Archives: 03/2009

What ‘Universal Coverage’ Really Means: Higher Taxes, Government Rationing

An editorial in today’s Wall Street Journal earns that page a membership in the Anti-Universal Coverage Club.

The editors explain that the universal-coverage scheme Massachusetts enacted in 2006 is a perfect microcosm of what congressional Democrats are trying to foist on the rest of the nation: compel universal coverage now, worry about the costs later.

Massachusetts is three years into that strategy, thus its experience shows us where that strategy leads.  Much as my colleague Mike Tanner predicted (repeatedly), it leads to higher taxes and government rationing.  The WSJ editors write:

The state’s overall costs on health programs have increased by 42% (!) since 2006.

Like gamblers doubling down on their losses, Democrats have already hiked the fines for people who don’t obtain insurance under the “individual mandate,” already increased business penalties, taxed insurers and hospitals, raised premiums, and pumped up the state tobacco levy. That’s still not enough money.

So earlier this year, [Gov. Deval] Patrick appointed a state commission to figure out how to control costs and preserve “this grand experiment”…

The Patrick panel is considering one option to “exclude coverage of services of low priority/low value.” Another would “limit coverage to services that produce the highest value when considering both clinical effectiveness and cost.” (Guess who would determine what is high or low value? Not patients or doctors.) Yet another is “a limitation on the total amount of money available for health care services,” i.e., an overall spending cap…

[Patrick] reportedly told insurers and hospitals at a closed meeting this month that if they didn’t take steps to hold down the rate of medical inflation, he would.

The editors conclude:

The real lesson of Massachusetts is that reform proponents won’t tell Americans the truth about what “universal” coverage really means: Runaway costs followed by price controls and bureaucratic rationing.

The Fed Is Now Scared

Bloomberg News (March 25, 2009) reported a speech by San Francisco Fed president Janet Yellen in which she called for authority for the central bank to issue its own debt. The request must have most people perplexed, especially since her rationale was delivered in Fed-speak. “Issuing such debt would reduce the volume of reserves in the financial system and push up the funds rate without shrinking the total size of our balance sheet,” Yellen said.

Actually, Yellen, who is also an economist, is addressing a very serious issue. It is one that critics of current Fed policy have been raising for some time.

The Fed is loading up its balance sheet with illiquid assets, including many dubious assets taken in as collateral for loans of money and Treasury securities to financial institutions. In the process, the Fed has an ever diminishing supply of highly liquid (and safe) Treasury securities on its own balance sheet.

Critics like economic historian Anna J. Schwartz and former Fed attorney Walker F. Todd have pointed out that the Fed will have a technical problem if it wants to start sopping up all the liquidity it has created. In a 2008 paper in International Finance, Schwartz and Todd wrote that “it is fair to ask what the Fed intends to do if it decided that it would tighten monetary policy by raising interest rates.” Without a sufficient supply of highly liquid assets to sell in the markets, the Fed would need to dispose of its illiquid assets at losses. That would possibly drive up interest rates more than desired.

Yellen’s call for the power to issue Fed debt signals a number of things. First, the Fed, contrary to recent happy talk from other officials, is worried about inflation. Second, its critics are correct that the Fed has painted itself into a corner by taking illiquid assets onto its balance sheet. Third, the Fed wants to hold those dubious assets to maturity (hence Yellen’s point about not “shrinking the total size of our balance sheet”).

Yellen’s trial balloon drew a “no comment” from the Fed’s Washington headquarters. The issue will not go away.

Canned Transparency

President Obama took a step toward making his administration more participatory and interactive Thursday. He answered questions that had been submitted to him in a program the White House calls “Open for Questions.”

Everyday Americans submitted questions, including video questions, and rated the questions of others to help determine which the president would answer. The questions he answered, of course, were the ones he and his staff chose.

President Obama promised to make his administration the most open and transparent in history, and taking questions from the public kind of looks like that. But it also kind of looks like a gimmicky, canned publicity stunt, rather than true openness in government.

Real transparency would include fulfilling his campaign promise to post bills online for five days before signing them. The president has now signed 10 bills into law and not subjected any of them to that five-day public review.

Deadly Canadian Care

An Illinois physician is arguing that actress Natasha Richardson might have survived her skiing accident if it had occurred in the United States rather than Canada. Explains Dr. Cory Franklin:

Canadian health care de-emphasizes widespread dissemination of technology like CT scanners and quick access to specialists like neurosurgeons. While all the facts of Richardson’s medical care haven’t been released, enough is known to pose questions with profound implications.

