Archives: January, 2012

Obamacare’s Sweetheart Deal for Massachusetts

A bunch of rural hospitals are upset about a provision of Obamacare that benefits Massachusetts above all other states. Forgive the bureaucratese, but you really have to read the Medicare Price Control Payment Advisory Commission’s description to appreciate the situation:

Among the proposed wage index reclassifications or exceptions granted to hospitals for FY2012, the rural floor exception triggered in the state of Massachusetts will have a large impact on hospital payments. Beginning in FY 2012, the conversion of Nantucket Cottage Hospital from a critical access hospital to an IPPS hospital will trigger the rural floor wage index exception for the 60 urban hospitals in the state of Massachusetts, increasing wage indexes for these hospitals from an average of 1.16 in FY2011 to 1.35 in FY2012. Nantucket Cottage Hospital is a rural island hospital, which has 15 inpatient beds and serves approximately 150 Medicare inpatients per year. This hospital will become the only rural IPPS hospital in the state of Massachusetts. As a result of this change in one small hospital’s status, and the subsequent change in the wage index, payment rates for urban hospitals in Massachusetts will increase by 8 percent, or by more than $200 million in FY 2012. These extra payments will be made budget neutral at the national level, and therefore all hospitals—including rural hospitals—will absorb the financial loss.

Got that? One small, rural, island hospital in Massachusetts changes its Medicare status, and—presto!—the other 60 Massachusetts hospitals suddenly qualify for an extra $200 million in Medicare subsidies. Land of the free! A letter from several state hospital associations complains the amount is actually $367 million per year. The best part: Medicare scrounges up that $200-$367 million by reducing subsidies to other states. Thus the nasty letter from the lobbyists for non-Massachusetts hospitals.

Cato adjunct scholar David Hyman writes about this dynamic in his excellent satire, Medicare Meets Mephistopheles:

Geographically based envy has also precipitated a “formula fight” among the states, complete with litigation, coalitions of aggrieved states and senior citizens, coverage in newspapers and editorials, and statements from concerned legislators… [C]ertain state medical societies have been particularly insistent that their states are being shortchanged by the Medicare program. These interest groups have had great success in persuading their elected representatives to change Medicare’s reimbursement formulas, so the Medicare money train unloads their “fair share.”

I’ve written before about how Romneycare solidified layers of corruption whereby Massachusetts officials (with the complicity of the Bush administration) bilked taxpayers in the other 49 states. It turns out that Obamacare also has a sweetheart deal for Massachusetts. Who knew Romneycare and Obamacare had so much in common?

Playing to Our Strengths—and Why COIN Doesn’t

A recent editorial in the Boston Globe noted with some glee that the Obama administration strategy document released last week included the “acknowledgement that America’s brief and unhappy foray into counterinsurgency operations has come to an end.” The Globe editorialists conclude “Given the checkered history of counterinsurgency, and its cost in lives and money, its demise is hardly unwelcome. Even better to read of it in the very document that hopes to guide how the United States conducts wars the next time around.”

As a COIN skeptic from well before the publication of FM 3-24 (when COIN was called nation-building), I am inclined to claim some vindication. Often with Justin Logan in the lead, I have probably written more about this subject than any other (including here and here). More broadly, Cato has been a hospitable venue for skeptical views of nation-building as a cure for terrorism, including these two fine papers that explained why we didn’t need to repair/reconstruct weak or failing states in order to defeat al Qaeda, and this paper by Jeffrey Record on why COIN/nation-building was inconsistent with America’s strategic culture, and therefore likely to fail.

But I expect that some COIN advocates will push back, and a few quite vociferously. Some might admit that, yes, Afghanistan has been an unholy mess, but we need to give it more time. The public has soured on the war there, and is now turning against the dominant strategy, COIN, but those attitudes, they will say, could be turned around with concerted presidential leadership. And then they will launch into their full-throated defense of COIN, which might go something like this:

COIN is still useful in particular situations, especially when the operations are in support of a credible local partner, when we are able and willing to apply the necessary resources to have a reasonable chance of success, and when we are prepared to remain for the long haul. And once we have committed to the COIN mission, we must ensure that we execute the mission properly, as spelled out in FM 3-24, which means that the troops must accept greater risk in order to minimize civilian casualties.

My response, and I think that of other COIN skeptics, is that those key ingredients are almost never in place, hence COIN almost never works.

