October 2010

October 19, 2010 1:02PM

A Less‐​Than‐​Rigorous ObamaCare Fact Check

Kaiser Health News and The Washington Post have posted a piece titled “Campaign Claims: Health Law Myths And Facts,” which examines these common criticisms of ObamaCare:

  1. “The law amounts to a ‘government takeover’ of health insurance and health care.” The article’s conclusion: “it falls far short of a government takeover.” That conclusion rests largely on the fact that “Medical care will be provided by private hospitals and doctors.” But as I explain in this study, “it is irrelevant whether we describe medical resources (e.g., hospitals, employees) as ‘public’ or ‘private.’ What matters—what determines real as opposed to nominal ownership—is who controls the resources.” Obama health official Jeanne Lambrew acknowledges as much: “the government role in socialized medicine systems [can include] public financing of private insurance and providers.” And as I concluded in this study, “Compulsory ‘private’ health insurance would give government as much control over the nation’s health care sector as a compulsory government program.” I wonder if the article’s authors spoke to anyone who raised this perspective.
  2. “The law will gut Medicare by cutting more than $500 billion from the program over 10 years; seniors will lose benefits and won’t be able to keep their doctors.” Conclusion: “The gutting of Medicare claim goes too far…What this means for seniors is a bit murkier.” True enough: even if ObamaCare’s implausible Medicare cuts take effect, they clearly would not “gut” Medicare. (BTW, click here or here for a politically sustainable way to restrain Medicare spending.) The authors also note that Medicare Advantage enrollees would lose some benefits. But when the article claims that ObamaCare will not eliminate any “basic” Medicare benefits, it neglects to mention that Medicare’s chief actuary estimates that the law could cause 15 percent of hospitals, home health agencies, and other providers to stop accepting Medicare patients. If your hospital no longer accepts your Medicare coverage, is that not a benefit cut?
  3. “The law will cause 87 million Americans to lose their current coverage.” Conclusion: “How true is it? Partly, at best. But evidence is limited.” The House Republicans’ Pledge to America claims that ObamaCare “will force some 87 million Americans to drop their current coverage.” The word drop is a bit strong; it’s more accurate to say that many Americans will have to switch to another plan, even if it’s just a more‐​expensive version of their current plan. Indeed, HHS estimates that 69 percent of employer plans will have to do so by 2013. Yet some people are being dropped from their current health insurance. When Principal Financial Group leaves the market, its nearly 1 million enrollees will lose their current health plan. Industry analysts expect more such departures. Why no mention of that?
  4. “The law is driving up costs and premiums and will continue to do so over the next several years.” Conclusion: “There may be very small increases initially.” Here the article is kinder to ObamaCare than even ObamaCare’s supporters are. May be? Even ObamaCare’s supporters admit the law will increase premiums for some people. Very small increases? Even HHS estimates that the requirement that consumers purchase unlimited annual coverage could increase premiums for some by 7 percent. (There’s no mention of Blue Cross and Blue Shield of Connecticut, which says ObamaCare will increase premiums for some of its customers by nearly 30 percent.) And why only initially? Do the authors expect that there will be no premium increases when HHS eventually stops issuing waivers? Or when HHS sets a minimum level of coverage that Americans must purchase in 2014? Or that ObamaCare has solved the tragedy of the commons? For support, the article claims, “the Obama administration, citing [various] estimates…says the law isn’t responsible for any increase greater than 1 to 2 percent.” Actually, that’s not what the administration says — it’s what they want you to think they’re saying. Read this letter and other administration utterances carefully. They say “1–2 percent” when speaking of ObamaCare’s average effect on premiums, and “minimal” when speaking of anything other than the average effect. (The administration’s threshold for “minimal” is presumably somewhere north of 7 percent.)
  5. “The law’s expansion of Medicaid will put massive pressure on state budgets at a time when many are already in crisis.” Conclusion: “The impact will probably be small, but it’s hard to say for sure.” The article only cites figures generated by supporters of the law, who say the impact will be small. Why just mention that there are figures from the other side? Why not include them?
  6. “The new law uses tax dollars to pay for abortions.” Conclusion: “Open to interpretation.” This was a missed opportunity to examine two crucial questions. First, would federal insurance subsidies truly be segregated from the separate premiums that consumers in ObamaCare’s exchanges would have to pay for elective‐​abortion coverage? Or would this just be an accounting gimmick? What would happen, for example, if there were more abortions than an insurer anticipated, and those separate premiums proved insufficient to pay for them? How would you keep one side of the ledger from spilling over into the other? Second, would the availability of federal subsidies for health insurance plans that make elective‐​abortion coverage available as a rider increase enrollment in those plans? If so, wouldn’t that implicitly subsidize elective abortions? Rather than examine those questions, the article punted.

On the whole, I’d say this fact check may have been very kind to the new law.

