Topic: Health Care & Welfare

“Charity Is in Its Nature Essentially Civilizing”: In Defense of Herbert Spencer

Ian Millhiser has responded to both my defense of Herbert Spencer and one from Reason’s Damon Root. Unwavering in his belief that Spencer was a monster, Millhiser has doubled down on his claim that Spencer advanced a kind of “genocidal libertarianism.” Millhiser has rightly retreated, however, from boldly claiming, without evidence, that Rand Paul is a fan of Herbert Spencer. I thank him for his response, and I offer a few more thoughts on Spencer here.

First, it’s clear that Millhiser is an active and vehement opponent of libertarianism. He seems to believe–although I don’t want to put words in his mouth–that libertarianism is inherently “genocidal,” regardless of whether it’s advocated by Spencer, Ayn Rand, Friedrich Hayek, or Milton Friedman. So, on one level, Millhiser’s reaction to Spencer is simply a reiteration of his distaste for libertarianism and, insofar as that is the source of Millhiser’s discontent, I’m not going to try to argue with him that libertarianism isn’t inherently a cold, heartless philosophy. The possibility of that debate being productive is long passed.

But is there something particularly odious about Spencer’s brand of libertarianism, as Millhiser seems to think? Spencer writes with the peculiar verve of a 19th-century British intellectual, coming from the same milieu as anthropologists who would blithely discuss the “savage and uncivilized mongoloid and negroid races.” Similarly, Spencer would insouciantly attack the lazy, shiftless, and incompetent.

Post-modern relativism makes us balk at these absolute terms. In modern politics we tend to think more about the conditions into which people are born rather than their personal responsibility. Discussions of the “deserving poor” and “undeserving poor” are now largely uncouth.

But to Spencer, as to most 19th-century political and social theorists, the distinction mattered. Like many modern libertarians and conservatives, Spencer was very concerned that profligate and indiscriminate assistance for the poor would incentivize bad behavior. Although many on the left loathe the idea that welfare can create bad behavior, most people understand that concern. To anyone who’s ever had to cut off ne’er-do-well friends or family from further charity in order to help them out, those concerns make sense.

Do Housing Vouchers Help Poor Children?

Why do poor parents have children who also grow up to be poor? One possible reason is that poor families do not have access to credit that would allow parents to invest more in the improvement of the human capital of their children. The conventional policy recommendation for this diagnosis is to increase transfers to poor families in order to remove their credit constraints.

The expansion of the Earned Income Tax Credit (EITC)—which uses the tax system to transfer money to low-income households—has been shown to increase standardized test scores. But critics of this research argue that factors unobservable to researchers but correlated with EITC receipt are responsible for children’s success, not the EITC transfers themselves.

Increasingly, economists use clever research designs that involve an element of random assignment, much like clinical trials of new pharmaceuticals, to provide more conclusive evidence of a program’s effectiveness or ineffectiveness. Recently, three researchers used a policy change in Chicago to test the effects of a change in housing subsidies.

Unlike many other welfare programs, housing subsidies are not given to everyone who qualifies for them, but are handed out on the basis of availability. In 1997, for the first time in 12 years, Chicago accepted applications for housing vouchers. About 82,000 people applied out of 300,000 poverty households in Chicago at the time. The applicants were randomly assigned a position in the waiting list. The first 35,000 on the list were told their number and that they would be offered a voucher within three years. The rest were told that they would not receive vouchers.

By 2003, 18,000 of the first 35,000 applicants had received vouchers. The Chicago Housing Authority had issued as many vouchers as it could fund, and stopped offering any new vouchers.

In a study I review in my “Working Papers” column in the current Regulation, Brian Jacob, Max Kapustin, and Jens Ludwig examine the outcomes 14 years later for children whose families “won” the Chicago housing vouchers versus the children of families that were told they would not receive a voucher. Families that won the lottery received a very large positive income shock—the equivalent of $12,000 a year—relative to the average income in the sample ($19,000 a year). If income alone allows families to improve the human capital in their children, we should see results from this experiment. 