  • If there was “a credible local partner” there likely wouldn’t be an insurgency in the first place. Insurgencies come about and grow in strength because the government they are rising up against is not serving the best interests of some segment of the population.
  • Applying “necessary resources” means, in practice, a massive number of foreign troops and vast sums of money, far more even than most COIN advocates admit in public. They are especially loathe to do so when those resources are desperately needed at home. (Equally troubling is the application of a massive, costly, long-term effort in one place when those same resources could be applied in pursuit of different – or even the same – national security priorities elsewhere.)
  • Remaining in country “for the long haul” means decades, not years, another bridge too far for most Americans. We are not inclined to lord over others for decades or longer as past empires did.
  • Executing COIN tactics “properly” means limiting the use of force such that you only kill the bad guys but never kill the good guys, or the indifferent neutrals. One unfortunate accident, involving the inadvertent killing of innocent bystanders (who the insurgents will very cynically shield behind) can undermine weeks or months of effort in building trust. We are foreigners in their country, and the locals will be disinclined to give us the benefit of the doubt, or to trust in our good intentions. Though I admire and respect the professionalism and sacrifice of our men and women in uniform, I don’t think it realistic to expect them to be perfect.

Afghanistan, by itself, does not prove that COIN can’t work. COIN might be the appropriate strategy in other cases or other places. But a football analogy is relevant here. Think of the upcoming AFC Championship Game between the New England Patriots and the Baltimore Ravens. A team with two-time MVP Tom Brady at quarterback doesn’t choose to pound the ball into the teeth of a run-stopping defense like Baltimore’s, especially when New England’s running backs are pretty average by NFL standards. Meanwhile, the Ravens’ Ray Rice is one of the premier backs in the league, so we can expect the Ravens to favor the ground game, run time off the clock, and keep Brady on the sidelines. In other words, each team will likely play to its strengths.

COIN skeptics said that Team USA should do the same. Although the COIN advocates claimed that there was no viable alternative, there was more than one way to win the game in Afghanistan, and we should play to our strengths. Our political culture and available resources, combined with the facts on the ground, advise us to avoid open-ended nation-building missions, generally, not just in Afghanistan. That means an air game (including air power from the sea), not a ground game.

I am pleased that the administration’s strategy seems to reflect these lessons. We’ll see, perhaps as early as next week, if their budget does as well.

Cross-posted from the Skeptics at the National Interest.

Tonight on Stossel: Ron Paul, War, and Military Spending

The GOP presidential candidates will participate in yet another debate tonight from South Carolina in anticipation of the primary there on Saturday. I hope that the moderator, CNN’s John King, will bring up some of the major national security issues at hand, namely military spending.

Out of all the GOP contenders, it is clear that Ron Paul is the only candidate still standing that offers an alternative to the entrenched Republican foreign policy views. Some have called his foreign policy positions naïve and outside the mainstream. Others point to the fact that Ron Paul is so popular precisely because he is outside the mainstream and presents a different perspective on the intertwined issues of national security and military spending. Of course, the “mainstream” views on foreign policy are relative: what is common thinking inside the Beltway is not usually representative of the country.

Tonight at 10 PM EST on Fox Business Network’s Stossel, a host of experts will discuss Ron Paul’s foreign policy views, war, and whether the federal government has gone too far in its Constitutional obligation to defend the homeland. I will be discussing military spending and argue that we can cut the Pentagon’s budget and be more secure for it.

FHA and the Foreclosures of Tomorrow

The recently released Federal Reserve White Paper on the Housing Market has received considerable attention, at least for its policy proposals.  I found one of the more interesting pieces of data in the paper to be the number of mortgages with negative equity, reproduced below (Figure 3 in the Fed paper).

What I found both interesting and distressing is that despite the fact that the Federal Housing Administration (FHA) was only about 2 percent of mortgages at the height of the bubble in 2005/2006, FHA is now over a fourth of total mortgages with negative equity.  Of course this was all predictable (I actually predicted it).  If you decide, as did our federal government, to get lots of borrowers into loans with very little equity, at a time when prices are falling, you will create a whole lot of loans with negative equity.  Thank you FHA for creating a mess that was completely 100% avoidable.  But who cares when you’re ultimately just sticking it to the taxpayer, right?

The Citizens United Anniversary

The second anniversary of the Citizens United decision has arrived bringing with it a new poll by The New York Times and CBS News. Question 68 asks whether groups unaffiliated with a candidate should be permitted to spend unlimited sums on advertisements during a political campaign. 67 percent say such spending should be limited; 29 percent say it should not be limited.

Three points here.

First, the majority disagrees not just with Citizens United but also with the basic campaign finance law decision, Buckley v. Valeo, which established that while contributions could be limited, spending could not be restricted under the First Amendment.

Second, it is discouraging but not surprising that freedom of speech in this concrete case does not receive majority support. While majorities support the First Amendment as an abstract symbol, polling has shown for decades that majorities oppose concrete applications of many provisions of the Bill of Rights. It is good, therefore, that a constitutional republic is not just rule of a majority.

Third, the glass is half full. Support for spending unlimited sums on advertisements has increased by 45 percent over the last 15 months (from 20 to 29 percent). The trend is better than the headline number. Moreover, after a few elections, independent spending may become less a partisan issue, thereby adding to the support for free speech by such groups.