October 19, 2010 12:57PM

It’s a Little Late to Be Discussing National Standards Governance

What do you do when you’re asked your opinion about how to implement something you don’t like? Do you use the opportunity to say why you think implementation will fail, and how to minimize the damage, even if doing so might make you look like a collaborator? Or do you say nothing and just let bad stuff happen?

A couple of months ago, I was presented with that dilemma by the people at the Thomas B. Fordham Institute — you might have seen me discuss them once or twice — who were putting together a report on how to govern national standards and tests. They asked me, along with several other people who’d thought long and hard about national standards, to send them answers to several questions to help inform their thinking. Today, Fordham is releasing that report, and I have just a few notes about it.

First, you will see me quoted twice in the paper, and from those quotes you could get the impression that I’ve gone all Vichy on national standards. I don’t think Fordham authors Chester Finn and Michael Petrilli intended to do that, nor do the context of the quotes necessarily support that conclusion, but one could get that impression nonetheless. Fortunately, Fordham kindly posted my entire questionnaire – as well as those of several other respondents — on the report’s Web page, and you can go there for my complete thoughts. If you don’t want to do that, though, I’ll summarize (stop me if you’ve heard this before): As long as government runs and funds schools rather than giving parents control of education money and educators full freedom, standards‐​and‐​accountability regimes, no matter how strong they start off, will ultimately be rendered meaningless by politics.

My second note is that the overall report is aggravating because it is impossible to concretely discuss the governance of standards that almost no one knows about, and accountability systems that don’t exist. The Fordham authors acknowledge this problem, but acknowledging it doesn’t make it any less enervating. It also highlights that we’ve skipped a critical, much more fundamental debate: Even if you think centralized standards are a good idea — and almost everything we know about markets, competition, and innovation says they aren’t — how do you, really, keep politics from gutting standards and accountability? It’s a debate we needed to have long before states started to adopt national standards, largely in the pursuit of federal dough.

All that said, there is one, small part of the report that I find quite satisfying. A few months ago, Fordham President Chester Finn called people like me and Jay Greene “paranoid” for arguing that national standards would be hollowed out by politics. Well, in the report, while it is not explicitly identified as such, you will find what I am going to take as an apology (not to mention a welcome admission):

How will this Common Core effort be governed over the long term?…This issue might seem esoteric, almost philosophical in light of the staggering amount of work to be done right now to make the standards real and the assessments viable. But we find it essential—not just for the long‐​term health of the enterprise, but also to allay immediate concerns that these standards might be co‐​opted by any of the many factions that want to impose their dubious ideas on American education. You don’t have to be a conspiracy theorist to worry about this possibility [italics added]…

No, you don’t.

October 19, 2010 10:45AM

That Conway Ad and Social Liberalism

The infamous Conway attack on Rand Paul may be found here. Most people have focused on religion and politics in talking about the ad. I want to examine a part that has been overlooked.

We often hear that contemporary liberalism comprises a big state role in economic regulation combined with a small state regarding social and civil liberties. Maybe not.

Look at the disclaimer at the beginning of the ad. Who is standing behind Jack Conway? Those two gentlemen would police officers, probably Kentucky state police. Why are they there? After all, Conway could have put his loving wife and dear children in the background. But he choose police officers. Conway is saying: “I stand with the forces of order.” Not a very socially liberal message.

Why are the police willing to be in Conway’s ad? After all, the forces of order usually endorse the Republican candidate. Not this time. The Fraternal Order of Police in Kentucky endorsed Jack Conway. Why? Rand Paul suggested the drug war in Kentucky might be paid for in Kentucky. This had two effects. First, it cast doubt on the holiness of the anti‐​drug crusade. By putting the police officers behind him, Jack Conway is saying: “I will fight the drug war no matter what.” Not good for social liberalism or civil liberties.

Of course, the police have a material interest in the drug war in Kentucky. They believed that Dr. Paul’s call for federalism would mean lower salaries and less resources for the drug war in Kentucky. Conway is saying here: no budget cuts for my friends, the forces of order. Thus does the drug war bring the Kentucky State Police and the Daily Kos into a political alliance.

Like most politicians, Jack Conway is doing whatever is necessary to win a senate seat. He could end up as the pivotal vote for a Democratic Senate majority, at least in partisan matters.

If he votes as he ran, Conway will be a reliable vote for the policy status quo on the drug war, against civil and social liberties, and for a politics that always and everywhere covets victory “by any means necessary.” He should fit in well in Washington, especially with the more authoritarian parts of the GOP.

October 19, 2010 9:41AM

The Tea Party Continues to Freak Out Intellectuals

Peter Baker reports in the New York Times:

To better understand history, and his role in it, Obama invited a group of presidential scholars to dinner in May in the living quarters of the White House.* Obama was curious about, among other things, the Tea Party movement. Were there precedents for this sort of backlash against the establishment? What sparked them and how did they shape American politics? The historians recalled the Know‐​Nothings in the 1850s, the Populists in the 1890s and Father Charles Coughlin in the 1930s.