The authors find very few effects on schooling, crime, or health outcomes—and none were significant. “Our estimates imply that extra cash transfers beyond the current level provided in the United States are likely to have a smaller impact per dollar than the best-practice educational interventions explicitly designed to improve children’s human capital,” they write. Their results are consistent with the findings of sociologist Susan Mayer, who concluded in her 1997 book What Money Can’t Buy (Harvard University Press) that there is “little reason to expect that policies to increase the income of poor families alone will substantially improve their children’s life chances.”

Curing Cancer with Innovation

While a “cure for cancer,” is not yet in hand, it is probably not as far away as you think. As an article in yesterday’s Wall Street Journal shows, we are making tremendous strides in the fight against cancer.

Let us take a moment to look at the data and rejoice in the many lives saved by medical innovation. We focus on gains made against the top four deadliest cancers: lung cancer, bowel cancer, breast cancer, and prostate cancer.

Consider how the lung cancer death rate per 100,000 men has decreased since the 1980s:

While the decline is global, the greatest gains can be seen in wealthy, developed countries like the United States. This is in part because, as HumanProgress.org advisory board member Matt Ridley notes, “In the western world we’ve conquered most of the causes of premature death that used to kill our ancestors,” and with old age comes an increased incidence of cancer, making gains against cancer more notable.

Maine’s Recommitment to Work Requirements

Last week, the Associated Press reported that more than 9,000 food stamp recipients in Maine have been removed from the program because they failed to comply with the program’s work requirements. These requirements themselves are largely nothing new, but in the years since the recession, almost every state received a waiver exempting them from these provisions. By allowing the waiver to lapse, Maine will again enforce the requirement that able-bodied adults without dependents participate in some form of work activity. These rules only apply to a small fraction of beneficiaries, just 10 percent of Maine’s beneficiaries in 2013. A spokesman for the Maine Department of Health and Human Services revealed that the number of SNAP beneficiaries subject to the reinstated requirements has fallen from roughly 12,000 to 2,680. This is a steep reduction, but relatively small compared to the 250,000 people in the Supplemental Nutrition Assistance Program (SNAP) when the rule change went into effect.

Even before the recession, the percentage of Maine households in the program surged from 9.6 percent in 2002 to 12.3 percent in 2007. The recession caused the beneficiary rolls to swell even further, and they have continued to grow in the years since, in part due to the waiver. In 2013, 18 percent of Maine households participated in SNAP, third highest in the country. As the figure shows, since October 2010, Maine’s unemployment rate has fallen significantly, but the number of SNAP recipients remains elevated. Since the enforcement of the new rules began, these two measures have been more highly correlated.

Maine Unemployment Rate vs. SNAP Beneficiaries

 

Sources: Federal Reserve Bank of St. Louis, “Federal Reserve Economic Data,” MEUR_NBD20100901, BRME23M647NCEN; Office of Family Independence, “Geographic Distribution of Programs and Benefits,” Maine Department of Health and Human Services, June 2013-February 2015.

Over-Budget Hospitals

The Veterans Health Administration (VHA) is plagued with problems. Veterans wait months for medical care and have few options for accessing non-VHA providers. In addition to all of the issues relating to providing health care, construction of VA medical facilities is mismanaged, which burdens taxpayers with billions of dollars in extra costs.

However, the VHA might be trying to change direction. Glenn Haggstrom, the individual who oversees VHA construction, “stepped down” last week after being put under internal investigation. Hopefully, he will be replaced by a reform-minded leader. In 2013 the Government Accountability Office (GAO) found a host of problems at the four largest VHA construction projects, which are located in Denver, Orlando, New Orleans, and Las Vegas. All four projects had major cost overruns and schedule delays.

The Next Big Obamacare Case?

