For a longer video version of the case against states creating Exchanges, see this somewhat-dated-but-still-relevant Cato video:
For a longer video version of the case against states creating Exchanges, see this somewhat-dated-but-still-relevant Cato video:
The Obama administration had set a deadline of November 16 for states to signal whether they would create their own health insurance “exchanges,” or let the federal government do it.
But the federal government is so desperate to have states do the heavy lifting, and so few states are interested, that for some time (most recently in a National Review Online column that posted yesterday) I have been predicting the Obama administration would push back that deadline. It seems I was right. Well, today’s CQ Healthbeat reports:
The federal government is likely to extend the Nov. 16 deadline for states to decide whether they will run their own health insurance exchanges, according to several state officials. … Instead, HHS officials are expected to set a new deadline for states that want to operate the marketplaces alone but have a rolling deadline with ongoing discussions for states that are interested in a partnership.
What is the difference between a “rolling deadline” and no deadline?
It’s “the REAL ID rebellion“ all over again.
Three states’ ballot initiatives might legalize the recreational use of marijuana this year. To the displeasure of some current and former drug warriors, the Obama Department of Justice is silent on the matter.
Those urging the feds to weigh in, unfortunately, rest their case on some bad reasoning:
But their claim is just not true. Here’s why. Let’s say the feds have a law banning the use of sugar in iced tea. An example of a state law that conflicts with this federal law would be one that requires the use of sugar in iced tea, not a state law that simply permits the use of sugar. A failure to adopt a law that prohibits the same thing the feds prohibit is simply not a conflict.
Another reason the Justice Department may be silent on these state ballot initiatives? President Obama is less popular nationwide than marijuana legalization.
The Washington Post’s Sarah Kliff writes that the Department of Health and Human Services has decided to “punt” on the “monumental” task of dictating exactly what types of coverage those who get health insurance through the individual market or small employers must purchase. HHS has decided to let each state decide for its own residents what constitutes “essential health benefits.” It was a shrewd move: under the guise of decentralized decision-making, HHS is offering to let state officials take the blame for an inevitably controversial decision and the inevitable higher costs that will result. Yay, federalism! States have until the end of this month to decide just how much coverage they are going to help ObamaCare force their citizens to purchase.
Kliff reports that many states are now wrestling with the unanswerable question, “What health-care benefits are absolutely essential?”
Is acupuncture essential health care? Weight-loss surgery? Under Obamacare, states choose…
California legislators say acupuncture makes the cut. Michigan regulators would include chiropractic services. Oregon officials would leave both of those benefits on the cutting-room floor. Colorado has deemed pre-vacation visits to travel clinics necessary, while leaving costly fertility treatments out of its preliminary package…
A Virginia advisory board recommended that the state adopt a plan that includes speech therapy and chiropractic care. A District subcommittee has endorsed a plan pegged to an existing BlueCross BlueShield package, and public comment remains open through Friday Sept. 28…
Of course, an objective definition of “essential” coverage is impossible. Like “medical necessity,” the only way to determine whether health coverage is “essential” is if the benefits exceed the costs. That is an inherently subjective question that no legislator or regulator, state or federal, can or should try to answer for a diverse population of consumers. When they do, health care providers invariably hijack the process, demanding that consumers be required to purchase coverage of their services. Since the legislators/regulators are handing out benefits while consumers and taxpayers shoulder the costs, the result is predictable: health insurance premiums rise.
Thanks to HHS’s punt, providers now have an even greater incentive to lobby states to mandate coverage of their services. If a state creates its own list of “essential health benefits,” then any benefits the state mandates will be eligible for federal subsidies. If not, the cost of state-mandated benefits continues to fall on consumers or employers, who tend to complain. (Again, shrewd. Corrupt and irresponsible. But shrewd.)
But since ObamaCare is on the books, and HHS gave states a choice, what should states do?
The choice is identical to what states face with regard to health insurance Exchanges: states have the option to implement part of ObamaCare themselves, but no matter what they decide, Washington is ultimately running the show.
The federal government will not let states pick a menu of “essential health benefits” or establish an Exchange with fewer regulatory controls than HHS would impose itself. Since less regulation than the federal government would impose is not an option, implementing these parts of the law can only lead to more regulation, fewer choices, and higher costs. And of course, state officials will take the blame when ObamaCare starts increasing costs and denying care to people. There is simply no good reason for states to assume this impossible, harmful, and thankless task.