I’m struck by the historians’ choices (or maybe President Obama’s recollection of their choices)? Who are the Tea Partiers like? The Know‐​Nothings and Father Coughlin’s left‐​wing, anti‐​capitalist, anti‐​semitic Union for Social Justice. (And the Populists, which is a more interesting comparison, being a mass movement that arose mostly spontaneously. But it was primarily a political party, which reflects the confusion that the term “Tea Party” seems to generate.) Nobody thought of, say, the antiwar movement of the 60s or the tax revolt of the 70s? Or even the counterculture and feminist movements, both of which pioneered the cultural‐​reform style that Jonathan Rauch finds in the Tea Party:

Raise consciousness. Change hearts, not just votes. Attack corruption in society, not just on Capitol Hill.

With a few rare exceptions like Rauch and John Judis, non‐​conservative intellectuals are just freaked out by a mass movement against big government. Jill Lepore, Sean Wilentz, E. J. Dionne, Frank Rich — they just can’t imagine that real middle‐​class Americans could honestly oppose President Obama’s tax‐​and‐​spend agenda and march in the streets against it — just like, you know, they did against the war and stuff. It’s got to be racism, billionaires, extreme libertarianism, extreme authoritarianism, the John Birch Society, something. And so they tell the president that the Tea Party is reminiscent of “the Know‐​Nothings and Father Coughlin.” Why oh why can’t we have better historians?

*It’s not clear if this dinner is different from the widely reported July 2009 dinner with historians.

October 19, 2010 7:09AM

Charitable Donations to the Government

The New York Times took a look at people who voluntarily send money to Washington in order to help pay down the federal debt. Last year, the Bureau of the Public Debt received $3.1 million in such donations. Looking at the federal budget, I found a total of $241 million in “gifts and contributions” for fiscal year 2010.

Charitable donations to the federal government are insignificant when compared to donations made to private charities. A Cato essay on welfare spending points out that Americans contribute more than $300 billion a year to organized private charities and volunteer more than 8 billion hours a year to charitable activities, which can be valued at about $158 billion.

Thus when given the choice, people overwhelmingly entrust their donations to private charities not the government. One can only imagine what donations to private charities would be if government at all levels didn’t confiscate trillions of our dollars in taxes every year.

Warren Buffett, one of the richest men in the world, decided several years ago to leave most of his fortune to private charities. Buffett is notorious for advocating tax increases to support government spending. Yet, when he made the decision to donate his wealth, Buffett went with the private sector instead of the government.

A frustrating aspect of today’s public policy debate is that many pundits seem oblivious to the fact that the private sector could take care of those people truly in need if it was allowed to retain more of its earnings from the clutches of government. The government “crowds out” all kinds of private efforts and resources. If the government were to recede, private sector efforts to aid the needy would expand.

October 18, 2010 5:30PM

The Cuba Embargo at 50

Fifty years ago Tuesday, the United States began to impose sanctions on Cuba in what would turn into a comprehensive U.S. trade, finance and travel embargo.

Though the embargo is not the cause of Cuba’s dismal and deteriorating economic and social conditions, neither has it worked to change Cuban policies or even lead to regime change.

It is time to lift the embargo. Doing so will not save communism from its inherent flaws; that system collapsed spectacularly elsewhere around the world in places where the West maintained or established trade. Keeping the sanctions will only further allow the dictatorship and its sympathizers to explain away the regime’s own failings. It would be better for Cubans and the world to see the unraveling of Cuban communism without U.S. intervention. When a free Cuba is eventually born, it will more easily flourish if enemies of the open society cannot rely on a false narrative about how the colossus of the North finally killed off the island’s socialist experiment.

A good way to start would be by lifting the travel portion of the embargo. That measure would expose ordinary Cubans to hundreds of thousands of American citizens, thus inevitably expanding Cuba’s informal economy and establishing innumerable relationships that would make Cuban citizens more independent of the state. The regime may try to reap the benefits of increased revenues, but it will have unleashed a social dynamic that will be difficult to control.

October 18, 2010 5:20PM

A Market Rescue in Chile

The Chilean mine accident and subsequent dramatic rescue of 33 miners in Chile has prompted criticism of capitalism from the usual quarters. Happily, there is an increasing recognition of the real story, as noted by Dan Henninger in the Wall Street Journal: capitalism saved the miners. Chile, long Latin America’s freest economy and now the fifth freest economy in the world according to the Economic Freedom of the World report, was able to rely on the latest technology and expertise provided by capitalist companies from around the world to execute a rescue that would not have been possible before the current era of globalization. The Washington Post also editorialized to that effect, saying, “Thanks to Chile’s openness to the world and embrace of entrepreneurship, it was able to effectively deploy cutting‐​edge technologies.” Here, commentator Star Parker writes about the miners and Chile’s remarkable transformation that began in the 1970s.