Tag: affordable care act

Google Co-Founders Sergey Brin & Larry Page: Health Care Regulation Is Blocking Innovation

At a forum sponsored by Khosla Ventures, Google co-founders Sergey Brin and Larry Page discussed the burden of health care regulations in the United States. When asked, “Can you imagine Google becoming a health company?”, Brin responded:

Health is just so heavily regulated, it’s just a painful business to be in. It’s just not necessarily how I want to spend my time. Even though we do have some health projects, and we’ll be doing that to a certain extent. But I think the regulatory burden in the U.S. is so high that I think it would dissuade a lot of entrepreneurs.

Page agreed:

I am really excited about the possibility of data also to improve health. But I think that’s what Sergey’s saying. It’s so heavily regulated, it’s a difficult area…I do worry, you know, we kind of regulate ourselves out of some really great possibilities.

But surely, the United States does not have government-run health care.

The discussion begins at about 29:00.

The More We Learn about ObamaCare, the Less the President Wants to Discuss It

Remember how the more we learned about ObamaCare, the more we would like it? Well, it seems the more we learn about this law, the less President Obama wants to talk about it. He relegated it to just a few paragraphs, tucked away near the end of his latest State of the Union political rally speech. And while he defended the law, he closed his health care remarks by begging Congress not to repeal it, and asking the American people to nag each other into buying his health plans.

My full response to the president’s health care remarks are over at my Forbes blog, Darwin’s Fool. Here’s an excerpt:

Note what the president did not say: he did not say that [Amanda] Shelley would not have gotten the care she needed. That was already guaranteed pre-ObamaCare. If ObamaCare saved Shelley from something, it was health care bills that she couldn’t pay. It’s impossible to know from this brief account just how much that might have been. But we can say this: making health care more affordable for Shelley should not have cost anyone else their job. It may be that ObamaCare doesn’t reduce bankruptcies at all, but merely shifts them from medical bankruptcies to other types of bankruptcies because more people cannot find work.

Read the whole thing.

Actually, I should amend that. Making health care more affordable will cost some people their jobs, and that’s okay. Progress on affordability comes when less-trained people (e.g., nurse practitioners) can provide services that could previously be provided only by highly trained people (e.g., doctors). When that happens, whether enabled by technology or removing regulatory barriers, prices fall – and high-cost providers could lose their jobs. The same thing has happened in agriculture, allowing food prices to drop and making it easier to reduce hunger. My point was that we should not be making health care more affordable for Ms. Shelley by taxing her neighbor out of a job.

“We have to pass the bill to find out what’s in it”

The Affordable Care Act is like a big box of Christmas presents: you keep rummaging around in the peanuts and find hidden treasures. Or hidden costs, as it were. Here’s one I hadn’t heard of until today:

Office workers in search of snacks will be counting calories along with their change under new labeling regulations for vending machines included in President Barack Obama’s health care overhaul law.

Requiring calorie information to be displayed on roughly 5 million vending machines nationwide will help consumers make healthier choices, says the Food and Drug Administration, which is expected to release final rules early next year. It estimates the cost to the vending machine industry at $25.8 million initially and $24 million per year after that, but says if just .02 percent of obese adults ate 100 fewer calories a week, the savings to the health care system would be at least that great.

The rules will apply to about 10,800 companies that operate 20 or more machines. Nearly three quarters of those companies have three or fewer employees, and their profit margin is extremely low, according to the National Automatic Merchandising Association. An initial investment of $2,400 plus $2,200 in annual costs is a lot of money for a small company that only clears a few thousand dollars a year, said Eric Dell, the group’s vice president for government affairs.

“The money that would be spent to comply with this - there’s no return on the investment,” he said.

In my experience, vending machines shuffle their offerings fairly frequently. If the machine operators have to change the calorie information displayed every time they swap potato chips for corn chips, then $2,200 seems like a conservative estimate of costs. But then, as Hillary Clinton said when it was suggested that her own health care plan would bankrupt small businesses, “I can’t be responsible for every undercapitalized small business in America.”

Obamacare’s Atomistic Individualism

Lots of people are engaging in mockery and schadenfreude over the New York Times report that 

Many in New York’s professional and cultural elite have long supported President Obama’s health care plan. But now, to their surprise, thousands of writers, opera singers, music teachers, photographers, doctors, lawyers and others are learning that their health insurance plans are being canceled and they may have to pay more to get comparable coverage, if they can find it.