In the U.S. Richardson likely could have been both diagnosed locally and flown to emergency care in a nearby city.  Adds Franklin:

What would have happened at a US ski resort? It obviously depends on the location and facts, but according to a colleague who has worked at two major Colorado ski resorts, the same distance from Denver as Mt. Tremblant is from Montreal, things would likely have proceeded differently.

Assuming Richardson initially declined medical care here as well, once she did present to caregivers that she was suffering from a possible head trauma, she would’ve been immediately transported by air, weather permitting, and arrived in Denver in less than an hour.

If this weren’t possible, in both resorts she would’ve been seen within 15 minutes at a local facility with CT scanning and someone who could perform temporary drainage until transfer to a neurosurgeon was possible.

If she were conscious at 4 p.m., she’d most likely have been diagnosed and treated about that time, receiving care unavailable in the local Canadian hospital. She might’ve still died or suffered brain damage but her chances of surviving would have been much greater in the United States.

American medicine is often criticized for being too specialty-oriented, with hospitals “duplicating” too many services like CT scanners. This argument has merit, but those criticisms ignore cases where it is better to have resources and not need them than to need resources and not have them.

Obviously, Americans also die needlessly from substandard care on occasion.  But where government controls the entire health care system, politics is likely to trump consumers from beginning to end.  And that is evidently the case in Canada, where pets typically have speedier access than humans to many of the technological advances that Americans take for granted.  Policymakers must not forget the needs of patients as they rush to “reform” the U.S. health care system.

(H/t to Matthew Vadum.)

Thursday Podcast: ‘A Failed Drug War in Mexico’

Since 2008, more than 7,000 people have been killed  in violence associated with the drug war in Mexico. Secretary of State Hillary Clinton is traveling to the region this week, and said Wednesday that the United States shares the blame for the violence.

In today’s Cato Daily Podcast, Cato scholar Doug Bandow offers analysis on how the U.S. should respond to the crisis on our southern border.

Ken Lammers on Posner and Strict Liability

Ken Lammers, who blogs over at CrimLaw, recently posted a review of my new book, In the Name of JusticeBy way of background, the book is an edited collection of essays.  The lead essay is a reprint of the 1958 classic, “The Aims of the Criminal Law,” by Harvard Law Professor Henry Hart.  Legal and criminal law experts, such as Judge Richard Posner and James Q. Wilson (among others), have written original essays about Hart’s ideas.  

 Among other things, Hart critiqued the doctrine of strict criminal liability–which essentially dispenses with the requirement of proving someone’s criminal intent.  Hart says this is profoundly wrong.  The essence of  criminal conduct is that the person has done something which is blameworthy.  With strict liability, prosecutors can condemn certain persons as “criminals” without proving that they have done anything that is truly blameworthy.

Judge Richard Posner’s essay offers a defense of the strict liability doctrine, but Ken Lammers is not persuaded.  Here’s an excerpt:

Posner’s strongest argument is born of the wisdom of ignorance: the statutory rape argument. The statutory rape, best-interest-of-the-child, absolute strict liability is a creature born of emotion divorced from logical thought. We must protect the children at all costs. Therefore, anybody who crosses the line gets convicted no matter the circumstance. “The effect is to induce men to steer well clear of young-looking women, a form of care they would be less likely to use if ignorance were a defense.” (p. 97)

This pretty much brands Posner as someone who has not had actual trial experience. He’s never seen that trial wherein the immature 18 year old defendant (looking all of 14) has “raped” the 14 year old predatory girl (who looked 20) who had a list on her bedroom door of men she aimed to have sex with and had crossed several names off as she achieved her goal. Y’know, the same girl who turned the defendant in because she got mad at him when he found out her age and refused to have sex with her anymore. Guilt via strict liability. I’ve seen at least two cases with facts similar to this in my 8+ years practicing (none at my current locale); persons in larger jurisdictions can probably relate more of the same. This is how the “justice” of strict liability plays out in real life and anyone who thinks that is the proper way for the law to work is clearly engaging in faulty reasoning.

I agree.  And statutory rape is just a single example of where the doctrine of strict liability has taken hold.  Once that precedent was established, it has expanded elsewhere, as have the injustices.  For example, the law bans felons from possessing guns and ammunition.  Dane Yirkovsky found a bullet at his girlfriend’s house and put it in a dish on the dresser.  Later, police search and find the bullet.  Yirkovsky tells them that he  put it there.  Since he is an ex-con, he gets arrested on a felon-in-possession charge.  And with mandatory minimum sentencing in place, he is now serving a fifteen year prison sentence. Under the law, Yirkovsky is “guilty.”  But did he do anything that was really  blameworthy?  Can his conduct really be described as “criminal?”

To learn more about the state of our criminal law, get the book.