Topic: Cato Publications

This Week at

It’s been a busy week over at We began with a new Excursions essay from George H. Smith. Provocatively titled “Fingering the King on the Road to Independence,” Smith’s piece examines how the pre-Revolution Coercive Acts led Americans to blame the king for the conspiracy to strip them of their rights and liberties.

We posted two new videos featuring the philosopher Douglas Rasmussen, one to our Libertarian View series and the other of a lecture he gave in 1991 on morality and capitalism. Here are embeds of those videos:

We also added a speech by Ted Galen Carpenter dealing with the impact of a country’s foreign policy on its domestic policies.’s magazine section grew with the addition of Literature of Liberty, published from 1978 through 1982, first by the Cato Institute and then by the Institute for Humane Studies. Each issue begins with a long essay exploring and analyzing the literature and thought in a particular field, such as Eric Foner discussing “Radical Individualism in America: Revolution to Civil War” or John Hospers writing about “The Literature of Ethics in the Twentieth Century.” The second half of each Literature of Liberty contains a wealth of summaries of academic articles and books of interest to libertarians.

Finally, the Exploring Liberty series of introductory lectures on libertarian theory and history is now available in podcast form, so you can listen on the go. It’s on iTunes as well as direct from the Exploring Liberty podcast feed.

As always, you can keep up to date with on Facebook, Twitter, via RSS, or by visiting the site.

Romneycare & Free Riders

During last night’s GOP presidential debate, Rick Santorum and Mitt Romney had a polite disagreement over Romneycare’s impact on free-ridership in Massachusetts. The short version: Santorum was right. Romney and even disputed Santorum’s claim, but they misunderstood it.

The exchange comes 2:15 into this video from Kaiser Health News:

Here’s the Kaiser Health News transcript:

SANTORUM: Just so I understand this, in Massachusetts, everybody is mandated as a condition of breathing in Massachusetts, to buy health insurance, and if you don’t, and if you don’t, you have to pay a fine.

What has happened in Massachusetts is that people are now paying the fine because health insurance is so expensive. And you have a pre-existing condition clause in yours, just like Barack Obama.

So what is happening in Massachusetts, the people that Governor Romney said he wanted to go after, the people that were free-riding, free ridership has gone up five-fold in Massachusetts. Five times the rate it was before. Why? Because…

ROMNEY: That’s total, complete…

SANTORUM: I’ll be happy to give you the study. Five times the rate it has gone up. Why? Because people are ready to pay a cheaper fine and then be able to sign up to insurance, which are now guaranteed under “Romney-care,” than pay high cost insurance, which is what has happened as a result of “Romney-care.”

ROMNEY: First of all, it’s not worth getting angry about. Secondly, the…


ROMNEY: Secondly, 98 percent of the people have insurance. And so the idea that more people are free-riding the system is simply impossible. Half of those people got insurance on their own. Others got help in buying the insurance. writes:

Romney is right. The percentage of insured residents in the state went up from 93.6 percent in 2006, the year the law was enacted, to 98.1 percent in 2010. And data from the state Division of Health Care Finance and Policy show a 46 percent decline in the number of free care medical visits paid for by the state’s Health Care Safety Net. The number of inpatient discharges and outpatient visits under the program went from 2.1 million in 2006 to 1.1 million in 2010 (see page 12)…

A Santorum campaign spokesman pointed us to a Wall Street Journal column by Michael F. Cannon of the libertarian Cato Institute, who stated that “Massachusetts reported a nearly fivefold increase in such free riding after its mandate took effect.” But that doesn’t square with official data just cited. Cannon didn’t specify the time period and so may have referred to some temporary or transitory bump in free riders. We will update this item if we are able to get more information from Cannon.

Speaking of facts, here’s a fun one: both Kaiser Health News and unnecessarily flank “Romneycare” with quotation marks when it appears within a quote from Santorum. As if Santorum had used quotation fingers. Adorable. But I digress.

Romney and failed to consider that there are different types of free riding. One type happens when government guarantees access to emergency-room care: people show up to get care, and they don’t pay. Another type happens when government guarantees people the ability to purchase health insurance at standard rates no matter how sick they are: people wait until they are sick to purchase health insurance and drop it right after they get the care they needed. These free riders pay far less than they would in a free market, which would not allow such behavior. Romney and assumed Santorum meant the former type of government-induced free riding, when he was clearly talking about the latter.