It’s a liberals’ nightmare:

It is not lost on many of the professionals that they are exactly the sort of people — liberal, concerned with social justice — who supported the Obama health plan in the first place. Ms. Meinwald, the lawyer, said she was a lifelong Democrat who still supported better health care for all, but had she known what was in store for her, she would have voted for Mitt Romney.

It is an uncomfortable position for many members of the creative classes to be in.

“We are the Obama people,” said Camille Sweeney, a New York writer and member of the Authors Guild. Her insurance is being canceled, and she is dismayed that neither her pediatrician nor her general practitioner appears to be on the exchange plans. What to do has become a hot topic on Facebook and at dinner parties frequented by her fellow writers and artists.

“I’m for it,” she said. “But what is the reality of it?”

But I noticed something that I haven’t seen any comments on: the way the Affordable Care Act is forcing people out of group plans and forcing them to enter the health insurance system as individuals:

They are part of an unusual, informal health insurance system that has developed in New York, in which independent practitioners were able to get lower insurance rates through group plans, typically set up by their professional associations or chambers of commerce. That allowed them to avoid the sky-high rates in New York’s individual insurance market, historically among the most expensive in the country.

But under the Affordable Care Act, they will be treated as individuals, responsible for their own insurance policies. For many of them, that is likely to mean they will no longer have access to a wide network of doctors and a range of plans tailored to their needs. And many of them are finding that if they want to keep their premiums from rising, they will have to accept higher deductible and co-pay costs or inferior coverage.

Libertarian scholars stress the importance of civil society. I wrote about it in Libertarianism: A Primer. David Beito wrote a whole book on the mutual aid associations that brought people together in social groups were replaced by “impersonal bureaucracies controlled by outsiders.” Tocqueville and his modern followers extolled the virtues of “mediating institutions” that stood between the lone individual and the all-powerful state.

Now it seems that Obamacare, perhaps unintentionally, is destroying some of those mutual aid organizations, those mediating institutions, in order to force individuals to deal directly with the state and/or the vast insurance corporations.

Left-liberals often accuse libertarians of favoring “atomistic individualism” – an absurd charge about people who regard cooperation as so essential to human flourishing that we don’t just want to talk about it, we want to create social institutions that make it possible. But now it seems we have another example of a big-government, left-liberal policy that is pushing people away from cooperation and community and toward atomistic individualism.

A Conspiracy against Obamacare

A Conspiracy Against Obamacare coverLast week, A Conspiracy Against Obamacare: The Volokh Conspiracy and the Health Care Case was released, of which I am proud to be the editor. The book compiles the discussions and debates about the Affordable Care Act that occurred on the legal blog the Volokh Conspiracy, supplemented with new material. The posts are stitched together into a narrative structure. As a result, you can see the constitutional arguments against the Affordable Care Act develop in real time, from before the law was passed all the way to the Supreme Court. 

The book documents a bellwether moment in the history of legal academia: A legal academic blog influencing major Supreme Court litigation. And not just major Supreme Court litigation, but a case that went from a much derided challenge to the biggest and most watched case in decades. As former Solicitor General Paul D. Clement, who expertly argued the case before the Court, kindly wrote in the foreword, “The Constitution had its Federalist Papers, and the challenge to the Affordable Care Act had the Volokh Conspiracy.”

The contributors are Randy E. Barnett, Jonathan H. Adler, David E. Bernstein, Orin S. Kerr, David B. Kopel, and Ilya Somin, most of whom are closely associated with Cato in one way or another.

In the introduction, I discuss the constitutional arguments against the law in a more abstract way, as well as describe how the law is destined to fail due to poor design. We are seeing the beginning of those failures now, but I fear we ain’t seen nothin’ yet.

It was not much commented on at the time–the administration and the law’s supporters were too busy spiking the ball–but the Supreme Court’s decision will speed up the law’s inevitable failures. As I describe in the introduction:  

Due to the chief justice’s unpredictable opinion, we are now likely stuck with a law that I fear will seriously damage the health of Americans. What’s more, attempts to further centralize power will not stop at the individual mandate. When the law fails, as I predict it will, it will be said that the federal government lacked enough power to make it work. The chief justice’s opinion gives people a real choice whether to comply with the requirement to purchase insurance or pay a “tax.” Many people will not, and as the price of insurance goes up, more and more people will choose to remain uninsured. This will certainly be called a “loophole.” Similarly, the Court also gave states a choice about whether to comply with the Affordable Care Act’s Medicaid expansion. Another “loophole.” Finally, the states that don’t create health care exchanges will also throw wrenches in the law’s overall scheme. “Loopholes” all around. Having freedom of choice in deeply personal health care decisions, however, is not a loophole.

