Topic: Regulatory Studies

The New York Times and The Boston Globe Unload on ObamaCare

Aside from one necessary clarification (see far below), it would be difficult to improve on what the New York Times, the Boston Globe, and the enrollees they interview have to say about ObamaCare.

First, from yesterday’s New York Times article, “Many Say High Deductibles Make Their Health Law Insurance All but Useless”: 

But for many consumers, the sticker shock is coming not on the front end, when they purchase the plans, but on the back end when they get sick: sky-high deductibles that are leaving some newly insured feeling nearly as vulnerable as they were before they had coverage.

“The deductible, $3,000 a year, makes it impossible to actually go to the doctor,” said David R. Reines, 60, of Jefferson Township, N.J., a former hardware salesman with chronic knee pain. “We have insurance, but can’t afford to use it.”…

“We could not afford the deductible,” said Kevin Fanning, 59, who lives in North Texas, near Wichita Falls. “Basically I was paying for insurance I could not afford to use.”

He dropped his policy…

“Our deductible is so high, we practically pay for all of our medical expenses out of pocket,” said Wendy Kaplan, 50, of Evanston, Ill. “So our policy is really there for emergencies only, and basic wellness appointments.”

Her family of four pays premiums of $1,200 a month for coverage with an annual deductible of $12,700…

Alexis C. Phillips, 29, of Houston, is the kind of consumer federal officials would like to enroll this fall. But after reviewing the available plans, she said, she concluded: “The deductibles are ridiculously high. I will never be able to go over the deductible unless something catastrophic happened to me. I’m better off not purchasing that insurance and saving the money in case something bad happens.”

“While my premiums are affordable, the out-of-pocket expenses required to meet the deductible are not,” said [Karin] Rosner, who makes about $30,000 a year…

“When they said affordable, I thought they really meant affordable,” [Anne Cornwell of Chattanooga, Tenn.,] said.

And from today’s Boston Globe article, “High-Deductible Health Plans Make Affordable Care Act ‘Unaffordable,’ Critics Say”:

“We can’t afford the Affordable Care Act, quite honestly,” said Cassaundra Anderson, whose family canvassed for Obama in their neighborhood, a Republican stronghold outside Cincinnati. “The intention is great, but there is so much wrong. . . . I’m mad.”…

The Andersons’ experience echoes that of hundreds of thousands of newly insured Americans facing sticker shock over out-of-pocket costs…

“This will be an issue at least one more time in the 2016 election. It could absolutely still hurt Democrats,” said Robert Blendon, a professor of health policy and political analysis at the Harvard School of Public Health. “Polls about the Affordable Care Act have a considerable amount of middle-income people who say either the program has done nothing for them or actually hurt them.”…

“Unfortunately, what we are headed toward now is universal crappy health insurance,” said Dr. Budd Shenkin, a California pediatrician…“It’s just not a good deal for people,” he said.

“We’re in the process of looking at going without insurance,” [Cassaundra Anderson] said, calculating that the family will be better off financially just paying the $2,000 tax penalty for not abiding by the law’s mandate. “What am I even paying these insurance people for? Why should we reenroll?”…

“I cannot get anything with this insurance. Nothing,” said [Laura] Torres, who avoids seeking treatment for her thyroid condition and high blood pressure because of cost. “I just pay my monthly payments, try to take care of myself, go to work, and hope something serious doesn’t happen to me.”…

Amete Kahsay, 53, works as a temporary warehouse packer in Columbus. The Affordable Care marketplace is her only option for health insurance. She and her husband, an airport shuttle driver, pay $275 a month for a “bronze” plan with a $13,200 deductible.

Shortly after they signed up for insurance last year, her husband rushed her to the emergency room when she experienced dizziness. The visit, which included a CT scan of her brain, cost $1,700. She paid the charge from her savings, then returned to her native Ethiopia, where care is cheaper, to consult a neurologist and seek follow-up care.

“I support Obamacare. Without it, I wouldn’t have any type of insurance. But I’m not sure it’s worth the money,” said Kahsay, a US citizen who is registered as an independent voter. “Now, unless I get very, very sick, like only if it’s life-threatening, I won’t go to the doctor. I just lay down and take a rest.”

