Tag: public choice

Big Business Gets Yet Another Obamacare Delay That Individuals Don’t

“I didn’t simply choose to delay this on my own,” President Obama reassured the nation about his unilateral decision to delay Obamacare’s employer mandate. “This was in consultation with businesses all across the country,” he said, as if that made the situation better instead of worse. Obama threw his “consultants” another bone when he decided to delay the reporting requirements the law imposes on employers, also until 2015. The president’s generosity toward large corporations will be financed by the American taxpayer. The Congressional Budget Office projects these delays will cost taxpayers another $3 billion in new government spending and reduce federal revenues by $9 billion, for a total increase in the federal debt of $12 billion. Yet the president fails to show the same concern for individual taxpayers. When the House of Representatives, including dozens of Democrats, voted to extend the same break to individuals by delaying Obamacare’s individual mandate by one year, President Obama threatened to veto that bill. Bizarrely, he also threatened to veto another bill (approved by an even broader bipartisan majority) that would make legal his illegal delay of the employer mandate.

So perhaps we should not be too surprised now that the New York Times reveals yet another delay the president approved at the behest of big business:

In another setback for President Obama’s health care initiative, the administration has delayed until 2015 a significant consumer protection in the law that limits how much people may have to spend on their own health care.

The limit on out-of-pocket costs, including deductibles and co-payments, was not supposed to exceed $6,350 for an individual and $12,700 for a family. But under a little-noticed ruling, federal officials have granted a one-year grace period to some insurers, allowing them to set higher limits, or no limit at all on some costs, in 2014…

[F]ederal officials said that many insurers and employers needed more time to comply because they used separate companies to help administer major medical coverage and drug benefits, with separate limits on out-of-pocket costs…

A senior administration official, speaking on condition of anonymity to discuss internal deliberations, said: “We knew this was an important issue. We had to balance the interests of consumers with the concerns of health plan sponsors and carriers, which told us that their computer systems were not set up to aggregate all of a person’s out-of-pocket costs. They asked for more time to comply.”…

Theodore M. Thompson, a vice president of the National Multiple Sclerosis Society, said: “The promise of out-of-pocket limits was one of the main reasons we supported health care reform. So we are disappointed that some plans will be allowed to have multiple out-of-pocket limits in 2014.”

It is a sign of Obamacare’s complexity that the Obama administration felt it needed to issue this delay. It is a further sign of the law’s complexity that this delay was announced in February, yet is only coming to light now.

Faith in Government, Unshakable

Belatedly, I’ve come across the review by Jonathan Martin of Politico of the book Act of Congress: How America’s Essential Institution Works, and How It Doesn’t by Robert Kaiser, a 50-year reporter and editor at the Washington Post. What struck me was that both of these very knowledgeable Washington journalists seem very clear-eyed about the deficiencies of the legislative process, and yet their understanding doesn’t cause them to question the idea of having government manage every facet of our lives. Here are some excerpts from the review:

Congress is dominated by intellectual lightweights who are chiefly consumed by electioneering and largely irrelevant in a body where a handful of members and many more staff do the actual work of legislating. And the business of the institution barely gets done because of a pernicious convergence of big money and consuming partisanship.

That is Robert Kaiser’s unsparing assessment in “Act of Congress,” the latest volume in a growing body of work lamenting our broken capital….

In the passing of Dodd-Frank, the public interest—however that might be defined—often took a back seat to money, special interests and political expediency.

It did not help, notes Mr. Kaiser, that many members of Congress are politics-obsessed mediocrities who know little about the policy they’re purportedly crafting and voting on. Indeed, it is Mr. Kaiser’s frank and often scathing criticism of Congress that enlivens a book that might otherwise strain the attention of anyone not intensely interested in the regulation of derivatives….

That phone call, writes Mr. Kaiser, underlined a fact of modern congressional life: “Most members both know and care more about politics than about substance.”…

“Of the 535 members of the House and Senate, those who have a sophisticated understanding of the financial markets and their regulation could probably fit on the twenty-five man roster of a Major League Baseball team,” Mr. Kaiser writes. “Members’ ignorance empowers lobbyists and staff.”

