Archives: June, 2011

ACO Debacle Exposes Obamacare’s Fatal Conceit

That’s the title of my latest Kaiser Health News column. Excerpts:

Obamacare’s number-one idea for improving health care quality and reducing costs is to promote something called “accountable care organizations” in Medicare. That effort is sinking like a stone, because it – like the rest of this sweeping law – is premised on the fatal conceit that government experts can direct the market better than millions of consumers making their own decisions…

The only way to improve quality while reducing costs is to give patients the incentive and the power to say “no” to inefficient providers. The Medicare reforms that passed the House don’t go as far as they should, but they are a good start.

For one thing, they would do a better job of promoting [accountable care organizations]. The House reforms build on Medicare Advantage, which already gives one fifth of Medicare enrollees the freedom to choose their own health plan.  Kaiser Permanente CEO George Halvorson says the new law’s ACO program “is not as good as” Medicare Advantage when it comes to promoting accountable care.

And he should know something about that.

Curricula with an Agenda? It Ain’t Just Big Coal

Today the Washington Post has a big story on efforts by the coal industry to get public schools to teach positive things about — you guessed it — coal. The impetus for the article is no doubt a recent kerfuffle over education mega-publisher Scholastic sending schools free copies of the industry-funded lesson plan “The United States of Energy.” Many parents and environmentalists were upset over businesses putting stealthy moves on kids, and Scholastic eventually promised to cease publication of the plan.

Loaded curricula designed to coerce specific sympathies from children, however, hardly come just from industry, as the Post story notes. Indeed, as I write in the new Cato book Climate Coup: Global Warming’s Invasion of Our Government and Our Lives, much of the curricular material put out at least on climate change is decidedly alarmist in nature, and is funded by you, the taxpayer. In other words, lots of people are trying to use the schools to push their biases on your kids, which is an especially dangerous thing considering how unsettled, uncertain, and multi-sided so many issues are.

In light of the huge question marks that exist in almost all subjects that schools address, the best education system is the one that is most decentralized, in which ideas can compete rather than having one (very likely flawed) conclusion imposed as orthodoxy. And it would be a system in which no level of government — either district, state, or federal — would decide what view is correct, or what should be taught based on the existence of some supposed consensus, as if “consensus” were synonymous with “absolute truth.” What is truth should not be decided by who has the best lobbyists or most political weight, nor should children be forced to learn what government simply deems to be best.

Of course, there are some people who will decide that they are so correct about something that it would be abusive not to have government force children to learn it. If their conclusion is so compelling and obvious, however, no coercion should be necessary to get people to teach it to their children — it should be overwhelmingly clear. More importantly, if there is controversy, efforts to impose a singular view are likely to fail not just with the children of unbelievers, but for many of the children whose parents share the view. As significant anecdotal evidence over the teaching of human origins has stongly suggested — and new empirical work has substantiated — when public schools are confronted with controversial issues, they tend to avoid them altogether rather than teach any side. In other words, efforts at compulsion don’t just fail, they hurt everyone.

Educational freedom, then, is the only solution to the curricular problem. If you want full power to avoid the imposition of unwanted materials on your children, you must be able to choose schools. And if you want to ensure that your kids get the instruction you think every child should have, everyone else must have that ability, too.

This Week in Government Failure

A fierce storm from Mother Nature killed my Internet connection last Friday (I didn’t see any black helicopters, so I’m assuming it was her). Therefore, the following are issues we focused on over the last two weeks at Downsizing the Federal Government:

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Friday Links

  • “PBS used to ask, ‘If not PBS, then who?’ The answer now is: HBO, Bravo, Discovery, History, History International, Science, Planet Green, Sundance, Military, C-SPAN 1/2/3 and many more.”
  • “The fiscal problem that is destroying U.S. economic confidence is not the fiscal balance, however. It is the level of government expenditures relative to GDP.”
  • “The Pentagon’s first cyber security strategy… builds on national hysteria about threats to cybersecurity, the latest bogeyman to justify our bloated national security state.”
  • How ‘secure’ do our homes remain if police, armed with no warrant, can pound on doors at will and, on hearing sounds indicative of things moving, forcibly enter and search for evidence of unlawful activity?”
  • National debt is driving the U.S. toward a double-dip recession

Whitewashing the Auto Bailouts

With his appearance at a Toledo factory today, President Obama seems to want to make the auto bailout a campaign issue. Let’s welcome that. Americans should understand what transpired.

