Tag: Obamacare

Why Ryan-Rivlin Beats ObamaCare on Costs — and Spending

Washington Post blogger Ezra Klein asks of Rep. Paul Ryan’s (R-Wisc.) Medicare voucher proposal (co-authored with former Congressional Budget Office director Alice Rivlin):

Why are the cost savings in his bill possible, while the cost savings in the Affordable Care Act aren’t?…when it comes to the ACA, Ryan firmly believes that seniors will quickly and successfully force Congress to reverse any reforms that degrade their Medicare experience. That’s a fair enough concern, of course. What’s confusing is why it isn’t doubly devastating when applied to Ryan-Rivlin.

Set aside that Klein violates Cannon’s First Rule of Economic Literacy: Never say costs when you mean spending.  And that he uses the word “affordable” to describe ObamaCare.

There are two reasons why the Medicare spending restraints in the Ryan-Rivlin proposal are more likely to hold than those in ObamaCare.

First, ObamaCare’s restraints amount to nothing more than ratcheting down the price controls that traditional Medicare uses to pay health care providers.  Structuring Medicare subsidies in this way – setting the prices that Medicare pays specific providers – makes it very difficult to lower those prices, because the system itself creates huge incentives for providers to organize and lobby to undo those restraints.  As I explain more fully in this op-ed from September 2010, Medicare vouchers would change that lobbying game by reducing the incentives for provider groups to expend resources in the pursuit of higher Medicare spending.  That gives the Ryan-Rivlin restraints a much better shot at surviving.  (Seriously, it’s a pretty cool feature.)

Second, Klein predicts a backlash against Medicare vouchers because he says it amounts to “giving seniors less money to purchase more expensive private insurance.”  The notion that Medicare is less costly than private insurance is pure, uninformed nonsense.  Medicare and a “public option” are attractive to the Left precisely because such programs hide the full cost of their operations from enrollees and taxpayers.  It is a virtue of vouchers that they would reveal to Medicare enrollees the actual prices of the coverage and services they demand, because that information will spur enrollees to be more cost-conscious when selecting a health plan and consuming medical services.  That, in turn, will force insurers and providers to compete on the basis of cost to a degree never before seen in this nation, competition that will generate the sort of cost-saving innovations that Jim Capretta discusses here.

Both of these reasons boil down to the truism that nobody spends other people’s money as carefully as they spend their own.  We’ll make a lot of progress in this country when the Left realizes how much damage they’ve done by ignoring that truism.

Fixing the Economy Demands More Than a Stroll across Lafayette Park

President Obama’s visit with the Chamber of Commerce this week has infuriated the anti-business Left.  But short of expropriation and nationalization, what doesn’t? 

Robert Reich and NPR and the scribes at the Huffington Post just don’t get it.  Their man may be in the White House, but business holds the keys to the kingdom.  Whether the president’s priority is job creation or reelection, nothing matters more than sustained economic growth. And without business having confidence that policy in the United States will become more hospitable and predictable, investment and job creation will remain tepid.

The president doesn’t have nearly the leverage assumed in the delusions of groups like Public Citizen, which wrote: “What America needs is not olive branches to giant corporations but controls over the companies that sank the economy.”  Back here in reality, businesses have options.  Many can choose to produce and operate in other countries, where the economic environment may be more favorable.  In that regard, globalization has produced a veritable Galt’s Gulch, which serves as an important check on bad economic policy.  Governments are now competing with each other to attract the financial, physical, and human capital necessary to nourish high value-added, innovation-driven, 21st century economies.  Gratuitously punitive anti-business policies will only chase away the companies that the president exhorts to invest and hire.

According to a survey of 13,000 business executives worldwide, conducted by the World Economic Forum, 52 countries have less burdensome regulations than the United States.  Add to that the fact that the United States has the highest corporate tax rate among all OECD countries and it becomes less mysterious why U.S. businesses shift more operations abroad.

As I wrote in a December 2009 Cato paper:

Governments are competing for investment and talent, which both tend to flow to jurisdictions where the rule of law is clear and abided; where there is greater certainty to the business and political climate; where the specter of asset expropriation is negligible; where physical and administrative infrastructure is in good shape; where the local work force is productive; where there are limited physical, political, and administrative frictions.