What makes “Act of Congress” especially valuable is its detailed portrait of Washington’s influence peddlers and, in particular, the powerful aides who script their boss’s statements, write the bills and often become lobbyists themselves after leaving the government payroll. 

Martin concludes:

Big money, small politicians, and the lobbyists and staff running the place: It’s hardly a new story about Washington. But Mr. Kaiser names names and spares no one.

So the question is, If you understand just how poorly most legislation is crafted, if you understand the corruption and ignorance that go into making rules for 300 million Americans, why are you still wedded to the idea that inevitably ignorant and corrupt people should make rules for everything from health care to banking to retirement to drug policy? 

Both Jeffrey Friedman and Ilya Somin have written for the Cato Institute, and in Somin’s forthcoming book, about the problem of public ignorance and value of a much smaller and less centralized government that could depoliticize decision-making and limit the scope of errors.

Faith in government, like a second marriage, is a triumph of hope over experience.

Subsidies and Votes — in India and the United States

When Americans suggest that government transfer programs might affect the way people vote, the mainstream media react with the indignation that greeted Mitt Romney’s “47 percent” comment. Of course, in other contexts the media certainly know that programs like Social Security, Medicare, and farm subsidies impact voting, but Republicans seem to get pounded for making that point.

But when it comes to other democracies, such as India, journalists don’t seem to have any trouble seeing the electoral advantages of government spending. Jim Yardley reports from India for the New York Times:

Frustrated by delays in Parliament, and eager to gain favor with rural voters ahead of national elections, India’s cabinet has approved a sweeping executive order that establishes a legal right to food and will create what is likely to be the world’s largest food subsidy system for the poor….

For the governing Congress Party, the new ordinance fulfills a campaign pledge made by Mrs. Gandhi and provides her party with something tangible to offer voters as the country prepares for national elections next year. The coalition government has been battered by corruption scandals and a sinking economy. With polls suggesting a loss of public support for the Congress Party, the food ordinance is good politics, some analysts say, if uncertain economics.

I noted a few months ago that the Washington Post had made a similar point:

Trying to rekindle the fire of India’s economy, Finance Minister P. Chidambaram promised Thursday to rein in a runaway deficit even as he raised spending on welfare schemes that the government hopes will woo voters in elections scheduled for next year….

“The finance minister faced two counter-veiling pressures: to present a populist, voter-friendly budget and also control the huge fiscal deficit,” said Vir Sanghvi, a political analyst. “What he presented was a ‘this-is-the-best-we-can-manage-under-the-circumstances’ kind of a budget. . . . He is hoping that the economy will improve and prices will come down by the time of the election. That is a big political gamble.”

Chidambaram promised to increase spending on rural welfare schemes, rural roads and jobs, food guarantees for the poor, women’s safety programs, tax breaks on loans for first-time home buyers and a women’s bank.

Is it really so hard to imagine that American politicians might also see transfer programs as measures that would benefit them on election day? Of course, the more fundamental impact of transfer programs may be to make both parties afraid to cut spending. What politician in either party wants to propose cuts in Social Security, Medicare, student loans, or farm subsidies? It’s not that transfer recipients all vote for the same party; it’s just that both parties fear the loss of votes if they interfered with the flow of subsidies. And not just in India.

How to Tell If the Government Has Taken over Health Care

From the Washington Post:

Hedge fund executives and other investors are increasingly interested in the timing and nature of health-policy decisions in Washington because they directly affect the profits and stock prices of pharmaceutical, insurance, hospital and managed-care companies…

[Former Centers for Medicare & Medicaid Services] director Thomas Scully, who served during the Bush administration…said he thought that it was useful for CMS officials to have more communication with Wall Street investors as a way for regulators to learn and “explain what an $800-billion-a-year agency” does with its money.

So long as someone is still making a buck, it’s not socialized medicine…right?

Government on the Friends and Family Plan

In his stirring speech to the 1984 Democratic National Convention, then-New York governor Mario Cuomo used an extended metaphor of the whole nation as a family. So maybe it should come as no surprise to discover that his son, current New York governor Andrew Cuomo, uses the New York State government as a jobs program for his friends and their families. The Empire State Development Corporation in particular is chock-full of his donors and friends, and their young sons–not to mention Cuomo’s political advisers.

