Archives: 11/2014

Drugs for the Deceased

Medicare fraud is rampant. The Government Accountability Office (GAO) estimates fraud compromises 8 percent of total expenditures, or $44 billion annually. Outside estimates are as high as $120 billion. A recent report from the Department of Health and Human Services Inspector General highlights just one of the many examples of waste, fraud, and abuse within the system: Medicare paying for drug coverage of deceased beneficiaries.

Medicare Part D provides prescription drug coverage to 39 million seniors costing taxpayers $59 billion annually, net of premiums paid by seniors. In 2013 Medicare paid for 1.2 billion prescriptions.

The Inspector General’s report details the fraud: “In 2012, Medicare paid for 348 HIV [human immunodeficiency virus] drugs for 158 deceased beneficiaries. The total cost for these drugs was $292,381.” The report studied HIV drugs as they are targets for abuse since they are so expensive.

These drug claims were not isolated instances. The IG found “each of the 158 beneficiaries had between 1 and 6 drugs dispensed after the date of death; most beneficiaries had at least 2.” Medicare spent $7,160 for three prescriptions for one patient’s drugs in Florida. They were approved on two separate occasions after his death. Medicare approved three prescriptions for a patient in Michigan costing $5,616.

Approvals occur because of a delay in receiving information about a beneficiaries death. This results in a period where the recipient is dead, but Medicare’s system still consider the patient to be alive.

This is not the first time that the Inspector General has criticized Medicare’s handling of deceased beneficiaries. In 2011 the Inspector General found that Medicare Part C and D paid $21 million for claims by deceased beneficiaries.

The Inspector General acknowledged that the total amount of fraud was miniscule compared to total Medicare spending. HIV drugs represent just one-quarter of one percent of Part D prescriptions. But the approval process is the same for all Part D drugs meaning other drugs are also vulnerable to improper payments for deceased individuals. The report says “A change in CMS’s practice would affect all Part D drugs, not just HIV drugs. Considering the enormous number of Part D drugs, a change in practice could result in significant cost savings for the program and for taxpayers.” An estimate of cost savings is not included, but it would likely be in the millions.

Medicare does plan to fix the system for dead beneficiaries, but with billions  wasted on Medicare every year, stopping the tide of improper payments seems unlikely without major structural reform of the program.

Government Shutdown Theater: Republicans Should Not Surrender to Obama’s Blackmail

Notwithstanding the landslide rejection of Obama and his policies in the mid-term election, I don’t think this will produce big changes in policy over the next two years.

Simply stated, supporters of limited government do not have the votes to override presidential vetoes, so there’s no plausible strategy for achieving meaningful tax reform or genuine entitlement reform.

But that doesn’t mean that there won’t be important fiscal policy battles. I’m especially worried about whether we can hold on to the modest fiscal restraint (and sequester enforcement) we achieved as part of the 2011 debt limit fight.

Scaring Students For Their Own Good

“I thought he was going to shoot me.”

That’s the text message that a mother received from her terrified child at Jewett Middle Academy in Winter Haven, Florida. But the child wasn’t describing a psychotic school shooter. It was a drill. As the local CBS affiliate reported:

Students at Jewett Middle Academy said they were terrified when police officers burst in the doors for a planned active shooter drill – but students and teachers are irked they were not told ahead of time.

Seventh-grader Lauren Marionneaux told WTVT-TV that when the officers burst into her class with an AR-15, she was in fear for her life.

“We actually thought that someone was going to come in there and kill us,” the station quoted her as saying.

In the wake angry protests from parents, students, and teachers, school officials explained that the secrecy surrounding the drill was necessary for the students’ safety:

“Unfortunately, no one gets an advanced notice of real life emergencies,” Polk County Public Schools spokesman Jason Gearey said in an e-mailed statement to The Washington Post. “We don’t want students to be scared, but we need them to be safe.”

They don’t want students to be scared, but unannounced active shooter drill is guaranteed to scare kids. Moreover, as Lenore Skenazy points out, such drills could actually put people in danger:

Of course, the authorities neglected to notice that no one sets the school on fire to create more realistic fire drills. Nor do they drag in giant wind machines to replicate the feel of an impending tornado.

The fear that teachers might suffer heart attacks, that kids might experience psychotic breakdowns, that someone with his own weapon might shoot real bullets in defense—none of that seemed to occur to our peacekeepers. Nor did the notion that distraught parents might race frantically to the school, endangering anyone in their path.

No, these cops were so focused on the most horrific, least likely crime that nothing else mattered.

School shootings are every parent’s worst nightmare, but fortunately they are exceedingly rare. As I explained back in September, fewer than one in 10,000 schools have had a shooting in the last two years, and fewer than one out of every 2,273,000 students per year are killed at school including all types of violence, not just shootings. By contrast, according to National Geographic, the odds of being hit by lightning in a given year is one out of 700,000.

