Topic: Health Care & Welfare

The Biggest Loser In The Democratic Debate Wasn’t Hillary or Bernie, It Was ObamaCare

Hillary Clinton and Sen. Bernie Sanders participate in a Democratic primary debate in Charleston, South Carolina, on Jan. 17, 2016.

In their final debate before they face Democratic primary voters, Hillary Clinton and Bernie Sanders traded sharp jabs on health care. Pundits focused on how the barbs would affect the horse race, whether Democrats should be bold and idealistic (Sanders) or shrewd and practical (Clinton), and how Sanders’ “Medicare for All” scheme would raise taxes by a cool $1.4 trillion. (Per. Year.) Almost no one noticed the obvious: the Clinton-Sanders spat shows that not even Democrats like the Affordable Care Act, and that the law remains very much in danger of repeal.

Hours before the debate, Sanders unveiled an ambitious plan to put all Americans in Medicare. According to his web site, “Creating a single, public insurance system will go a long way towards getting health care spending under control.” Funny, Medicare has had the exact opposite effect on health spending for seniors. But no matter. Sanders assures us, “The typical middle class family would save over $5,000 under this plan.” Remember how President Obama promised ObamaCare would reduce family premiums by $2,500? It’s like that, only twice as ridiculous.

Clinton portrayed herself as the protector of ObamaCare. She warned that Sanders would “tear [ObamaCare] up…pushing our country back into that kind of a contentious debate.” She proposed instead to “build on” the law by imposing limits on ObamaCare’s rising copayments, and by imposing price controls on prescription drugs. Sanders countered, “No one is tearing this up, we’re going to go forward,” and so on.

Such rhetoric obscured the fact that the candidates’ differences are purely tactical. Clinton doesn’t oppose Medicare for All. Indeed, her approach would probably reach that goal much sooner. Since ObamaCare literally punishes whatever insurers provide the highest-quality coverage, it therefore forces health insurers into a race to the bottom, where they compete not to provide quality coverage to the sick.  That’s terrible if you or a family member have a high-cost, chronic health condition—or even just an ounce of humanity. But if you want to discredit “private” health insurance in the service of Medicare for All, it’s an absolute boon. After a decade of such misery, voters will beg President (Chelsea) Clinton for a federal takeover. But if President Sanders demands a $1.4 trillion tax hike without first making voters suffer under ObamaCare, he will over-play his hand and set back his cause.

The rhetoric obscured something much larger, too. Clinton and Sanders inadvertently revealed that not even Democrats like ObamaCare all that much, and Democrats know there’s a real chance the law may not be around in four years.

During the debate, Sanders repeatedly noted ObamaCare’s failings : “29 million people still have no health insurance. We are paying the highest prices in the world for prescription drugs, getting ripped off…even more are underinsured with huge copayments and deductibles…we are spending almost three times more than the British, who guarantee health care to all of their people…Fifty percent more than the French, more than the Canadians.”

Sure, he also boasted, repeatedly, that he helped write and voted for the ACA. Nonetheless, Sanders was indicting ObamaCare for failing to achieve universal coverage, contain prices, reduce barriers to care, or eliminate wasteful spending. At least one of the problems he lamented—“even more [people] are underinsured with huge copayments and deductibles”—ObamaCare has made worse. (See “race to the bottom” above, and here.)

When Sanders criticized the U.S. health care system, he was criticizing ObamaCare. His call for immediate adoption of Medicare for All shows that the Democratic party’s left wing is simply not that impressed with ObamaCare, which they have always (correctly) viewed as a giveaway to private insurers and drug companies.

Clinton’s proposals to outlaw some copayments and impose price controls on prescription drugs are likewise an implicit acknowledgement that ObamaCare has not made health care affordable. In addition, her attacks on Sanders reveal that she and many other Democrats know ObamaCare’s future remains in jeopardy.

Seriously, does anyone really think Clinton is worried that something might “push[] our country back into that kind of a contentious debate” over health care? America has been stuck in a nasty, tribal health care debate every day of the six years since Democrats passed ObamaCare despite public disapproval. Or that Republicans would be able to repeal ObamaCare over President Sanders’ veto?

Popular ACA Provision’s $1,200 per Year Pay Cut

Since the Affordable Care Act came into effect in September 2010, its dependent coverage provision has mandated that insurers allow children to remain on their parents’ plans until age twenty-six. According to some polls, it is the single most popular provision in the law, enjoying high levels of support from Independents, Democrats, and Republicans alike. This is a marked contrast to the law as a whole, which remains unpopular to this day.  The Obama administration has pointed to increasing insurance coverage among young adults as a sign of the provision’s success. A new working paper might dampen some of this fanfare, as the researchers find evidence that the dependent coverage provision led to reduced wages of roughly $1,200 a year for affected workers. Policies and choices have trade-offs, and this mandate is no exception. 

