans into believing that there is a connection between the “climate” and health.

Here’s just a few of the dozens of events and programs it will initiate so that the media will report on them and thus convey the message that climate change is the greatest threat to Americans today:

“The Administration is expanding its Climate Data Initiative to include more than 150 health-relevant datasets…this is intended to help communities and businesses reduce the health impacts of climate change.” Only there are no such impacts.

The Administration is announcing a coalition of Deans from 30 medical, public health, and nursing schools around the country, who are committing to ensure that the next generation of health professionals is trained to address the health impacts of climate change.” Only there are no such impacts.

“Announcing the White House Climate Change and Health Summit.” It will feature the Surgeon General who will lead discussions to “the public health impacts of climate change and identify opportunities to minimize these impacts.” Only there are no impacts and nothing that could be done if there were.

From the Department of Homeland Security to the Department of the Interior and the Environmental Protection Agency, many elements of the federal government will be integrated into this massive brainwashing effort.

What can be done to ignore a government determined to lie to everyone about a “threat” that does not exist? Not much.

© Alan Caruba, 2015

RELATED ARTICLE: Earth Day: 22 Ways to Think about the Climate-Change Debate

Not Just the VA: Another example of government failure in healthcare by Terree P. Summer

Jay Littlewolf, a 54-year-old man, said inadequate healthcare at the government clinic compounded his problems with a diabetic ulcer on his right foot. He said that at one point he was told the remedy was to cut off his toes. Instead, he sought private medical treatment in Billings, Montana. “I don’t like those comments when the podiatrist says he just wants to cut your toes off,” Littlewolf said. “I know there are alternatives. Common sense says that.” To date, Jay has spent $3,000 out of pocket and expects his total bill to exceed $20,000. He wants to be reimbursed—and pay the balance of the bill—but the government agency has refused.

“We are trained and born not to challenge the system,” he said. “I’m not trying to challenge the system. I just want my bills paid. I wanted to save my toes, my foot, my leg, my life. All I want to do is mow my darn lawn.”

Littlewolf’s story is reminiscent of the stories of neglect and incompetency at the U.S. Department of Veterans Affairs (VA), the agency charged with caring for American veterans. Last April, news broke that the VA had serious problems. They came to light in its Phoenix  facility, where more than 40 veterans died while waiting for care. An internal audit released June 9, 2014, revealed that more than 120,000 veterans nationwide were left waiting or never got care and that pressures were placed on schedulers to use unofficial lists or engage in inappropriate practices to make waiting times appear more favorable. On June 11, 2014, the Federal Bureau of Investigation opened a criminal investigation of the VA.

Littlewolf, however, isn’t a veteran, and he was not dealing with the VA. Jay is a Native American and a member of the Northern Cheyenne reservation in Montana. He’s talking about the Indian Health Service (IHS), another federal government-operated healthcare system. When the scandal broke about the VA, the media, pundits, and politicians quickly concluded that the remedy for the VA’s ills was reform: more funding, regulation, and accountability. But the occurrence of the same problems at the IHS suggests that these sorts of problems may be endemic to government-run systems. Unfortunately, few are stepping up to recommend a more permanent fix than to enact reforms to the existing systems. What is needed is the privatization of healthcare services for those who suffer under government-controlled programs.

The IHS is familiar to me, as my grandfather was an IHS physician in Arizona. There are 22 tribes in my home state, and growing up there, I saw the issues facing Native Americans up close. The IHS has problems with long waits, inferior care, rationing, and lack of access—just as with the VA and with nationalized healthcare systems abroad. And, like the VA, when healthcare is under government control, it becomes inefficient and ineffective. Just ask Littlewolf.

In 2004, a report of the U.S. Commission on Civil Rights unsurprisingly blamed the substandard care in the IHS on the usual culprits: lack of funding, hiring the wrong people, retention and recruiting of qualified healthcare providers, and maintenance of aging facilities. As usual, the report didn’t point to the real problem: the program itself.

