Tag: consumer

Mr. President, Here Is Our Answer

President Obama continues to portray the debate over health care reform as a choice between his plan for a massive government-takeover of the US healthcare system and “doing nothing.”  Those who oppose his plan are said to be “obstructionist” or in favor of the status-quo.  Yesterday, the President again said, “I’ve got a question for all those folks [who oppose his plan]: What are you going to do? What’s your answer? What’s your solution?”

Well, I can’t speak for all his critics, but the Cato Institute has a long record of supporting health care reform based on free-markets and competition.  If the President wanted to know more he might have read my recent op-ed in the Los Angeles Times or Michael Cannon’s piece in Investors Business Daily.  He could have read our book, Healthy Competition.  Or he might have just gone to healthcare.cato.org and read our plan:

  • Let individuals control their health care dollars, and free them to choose from a wide variety of health plans and providers.
  • Move away from a health care system dominated by employer-provided health insurance. Health insurance should be personal and portable, controlled by individuals themselves rather than government or an employer. Employment-based insurance hides much of the true cost of health care to consumers, thereby encouraging over-consumption. It also limits consumer choice, since employers get final say over what type of insurance a worker will receive. It means people who don’t receive insurance through work are put at a significant and costly disadvantage. And, of course, it means that if you lose your job, you are likely to end up uninsured as well.
  • Changing from employer to individual insurance requires changing the tax treatment of health insurance. The current system excludes the value of employer-provided insurance from a worker’s taxable income. However, a worker purchasing health insurance on their own must do so with after-tax dollars. This provides a significant tilt towards employer-provided insurance, which should be reversed. Workers should receive a standard deduction, a tax credit, or, better still, large Health Savings Accounts (HSAs)  for the purchase of health insurance, regardless of whether they receive it through their job or purchase it on their own.
  • We need to increase competition among both insurers and health providers. People should be allowed to purchase health insurance across state lines. One study estimated that that adjustment alone could cover 17 million uninsured Americans without costing taxpayers a dime.
  • We also need to rethink medical licensing laws to encourage greater competition among providers. Nurse practitioners, physician assistants, midwives, and other non-physician practitioners should have far greater ability to treat patients. Doctors and other health professionals should be able to take their licenses from state to state.   We should also be encouraging innovations in delivery such as medical clinics in retail outlets.
  • Congress should give Medicare enrollees a voucher, let them choose any health plan on the market, and let them keep the savings if they choose an economical plan. Medicare could even give larger vouchers to the poor and sick to ensure they could afford coverage.
  • The expansion of “health status insurance” would protect many of those with preexisting conditions. States may also wish to experiment with high risk pools to ensure coverage for those with high cost medical conditions.

Mr. President, the ball is back in your court.

Mortgage Mods: Congressman Prefers Coercion over Cooperation

The recent focus in Washington on mortgage modifications once again illustrates one of the most fundamental flaws in current political debate:  the notion of using government to threaten or force the “voluntary” transfer of wealth from one group of citizens to another.

Just this week Rep. Barney Frank warned the banking industry if they don’t “voluntarily” do more to reduce foreclosures, Congress will step in and make them do so, by allowing bankruptcy judges to re-write mortgage contracts.  This proposal is really nothing more an ex poste transfer of wealth from investors in mortgage backed assets to borrowers.

Of course, Rep. Frank and others respond that they are only trying to “bring lenders to the table” in order to keep negotiations going.  In the words of many “consumer” advocates, this is just a “stick” to the motivate the lenders.  I could think of few things more offensive to a free society.  In a government truly constituted on the notion of the common good or general welfare, it would be no more appropriate to use the stick of the state on lenders than it would be on borrowers.  Government quite simply should not take sides in purely private disputes. 

One would think that if anyone could understand the principle that government should not interfere in the private, voluntarily entered relationships of consenting adults, it should be Mr. Frank.

Don’t Fear the Freedom, Higher Ed!

It’s not often that I can transition from my education beat to other hot topics, but an Inside Higher Ed story on colleges’ health-care benefits includes this little nugget:

One trend documented in the survey that may concern many employees is the increase in “consumer driven” health insurance plans by colleges. These typically involve employees setting up tax-free accounts to pay for some care, and then high deductibles for major medical expenses. This year, 17 percent of colleges were offering the plans, up from 11 percent two years ago.

So what’s so terrible about “consumer driven” health care, which from the article sounds like health savings accounts ? The story doesn’t say – nor does it give any details on who puts the money into the accounts or other minimally useful info – it just suggests that employees should be a little scared of controlling their own health care funds. 

Unfortunately, this kind of reflexive fear of markets and freedom is a hallmark of both education and health care debates, so this thoughtless little passage hardly comes as a surprise. But I want to help Inside Higher Ed: If you folks want to be informed next time you cover health care, give these guys a call. They’ll be more than happy to help you, just as I am with all of your education-related needs!

Operators, as they say, are standing by…

Does the Left Know We Had a Housing Bubble?