The necessary clarification is that these people are not complaining about high-deductibles in a market system. In a market system, consumers who choose high deductibles save money on their premiums and therefore have more resources to help them pay their out-of-pocket expenses. ObamaCare, on the other hand, manages to pair high deductibles with higher premiums, stripping many people of this benefit of high-deductible plans and leaving them unable to pay their medical bills. 

Vermont Official Foresaw Collapse of ObamaCare Co-Ops

The Daily Caller has an excellent article recounting that it wasn’t just opponents who saw trouble ahead for ObamaCare’s health-insurance cooperatives, of which more than a dozen have now collapsed. 

Susan L. Donegan was commissioner for Vermont’s Division of Insurance in 2013 when she refused to issue a license to the proposed Vermont Health CO-OP, saying it failed to meet state standards. Her action barred the Obamacare non-profit from selling health insurance in the state…

Today, she looks like a prescient state official who likely saved thousands of Vermonters from buying their health insurance from a doomed insurer.

That’s because 13 of the 24 co-ops set up under Obamacare have collapsed, costing the federal treasury $1.3 billion. More than 800,000 co-op customers now find themselves without health insurance coverage and are scrambling to find new policies due to the co-op failures. 

Turns out that some of the biggest problems she identified two years ago in her state also doomed co-ops across the country…

Denying a license to the health co-op was not an easy decision for Donegan, who first joined Democratic Gov. Peter Shumlin’s administration as a deputy insurance commissioner in 2010.

First, she already knew when the co-op’s application arrived at her her office that federal officials in Washington, D.C., had pre-approved the co-op’s plan and allocated to it $33 million in taxpayer funds.

Second, she knew the co-ops were an important part of President Obama’s signature health reform effort. Obama is extremely popular in Vermont, having garnered 67 percent of the vote in his 2008 and 2012 campaigns…

Donegan sensed trouble as soon as she read the co-op’s application. There were optimistic and questionable forecasts, a board filled with friends, sweetheart deals, high salaries, deep conflicts of interest and a staff with little business expertise.

The failure of more than a dozen other ObamaCare co-ops suggests these problems were not limited to Vermont’s proposed co-op. Yet regulators in those states, not to mention CMS, nevertheless approved them.

One might even say the rule is that government regulators either were unable to spot these co-ops’ looming insolvency, or worse, allowed political considerations to trump their judgment; and Vermont is the exception, where regulators both identified the problem and had the courage to pay the political cost of denying that carrier a license. Something to keep in mind when contemplating the costs and benefits of government regulation of insurance-carrier solvency.

Any count of failed ObamaCare co-ops should be sure to include Vermont’s.

H/T: Greg Scandlen.

“Underground Regulations” Violate the Constitution as Much as Headline-Grabbing Executive Actions

Small business owners aren’t typically lawyers, though they are undoubtedly familiar with the thousands of inscrutable pages of new regulations published every year in the Federal Register. Instead of devoting their energies to growing their businesses, owners must expend significant time and resources ensuring compliance with these voluminous and often vague regulations, with costly fines looming as consequences for failure to comply. “The Fourth Branch & Underground Regulations,” a new report by the National Federation of Independent Businesses (NFIB), details the processes by which administrative agencies skirt “notice-and-comment” requirements to impose new interpretations of rules that avoid the constitutional system of checks and balances. Unfortunately, operating on this shifting field disproportionately affects small businesses, as they are most poorly equipped to lobby for favorable rules.

The Administrative Procedure Act established “notice-and-comment” as a means for regulated businesses to voice concerns with or offer suggestions to improve proposed regulations. However, “non-legislative rules,” or “general statements of policy” and “interpretive rules,” are not required to undergo this process. This grants administrative agencies – the “Fourth Branch” of government – significant leeway in how “legislative rules” are interpreted and implemented, essentially giving them law making power. The recent Supreme Court ruling in Perez v. Mortgage Bankers Association allows agencies not only to interpret rules without undergoing “notice-and-comment,” but also the ability to change their interpretation at any point.(Cato filed an amicus brief in the case.)