As with all government programs, inevitably most of the funding goes to pay bureaucrats and administrators, leaving little money for medical staff salaries and treatment. Low salaries contribute to unfilled vacancies, poor retention, and low morale among staff, causing waiting lists and inferior treatment for patients. The IHS has job vacancy rates for healthcare professionals ranging from 12 percent to 32 percent.

Bureaucrats cover up their mistakes with phony documents, like those found in the VA scandal, showing that patients are being promptly treated. Ultimately, supporters of government control lament that if only the right people could be found to run the program, everything would be fine.

In order to justify their salaries, government administrators promulgate endless regulations, bogging down the treatment process with red tape. Additionally, the IHS has a bloated bureaucracy, with over 14,000 employees, including eight assistant surgeon generals, 439 “Director Grade” bureaucrats, and 601 “Senior Grade” bureaucrats. Yet, in 2005, per capita federal spending on patients by the IHS was only $2,130—half the amount spent on federal prisoners’ care.

In a move in the right direction, in 2008, U.S. Senator Tom Coburn (R-OK), introduced an amendment to the Indian Health Care Improvement Act that would allow tribal members to choose from various healthcare coverage options, including the ability to purchase private health insurance. According to Senator Coburn, the IHS currently rations services on the basis of whether a particular service will save a “life or limb.” Unfortunately, but not surprisingly, Coburn’s amendment was voted down, 28 to 67.

While Coburn’s attempt at reform was laudable—and would have, at a minimum, provided an option for Native Americans seeking better health care—it didn’t really address the root of the problem. The only lasting solution that would ensure improvements in care and health outcomes would be the privatization of services to Native American tribes. I’m not confident that such a change is likely in the near future—for the IHS or for the VA. And, unfortunately, the problems that have plagued the VA and the IHS are harbingers of a future under our increasingly socialized healthcare system.

ABOUT TERREE P. SUMMER

Terree P. Summer is an economist and author specializing in healthcare and the federal budget. She is the author of What Has Government Done to Our Health Care? published by the Cato Institute (1992).

EDITORS NOTE: The featured image is courtesy of FEE and Shutterstock.

New York Federal Reserve: Higher Health Costs, More Part-Time Workers from Obamacare

Obamacare puts employers in a bind, two New York Federal Reserve surveys show. Employers’ health care costs continue to rise, and the health care law is driving them to hire more part-time labor, CNBC reports:

The median respondent to the N.Y. Fed surveys expects health coverage costs to jump by 10 percent next year, after seeing a similar percentage increase last year.

Not all firms surveyed said the Affordable Care Act (ACA) is to blame for those cost increases to date. But a majority did, and the percentage of businesses that predicted the ACA will hike such costs next year is even higher than those that said it did this year.

Obamacare’s higher costs will cascade down to consumers. The surveys found that “36 percent of manufacturers and 25 percent of service firms said they were hiking prices in response” to Obamacare’s effects.

The Empire State Manufacturing Survey polls New York State manufacturers, and the Business Leaders Survey polls service firms in the New York Federal Reserve District.

A June Gallup poll found that four in ten Americans are spending more on health care in 2014 than in 2013.

Let’s dig into the numbers.

When asked, “How would you say the ACA has affected the amount your firm is paying in health benefit costs per worker this year?” More than 73% of manufacturers and 58% of service firms said the health care law has increased costs this year.

Companies are also more pessimistic about Obamacare next year. Over 80% of manufacturers and 74% of service firms expect health plan costs to increase in 2015.

New York Federal Reserve Empire State Manufacturing and Business Leaders Surveys

Source: New York Federal Reserve. For a larger view click on the image.

Employers were also asked what effects Obamacare is having on their labor forces. Over 21% of manufacturers and nearly 17% of service firms say they reduced the number of employees because of the law, while only about 2% of each have hired more workers. What’s more, nearly 20% of both manufacturers and service firms say that Obamacare has pushed them to increase their proportion of part-time workers, but just under 5% of each type of firm said they have lowered them. Presumably this is due to the perverse incentives from Obamacare’s employer mandate.

This data fits with research from the Atlanta Federal Reserve that found that since the recession, 25% of firms have a greater share of part-time workers, while only 8% have a lower share. This data also fits with anecdotes from around the country of employers saying that they’re hiring more part-time workers because of Obamacare.