Instead of doing the feds’ dirty work, states should use this opportunity to show how ObamaCare rigs the game against states and consumers alike. State officials that want to rid the nation of ObamaCare should submit to HHS a “benchmark” EHB plan that they know HHS will refuse. It could be either the most affordable health plan they can find in their individual or small group markets, or a plan that state officials designed themselves. Leave out benefits that HHS considers dealbreakers. Push the deductible as high as you dare. Allow annual or lifetime limits. The less coverage you include in your EHB benchmark, the more choice consumers will have and the lower the premiums will be. Submit such a proposal to HHS and dare them to reject it. Let your voters see that under ObamaCare, choice is a mirage. Dare HHS to explain why they rejected affordable health plans and forced the Treasury to subsidize more-expensive health plans.
Alternatively, state who are not inclined to confrontation can tell the Obama administration the same thing they should say with regard to health insurance Exchanges: it’s your stupid law, you implement it.
Simply stated, I want people to have the freedom to benefit from better tax policy in other jurisdictions, especially since that penalizes governments that get too greedy.
I’m currently surrounded by hundreds of people who share my views since I’m in Prague at a meeting of the Mont Pelerin Society. And I’m particularly happy since Professor Lars Feld of the University of Freiburg presented a paper yesterday on “Redistribution through public budgets: Who pays, who receives, and what effects do political institutions have?”
His research produced all sorts of interesting results, but I was drawn to his estimates on how tax competition and fiscal decentralization are an effective means of restraining bad fiscal policy.
Here are some findings from the study, which was co-authored with Jan Schnellenbach of the University of Heidelberg.
In line with the previous subsections, we find that countries with a higher GDP per employee, i.e. a higher overall labor productivity, have a more unequal primary income distribution. …fiscal competition within a country or trade openness as an indicator of globalization do not exacerbate, but reduce the gap between income classes. …expenditure and revenue decentralization restrict the government’s ability to redistribute income when fiscal decentralization also involves fiscal competition. …fiscal decentralization, when accompanied by high fiscal autonomy, involves significantly less fiscal redistribution. Please also note that fiscal competition induces a more equal distribution of primary income and, even though the distribution of disposable income is more unequal, it is open how the effect of fiscal competition on income distribution should be evaluated. Because measures of income redistribution usu-ally have adverse incentive effects which consequently affect economic growth negatively, fiscal competition might be favorable for countries which have strong egalitarian preferences. A rising tide lifts all boats and might in the long-run outperform countries with more moderate income redistribution even in distributional terms.
The paper includes a bunch of empirical results that are too arcane to reproduce here, but they basically show that the welfare state is difficult to maintain if taxpayers have the ability to vote with their feet.
Or perhaps the better way to interpret the data is that fiscal competition makes it difficult for governments to expand the welfare state to dangerous levels. In other words, it is a way of protecting governments from the worst impulses of their politicians.
I can’t resist sharing one additional bit of information from the Feld-Schnellenbach paper. They compare redistribution in several nations. As you can see in the table reproduced below, the United States and Switzerland benefit from having the lowest levels of overall redistribution (circled in red).
It’s no coincidence that the United States and Switzerland are also the two nations with the most decentralization (some argue that Canada may be more decentralized that the United States, but Canada also scores very well in this measure, so the point is strong regardless).
Interestingly, Switzerland definitely has significantly more genuine federalism than any other nation, so you won’t be surprised to see that Switzerland is far and away the nation with the lowest level of tax redistribution (circled in blue).
One clear example of Switzerland’s sensible approach is that voters overwhelmingly rejected a 2010 referendum that would have imposed a minimum federal tax rate of 22 percent on incomes above 250,000 Swiss Francs (about $262,000 U.S. dollars). And the Swiss also have a spending cap that has reduced the burden of government spending while most other nations have moved in the wrong direction.
While there are some things about Switzerland I don’t like, its political institutions are a good role model. And since good institutions promote good policy (one of the hypotheses in the Feld-Schnellenbach paper) and good policy leads to more prosperity, you won’t be surprised to learn that Swiss living standards now exceed those in the United States. And they’re the highest-ranked nation in the World Economic Forum’s Global Competitiveness Report.
This blogpost was co-authored by Cato legal associate Trevor Burrus.
In 2010, the Supreme Court decided United States v. Bond, a case that seems right out of a soap opera. Carol Anne Bond learned that her best friend was having an affair with her husband, so she spread toxic chemicals on the woman’s car and mailbox. Postal inspectors discovered this plot after they caught Bond on film stealing from the woman’s mailbox.
Rather than leave this caper to local law enforcement to resolve, however, a federal prosecutor charged Bond with violating a statute that implements U.S. treaty obligations under the 1993 Chemical Weapons Convention. Bond pled guilty and was sentenced, but she reserved the right to appeal her conviction on the ground that the statute at issue violates the Tenth Amendment—in that her offense was local in nature and not properly subject to federal prosecution.