Fancying himself “Savior of the Auto Industry,” the president deserves credit only for choosing to insulate two companies (and the UAW) from the consequences of their decisions. But with that credit he must accept responsibility for sluggish U.S. business investment, limited job creation, and the anemic economic recovery, which is due in no small measure to the regime uncertainty that descends from his intervention in the auto industry.

The administration suggests that the entire cost of the auto bailout is captured by the outlays that haven’t or won’t be returned. Despite much smaller claims from the administration, that figure will be about $5.5 billion in Chrysler’s case (the administration is overlooking $4 billion written off when New Chrysler emerged from bankruptcy) and somewhere from $7 to $15 billion in GM’s case (depending on average share price for 500 million shares). Should that loss have to be reported to the FEC on a dollar-per-auto-worker-vote basis?

But the costs are much greater than these outlays.

The most compelling objections to the bailout were not rooted in the belief that the government couldn’t use its assumed power to help Chrysler and GM. On the contrary, the most compelling objections were over concerns that the government would do just that. It is the consequences of that intervention — the undermining of the rule of law, the confiscations, the politically driven decisions, and the distortion of market signals — that animated the most serious objections. Ford never publicly objected to the interventions to rescue its rivals. Do you think Ford may feel entitled to a future bailout if needed, having foregone the recent one? Does Ford think it has a pretty good insurance policy if it takes excessive risks that go awry?  This is a cost that’s tough to measure, but an important cost nonetheless.

Any verdict on the outcome of the auto industry intervention must take into account, among other things, the billions of dollars in property confiscated from the auto companies’ debt-holders; the higher risk premium built into U.S. corporate debt as a result; the costs of denying the other, more successful auto producers the spoils of competition (including additional market share and access to the resources misallocated at Chrysler and GM); the costs of rewarding irresponsible actors (like the UAW) by insulating them from the outcomes of what should have been an apolitical bankruptcy proceeding; the effects of GM’s nationalization on production, investment, and public policy decisions; the diminution of U.S. moral authority to counsel foreign governments against market interventions that can adversely affect U.S. businesses competing abroad; and the corrosive impact on America’s institutions of the illegal diversion of TARP funds to achieve politically desirable outcomes.

Let’s make the auto bailout a campaign issue and see if we can’t reconcile all of its costs.

Heckuva Job on that Stimulus!

Based on this morning’s numbers, I’ve updated my chart showing what the Obama Administration said would happen with the so-called stimulus compared to what actually has happened. As you can see, the unemployment rate is about 2.5 percentage points higher than the White House claimed it would be at this point.

Since I just did an I-told-you-so post about Greece, I may as well pat myself on the back again (albeit for another completely obvious prediction). Here’s the video I narrated a couple of years ago on the Obama faux stimulus.

That’s Not Healthy: Poverty Is a Salve for ObamaCare’s Individual Mandate?

Some tidbits from the health care policy world:

  • Philip Klein is perhaps too kind to the Obama administration’s latest defense of ObamaCare in “Obama solicitor general: If you don’t like mandate, earn less money.”
  • The Obama administration launches a hospital payment reform effort that, rather than promote high-quality, low-cost medical care, will demonstrate once again why Medicare is incapable of such.
  • The physicians lobby, having thrown its support behind ObamaCare with the expectation that Congress would jack up Medicare’s physician price controls, is still begging Congress to do so.
  • The Obama administration launches a lame effort to reduce medical errors in Medicaid, decades after markets devised far more powerful deterrents.