He’s not alone in spending (other people’s) money to help family and friends. The Washington Post reported in December on the family-friendly atmosphere at the Metropolitan Washington Airports Authority:

Meet the Kulle family: mom Helen, daughter Ann Kulle-Helms, son-in-law Douglas Helms, son Albert, daughter-in-law Michele Kulle and Michele’s brother, Jeffrey Thacker.

They all worked for the Metropolitan Washington Airports Authority. All at the same time.

One MWAA board member, 

who has had at least three relatives, including a daughter-in-law, work at the agency, said family members are employed frequently, particularly among board members.

“If you ask a third of those folks, their relatives work there,” he said. “I never thought that we were doing anything wrong.”

“This is a government town and an agency town,” Crawford said. “If there’s a possibility that you can hire a relative … it was the norm.”

This Month at Cato Unbound: What Keeps Money Out of Politics?

It’s called the Tullock Paradox: if you run the numbers, the expected returns to lobbying commonly appear much larger than they ought to be. Bad behavior pays really well, and yet corporations and interest groups routinely pass on what would seem, from a coldly amoral stance, to be easy money. Rational economic actors ought to bid up the price of government favor—and thus bid down the rate of return—but real-world actors don’t do so.

Why don’t we see even more money in politics? That’s the question we ask in the April, 2013 issue of Cato Unbound.

To answer that question, we have invited Fred L. Smith, founder and chairman of the Competitive Enterprise Institute, a man who has spent much of his career pondering just this question, and who benefits from an insider’s view of political advocacy. His lead essay suggests that there is a widespread distaste for political activity among people who would otherwise turn to lobbying, and often that’s with good reason.

To discuss with him the potential pitfalls of public choice modeling, we have invited a panel of distinguished academics: Professors Stephen Ansolabehere of Harvard University, Francesco Parisi of the University of Minnesota School of Law, and Raymond J. La Raja of the University of Massachusetts at Amherst.

As always, Cato Unbound readers are encouraged to take up our themes and enter into the conversation on their own websites and blogs, or on other venues. We also welcome your letters. Send them to jkuznicki at cato dot org. Selections may be published at the editors’ option.

Better than Medicaid Expansion: Missouri Senate Approves ‘Good Samaritan’ Law

Never mind Medicaid expansion. The Missouri Senate has approved a bill that would allow doctors to give free medical care to the poor. 

You wouldn’t think the government would have to pass a law to let doctors give free health care to the poor. Yet nearly every state prohibits out-of-state physicians and other clinicians from providing free charitable care to the poor unless those clinicians obtain a new medical license from that state.

In a forthcoming paper for the Cato Institute, I explain how medical licensing laws deny care to the poor, and how reforming those laws is a better alternative than Medicaid expansion:

Remote Area Medical has had to turn away patients or scrap clinics in places California, Florida, and Georgia. “Before Georgia told us to stop,” says founder Stan Brock, “we used to go down to southern Georgia and work with the Lions Club there treating patients.” After a tornado devastated Joplin, Missouri, Remote Area Medical arrived with a mobile eyeglass lab, yet state officials prohibited the visiting optometrists from giving away free glasses.

These stories belie the claim that government licensing of medical practitioners protects patients. Instead, they block access to care for the most vulnerable patients.

States should adopt “Good Samaritan” laws, like those enacted in Tennessee, Illinois, and Connecticut. Those states allow out-of-state-licensed clinicians to deliver free charitable care in their states without obtaining a new license. To protect patients, visiting clinicians are and should be subject to the licensing malpractice laws of the state in which they are practicing.

This week, Missouri’s Senate passed such a Good Samaritan law. (It even lets licensed veterinarians come to the state to provide free charitable care to animals.) The bill also provides an inducement to out-of-state clinicians by reducing their liability exposure for malpractice. It would be better if the state were to let doctors and patients choose their own malpractice liability rules via contract. Unlike ObamaCare’s massive Medicaid expansion, this bill would expand access to care for the poor without costing states or taxpayers a dime.

Here’s a video on Remote Area Medical, the good that it does–and the good that licensing laws prevent it from doing.

Even if you’re not ready to concede that medical licensing laws are harmful and should be repealed, you would have to admit it makes no sense for the government to block licensed doctors from treating the poor for free.

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