New York Federal Reserve Empire State Manufacturing and Business Leaders Surveys

Source: New York Federal Reserve. For a larger view click on the image.

The sad truth is the health care law is pushing higher health costs onto employers and incentivizing them to hire more part-time workers. Despite passing a law in 2010 loaded with rules, regulations, mandates, and taxes, health care reform is needed more than ever. For solutions that that will control health care costs, improve quality, and expand access, check out the U.S. Chamber’s Health Care Solutions Council report.

Follow Sean Hackbarth on Twitter at @seanhackbarth and the U.S. Chamber at @uschamber.

Tragedy of the Healthcare Commons: The Affordable Care Act contributes to an already unsustainable situation by D.W. MacKenzie

Recent difficulties with implementing the Affordable Care Act have increased opposition to the program. A majority of Americans now oppose it. Problems with the healthcare.gov website are in all likelihood temporary. However, there are serious long-term problems, particularly considering long-term finance and labor-supply issues. Give the mounting difficulties with and growing concerns about the ACA, it is worthwhile to reconsider the main issues regarding this program.

The Congressional Budget Office (CBO) recently published a report examining some of these problems. It contains nothing new. Many commentators have discussed the projection of lower labor-force participation. Obamacare subsidies will allow lower-income Americans to work less. People do in fact work less if their costs are shared. The tendency of people to withhold work from collective undertakings is known among economists as a tragedy of the commons.

Reduced labor-force participation means both lower total tax revenue and higher spending on government benefits. The CBO’s long-term forecasts report serious imbalances between tax revenues and federal spending. Federal deficits are projected to remain high, but “manageable,” for about a decade.

The costs of entitlements, along with regular budget items (defense and non-defense), are relevant to any discussion of the ACA’s affordability. The retirement of the baby boomers, though, will result in steadily rising costs for older entitlement programs. Taxpayers are already legally responsible for a national debt of $17 trillion (which  will hit $20 trillion by the time Obama leaves office). Interest payments on the national debt are low for the time being, but they won’t stay that way forever. The Medicare trustees have admitted to a long-term deficit of $34 trillion, but independent estimates run much higher. Social Security has an unfunded liability of more than $12 trillion. These costs pile on top of the current regular budget of $3.5 trillion, not to mention projected growth in this budget. Taxpayers are also responsible for the ACA’s cost overruns. Section 1342 of the ACA makes taxpayers responsible for bailing out insurance companies if the need arises.

Taxpayers are legally obligated to finance all of the above-mentioned expenditures, debts, and unfunded liabilities. People who believe in individual liberty reject the idea that people are morally obliged to fund ever-rising Federal expenditures. But the dispute over whether American taxpayers should fund projected federal spending is rendered academic by the fact that younger Americans will not be able to afford to pay for all of it. The commons created out of the New Deal and the Great Society is collapsing.

Economist Larry Kotlikoff estimates that average rates of taxation would have to rise 56 percent to cover projected increases in federal expenditures. Kotlikoff’s estimate may be high, but even a lower figure would leave Americans in dire financial straits. Taxpayers simply will not be able to fund all projected increases in all current federal programs. Bond investors will not finance our rising national debt in unlimited amounts. The ACA’s increased spending and lower labor-force participation, on top of these increases, makes national bankruptcy that much more likely.

National bankruptcy is not inevitable. The U.S. government is heading toward bankruptcy superficially because politicians have failed to set rational budget priorities, and fundamentally because citizens expect far too much of the public sector. The ACA was created out of concern that financial considerations bar access to healthcare to many people. And Americans do spend a large percentage of national income on healthcare.

The good news is that “we” have a substantial amount of leeway to save money on healthcare. Data on the overall effectiveness of public healthcare spending is clear, but not nearly as well known among voters. For example, The RAND Corporation conducted a health insurance experiment from 1974 to 1982, which showed that making healthcare “free,” or available at no personal marginal cost, does lead people to buy more. Much of this extra healthcare is inappropriate or largely unneeded, however. When people pay for more of their healthcare out of pocket, they tend to waste less money. The RAND study concluded, “In general, the reduction in services induced by cost sharing had no adverse effect on participants’ health.” Many other studies cast doubt on the effectiveness of providing healthcare at no private cost. According to another study, “Medicare enrollees in higher-spending regions receive more care than those in lower-spending regions but do not have better health outcomes or satisfaction with care.” Studies of people with health savings accounts (HSAs), as compared with people with plans like PPOs, show HSA holders control premium inflation better than their PPO counterparts.