She won the first part of that appeal process: The Supreme Court unanimously accepted the argument offered in an amicus brief by Cato and the Center for Constitutional Jurisprudence that there’s no reason in constitutional structure or history that someone can’t use the Tenth Amendment to challenge the constitutionality of the statute under which she was convicted.
On remand to the Philadelphia-based U.S Court of Appeals for the Third Circuit, Bond (now with standing to challenge that law) raised the argument that Congress’s limited and enumerated powers cannot be increased by treaties. We again filed in that case in support of Bond. The Third Circuit disagreed, however—if reluctantly—based on one sentence by Justice Oliver Wendell Holmes in Missouri v. Holland (1920) that has been interpreted to mean that Congress’s constitutional powers can indeed be expanded by treaties.
Writing separately, Judge Ambro agreed that Holland clearly addressed the issue but “urge[d] the Supreme Court to provide a clarifying explanation of its statement” regarding the treaty power. Bond has thus brought her case back to the Supreme Court, asking the Court to clarify and cabin Holland.
In this, our third brief in the case, we are joined again by the Center for Constitutional Jurisprudence in arguing—again based on the work of Georgetown law professor and Cato senior fellow Nicholas Quinn Rosenkranz—that allowing Congress to broaden its powers via treaties is an astounding manner in which to interpret a document that creates a federal government of limited powers. Not only would this mean that the Executive has the ability to expand federal power by signing a treaty, but it would mean that foreign governments could change federal power by abrogating a previously valid treaty—thus removing the constitutional authority from certain laws.
We also point out how the most influential argument supporting Holland is based on a clear misreading of constitutional history that has been repeated without question and that the ruling is in deep tension with other cases. We’re in a constitutional quagmire with respect to the treaty power that can only be escaped by limiting or overturning Missouri v. Holland.
The Court will decide this fall whether to Bond v. United States.
I’ve had it with “American exceptionalism.” Enough already.
The phrase has garnered a considerable amount of attention lately, namely because Republicans are saying it over and over again. The Atlantic points out that the term itself was coined by Joseph Stalin, lamenting America’s inability to go communist (cf. Louis Hartz). Of course, the concept that America was different than Europe goes back at least to Tocqueville, but is it too much to ask that we recall Tocqueville was writing nearly 200 years ago? Might we not pause, at least momentarily, to reconsider the argument from authority and subject it to a bit of scrutiny?
I complained about the pervasive theme at the Republican convention in my podcast yesterday, and Alex Massie holds forth against the exceptionally exceptionalistic speechifying at Foreign Policy today. Republicans—and the rest of us—ought to just shut up about exceptionalism already. As it stands now, a few word substitutions could make Herder or Fichte feel right at home at a GOP convention. We ought not to like this.
Encouraging citizens to reify, then flutter with excitement at the uniqueness of their own “imagined community” lubricates both the administrative capacity of and enthusiasm for the Great American Welfare/Warfare State that is presently bankrupting our unborn children. Those of us who would like a bit more federalism, veering toward sectionalism even, do so realizing that this would create downward pressure on the centralization of our lives in the body of the national government. (“Who is this fellow 2,000 miles away from me and why should I subsidize his career and pay his flood insurance and pension?”) That the disgrace of slavery accompanied the last era of sectionalism in this country is no reason to throw out the concept itself.
Bizarrely, the GOP married this nationalistic theme with an ostensible concern for how America is viewed across the world. Might we not consider that the world finds this constant self-congratulation unseemly and perhaps even dangerous? Imagine your coworker, or neighbor, or spouse, constantly parading about, preening and pronouncing that he is the greatest person ever to have been made and marveling at how lucky are those subject to his ministrations. Any impartial observer would forgive you for nudging him off a pier, and all the more so if he were, in fact, great.
This is perhaps the saddest part of the whole garish spectacle. The United States is a great country. Take a look around you. Saying it over and over again doesn’t make it any more so; in fact it makes it less. All the bleating about our exceptionalism from our leaders is enough to make you think that they don’t really believe it. The party doth protest too much, methinks.
The next time your would-be ruler holds forth about exceptionalism, remind yourself what Mencken said:
Democratic man, as I have remarked, is quite unable to think of himself as a free individual; he must belong to a group, or shake with fear and loneliness—and the group, of course, must have its leaders. It would be hard to find a country in which such brummagem serene highnesses are revered with more passionate devotion than they get in the United States. The distinction that goes with mere office runs far ahead of the distinction that goes with actual achievement.
That’s what this is all about: If we allow the other party or candidate to insert its peculiar and grotesque proboscides into our homes, wallets, and lives—well, we’ll be just that much less exceptional.
Much more in the podcast:
This work by Cato Institute is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 3.0 Unported License.