Topic: General

With Enzi Bill, GOP Abandons Federalism, Free Trade

By
Michael F. Cannon

The U.S. Senate steps through the looking glass this week, with a debate on a health care bill that would shift power from the states to the federal government. Republicans, who typically argue against such things, support the bill. Democrats, who never miss a chance to expand federal power, oppose it.

The bill, sponsored by Sen. Mike Enzi (R-WY), deals with health insurance regulation. That has traditionally been the province of the states, with one large exception: In 1974, the feds allowed large employers to avoid state regulation by opting for federal regulation.  That gave multi-state employers the benefit of only having to contend with one set of health insurance regulations (rather than 50). Federal regulation has also traditionally been less burdensome than state regulation.

In fact, the states have been regulating health insurance like mad. Many states require consumers to purchase unwanted or even offensive coverage. (Thirty states require Catholics to purchase coverage for contraception; 14 states require them to purchase in-vitro fertilization coverage.) States have passed some 1,800 of these “mandated benefit” laws. The states also regulate insurance prices, which actually increases the number of uninsured.

States get away with over-regulation because they prohibit consumers and employers from buying health insurance from out-of-state. If you lived in some regulatory hell-hole – let’s say, New Jersey – you could obtain much cheaper coverage by dealing with a carrier regulated by another state.

If Bruce Springsteen can purchase voice insurance from Lloyd’s of London, surely his neighbors should be able to buy health insurance from Pennsylvania.

Enter Sen. Enzi, who has an odd solution to this mess: Let trade associations offer health insurance to their members, and let the feds decide what state regulations they follow.  The bill seems to be deregulatory; it would allow “association health plans” to avoid some unnecessary regulatory costs. But it would be the feds – rather than employers or consumers – who choose the set of rules that govern one’s health coverage. Thus the bill would shift power from the states to the feds.

Democrats oppose the bill, though it’s hard to fathom why. The bill would make broad-based federal health insurance regulation – a long-time Democratic goal – much easier to achieve. In short order, that would erase any short-term savings the Enzi bill might deliver.

Sometimes, I suspect the Democrats’ opposition is a ruse: They keep opposing the idea because if they supported it, Republicans might come to their senses.

The real tragedy is that Republicans have at their fingertips legislation that would give individuals consumers and employers the right to purchase coverage from out-of-state.  Sen. Jim DeMint (R-SC) and Rep. John Shadegg (R-AZ) have a bill that would tear down those barriers to trade between states, as Congress was meant to do under the Commerce Clause. 

But the Shadegg-DeMint bill doesn’t have a powerful coalition of trade associations lobbying for its passage. Trade associations like the Enzi bill because it would allow them to offer health insurance as a benefit to their members. The Shadegg-DeMint bill would do the same thing. But somewhere along the way it was determined that federal regulation would be more politically feasible than free trade between the states.

I guess it’s easier to convince Republicans to increase their own power than to return power to individuals.

Topics: 
General, Health Care, International Economics and Development, Law and Civil Liberties, Regulatory Studies

Who’s More Myopic?

By
Jagadeesh Gokhale

Here’s a partial view of the range of issues that needs to be scaled in order to constrain the future size of the federal government. In what follows, A = widely appreciated by the public, N = not widely appreciated, and A-N = appreciated by a few.

  • Waiting to reform will mean that the median voter will be older – and tend to vote for tax hikes rather than benefit cuts as a solution to entitlement shortfalls (A).
  • Waiting to reform entitlements makes the cost of fixing them increase as a percentage of GDP – and last year, we decided to postpone Social Security reform until who knows when. Just for Social Security, each year brings an additional $600 billion in cost (official Social Security Administration estimate). Note, the economy adds only about $450 billion in additional output each year (N).
  • When analyzing the merits and demerits of reforms, we do not consider their full cost because we make policies based on short-horizon fiscal measurements – the 10-year cost of prescription drugs, for example (A-N).
  • Recently emerged needs for countering terrorism and international nuclear blackmail means the peace dividend has evaporated and cutting other government spending is less viable as a means of releasing resources for entitlement outlay needs (A-N).
  • Private saving has declined and remains low (zero percent on personal saving) precisely because of the types of entitlements we have adopted (my finding from past research on why national saving declined in the U.S.). We’re lucky to be able for borrow capital from abroad today, but all such borrowing will have to be repaid with interest – perhaps just when we need to distribute more for retiree support (A-N).
  • We just enacted a massive new and irreversible entitlement – Medicare prescription drugs – the constituency for which will grow more solid by the year (A).