Having people pay deductibles or bear other out-of-pocket costs causes us to economize on healthcare. Health insurance pools risks and creates a type of commons, whether done privately or publicly. The private commons of insurance companies does, however, have limits. Private insurance companies deny some types of coverage, depending on how much insurance people contract for in the first place. In other words, private insurance is not an open commons—it specifies the extent to which each policy holder can draw out of the insurance pool.

Public insurance programs lure people in by promising more benefits than private insurance plans offer. Yet public programs ultimately run into the basic problem of scarcity. The ACA pushes people out of very basic insurance plans into plans with higher levels of coverage, but excessive coverage is a major source of high healthcare costs. Americans spend a sizable portion of GDP on health expenses (17.9 percent in 2011). The overconsumption of healthcare by overinsured Americans is both a major source of excessive costs and a cost that can be cut with little adverse effect.

The tendency of people to waste money in open-access healthcare financing is simply going to produce another tragedy of the commons. Too few young people have been signing up at Healthcare.gov because younger Americans are mostly smart enough to avoid paying into a commons. Americans are signing up mainly because they expect to draw subsidies out of this commons.

Problems with managing a commons in healthcare financing are serious. Once someone enters into a life-threatening medical condition, they and their family will want every possible available step taken to save this person—provided that “someone else” pays. Passing costs onto someone else is, aside from being morally dubious, unworkable in the aggregate because we are each “someone else” to everyone else.

There are many costs associated with government intervention into the healthcare industry: administrative and regulatory compliance costs, elevated costs of litigation and court rulings, lobbying costs, costs of perverse incentives. The perversities associated with treating health as an open-access and politicized commons have, along with other, government spending programs, created an unsustainable fiscal situation. The unaffordability of the Affordable Care Act leaves us with two main options: Congress can repeal the ACA immediately through the legislative process, or we can all wait for the repeal process of national bankruptcy.

ABOUT D.W. MACKENZIE

D. W. MacKenzie is an assistant professor of economics at Carroll College in Helena, Montana.

Ten Bills, Ten Solutions to save America

Russ Vought, Political Director for Heritage Action for America, notes, “During the State of the Union address, President Obama called for 2014 to be a year of action. We agree, but Americans deserve action that will take the nation in the right direction. That’s why, with no clear goals or mandate from the Washington Establishment, we hosted the first Conservative Policy Summit.

On February 10th, Heritage Action brought together leaders to highlight conservative bills that would improve the lives of hardworking Americans. 10 speakers. 10 solutions.

[youtube]http://youtu.be/26d0H5Wl43M[/youtube]

Conservatives must lead through action. And we are. Heritage Action brought these leaders together on February 10th. The Conservative Policy Summit highlights the bills they have introduced, showing Americans a winning conservative reform agenda. Watch important discussion about our nation’s most pressing issues and learn about the conservative answers.

 

Privacy – Rep. Matt Salmon (R-AZ)
Social Welfare – Rep. Jim Jordan (R-OH) 
Health Care – Rep. Tom Price (R-GA) 
Health Care – Rep. Phil Roe (R-TN) 
Energy – Sen. Ted Cruz (R-TX)

Housing – Rep. Jeb Hensarling (R-TX)
Transportation – Rep. Tom Graves (R-GA)
School Choice – Sen. Tim Scott (R-SC)
Higher Education – Sen. Mike Lee (R-UT)
Religious Freedom – Rep. Raul Labrador (R-ID)

EDITORS NOTE: The featured image is courtesy of Claude Covo-Farchi. The use of this image does not in any way that suggests that Covo-Farchi endorses Heritage Action or the use of the work in this column. This file is licensed under the Creative Commons Attribution-Share Alike 2.0 Generic.