The data that Santorum and I cite come from a report by the Massachusetts Division of Insurance. See this June 2010 blog post, where I quote the Boston Globe:

The number of people who appear to be gaming the state’s health insurance system by purchasing coverage only when they are sick quadrupled from 2006 to 2008, according to a long-awaited report released yesterday from the Massachusetts Division of Insurance.

The result is that insured residents of Massachusetts wind up paying more for health care, according to the report.

“The active members subsidize some of the costs tied to those individuals who terminate within one year,” the report says…

The number of people engaging in this phenomenon — dumping their coverage within six months — jumped from 3,508 in 2006, when the law was passed, to 17,177 in 2008, the most recent year for which data are available.

Actually, it more than quadrupled: 17,177/3,508≈4.9. But whatever. Santorum was right.

One might object that these numbers seem like small potatoes compared to the apparent drop in visits paid from the Commonwealth’s Health Care Safety Net program. Fair point. But the type of free riding Santorum identified is incomparably worse than the kind that happens in hospital emergency rooms. When people can wait until they are sick to purchase insurance, overall premiums rise so high that the health insurance market collapses in an “adverse selection death spiral.” That’s how Obamacare destroyed (and is destroying) the market for child-only coverage in dozens of states. It’s why Obamacare’s CLASS Act collapsed years before it collected a single premium. It’s happening very slowly in Massachusetts, but it is happening. And it will happen to all private health insurance under Obamacare. In contrast, as I mention in my Wall Street Journal piece, the ER-type of free riding increases health insurance premiums by “at most 1.7 percent,” according to the Urban Institute. That’s not ideal, but it’s not catastrophic.

One might also object that this latter type of free riding can’t be a problem since Romneycare has increased the number of Massachusetts residents with health insurance coverage. Also a fair point. But not only can adverse selection occur at the same time that coverage is expanding, it has the potential to completely undo those coverage gains over time. Moreover, some of Romneycare’s supposed coverage gains might be people who are actually uninsured but conceal that fact from government surveys rather than admit to unlawful behavior. These are the ultimate free riders: they’re not even paying the fine. In this Cato Institute study, Aaron Yelowitz and I found evidence consistent with such concealment behavior in the Census Bureau’s Current Population Survey.

Personal Accounts—for Medicare

Last night, Newt Gingrich praised the Chilean Social Security system, which allows workers to save for their retirements in personal accounts, rather than contribute to the government pension scheme. Several of my Cato colleagues are far more qualified than I am to comment on that system, including Mike Tanner, Jagadeesh Gokhale, and Jose Pinera–who designed and implemented it. But personal accounts are as important for reforming compulsory health insurance schemes like Medicare as they are for reforming compulsory pension schemes.

In 2010, I traveled to Chile to deliver an address to the International Federation of Pension Fund Administrators (FIAP).  I detailed the harms caused by compulsory health insurance schemes and explained how personal medical accounts would improve health care and generate wealth even for the poor:

In designing health care markets, perfection is not an option. Under any system, whether state-run or the free market, some patients will inevitably fall through the cracks.

Personal medical accounts can help fill in those cracks by enabling innovations that improve medical care and bring it within reach of the poor. Yes, some will not earn enough to provide for themselves. And when we are free to make our own decisions, a small number of people will make poor decisions. I believe we have a moral duty to care for patients who could not or would not provide for themselves. Personal medical accounts will make it easier for us to meet that moral duty.

Under compulsory health insurance schemes, those cracks widen, and more people fall through. Price and exchange controls block innovation. Governments waste resources on low-value medical care. Some would describe these as the unavoidable costs of creating an equitable society. But those wasted resources do not purchase solidarity. They purchase sickness and poverty.

FIAP turned my address into this book chapter, which also explains how to craft a system of personal medical accounts.

For current enrollees, who have not built up savings in a personal medical account, Congress should make Medicare look more like Social Security. That is, the government should subsidize Medicare enrollees by giving them cash, rather than creating a complex health-insurance scheme that effectively lets government officials shape the entire health care sector.

Today, at Least, Britannica Rules the Web

Congratulations to Wikipedia for going dark for a day in protest of the “online piracy” bills being considered in Congress.

But what do we do for information today? You know, we’ve gotten used to being able to find information now. So here’s an idea: Try the original encyclopedia, the one written (in most cases, ahem) by scholars and experts, Britannica.

You could start with their article on libertarianism. Or indeed their article on censorship. And then move on to the columns that I wrote there for most of 2011, on such topics as the debt ceiling crisis, the French Revolution, the founding documents of the United States and the Communist Party of China, the false charge of isolationism, marriage equality in 1967 and 2011,  government waste (“this is the business you have chosen”), the Stonewall protests, the triumph of feminism, and why Keynes threw towels on the floor. Good heavens – that ought to keep you busy on Wednesday.

