All Wet

For wetlands and Commerce Clause groupies, I have a short piece published in the Environmental Law Institute’s National Wetlands Newsletter analyzing the impact of last term’s wetlands-meets-federalism decision, Rapanos v. United States, here. While every critic of the case singles out Justice Kennedy for criticism, I aim equal ire at the failings of Chief Justice Roberts’ short, and equally problematic, concurrence.

Educational Excellence Through Central Planning?

In a Washington Post op-ed, former education secretaries Rod Paige and Bill Bennett call for a federal education testing regime. States that don’t like the idea would be free to keep their own standards, but only under the “rules and meddling of federal bureaucrats” that already takes place under the No Child Left Behind law (NCLB). What they’re saying to states is this: why don’t we replace those NCLB handcuffs – that you might slip out of anyway – with a nice new straightjacket.”

In trying to sell this idea, they acknowledge that the Constitution makes no mention of education – and hence, by the 10th Amendment, leaves power over it in the hands of the states and the people – but then dismiss adherence to that Amendment as “a naïve commitment to states’ rights.” It is federal officials like these, keep in mind, who would oversee the standards and tests in question. I can see it now. “Guess what I learned in school today, daddy: ‘The Bill of Rights is for wussies!’”

Even more puzzling, the secretaries acknowledge the virtues of competitive education markets in their double plus ungood argument for central planning. As a champion of the Western literary canon, surely Mr. Bennett has turned the pages of Adam Smith’s Wealth of Nations, which begins by explaining that markets depend on specialization and the division of labor. Imposing a single set of federal standards and tests would crush the diversity that markets require.

Most short-sightedly, the secretaries’ simply assume that a new federal standards and testing regime would necessarily meet with their approval. They make that gross assumption at a time when their own party’s control of congress is in doubt, and after acknowledging that “most states have deployed mediocre standards.”

In a nutshell, it’s a bad argument for a bad idea.

Remind me again, which of the two major parties stands for limited government?

Medicare Politics Will Sink Quality Efforts

As David Hyman explains in Medicare Meets Mephistopheles (book forum today), Medicare’s already-high tax burden is set to explode when the baby boomers begin to retire in 2011. Yet for all that money, the quality of care that Medicare delivers is downright mediocre.

Some members of Congress, led by Senate Finance Committee chairman Chuck Grassley (R-IA), are using the threat of a cut in Medicare payments to force physicians to accept tying those payments to government-defined quality measures.

Physicians, led by the American Medical Association, are essentially responding, Ditch the planned pay cut – then we’ll talk.”

Who’s right? Whose approach will get seniors and taxpayers the most value for their Medicare dollars? No one really knows, and thus all the political wrangling.

But one thing can be known: the approach that Congress chooses will be determined by raw political power – not by what provides the greatest value. For example, if the physicians get their way, every bit of quality improvement will cost taxpayers more money, because the AMA won’t even support pay cuts for lousy doctors.

As I explain in a recent paper, that is exactly why we don’t want Congress itself in the business of measuring and rewarding health care quality. That task is better left to a competitive market process. Congress should confine “pay-for-performance” to private Medicare plans, and encourage greater enrollment in private plans by giving seniors risk-adjusted vouchers rather than a defined benefit.

Breathtaking

The front-page story on tariff suspensions in today’s Washington Post has to be one of the worst examples of economic policy reporting that I’ve ever seen – and I work in health policy.

(Cato’s trade policy scholars convey that they were particularly suprised that such an article appeared in the Post, whose reporting is normally quite trade-literate.)

Emergency Care Providers Decline “Free” Money

A couple of years ago, Congress created a $1 billion fund to reimburse providers for emergency medical care delivered to illegal immigrants who don’t pay their bills, but providers aren’t signing up for the free money.

According to the Chicago Tribune, “In Illinois, one of six states slated to receive the bulk of the money, just 6 percent of the $12.1 million available to hospitals, doctors and ambulances has been spent.”  Why so little?

The biggest deterrent to applying for the money, [hospital officials] explain, is concern about time-consuming paperwork that can offset any money gained…

Another problem for some is more of a moral issue, a concern by hospital officials that questions about immigration status will scare off already worried immigrants. These hospitals are uneasy with the requirement that they document whether their patients are eligible for the federal money.

If winning congressional approval of this handout required loading it down with so much red tape that even its intended beneficiaries don’t want the money, then might this be a government program that Republicans could eliminate?  Maybe? 

Don’t hold your breath.  One of the program’s biggest supporters is conservative Republican Jon Kyl of Arizona, a member of the Senate leadership.  Back in 2004, Kyl boasted that he had secured $42 million for Arizona through this program.  (Only $5 million of that has so far been spent.)