Popularity of Select Provisions of the Affordable Care Act

Source: Kaiser Health Tracking Poll: March 2014.

Prior to the ACA, some states had passed some form of extended dependent coverage mandates, while others had not. The researchers were able to exploit this variation, using the states with prior mandates as a control group. They estimate that the dependent coverage provision reduced wages by roughly $1,200 per year for workers 26 and older. As might be expected, firms that offer health insurance are more affected than those that do not. Somewhat more surprisingly, they find that workers with eligible children are not the only ones affected: there is some degree of pooling and childless workers see wage reductions as well. These findings also imply at least a moderate level of crowd-out, meaning that some proportion of the young adults gaining coverage shifted from other forms of coverage. The authors also failed to find any significant change in labor supply resulting from the reductions in wages, but suggest one possible explanation may be the timing of the provision’s implementation in the weak labor market in late 2010. Parents might value the extended insurance coverage the provision allows, and some young adults who gained coverage might be better off, but these changes come at a cost in the form of reduced wages.

The dependent coverage provision is one of the most broadly popular aspects of the health reform, and it does seem to have increased insurance coverage among the target population to some extent. These gains come with trade-offs, however, and this evidence indicates that workers at affected firms saw wage reductions of about $1,200 per year. Favorable reports citing increased health insurance coverage should take this new evidence into account. Once the costs are fully understood, the provision might not be quite as popular. 

Hobby Lobby 2: Executive-Agency Boogaloo

The Supreme Court said in Hobby Lobby that, under the Religious Freedom Restoration Act (RFRA), the Department of Health and Human Services (HHS) could not apply its contraceptive mandate to closely held for-profit corporations when doing so would violate the owners’ sincere religious beliefs. Around the time of that decision, the Court stayed the application of the mandate to a group of nuns known as the Little Sisters of the Poor. The Little Sisters—like the plaintiffs in six other cases that have now been consolidated under the name Zubik v. Burwell—object to the “accommodation” that HHS crafted for their religious beliefs and the Supreme Court will now be evaluating their claims.

Are We Entering The Age of Exponential Growth?

In his 1999 book The Age of Spiritual Machines, the famed futurist Ray Kurzweil proposed “The Law of Accelerating Returns.” According to Kurzweil’s law, “the rate of change in a wide variety of evolutionary systems (including but not limited to the growth of technologies) tends to increase exponentially.” I mention Kurzweil’s observation, because it is sure beginning to feel like we are entering an age of colossal and rapid change. Consider the following:

According to The Telegraph, “Genes which make people intelligent have been discovered [by researchers at the Imperial College London] and scientists believe they could be manipulated to boost brain power.” This could usher in an era of super-smart humans and accelerate the already fast process of scientific discovery.

Elon Musk’s SpaceX Falcon 9 rocket has successfully “blasted off from Cape Canaveral, delivered communications satellites to orbit before its main-stage booster returned to a landing pad.” Put differently, space flight has just become much cheaper since main-stage booster rockets, which were previously non-reusable, are also very expensive.

It’s the Heritage Individual Mandate Debate All Over Again

A group of prominent conservatives recently released an ObamaCare replacement plan that would replicate many of that law’s worst features. As I explain in a new post at Darwin’s Fool, conservatives need to examine this proposal closely against the alternative. An excerpt:

If you’re a conservative and you’re reading this, chances are good you have a gun to your headConservatives are so averse to health policyNational Review‘s Ramesh Ponnuru once quipped that “Republicans will do anything to repeal ObamaCare–except think about health care.” This is no small problem. Indeed, it is how we got ObamaCare in the first place: conservative neglect enabled a raft of very un-conservative health care ideas to germinate at the Heritage Foundation for a decade and a half. By the time Democrats picked up those ideas and ran with them in 2009, it was too late. Conservatives were powerless to stop them.

Conservatives may indeed be just one election away from repealing ObamaCare, which is all to the good. But some conservatives have proposed replacing ObamaCare with refundable tax credits for health-insurance.  Tax credits are ObamaCare-lite. They would cement in place many of ObamaCare’s worst features, and replicate its awful results. If those features acquire a bipartisan imprimatur, we will never in our lifetimes be rid of them. Unless conservatives give tax credits the scrutiny they should have applied to the Heritage Foundation plan in the 1990s, they will make the same mistake all over again.

Conservatives don’t have to repeat history. A better set of reforms offers a clear path toward a market system, and away from ObamaCare, by building on the bedrock conservative idea of health savings accounts (HSAs). “Large” HSAs would deliver better, more affordable, and more secure health care, particularly for the most vulnerable. At the same time, Large HSAs would give workers a larger effective tax cut than all the Reagan and Bush tax cuts combined, and nine times larger than repealing ObamaCare.

Read the whole thing.

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.