Medicaid, the entitlement program for low-income Americans jointly funded by the state and federal government, represents about 25 percent of state budgets. Federal funding represents more than half (57 percent) of that amount, and that funding is now being threatened by Obamacare.

In what seems like déjà-vu all over again, Maine’s Department of Health and Human Services (DHHS) is pursuing a lawsuit to prevent this sort of federal coercion.

Here’s the scoop: In 2009, the American Recovery & Reinvestment Act (ARRA) offered states stimulus funds if they agreed to a maintenance-of-effort (“MOE”) provision that required them to maintain Medicaid-eligibility standards at July 2008 levels through December 2010. MaineCare, Maine’s Medicaid program, accepted those funds and the accompanying MOE provision. In relevant part, MaineCare covered low-income individuals ages 18 to 20 in 2008 — even though Medicaid doesn’t require states to include non-pregnant, non-disabled 18- to 20-year olds — so that MOE provision required Maine to continue to do so through 2010. Then the Affordable Care Act came along and added its own MOE provision, which required states to “freeze” eligibility levels until 2019 or risk losing all federal Medicaid funding.

When the ACA took effect on March 23, 2010, Maine was still bound by the ARRA’s MOE requirements, and thus had to continue to cover 18- to 20-year olds for an additional nine years. In August 2012, however, the Maine DHHS sought to drop this coverage. The federal Center for Medicare and Medicaid Services (CMS) rejected Maine’s position regarding alleged inconsistencies between the MOE provisions.

On appeal, Maine argued that the ACA’s MOE provision is unconstitutionally coercive under the Spending Clause, that it unconstitutionally applies retroactively to ARRA MOE provisions, and that it violates Maine’s right to equal sovereignty. Nevertheless, the U.S. Court of Appeals for the First Circuit affirmed the CMS decision, so Maine now seeks Supreme Court review.

Spring Regulation Issue: Oil, Obamacare and Tech Innovation

This week, Cato released the Spring issue of Regulation.

The cover article, by economist Pierre Lemieux, argues that the recent oil price decline is at least partly the result of increased supply from the extraction of shale oil.  The increased supply allows the economy to produce more goods. This benefits some people, if not all of them.  Thus, contrary to some commentary in the press, cheaper oil prices cannot harm the economy as a whole.

A related article examines the dramatic increase in crude oil transported by trains and whether additional safety regulation of tank car design should be enacted.  Economist Feler Bose argues that companies have an incentive to reduce accidents to reduce insurance rates.  Thus less-obvious ways to prevent accidents, like better track maintenance, may be more cost-effective and undertaken voluntarily to reduce insurance costs.

The issue has three articles on health policy.  Cal State Northridge professor Shirley Svorny describes how state medical licensure boards do very little to discipline doctors who cause medical errors.  Instead, medical quality is created by the private decisions of individual hospitals to grant privileges to doctors to treat patients and the decisions of specialty boards, such as those that govern cardiology, to certify members as qualified.  A second article concludes that the regulation of electronic cigarettes is likely, even though the evidence for adverse health effects is thin, because a powerful coalition of existing cigarette companies and anti-smoking activists would benefit. A third article examines questionable legal maneuvering by states to implement aspects of the Affordable Care Act (Obamacare).

Finally, two articles describe the regulation of emerging technologies. The first, by Oxford’s Pythagoras Petratos, examines nanotechnology and argues that both the Food and Drug Administration and the Environmental Protection Agency are ill-suited to regulate this complex technology. This bureaucratic burden could slow nanotech innovation in the United States. The second article, by Henry Miller of the Hoover Institution, describes the regulation of so-called “biosimilar” drugs.  Biosimilars are “generic” versions of patented biologic drugs, which are produced by living cells through genetic engineering rather than the chemical reactions used to produce traditional patented and generic prescription drugs.  He concludes that clinical trials will be necessary to prove biosimilarity and thus “biosimilar” drugs will not be cheap like traditional generic drugs.