Without a required need for transparency, agencies are thus free to issue “underground regulations” that impose serious and sudden rules on regulated businesses. NFIB examines four ways in which these “underground rules” are established: executive orders, guidance documents, amicus filings, and enforcement actions. Recognizing the potential dangers of this “underground” system of lawmaking, NFIB argues that “the regulated public should have a right to voice concerns over any newly announced rules, policy, or administrative interpretation of law that may impose affirmative regulatory burdens on individuals or businesses” and urges agencies to “allows some opportunity for notice-and-comment on all new rules imposing liabilities or other regulatory burdens – without regard to quantifiable compliance costs.”

Freed from congressional oversight and the beneficiary of considerable judicial deference, administrative agencies can pursue ideological agendas without the general public even being aware regulations are being instituted. One way this is achieved is by filing an amicus brief in a case between two private parties. An agency can offer the court its authoritative interpretation of a rule – though given the ruling in Perez, the agency can change that interpretation in a later brief in another case or court.

Redskins’ Trademarks Are Constitutionally Protected

Washington’s football team has been called the Redskins since 1933, and that team name has been a registered trademark since 1967. Nevertheless, last year, the Patent and Trademark Office (PTO) cancelled the Redskins’ trademarks on the basis that a “substantial composite” of Native Americans found the team name “disparaging” when those trademarks were first registered. The team challenged the cancellation on the ground that it was based on the content of the marks’ expression, in violation of the First Amendment.

The federal district court in Virginia held that the First Amendment is irrelevant here because the Redskins remained free to use their name and marks without registration and, in any event, trademarks are government speech and the government can decide how it wants to speak. The Redskins have appealed that decision to the Richmond-based U.S. Court of Appeals for the Fourth Circuit—read their entertaining brief—and Cato has filed a brief supporting the team.

Although the line between core political speech and commercial speech may at times be difficult to draw, both are entitled to First Amendment protection and, in any event, trademarks are used for more than commercial transaction. Furthermore, registration offers substantial rights and benefits to trademark owners—such as the right to license and to sue for misappropriation—which the government can’t deny simply because it doesn’t like the mark. And trademarks, among other types of intellectual property, don’t constitute government speech.

The lower court relied on the Supreme Court’s recent decision in Walker v. Texas Division (the Confederate flag license-plate case), but trademarks don’t satisfy Walker’s new test for government speech: (1) the government has not traditionally used trademarks to communicate messages, (2) nor has trademark registration historically been restricted to speech with which the government agrees, (3) nor do observers understand trademarks to be the speech of the government, (4) nor does the government maintain control over trademarks upon registration. Instead, the Lanham Act—the federal trademark statute—establishes a generally available regime allowing the expression of a variety of viewpoints. Because such expression is constitutionally protected, the Lanham Act’s registration process is subject to First Amendment review, which dooms the law’s “disparagement” bar.

Indeed, the PTO’s record reveals confusion, bordering on incoherence, from the highly subjective application of disparagement standards built on shifting attitudes. For instance, the office has registered a number of trademarks involving the words “dyke” and “fag” (our brief has many more colorful examples) but also at times denied registration for designations using those words.

Moreover, the disparagement bar enshrines the heckler’s veto. As the Supreme Court said in Texas v. Johnson (the 1989 flag-burning case), “If there is a bedrock principle underlying the First Amendment, it is that the government may not prohibit the expression of an idea simply because society finds the idea itself offensive or disagreeable.” Although there are categories of speech unprotected by the First Amendment—such as defamation or incitement of violence—disparaging speech is not one of them and courts do not have “freewheeling authority to declare new categories of speech outside the scope of the First Amendment.” The Lanham Act’s disparagement bar is content-based because it cannot be “justified without reference to the content of the regulated speech.”

Even worse, the bar compels viewpoint discrimination—a particularly pernicious form of censorship—by allowing positive references to a group or idea but not (arguably) negative ones. Even if trademarks were considered purely commercial speech, which enjoys less constitutional protection under current doctrine, the disparagement bar would fail because the government has no substantial interest unrelated to the suppression of speech.

