Topic: Health Care & Welfare

Finland to Break New Ground with Basic Income Experiment

Despite some of the breathless headlines, Finland is not adopting a national universal basic income. That is, Finland is not scrapping the existing welfare system and distributing the same cash benefit to every adult citizen without additional strings or eligibility criteria. Finland is moving forward with one of the most extensive and rigorous basic income experiments in decades, which could help answer some of the lingering questions surrounding the basic income. The failures of the current system are well documented, but there are concerns about costs and potential work disincentives with a basic income. Finland’s experiment could prove invaluable in trying to find an answer some of these questions, and whether it is possible some kind of basic income or negative income tax would be a preferable alternative to the tangled web of programs in place now.

The Finnish Social Insurance Institution (Kela) will lead a consortium of think tanks, universities, and businesses in surveying the existing literature, analyzing past experiments, and designing different models to test in Finland. They will present an interim report next March, where the government will decide which models to develop further. The consortium will present a final report in November, after which the government will choose which models to actually test. The experiment will begin in 2017 and last for two years, after which the consortium will begin to evaluate the results.

One of the most important issues with any basic income proposal is deciding whether it would replace the current system or be added on to the existing structure. (The latter, of course, does not have much appeal from a limited-government perspective.) The consortium is considering multiple models, as Kela’s presentation shows: 

The Senate’s Historic ObamaCare Repeal Vote

Highlights from my op-ed today at Real Clear Policy on last week’s Senate vote repealing the majority of ObamaCare:

Health-care entitlements are supposed to be a political third rail — touch them, and you die. This Senate vote means majorities in both chambers of Congress will approve a bill repealing not one but two health-care entitlements…That alone makes yesterday’s vote historic.

Even more remarkable, it is doubtful Republicans will suffer at the polls for it. Republicans have done well by running against Obamacare. Most recently, Matt Bevin won the governor’s race in Kentucky by campaigning against ObamaCare’s Medicaid expansion, which his predecessor implemented.

The history-making doesn’t end there. A bill repealing the majority of ObamaCare is now almost certain to land on President Obama’s desk. It is not often that presidents have to veto a law repealing most of their signature legislative achievement.

Finally, the vote is historic for what it portends: It proves that America is just one presidential election away from repealing ObamaCare…

With that prospect on the horizon, states that have not implemented ObamaCare’s Medicaid expansion will now be even more reluctant to do so. This vote may even encourage Governor Bevin to make Kentucky the first state to withdraw from the expansion…

Republicans and Democrats should replace ObamaCare not with “ObamaCare-lite,” but with reforms like large health savings accounts (HSAs), which would drive down medical prices and deliver an effective tax cut of $9 trillion — greater than the Reagan and Bush tax cuts combined.

 

Bringing More Competition to Health Insurance

This week, The Economist magazine has an article reporting that U.S. health insurance companies are making lots of money right now:

the share prices of America’s five biggest health insurers—UnitedHealthcare, Aetna, Humana, Cigna and Anthem—have all roughly tripled over the past five years. The big insurers have been consistently and highly profitable … . Unlike most big American firms, the trend is still upward. All five will probably report record profits for this year, next year and several more to come, predicts Ana Gupte, an analyst with Leerink, a research firm. For that, they owe a debt of gratitude to an unlikely creditor. The results of most financial firms may have buckled under the weight of new regulation, but health insurers appear to be thriving in the complicated new regulatory environment.

… in America, at least, health care turns out to be the most exciting corner of the [insurance] industry. The vast expense and unintelligible complexity of American health care may be a national disgrace, but they are a huge opportunity for firms that can navigate the system and minimise costs.

It’s not particularly surprising that regulation benefits the rich and powerful in this way.  So what can be done about it?  One obvious solution is to pull back on all that regulation, but that has been politically difficult.  Another option, which I’ve mentioned before, is to encourage foreign insurance companies to enter the U.S. market.  As noted, there’s plenty of money being made right now, which makes it a great time to get in.  No doubt many foreign companies find the U.S. regulations daunting, and perhaps this is why they have stayed out of the market so far.  But when you realize that regulation leads to such high profits, navigating the rules becomes worth the effort.  And what helps foreign insurance companies also helps U.S. consumers, as increased competition brings prices down.

I can imagine that federal and state regulations make it difficult for foreign insurers to operate in the U.S.  This is where trade negotiations can be helpful.  For example, in the trade negotiations going on right now with the EU, European companies can ask the EU trade negotiators to press for rules ensuring that U.S. regulations don’t discriminate against foreign insurance providers.

Do Conservatives Only Oppose Big-Government Health Care Schemes When Proposed by Democrats?

