Archives: May, 2008

Medicare Advantage for All

The Church of Universal Coverage is whipping itself into a fervor over the Healthy Americans Act (S.334), a piece of legislation originally introduced by Sen. Ron Wyden (D-OR) that promises “affordable, guaranteed private health coverage that will make Americans healthier and can never be taken away.”  Wyden has enlisted seven Republican senators as cosponsors, including such conservatives as Lamar Alexander (TN), Bob Bennett (UT), Mike Crapo (ID), and Judd Gregg (NH). 

That guarantee and that bipartisan support have generated opeds in major newspapers, a web site, journal articles, a preliminary scoring by the Congressional Budget Office, and much twittering among the left-wing blogocracy that this could be the vehicle for achieving universal coverage.  There’s even a clever video that, come to think of it, supporters of market-based health care reforms could emulate in selling their own ideas.

What’s most interesting about all this is that so many conservative Republicans are acquiescing to a sweeping government takeover of the health care sector.  The Healthy Americans Act wouldn’t go quite so far as to enact the Left’s long-sought dream of “Medicare for All,” where government would dictate the terms of coverage for all Americans, set the prices, and cut checks to the doctors.  Rather, it would throw us all into a Medicare Advantage-like program, where government would dictate the terms of coverage, set the prices, and cut checks to … insurance companies.  Call it “Medicare Advantage for All.”  I have more to say about how the Healthy Americans Act would operate in this podcast

The conservative group Americans for Tax Reform claims the Act would constitute “the largest tax increase in history.”  Former Republican House Majority Leader Dick Armey accuses the bill’s GOP supporters – in particular Sen. Chuck Grassley (R-IA), the ranking Republican on the Senate’s committee of jurisdiction – of “signing on with the government-run health-care Democrats.” 

So why would conservative Republicans sign on to such a bill?  In particular, why Bennett, who has done an admirable job as a member of the Joint Economic Committee of trying to explain free-market concepts to his fellow senators? 

Given the general lack of health-policy literacy on the Right, it seems plausible that these conservatives just didn’t know what they were doing – or that their understanding of the legislation was sufficiently dim that any resistance could be overcome just by dangling the words “health savings accounts” in front of them.

A more troubling prospect is that these conservative senators and their staffs knew exactly what they were supporting, but made the calculation that their immediate political needs are more important than their fellow citizen’s health and freedom.

I Knew We should Have Used the Cone of Silence!

Kevin Carey of Ed Sector blogged yesterday that he has intercepted a communication revealing “what extremist libertarians say when they think they’re talking to one another.”  He is referring to this month’s issue of the highly classified Cato newsletter. I knew we should have used the Cone of Silence instead of 3rd class mail!

The title of Carey’s post proclaims: ”Cato Renounces School Vouchers.” This would be difficult, since Cato has never advocated vouchers, or, for that matter, anything else. The Cato Institute does not take policy positions, its scholars do.

Carey also suggests that I am personally “abandoning vouchers,” citing an interview in our newsletter in which I explain one of the advantages education tax credits enjoy over vouchers. As it happens, I have been pointing to that and other advantages of tax credits for the last decade: in my 1999 book Market Education: The Unknown History, in the 2001 Cato paper  “Toward Market Education: Are Vouchers or Tax Credits the Better Path,” in the 2002 Independent Review essay “Giving Credit Where It’s Due: Why Tax Credits are Better than Vouchers,” and more recently.

Vouchers have many redeeming qualities when compared to both conventional government-run schools and charter schools, but since I concluded, while researching Market Education, that tax credits have important advantages over vouchers, I have recommended credits. 

The most puzzling part of Carey’s post is its conspicuous self-contradiction. On the one hand, Carey claims that tax credits ”only help people who make enough money to pay taxes.” On the other, he quotes my advocacy of tax credits for donations to non-profit scholarship funds serving low-income families. Since such programs already exist and are growing in several states, and are serving people who pay little or nothing in taxes, Carey’s post disproves itself.

Hmm. Is this some devious strategy to undermine “extremist libertarians” by doing our jobs for us, thereby putting us out of work?