When the time comes to revisit the Affordable Care Act, those choices by free, sovereign entities (citizens and states) will be blamed for the law’s dysfunctions. To paraphrase philosopher Robert Nozick, liberty disrupts patterns. Free choice inevitably upsets the carefully crafted plans of Washington.

As a solution to the law’s problems, more power will be proposed. A few voices, such as many who write for the Volokh Conspiracy and those of us at the Cato Institute, will strenuously argue that the problem is not a lack of power but a lack of freedom. I am not optimistic, however, that very many entrenched bureaucrats and politicians will locate the problem in the mirror rather than in the freedoms of the American people.

If the Affordable Care Act keeps going south at this rate, we may need to prepare to have that debate sooner than we expected. 

New Obamacare Lawsuit Targets Arizona Gov. Brewer’s Illegal New Taxes

In 1992, after seeing their taxes raised 8 times in 9 years, the people of Arizona overwhelmingly approved Proposition 108, a ballot initiative that amended the state constitution to require tax and fee increases to be passed by a 2/3 vote in each of Arizona’s legislative bodies.  Since then, Prop 108’s supermajority requirement has protected Arizona taxpayers from the kind of special-interest-driven tax increases that typically don’t enjoy public support. As a result, Arizona’s tax burden has fallen over the years, to the state’s great economic benefit.

Recently, however, as part of a brazen effort to force through Obamacare’s Medicaid expansion, Governor Jan Brewer – who ran for reelection last year as a staunch opponent of Obamacare – sidestepped Prop 108 in a way that threatens to eviscerate its taxpayer protections and otherwise violate Arizona’s stricter-than-normal adherence to the separation of powers.

Because the Medicaid expansion will cost Arizona an untold sum, and did not receive the 2/3 majority required for it to raise the taxes to pay for itself, Brewer employed more creative means to raise Arizonans’ taxes: delegating the taxation authority to a state bureaucracy and calling it an “assessment.” This approach takes advantage of Prop 108’s exception for “fees and assessments that are authorized by statute, but are not prescribed by formula, amount or limit, and are set by a state officer or agency.” Interpreted Brewer’s way, the exception allows the legislature to delegate a taxing power to state agencies that the legislature itself doesn’t have. If read this way, the exception would forevermore swallow the rule and impose an outcome contrary to Prop 108’s stated purpose.

Accordingly, our friends at the Goldwater Institute last week filed suit in state court on behalf of state lawmakers – including Rep. Adam Kwasman, a good friend of mine who’s now the vice-chair of the Arizona House Ways & Means Committee – and their constituents, challenging the new tax as a violation of Arizona’s constitution and the state’s separation of powers.  Goldwater argues that the hidden tax violates Prop. 108’s supermajority requirement for new taxes, and that Arizona’s strict separation of powers prohibits the delegation of taxing power to an unaccountable state bureaucracy.

Goldwater is clearly in the right. Prop 108 was adopted for the plain purpose of preventing precisely this type of special interest tax-and-spend behavior – behavior the people of Arizona will be even less able to oppose if state courts determine that a bare legislative majority can delegate taxation power that it doesn’t itself possess. Brewer’s Medicaid expansion, meanwhile, threatens to take the taxing power out of Arizonans’ hands and give it to bureuacrats and the special interests that lobby them.

It will be a shame if Arizona courts permit Brewer’s newfound insistence on enabling Obamacare to effectively neuter a constitutional provision supported by more than 70% of voters. For more commentary on the case, read Josh Blackman.

This blogpost was co-authored by Cato legal associate Julio Colomba.

Might the Washington Post Be Partial to ObamaCare?

Here’s a poor, unsuccessful letter I sent to the editor of the Washington Post:

Thirty-two states have issued a stunning vote of no confidence in President Obama’s health care law by refusing to finance and operate the new regulatory bureaucracies (“exchanges”) at its core. This development threatens to delay implementation of the law, at the very least.

Post readers learned of this once-unimaginable rebuke in an article that gave top billing to those states’ critics [“Critics Slam GOP States over Health Exchanges,” Dec. 14, A1]. The article further claimed, “there’s no question that federal officials will wield substantially more power” in those states, when in fact that highly disputed opinion is at the center of the entire debate.

This followed an article hailing an Obama administration decision to abandon a measure designed to reduce federal Medicaid spending as a “silver lining” [“A Supreme Court Silver Lining?: How Medicaid Dodged the Deficit Debate,” Dec. 12]. The article quoted six sources who supported the administration’s move, but none of the administration’s critics.

Post readers would be better served by less partial health policy coverage.

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