Conservatives outright reject the idea that big-government gun-control schemes would reduce mass shootings like the recent murders committed at a Planned Parenthood clinic in Colorado Springs. So why do so many conservatives seem to believe a big-government mental-health-care scheme, like the bill sponsored by psychologist and congressman Tim Murphy (R-PA), would be any more effective?

Murphy’s bill would reorganize and expand the federal government’s involvement in mental-health care. It would create a new Assistant Secretary for Mental Health and Substance Use Disorders at the U.S. Department of Health and Human Services. It would create an Interagency Serious Mental Illness Coordinating Committee. It would encourage telepsychiatry–by subsidizing it. It would expand Medicare and Medicaid subsidies for mental-health goods and services. It would leverage federal grants to coerce control how states treat mental-health patients suspected of being a threat to others. It would do other things.

Conservatives have lauded the bill and demonized its opponents. In October, National Review editorialized basically that Murphy’s bill would manage mental-health treatment from Washington better than Washington has ever managed mental-health treatment before.  Last week, The Wall Street Journal editorialized that opponents, including some Republicans, “object to involuntary commitment for the mentally ill, despite overwhelming evidence of the risks to society and the sick.” The Journal neglected either to recognize that involuntary commitment is a dangerous power for the government to wield, one with both benefits and costs, or to offer evidence that the benefits to society and the sick of broader involuntary commitment would exceed those costs.

Debating ObamaCare with Kathleen Sebelius

Back in October, I debated ObamaCare with former Secretary of the U.S. Department of Health and Human Services Kathleen Sebelius. Kansas City Public Television recently aired a package featuring the debate.

Complete footage of the debate is available here: Part 1Part 2Part 3Part 4Part 5, and Part 6.

One memorable moment came after I told the story of Deamonte Driver, a boy from Prince George’s County, Maryland, who died at age 12 because his mother was unable to find a dentist who would accept their Medicaid coverage. An infection that began in an abscessed tooth spread to Deamonte’s brain and ultimately killed him. A dentist could have prevented Deamonte’s death with a simple $80 extraction. But Medicaid pays dentists so little, that only one in six Maryland dentists accepts Medicaid patients. Deamonte’s mother and employees at a local non-profit called dozens of dentists to no avail.

Deamonte DriverSebelius responded that Deamonte would have died with or without Medicaid, and besides there is no alternative because “I don’t know any dentists who take uninsured people at all.” This from, as KCPT describes her, “the woman once charged with leading the nation’s health care system.”

Also on the panel were Tarren Bragdon of the Foundation for Government Accountability and Daniel Landon of the Missouri Hospital Association.

Will Obama Make Housing Affordable?

Property-rights and housing-affordability advocates were surprised and elated that the chair of President Obama’s Council of Economic Advisors, Jason Furman, gave a speech blaming housing affordability problems on zoning and land-use regulation. They shouldn’t be: while Furman is correct in general, he is wrong about the details and the prescriptions he offers could make the problems worse than ever.

There is no doubt, as Furman documents in his speech, that land-use regulation is the cause of growing housing affordability problems. Yet Furman fails to note the fact that these problems are only found in some parts of the country. This is a crucial observation, and those who fail to understand it are almost certain to misdiagnose the cause and propose the wrong remedies.

Citing Jane Jacobs (who was wrong at least as often as she was right), Forman blames affordability problems on zoning that “limits density and mixed-use development.” Such zoning is found in almost every city in the country except Houston, yet most cities don’t have housing affordability problems. Thus, such zoning alone cannot be the cause of rising rents and home prices.

Based on this erroneous assumption, Furman endorses what he calls the administration’s agenda, which is its Affirmatively Furthering Fair Housing program. Rather than making housing more affordable, this program is aimed at ending racial segregation of middle-class suburbs by requiring the construction of multifamily housing in suburbs that are not racially balanced relative to their urban areas. It assumes that multifamily housing is less costly (and thus more affordable to low-income minorities) than single family, but that is only true because units are smaller: on a dollar-per-square-foot basis, multifamily costs more than single family, especially for mid-rise and high-rise apartments. Multifamily also uses more energy per square foot than single family, which means heating bills will be higher.

CBO: Tangled Web of Welfare Programs Creates High Tax Rates on Participants

The dozens of different programs that form our tangled welfare system often impose high effective marginal tax rates that make it harder for low-income people to transition out of these programs and lift of those programs and into the middle class. As the people in these programs enter the workforce, get a promotion, or work more hours, they can lose a significant portion of those earnings through reduced benefits and increased taxes. A new report from the Congressional Budget Office (CBO) illustrates this predicament: many households hovering around the poverty level face steeper effective marginal tax rates than even the highest earners. These prohibitively high tax rates can discourage work and limit their prospects, ultimately making them less likely to escape poverty.