Most of these issues ARE known to policymakers and federal budget practitioners within the beltway. In fact, they have been known since the early 1990s. Despite recognizing these problems, Congress has repeatedly settled into postponing action on entitlement reforms.

What does that tell you?

Those who believe that the government should come to the aid of “myopic” individuals who don’t save enough for the future, think again.

Topics: 
General, Government and Politics, Social Security

Kerr on the NSA Database

By
Gene Healy

Over at the Volokh Conspiracy, Orin Kerr has an informative first cut at the legal issues surrounding the NSA’s newly revealed phone-call-record database. Bottom line: Whether you think the program is unlawful is likely going to depend on whether you think Article II allows the president to bypass statutes that infringe on tactics he wants to pursue in the war on terror.

Topics: 
General, Law and Civil Liberties

The Red Menace

By
Jerry Taylor

China’s plan to build 48 new airports over the next five years is freaking out environmentalists, who worry abou the impact of Chinese air travel on ozone depletion.  Apparently, the poor, unwashed masses of China should stick to their bikes while the rest of us jet around to U.N. conferences where we can worry about global warming and the oncoming environmental Armageddon in peace.

I’ll put “Chinese air travel” on my list of things to worry about tonight. 

Topics: 
Energy and Environment, General, International Economics and Development

You Put Your Left Foot in

By
Jerry Taylor

Look, I’m all for blaming government when blame is due, but conservatives have got to stop suggesting that high gasoline prices would disappear tomorrow if the government would repeal the ethanol mandate, build new refineries, open up the Arctic National Wildlife Refuge, or do the hokey pokey [.pdf].

Doing all of the above (save the hokey pokey) might reduce prices somewhat (and do more so over time), but 85 percent of the variation in gasoline prices is explained by variation in global crude oil prices. Crude oil prices are established by global supply and demand patterns, and there’s not much Congress can do about either.

Arguing that there are simple legislative fixes encourages the mistaken belief that there’s no problem Congress can’t solve. Too many people believe that already.

Topics: 
Energy and Environment, General, Government and Politics

Bloody Madness

By
Michael F. Cannon

God bless Sarah Lyall. Not only does the New York Times correspondent pen a steady stream of stories about the wackiness of the United Kingdom’s National Health Service.  She also drops references to Austin Powers and The Simpsons.

Her latest is a May 7 article on dentistry in Britain titled, “In a Dentist Shortage, British (Ouch) Do It Themselves.” Lyall introduces us to Britons who yank out their own teeth rather than rely on a “state-financed dental service [that is] stretched beyond its limit, no longer serves everyone, and no longer even pretends to try.”

The local private dentists are pricey, but some Britons are cutting those bills in half by visiting dentists in Hungary. Competition is funny that way.

Now if you’ll excuse me, I have to go floss.

Topics: 
General, Health Care

Repeat After Me: “We Are All Individuals”

By
Andrew J. Coulson

Back when Steve Martin was doing stand-up comedy (yes, I’m OLD), he had a wonderful bit in which he would get the audience to repeat a series of statements in unison, the last of which was “we are all individuals.” 

I’m sure that this bit of irony would have been lost on the editors of the Washington Post. In a May 9 feature, they asked three authors to discuss the battle between traditionalist and progressive pedagogical methods. The fatal conceit of this feature, to which all the contributors succumbed, was to ignore the most sensible approach of all: let families decide for themselves. 

If parents were free to choose the schools best suited to each of their children, and schools were forced to compete for the privilege of serving them, the most effective methods would flourish and the rest would be marginalized. We’d also likely find that certain methods work well with some children but not others. 

The sooner we overcome the Stalinesque notion that educational excellence can be pursued through more or better central planning, the better off our kids will be.

Topics: 
Education and Child Policy, General, Political Philosophy

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