Some experts have also questioned the efficacy of unannounced active shooter drills. In the Wall Street Journal, a former SWAT officer who conducts seminars to teach civilians how to deal with mass-shooting scenarios panned the idea: “There ends up being zero learning going on because everyone is upset that you’ve scared the crap out of them.” The Journal also reported several other instances of drills gone awry. In one drill at a nursing home, a police officer posing as an armed intruder forced a nurse into an empty room at gunpoint where “she tearfully begged for her life.” She was so traumatized that she quit her job. Other drills also left civilians traumatized or even physically injured:

The confusion that sometimes ensues during drills also can have unintended consequences. In March, a teacher in Boardman, Ohio, filed a lawsuit against local police and school officials, claiming he was unexpectedly tackled by a police officer during a drill at a high school, seriously injuring his hip and shoulder.

Jesse McClain, 60 years old, had volunteered to participate and was playing the role of a “panicked parent” when the officer tackled him without warning, his lawyer, John O’Neil, said. Boardman Township’s police chief and the superintendent of the town’s school district declined to comment on the incident, citing the lawsuit.

In Florida, a woman filed a complaint in March with state officials on behalf of her sister, a Fort Walton Beach nurse, over a drill at an Okaloosa County Health Department office. According to the complaint, employees weren’t informed about the drill, which involved a police officer firing blanks, and many were “hysterical, crying and shouting.”

As with fires and other hazards, it is important for schools to be prepared for an emergency. But policymakers must keep things in perspective. Keeping kids safe does not require terrifying them.

Interpreting Obama’s Immigration Executive Order

President Obama will soon announce an executive action to defer the deportations of somewhere between 1 million and 4.5 million unauthorized immigrants. Those whose deportations are deferred will be eligible for a temporary work permit through a 1987 provision in the Code of Federal Regulations.

Those who support immigration reform note that any executive action by the President will poison the well for reform, making it impossible for Congress to move piecemeal bills to the President’s desk.  Last year, one of the most effective arguments against immigration reform was that President Obama would not enforce the law as written, a prediction that seems to be borne out with this executive action.  The Wall Street Journal editorial board said it the best:

If he does issue an executive order, we hope Republicans don’t fall for his political trap.  He and many Democrats want Republicans to appear to be anti-immigrant.  They want the GOP to dance to the Steve King-Jeff Sessions blow-a-gasket caucus.

To poison the well of reform there actually had to be water in the well to begin with. I’m not convinced there was.  If there was a serious Congressional effort to reform immigration in the immediate future, then the President’s actions here would totally derail it.

Today in Cato’s Online Forum on Growth

The Cato Institute’s special online forum on reviving growth (see here for more details) continues today with the following four essays:

1. Dean Baker argues for free trade in doctors and drugs – by eliminating immigration restrictions and patent protection.

2. Jim Manzi also calls for more high-skill immigration, as well as visionary investments in scientific research and technology projects.

3. Jonathan Rauch proposes a national apprenticeship system.

4. Philip K. Howard makes the case for radical simplification of law.

Supreme Court Should Remove Kafka-esque Burden to Vindicating Property Rights

In order to create better telecom infrastructure, New York state law gives private telecom firms the power to take private property in exchange for just compensation. Verizon used this power to build terminal boxes on thousands of pieces of private property, thus essentially permanently occupying a part of the properties. Verizon is one of a few companies that enjoy this extraordinary, state-granted privilege to build things on other people’s property without their permission.

Those companies, however, must compensate the owners (at least theoretically) for these sorts of takings of property. Kurtz v. Verizon New York, Inc. arises from a putative class action alleging that Verizon failed to compensate 30,000-50,000 property owners for building terminal boxes on their property. Although Verizon is required to give property owners their “full compensation rights,” the plaintiffs argue that the company continuously flouts this requirement “as a matter of corporate policy and practice,” thus violating both the plaintiffs’ rights to procedural due process—for example, by not even notifying them that their property was being taken—and their Fifth Amendment rights to not have their property taken for public use without just compensation.

The U.S. Court of Appeals for the Second Circuit, however, ruled that the plaintiffs couldn’t proceed with their claims because of a case called Williamson County Regional Planning Commission v. Hamilton Bank of Johnson City (1985), in which the Supreme Court ruled that plaintiffs with takings claims have to seek relief from state courts before proceeding with a federal claim. Otherwise, the case will be dismissed for being not “ripe”—not ready for a federal court to hear the case.

Although this may seem like a small hoop-jumping exercise, this procedural requirement creates an unnecessary and burdensome extra step that can prevent many plaintiffs from ever having their takings claims heard in federal court. No other enumerated constitutional right has a similar requirement. Plaintiffs claiming a First Amendment violation, for example, don’t first have to exhaust their case in state courts.