For more on the case, which is formally called Pro-Football, Inc. v. Blackhorse, see my USA Today op-ed and Federalist Society podcast.

Ohio’s Issue 3: The Runt of the Marijuana Crop

By nearly a 2 to 1 margin, Ohio’s Issue 3 has failed. It may be just as well. Jacob Sullum writes at Reason:

[I]t’s not clear whether the rejection of Issue 3 reflects general resistance to legalization or opposition to the initiative’s most controversial feature: a cannabis cultivation cartel that would have limited commercial production to 10 sites controlled by the initiative’s financial backers. The ballot description highlighted that aspect of the initiative, saying Issue 3 “grants a monopoly for the commercial production and sale of marijuana for recreational and medicinal purposes” and would “endow exclusive rights for commercial marijuana growth, cultivation, and extraction to self-designated landowners who own ten predetermined parcels of land.”

This is nothing like the model that prevailed in Colorado, and that seems to be working well so far.

Establishing a permanent commercial pot cartel has no clear public policy rationale. It appears rather to have been an instance of shameless self-dealing by individuals who hoped to extract rents based on the public’s anxiety about change. Even – and I don’t say this lightly – even a state monopoly on commercial sales might have been better, in that the rents would have gone to a public purpose, rather than to some well-connected speculators, who ought not to profit from a law written specifically to favor them. Indeed, such laws are not properly called laws at all; they are privileges – private laws, rather than public ones, and as such they come under grave suspicion.

Go Ahead, Have a Lasik!

This morning, I saw a TV ad for Lasik eye surgery and that got me wondering, “What’s happened to the price of Lasik since I had my procedure 10 years ago?” We hear a lot about the rising cost of healthcare. (By the way, how is that Obamacare working out for you?) But, what about medical procedures that patients pay for themselves? And so I called the ophthalmologist who performed my Lasik operation (with superb results, I might add) to find out the details. 
Back in 2005, he charged $3,500 for fixing nearsightedness and astigmatism in both eyes, or $4,264 in 2015 dollars. Today, he charges $3,000. That amounts to a real price reduction of 30 percent. In the meantime, average hourly earnings of production and nonsupervisory employees (a close approximation to the quintessential “blue collar worker”), rose from $15.91 in January 2005 to $20.80 in January 2015. So, an ordinary American needed to work for 220 hours to afford a Lasik surgery in 2005. S/he needs to work 144 hours to afford the same procedure today. That’s a 35 percent decrease in terms of work time.
And, as my doctor reminded me, the price was not the only thing that has changed. Lasik machines today are significantly more precise, achieving 20/20 vision with greater regularity for nearsightedness, farsightedness and astigmatism. They are much safer and disastrous complications, such as the loss of sight, have become even rarer (i.e., Lasik has been a very safe procedure for a very long time). The doctors performing the operation are more experienced and the screening of potentially problematic patients has improved. 
Candidly, my doctor has admitted that the prices could come down even more. One reason for Lasik prices being what they are is that only ophthalmologists are allowed to perform Lasik operations. Optometrists, however, are banned. And, of course, draconian immigration rules make it super difficult for foreign doctors to work in the United States.
Still, relative to 10 years ago, today a prospective Lasik patient enjoys the benefits of better and safer machines, and a price/time reduction of 35 percent. Not bad, not bad at all. Please visit HumanProgress and search for “cost of cosmetic procedures” to see how other elective medical procedures have become cheaper over time.


China Abandons One Child Policy—Ends Suffering For Millions

Today, China abandoned its 35-year-old one-child policy. Based on the now debunked threat of overpopulation that was popularized by Stanford University scholar Paul Ehrlich, the communist government subjected the Chinese people to forced sterilizations and abortions. Many newborn babies were either killed or left to die. Today, the Chinese population suffers from a dangerous gender imbalance that favors boys over girls at a ratio of 117:100, and a demographic implosion that threatens future economic growth and prosperity. In fact, as Human Progress advisory board member Matt Ridley shows in his book The Rational Optimist, population growth and economic expansion go hand in hand. The horrific consequences of the Chinese one-child policy are a reminder of what happens when governments are allowed to interfere in the deeply personal decisions of individual citizens and their families.