This global competition in policy is a positive development.  But we are kidding ourselves if we think that we don’t have to compete and earn our share with good policies.  The decisions we make now with respect to our policies on immigration, education, energy, trade, entitlements, taxes, and the role of government in managing the economy will determine the health, competitiveness, and relative significance of the U.S. economy in the decades ahead.

The president is beginning to get it – though grudgingly.  He acknowledges the burdens of excessive and superfluous regulations and bureaucracy (remember his SOTU story about the jurisdictions entangled in the salmon’s journey from salt water to fresh water to the smoker?).  The president has hinted that he would like to see the corporate tax rate lowered.  He knows that businesses have options to invest, produce, and hire abroad—and that oftentimes U.S. policy chases them there.  But, so far, rather than push policies to encourage domestic investment, production, and hiring, the president has done the opposite, while demonizing businesses that follow the incentives to go abroad.

The president’s position during his exchange at the Chamber of Commerce was that he has made concessions to business by moving toward the center on tax and trade policy, and that now it is time for business to show good faith by investing and hiring.  But Obama’s small steps toward the center come after two years of sprinting to the left on economic policy.  After ObamaCare, Dodd-Frank, taxpayer bailouts, unorthodox and legally-questionable bankruptcy procedures, subsidies for select industries, Buy American and other regulations governing how and with whom “stimulus” dollars could be spent, and the administration’s tightening embrace of industrial policy, businesses want a more quiet, less intrusive, less antagonistic, predictable policy environment before they will feel comfortable playing the role Obama wants them to play.

Until that happens, the president shouldn’t expect torrents of investment and hiring from the business community.

‘1099’ Repeal Speaks Volumes About ObamaCare

From my latest Kaiser Health News op-ed:

When 34 Senate Democrats joined all 47 Republicans last week to repeal ObamaCare’s 1099 reporting requirement, their votes confirmed what their talking points still deny: ObamaCare will increase the deficit, no matter what the official cost projections say…

This public-choice dynamic [of concentrated benefits and diffuse costs] is why the Congressional Budget Office, the chief Medicare actuary, and even the International Monetary Fund have discredited the idea that ObamaCare will reduce the deficit. It is one of the principal reasons why, as Thomas Jefferson wrote, “The natural progress of things is for liberty to yield, and government to gain ground.” In other words, the game is rigged in favor of bigger government.

It also explains why the Obama administration is sprinting to implement ObamaCare in spite of a federal court having struck down the law as unconstitutional. The White House needs to get some concentrated interest groups hooked on ObamaCare’s subsidies – fast.

Read the whole thing here.

Responding to Akhil Amar on Obamacare

Yale law professor Akhil Amar, one of the nation’s leading constitutional scholars and a “progressive originalist” of sorts – he joined with Randy Barnett and others on a brief supporting our view of the Privileges or Immunities Clause in the McDonald case – had a fiery op-ed about Judge Vinson’s decision in the Sunday L.A. Times.  More than fiery; I’d say intemperate, uncharacteristically so for the mild-mannered Prof. Amar.

Here’s an excerpt:

There is nothing improper in the means that Obamacare deploys. Laws may properly regulate both actions and inactions, and in any event, Obamacare does not regulate pure inaction. It regulates freeloading. Breathing is an action, and so is going to an emergency room on taxpayers’ nickel when you have trouble breathing.

I was all set to respond when I saw that Tim Sandefur had beat me to the punch on PLF’s blog.  Here’s an excerpt of that:

Instead [of offering a limiting principle to federal power if the individual mandate passes constitutional muster], he resorts to the saddest of rhetorical tricks–accusing the judge of being like Roger Taney in Dred Scott. Lawyers should have their own “Godwin’s Law”: whoever is first to accuse the judge of being like Dred Scott loses the argument. Amar starts out by saying his students know more about the Constitution than Judge Vinson, but what I wonder is whether Amar’s students will, like their teacher, use false analogies, set up straw men, ignore their opponents’ arguments, and resort to the equivalent of childish name-calling.