The plaintiffs are now petitioning the Supreme Court to review the continuing relevance of Williamson County. In a brief supporting the petition, Cato, joining the Pacific Legal Foundation, argues that takings claims are ripe when the taking occurs, not after a plaintiff has gone through the state courts. Moreover, we point out that Williamson County, when combined with other rules of civil procedure, has actually prevented many claimants from ever bringing a case.

After exhausting their claims in state courts, some plaintiffs find that federal courts will dismiss their case on the ground that the matter has already been decided (what lawyers call res judicata, or “judged matter”). Other times, defendants will ask the judge to move the case from state court to federal court and then, once the case is in federal court, will argue that the plaintiffs did not exhaust their claims in state court (which of course they couldn’t have done because the defendants removed the case).

This Kafka-esque system is not the way to properly vindicate constitutional rights, and it’s certainly not what the Supreme Court imagined when it decided Williamson County. The Court should take this case to remove an unnecessary and harmful barrier to the protection of private property. 

You Ought to Have a Look: U.S./China Agreement, Moral Case for Fossil Fuels, Natural Variability

You Ought to Have a Look is a feature from the Center for the Study of Science posted by Patrick J. Michaels and Paul C. (“Chip”) Knappenberger. While this section will feature all of the areas of interest that we are emphasizing, the prominence of the climate issue is driving a tremendous amount of web traffic. Here we post a few of the best in recent days, along with our color commentary.

The big news of the week was the “historic” (in President Obama’s words) climate agreement between the U.S. and China—but about the only “historic” thing about it was the hype the White House and environmental groups heaped upon it.  In actuality, there was very little new news. The emissions reduction pathway that Obama announced for the U.S. was not much different (actually a teense lower) than the one announced after the (failed) U.N. Copenhagen meeting in 2009, and China agreed to…well, it’s unclear to what they agreed. NBC News reported “China intends to begin to halt the rise in CO2 emissions by around the year 2030.” Try that line (inserting your own specific vice) on your significant other and see how it goes over.

A good article in Reuters by John Kemp nicely eschews the hype and looks more closely at the facts.  He opening paragraph reads:

Nov 12 (Reuters) - The joint statement by the United States and China on climate change, issued on Wednesday, is more important for its political and diplomatic symbolism than any practical effect it might have in reducing emissions.

Both Kemp’s article and our article on the announcement are worth having a look at to see what the agreement really entails, and its chances at success (spoiler alert: they aren’t good).

Another big news item this week—or at least it should have been—was the release of Alex Epstein’s remarkable book The Moral Case for Fossil Fuels. We can’t say enough good things about this book—and we try often! You may have seen our glowing review on these pages yesterday along with some provocative text provided by Alex that cuts to the basic premise of the book—that the societal pros of fossil fuel use far, far exceed the cons, and therefore, it is, well, immoral, to try to restrict their usage and further development. This week Alex also hosted a Reddit AMA (“ask me anything”) to allow internet savvy folks to interact with him directly as ask questions about his new book and his general way of thinking.  Alex entertained many interesting questions, for example:

Question:  What should be the role of government with respect to pollution? Should it ban pollution? Limit it? Tax it?

Answer: Good question, the subject of chapter 7 “Minimizing Risks and Side-Effects.” The basic principle is that we should think of it in terms of individual rights. At a certain threshold of emission someone is polluting your person or property and should be forbidden to do so. But certain threshold is important and contextual based on the state of technology. So in the 1800s people should have been allowed to use the coal plants they did but we shouldn’t today. If something is fundamentally necessary to human life it’s not pollution. There’s a lot of complexity in application but that’s the framework I use.

If you want to see all that transpired in this lively round of questioning is archived here.

And finally, our friend, the ever-informative Dr. Roy Spencer has a good post up over at his blog looking at what really are the biggest influences on the climate during the timescale of our lifetime. What does he find? Why natural variability, of course! He takes us through a couple of the most influential natural sources of variability and the possible drivers behind them. Here is some insight from Roy:

But statistics aren’t enough. Since we understand that carbon dioxide is a greenhouse gas, and should cause some warming, but we don’t understand natural climate cycles, scientists only look where the streetlight of government funding illuminates the problem: CO2.

What complicates policymaking even further is that what motivates public perceptions and thus decision makers the most are weather events. Hurricane Sandy. A snowy winter. We end up blaming these on the only thing we thing we think we understand — increasing CO2 should cause some change, so it must be responsible for all of the change we see…

To the extent that human-caused warming is occurring, I am increasingly convinced it is a largely benign — and possibly beneficial — needle lost in the haystack of Mother Nature’s natural climate gyrations.

You ought to have a look at the rest of Roy’s article, which can be found here.