Rep. Tom Davis, Republican Brand Mangler - Er, Manager

In the opening segment of this week’s Washington Week on PBS, Representative Tom Davis (R-VA) commented on the viability of the Republican party in the upcoming elections: “The Republican brand name - if you were to put this on a dog food - the owners would just take it off the shelf because nobody’s buying it.”

Davis has more than a little responsibility for these circumstances. He’s been a consistent cheerleader of the REAL ID Act, for example, the moribund national ID law. He has consistently pressed and promoted REAL ID. He claimed that imposing $17 billion in costs on state governments is not an unfunded mandate, and pretended like shaking $50 million in federal money loose made any difference. Davis saluted the final regulations when they were issued earlier this year.

In a REAL ID story including Davis, Federal Computer Week saw fit to note that he “represents a Northern Virginia district heavily populated by federal employees and government contractors.”

P.J. O’Rourke comments in the most recent Cato’s Letter: “It took a Democratic majority in the House of Representatives 40 years—from 1954 to 1994—to get … corrupt and arrogant, and the Republicans did it in just 12.” Being wrong on liberty, even in service to your district’s government contractors, is not good for your party’s brand, Mr. Davis.

Retirement and Fuel Prices: A Match Made In Heaven?

Get ready for Washington D.C.’s Mall to be filled with seniors in the not-too-distant future.

About 25 percent of seniors depend entirely on Social Security for their consumption. And for two-thirds of them, Social Security makes up the majority of their monthly income. With soaring fuel and food prices, they are beginning to complain about being unable to make ends meet — as in, having to cut down on leisure and travel activities.

The rise in gas, food, and commodity prices is unlikely to be a bubble and won’t ”burst” anytime soon. Furthermore, the Fed’s recent interest rate–cutting binge has promoted a weaker dollar and risks higher future inflation and inflation expectations. That means our itinerant seniors will soon demand a larger inflation adjustment on their monthly checks than allowed by Social Security’s post-retirement benefit formula.

No prizes for guessing whether Congress will capitulate!

AZ Court Kills School Vouchers for Disabled, Foster Kids

An Arizona appellate court struck down two school voucher programs yesterday, finding that they violate a state constitutional prohibition against using public money to aid private or religious schools. The programs, serving disabled children and those in foster care, were unanimously ruled unconstitutional by a three-judge panel of Arizona’s Division Two Court of Appeals.

The ruling and the motivations behind the suit have been attacked by school choice groups, with the Alliance for School Choice calling it “shameful.” Praising the court’s decision, but doing little to allay concerns about the quality of public school instruction, John Wright, president of the Arizona Education Association, tautologically declared that “Arizonans understand that public schools are our pathway to great public schools.…”

What are the legal merits of this decision, and what does it mean for the affected kids and the school choice movement as a whole?

The ruling hinged on whether the vouchers in question can be considered aid to private and religious schools, because Article IX, paragraph 10 of the Arizona Constitution forbids the use of public money for that purpose. Choice advocates argued that the aid is being given to families and that the schools only benefit indirectly. The court found that while families are indeed aided, so too are the schools. However much I want all children to have access to a choice of independent schools competing to serve them, I find it hard to disagree with the court’s conclusion.

That doesn’t mean that the appellate court’s word is final. Choice advocates will no doubt appeal to the Arizona Supreme Court, which could agree with the narrower interpretation of the aid’s beneficiaries.

Even if it does not, yesterday’s ruling leaves open two paths for recreating the stricken programs in constitutionally acceptable fashion. The justices pointed explicitly to one obvious, if difficult, approach: seek an amendment to the state’s constitution that would strike or revise the “Aid Clause” ( Article IX, paragraph 10).

More helpfully, they also note that Arizona’s Supreme Court has already upheld the state’s education tax credit program in the face of an “Aid Clause” challenge (the Kotterman v. Killian ruling of 1999). As the appellate justices wrote yesterday:

Although Jordan and Kotterman… considered constitutional challenges based on this clause that to some extent foreshadowed the arguments presented here, the conclusions in both of those cases turned on facts clearly distinguishable from the facts of this case. In Kotterman, the court disposed of the Aid Clause challenge in a single paragraph, finding the tax credit there was neither an appropriation of public money nor the laying of a tax.