And then Thursday at noon, as Wikipedia and other sites reopen, you can go down to Capitol Hill at noon to see a panel of experts explain what’s wrong with the bills that the websites are protesting.

Drone Warfare at Cato Unbound

In recent years, drone warfare technology has made tremendous strides, allowing modern war to be conducted in many respects by remote control.

This may seem like a boon to technologically savvy countries like the United States, and in a sense it clearly is. But the moral calculus of war is rarely that simple. While drones can and do shield front-line troops from danger, and can often substitute for them entirely, they also have other effects. Drones can make it more likely that we will enter into wars, for example, and if so, then it’s no longer clear that they help the ordinary soldier. Drones may increase casualties among noncombatants; their pinpoint accuracy is only as good as the human intelligence behind them, which now may be more subject to manipulation, not less. And drones are also available to hostile states and nonstate actors, including terrorist groups like Hezbollah.

To discuss these issues, Cato Unbound this month has assembled a panel of experts on drones and ethics of war. Our lead essay is by David Cortright of the University of Notre Dame; he is joined by Benjamin Wittes of the Brookings Institution, as well as Daniel Goure of the Lexington Institute, who will contribute on Friday; and Tom Barry of the Center for International Policy, whose reply will appear on Monday.

Conversation will continue throughout the month, so be sure to subscribe via RSS if you want to see the discussion as it happens.

Withholding Scientific Data: Good Idea or Not?

Should information be withheld from academic journals because of the potential that it might fall into the hands of terrorists? The National Science Advisory Board for Biosecurity (NSABB) has asked the journals Science and Nature to keep certain details out of reports they intend to publish about experiments that produced a human-transmissible version of a flu virus that is deadly about 50 percent of the time.

The NSABB said conclusions should be published, but not “experimental details and mutation data that would enable replication of the experiments.” This government panel has not sought to ban the release this information, so we’re not talking about formal censorship, but the request is at an early point on the censorship continuum.

It would seem that withholding this information from academic journals might do some good. But the limiting factor on production of a newly transmissible virus is training in virology (or whatever) and access to the equipment that allows such work to be done—not access to data about the technique used in these experiments. Whether it’s published in these journals or not, a criminal/terrorist virologist would probably be able to access the data using the subterfuge of having a genuine scientific interest.

So, to stop terrorists accessing bioweapons do we limit training in virology? Control laboratory equipment as dual-use civilian/military technology? No, because the massive weight of training and equipment—something approaching, if not actually, 100 percent—will go to people who will use these things to make us safer, even if a one-off tries to use virology skills to make us unsafe.

It’s a close call, and I’m not entirely certain about what I’ve just said, but this is a more difficult logic puzzle than most people think. Given the overwhelming majority of good people using information for good, diffusion of information will almost always be good. I doubt that the NSABB has sufficiently considered the costs of withholding information about the modified virus from people who would use that information to secure against its modification by whatever invention they bring to bear. (I can’t cite the invention because it hasn’t been invented yet!)

This is akin to the gun control issue. Consensus goes against guns because they make a loud bang and often draw blood when they’re used harmfully, but they are utterly silent in their beneficial use of deterring crime and violence, which is what they do the vast majority of the time. The idea of a massive epidemic strikes our primal imaginations with fear, while the notion of scientists converting diffuse knowledge into security against epidimics is a somber intellectual exercise.

Speaking of imagination, the idea of the terrorist super-villain is widespread, but imaginary. It’s important to remember that the 9/11 terrorists had box cutters. They had no idea their attack would produce the collapse of the twin towers, though many people reasoned backwards from that devastation to give them sophistication (and motivations) they didn’t actually have. It’s our psychology/imagination that gave terrorists access to chem/bio/rad/super-weapons over the last decade, a notion that almost certainly infects the considerations of the NSABB.

It’s probably a mistake to withhold scientific data from publication. We’re rather more safe from the threat of biological terrorism than most people think, and we’d get marginally safer from having information about virus experiments easily available to any researcher who might use it to discover ways of making us even safer.

(Related: Milton Leitenberg of the University of Maryland’s Center for International and Security Studies has a great contrarian piece in the Cato book Terrorizing Ourselves about the counterproductive mania around bioweapons, though his points don’t easily sync up with what I’ve said here.)