Getting Better All the Time (Generally)

A few weeks ago, Don Boudreaux (on Cafe Hayek) and Will (here at Cato@Liberty) offered a thought experiment challenging the claim that American middle class living standards have been stagnant since the 1970s.

The stagnancy claim is rooted in federal statistics indicating that middle class wages have barely kept pace with inflation. Since childhood, I’ve heard many sober-faced adults (including some of my political science and econ professors in undergrad) voice this claim by saying that my generations would “be the first to have lower living standards than its parents.”

Don and Will respond to this claim by pointing out that the quality of “stuff” that a person can purchase with those wages has increased dramatically over that time. Federal statistics may see no difference between X real dollars spent on an 8-track player in 1970 and the same X real dollars spent on an iPod today, but consumers certainly do (especially joggers who don’t have to lug 8-track players and extension cords on their evening runs).

This response is the thesis of today’s New York Times “Economix” column by David Leonhardt. Leonhardt opens the article describing Chicagoan (and Northwestern economist) Robert J. Gordon and his snowblower:

“People can die from shoveling snow,” Mr. Gordon said. “I bet a lot of lives have been saved by snow blowers.”

Yet the benefits of the snow blower, namely more free time and less health risk, are largely missing from the government’s attempts to determine Americans’ economic well-being. The same goes for dozens of other inventions, be they air-conditioners, cellphones or medical devices. The reasons are a little technical — they involve the measurement of inflation — but they’re important to understand, because the implications are so large.

Gordon has worked on quantifying those benefits. The Times nicely captures the contrast between his research and the “stagnancy” federal data in this graphic on the median earnings for men, and notes that women do even better:

Two Views of Pay

This leads to two important conclusions:

  1. Living standards have improved markedly since the early 1980s.
  2. There has been a decline since about 2002.

Cato@Liberty readers may grumble about Leonhardt’s final graf, but the article is a great read.

As for my former profs, instead of their sobering worries, perhaps they should drop some Jiffy-pop in the microwave, turn on their plasma-screen TV, plop a Netflix in the DVD player or flip on the TiVo, and relax.

Help Wanted: New Medicare Administrator

Dr. Mark McClellan recently announced his intention to resign from the position of administrator of the Center for Medicare and Medicaid Services (CMS). 

Finding a replacement shouldn’t be hard.  The job description is simple.  The next Medicare administrator must run a sprawling program that buys health care for approximately 42 million Americans in every state of the union, and he must simultaneously:

  1. Spend less money on health care (to keep Congress and the Administration from calling for your head);
  2. Spend more money on health care (for example by averting the 5 percent cut in physician payments scheduled to take effect next year) to keep providers from calling from your head - and seniors from doing so once they can’t find a doctor to treat them;
  3. Using modest carrots and no sticks, dramatically improve the mediocre quality of care currently being delivered to Medicare beneficiaries - but don’t interfere with the way in which providers deliver health care, particularly if a low-quality provider has the ear of a congressman or employs lots of people in a swing district;
  4. Buy lots of pharmaceuticals for seniors - but don’t pay too much (because Congress and the Administration will have your head) or too little (or the pharmaceutical companies will stop developing innovative products);
  5. Using inadequate and outdated information, set the price that Medicare will pay for every single good and service that beneficiaries need in every county in the United States;
  6. Assure Congress that you are protecting the program from fraud and abuse, even though your own fraud control personnel have doubts about whether they have the tools to do so, and the program is routinely labeled as being at “high risk” for fraud;    
  7. Prepare Medicare for the impending tidal wave of baby boomers, who will stop paying into the system and will start expecting benefits in 2011; 
  8. Keep a straight face while you explain that Medicare will be there for future generations, even though your trustees have determined that putting just one part of the program in actuarial balance for the next 75 years will require an “immediate 121% increase in the tax rate or an immediate 51%reduction in expenditures;”
  9. Surrender your every waking hour to the thankless task of bailing out a sinking ship while being forced to cheer on the efforts of your bosses (in the Administration and Congress) to drill more and bigger holes in the bottom; and finally 
  10. Walk on water in your (non-existent) free time. 

The last item on the list is obviously a stretch, but the next administrator of CMS will face all of the other challenges. 

How did the Medicare program – born of such high hopes and good intentions – end up in this mess?  What can we do to address these problems? 

For some answers to these questions, along with a satirical perspective on the Medicare program, attend the book forum for Medicare Meets Mephistopheles at the Cato Institute on September 21, 2006.  Sign up here.