This is one of the reasons that Cato Institute scholars favor tax credit programs over voucher programs, as outlined in our Public Education Tax Credit model legislation and policy analysis. Reviving the two stricken voucher programs could thus be as simple as incorporating them into Arizona’s existing education tax credit program or reconstituting them as separate tax credit programs.

There will, however, be a temporary hitch to even that solution. The U.S. 9th Circuit Court of Appeals will soon be handing down a ruling that will likely strike down Arizona’s tax credit program under a clever, inventive, but thoroughly misguided interpretation of case law. This ruling, which could come down in the next several months, will almost certainly be overturned by the U.S. Supreme Court on appeal, as are so many of the 9th Circuit’s rulings.

Arizona’s disabled and foster children will ultimately enjoy meaningful educational freedom and choice, but they will sadly have to wait another year or two for a few remaining legal clouds to part. In the end, the sun will shine once more.

The Onion Couldn’t Have Topped This: Arlen Specter’s Spying Scandal

Wired’s Threat Level blog has a great post about Arlen Specter’s effort to get to the bottom of a recent spying scandal. Not, mind you, the Bush administration’s various warantless wiretapping programs, but rather spying among football coaches in the NFL:

Apparently real-world warrantless spying isn’t as egregious as snooping on opposing NFL coaches.

Specter and other lawmakers initially talked tough when The New York Times disclosed Bush’s spying program in 2005. “There is no doubt that this is inappropriate,” Specter said at the time.

But Congress, including Specter, eventually passed the Protect America Act, which allowed government officials to eavesdrop in the United States on telephone conversations and e-mails without warrants, if the target of the surveillance is “reasonably believed” to be overseas.

And now, with the warrantless wiretapping issue still simmering, Specter believes that the most pressing spying issue in the country involves coaches taping each others’ hand signals.

Reining In Abstract Patents

Over at Ars Technica, I’ve got an in-depth discussion of In Re Bilski, an important case that was argued before the U.S. Court of Appeals for the Federal Circuit last week. The Federal Circuit has jurisdiction over most patent appeals and, until recently, their decisions were rarely reviewed by the Supreme Court, making them effectively the final authority on patent issues. And unfortunately, they’ve made quite a mess of things, departing dramatically from Supreme Court patents and allowing patents on broad, abstract concepts (including software, which I wrote about last year). The result has been an explosion of low-quality patents and frivolous litigation:

Amazon’s much-derided one-click patent was approved the year after the decision. Patent litigation in the software industry has exploded with firms facing lawsuits over patents covering extremely broad software concepts such as wireless e-mail, web embedding, and converting IP addresses to phone numbers. Technically, these patents cover general purpose computers executing the algorithms described in the patent rather than the algorithms themselves. But because no one executes such algorithms with pen and paper, the net result has been to give the patent holders effective monopolies on the algorithms themselves.

The Federal Circuit has been catching a lot of flack for its patent jurisprudence in recent years, and they’ve showed an increased interest in revisiting past precedents. As I discussed in a Cato podcast last week, In Re Bilski concerns a patent that was rejected by the USPTO for being too abstract. In its call for amicus briefs in the case, the Federal Circuit explicitly asked for opinions on whether it should revisit its key rulings on abstract patents from the 1990s.

Unfortunately, the oral arguments suggest that the Federal Circuit is unlikely to abandon its dubious experiment with allowing patents on software and other abstract concepts. At best, I think we can expect the court to tinker at the edges, restricting the most egregiously abstract patents.

I’m more optimistic about the Supreme Court, which has shown a renewed interest in patent law in recent years and has shown no compunctions about overturning the Federal Circuit’s patent decisions. At least three Supreme Court justices (Scalia, Breyer, and Stevens) have raised questions about the patentability of software, suggesting that there may be some skepticism from the Supremes on this issue. If the case gets appealed to the Supreme Court, it will be another opportunity to correct a Federal Circuit that has not done a good job of respecting Supreme Court patent precedents.