Good on ya, Tim!  Read the whole thingDavid Bernstein and Ilya Somin have similarly chimed in, and similarly cited Tim.

One thing for which I will commend Amar is his adoption of the term “Obamacare.”  I’ve never understood how this is a pejorative (unless said with a sneer, but by that standard anything can be pejorative). The one semi-accurate criticism I’ve heard is that the law was mostly written by Congress, not the White House – for which the president got plenty of heat.  But that just means it would be better to call it Pelosi-Reid-care, which presumably is no more or less pejorative.  In any event, that ship has sailed: Obamacare this abomination (note I didn’t say “Obamination”) will remain.

After Florida, What’s to Be Done about ObamaCare?

Uncertainty over the practical effect of Judge Roger Vinson’s decision on Monday that ObamaCare is unconstitutional in its entirety continues to swirl all across the country. The day after the decision came down, as I noted here on Wednesday, Wisconsin Attorney General J.B. Van Hollen, one of the parties to the suit, issued a statement saying: “This means that, for Wisconsin, the federal health care law is dead,” and his state “was relieved of any obligations or duties” to carry out the statute. And just today Alaska’s Governor Sean Parnell asked his attorney general to advise him on whether implementing and enforcing the federal healthcare overhaul would put Parnell in violation of his oath of office. He told reporters that he took an oath to support and defend the constitutions of the United States and Alaska, adding that he has a duty to uphold the law. Other governors and state AGs, to say nothing of insurance companies, employers, and ordinary citizens, are all in the same boat, and will be until the Supreme Court finally decides the matter, which may be a year or more in the offing.

Here’s the legal issue in a nutshell. Two district courts have upheld the statute. Prior to Monday’s ruling, a district court in Virginia found a core element in ObamaCare, the individual mandate, to be unconstitutional. And on Monday Judge Vinson, in the Northern District of Florida, issued a “declaratory judgment,” declaring ObamaCare unconstitutional in its entirety. In his opinion he held that the judgment was “the practical equivalent of specific relief such as an injunction,” and he added that “it must be presumed that federal officers will adhere to the law as declared by the court.” The Obama administration has thus far shown no inclination to “adhere to the law as declared by the court.” Nor has the administration thus far sought to stay any practical effects of the court’s ruling.

Just what those effects may be is what is unclear, leading to the confusion. It would seem, at a minimum, that the parties to the suit are bound by the judgment. If so, at the least, the government has no authority to implement the statute within the jurisdiction of the Northern District of Florida. But beyond that jurisdiction, does the government have authority to do so with respect to those parties? Suppose one of the winning plaintiffs sought to enjoin the government in a jurisdiction that had upheld the statute. On which of the conflicting decisions would the court decide to grant or deny the motion? Suppose the government sought a writ of mandamus from a court in such a jurisdiction, ordering one of the plaintiffs to comply with the statute. Again, on which of the conflicting decisions would the court decide to grant or deny the motion?

The administration could seek to stay the effects of the two decisions that went against it, of course, which isn’t to say a court would necessarily issue such a stay. After all, if it turns out that those rulings are correct, a huge amount of trouble and expense, especially in financially strapped states, will have been for nothing – and vast insurance and medical markets will have been uprooted.

Not surprisingly, therefore, there is action in the political branches to try more quickly to resolve this matter. Yesterday, for example, Virginia Attorney General Ken Cuccinelli asked the Supreme Court to bypass the normal appeals process and review the decision from that state directly. The Obama Justice Department said it will oppose the motion. Then just today Senator Kay Bailey Hutchison (R-Texas) and 15 of her Republican colleagues announced that they’re working “to place a moratorium on any further implementation of the statute until there has been final judicial resolution in the pending lawsuits challenging the law.” Of particular note: “The bill delays provisions and new regulations of the Obama health care law not in effect on the date of enactment until final judicial resolution of the lawsuits. The bill does not suspend features of the law already in effect on the date of enactment.” And finally, on the other side of the aisle, Senator Bill Nelson (D-Florida) has just introduced a “Sense of the Congress” resolution urging the Supreme Court to put the matter on a fast track to resolution. Stay tuned, there’s much at stake.