Over the last week, speaking at a variety of events, I heard three different representatives of the Left; first a Democrat US Senator, then a senior member of the Obama Administration, and finally a “consumer” advocate, all repeat the same narrative:  all was fine in the housing market until predatory lenders forced hard-working honest families into foreclosure, which reduced house prices, bringing the economy to a crash.  That’s correct, apparently the Left believes we all would still be seeing double-digit home price appreciation if it wasn’t for those evil lenders.

Undoubtedly foreclosures, especially those that result in houses that remain vacant for a considerable amount of time, have an adverse impact on surrounding property values.  Many constitute a serious eye-sore and provide a haven for criminal activity.  But did foreclosures really drive down prices, or were foreclosures first driven by price declines resulting from a bursting housing bubble?  While causality is always difficult to establish with certainty, we do know that the rate of house price appreciation peaked and started declining about 18 months before the dramatic up-turn in mortgage delinquencies.  If one prefers a more rigorous test, economists at the Boston Fed have directly tested if prices first drove foreclosures or whether foreclosures drove prices.  Their results conclude that its was declining prices that matter, and that the price effect of foreclosures is minimal.

Why does any of this ultimately matter?  Because if we craft policies to avoid the adverse impacts of the next property bubble based upon a narrative of “consumer protection” – as is being pushed by the Obama Administration, we will do little to avoid the creation of the next housing bubble and its damaging aftermath.  Instead we should be focusing attention on those policies that contributed to the creation of the housing bubble: expansionary monetary policy and the Federal government’s blind pursuit of ever-expanding home-ownership rates at any cost.

Good News: Health Care Express Slows

Health care “reformers” (meaning those who want to effectively nationalize America’s medical system) have long understood that their best hope in the new political environment is to ram through legislation with the claim that it is an emergency and won’t wait.  The longer the American people think about the increased cost, decreased choice, and other negative impacts of a a government takeover, the less likely they are to support it.

Thankfully, the government health express has slowed noticeably in recent weeks.  Even supporters are coming to doubt that legislation can be approved before Congress goes home in August.  Reports Politico:

Health care reform proponents are growing pessimistic that they can meet President Barack Obama’s August target for passing a bill — saying the next four weeks must fall together perfectly, without a hitch or a hiccup.

The number of weeks that’s happened recently? Zero.

A series of setbacks has made the task of completing floor votes in both chambers virtually insurmountable, given the plodding pace of the Senate. The official line from the White House and the congressional leadership is it’s possible, but privately, there are a dwindling number of aides who would put money on it.

And without a deal by August, the ripple effects could start to endanger the prospect of health care reform this year altogether — chief among them, the closer it gets to the 2010 midterm elections, the harder it will be to get members to make the toughpolitical decisions needed to vote on a bill.

This is good news.  The U.S. health system needs fixing.  But the more rushed they are, the less likely policymakers are to do the right thing.  We need a medical system that is more responsive to consumers and market forces rather than to political forces and government dictates.

The European Union Stops Banning Ugly Veggies

The European Union has helped create a continental European market and knock down protectionist barriers, which is good.  But it also has created another opportunity for meddling bureaucrats to interfere with people’s lives. 

Now consumer protests have led to at least one victory for liberty.  Reports London’s Sun newspaper:

Now the European Commission has finally scrapped the 20-year ban on 26 types of fruit and veg including asparagus, celery and aubergines.

They ruled they can now be sold - as long as they are labelled as “intended for processing”.

Sainbury’s spokeswoman Lucy Maclennan said: “We are delighted to have played a part in winning the wonky veg war against these bonkers EU regulations.”

Tesco spokesman Adam Fisher said: “It’s not before time. We welcome this move.”

And last night it was predicted the change could see some prices fall by 40 PER CENT.

A Commission official said: “Times have changed - now household budgets are tighter and there is the problem of wasting food.”

One bad regulation down.  Who knows how many to go?

Cato on Health Care Reform

We are now facing some of the most sweeping changes health care has seen in decades. Reform is needed, but increasing government control over one-sixth of the economy and over important personal and private decisions – as many of the proposals aim to do – would harm American taxpayers, health care providers, and patients.

This week, the Cato Institute launched Healthcare.Cato.org, which highlights Cato’s contributions to the health care debate. The resources provided on the site provide in-depth analyses of health care issues and reform initiatives, and underscore the ways in which free-market reforms, increased consumer choice, and energized competition – not more government control – improve the quality and cost-efficiency of health care.

Please check back regularly for updates and new resources!

Update: The Cato Institute Conference on Health Care Reform will be Webcast live from 9:00-5:00 PM Wednesday.

Featured speakers:

  • Rep. Paul Ryan (R-WI)
  • Rep. Michael C. Burgess, M.D. (R-TX)
  • Rep. Jason Altmire (D-PA)
  • Karen Davenport, Director of Health Policy, Center for American Progress
  • Douglas Holtz-Eakin, Former Director, Congressional Budget Office, and Director of Domestic and Economic Policy for the McCain presidential campaign
  • Tom G. Donlan, Barron’s
  • Karen Tumulty, Time Magazine
  • Susan Dentzer, Health Affairs
  • John Reichard, Congressional Quarterly

Full schedule of events and Webcast, here.