Archives: 06/2012

Why ObamaCare Won’t Help the Sick

The Financial Times published my letter to the editor [$]:

Sir, “Imminent ‘ObamaCare’ ruling poses challenge for Republicans” [$] (May 25) doesn’t quite capture my views when it reports that I believe “resurrecting protections for patients with pre-existing conditions would be wrong.” ObamaCare is wrong precisely because those provisions will not protect patients with pre-existing conditions.

Those “protections” are nothing more than government price controls that force carriers to sell insurance to the sick at a premium far below the cost of the claims they incur. As a result, whichever carrier attracts the most sick patients goes out of business. The ensuing race to the bottom will even harm sick Americans who currently have secure coverage.

The debate over ObamaCare is not between people who care and people who don’t care. It is between people who know how to help the sick, and those who don’t.

Romney Etch-a-Sketches His Opposition to ObamaCare with Leavitt Pick

Mitt Romney has appointed ObamaCare profiteer and former Utah governor Mike Leavitt to head his presidential transition team. Politico reports that Leavitt has “headlined health care policy discussions at $10,000 per-person Beltway fundraisers for Romney” and may become White House chief of staff if Romney wins. ObamaCare opponents should be outraged.

Leavitt has spent the last couple of years spreading dangerous (but self-enriching!) nonsense about how states would benefit by establishing ObamaCare’s health insurance “exchanges.” He seldom mentions that his “consulting” business Leavitt Partners rakes in tons of ObamaCare cash by bidding on those contracts. Perhaps this is because reporters seldom ask.

Here’s a video Cato produced about why states should flatly refuse to create ObamaCare Exchanges:

Ben Domenech blogs about Leavitt’s ObamaCare-related iniquities here and here. Domenech writes, “Thankfully, this has been a push that Leavitt has been losing.”

But don’t count Leavitt out. Politico writes:

Leavitt has said some relatively positive things about certain elements of Obama’s health reform law…

[Leavitt’s longtime chief aide, Rich] McKeown, who still works with Leavitt at his Utah-based health care consultancy [Leavitt Partners], acknowledged that the former governor does not want to undo one key part of the controversial legislation.

“We believe that the exchanges are the solution to small business insurance market and that’s gotten us sideways with some conservatives,” he said.

The exchanges are not only a matter of principle for Leavitt — they’re also a cash cow.

The size of his firm, Leavitt Partners, doubled in the year after the bill was signed as they won contracts to help states set up the exchanges funded by the legislation.

And yet someone somehow managed to say this:

“He’s 100 percent in it for Mitt, no secret agenda for himself,” said one Romneyite.

The Romney camp still says Mitt will “repeal[] Obamacare, starting Day One.” If he were serious, he would announce that he will rescind this IRS rule on day one. But the fact that Romney picked Leavitt suggests he really doesn’t mind ObamaCare that much, and that he is just saying whatever he needs to say to get what he wants. I know. Mitt Romney. Go figure. In this case, that means assuaging all the Republicans and independents who hate ObamaCare.

Romney’s appointment of Leavitt is a first step toward flip-flopping–or Etch-a-Sketching, or Romneying(TM), or whatever–on ObamaCare repeal. But it’s hard to blame Romney for thinking Republicans won’t care. These are, after all, people who picked Mitt Romney as their presidential nominee.

Ouch! The Mainstream Media Calls Out the Mainstream Media

Today POLITICO Arena asks:

Is the media in the tank for Obama?

My response:

Is the mainstream media “in the tank” for Obama? Just when we get an MSM story documenting that, what do the targets of the story do? They shout “bias”! At that point, one is tempted to say “it’s all in the eye of the beholder.” But it’s not, as serious studies repeatedly show.

POLITICO’s Jim VandeHei and Mike Allen should be credited, then, with documenting the case once again, not condemned, as the Washington Post and New York Times rushed to do when their story came out. Take the Post’s recent coverage. Last Thursday, for example, we find this headline on page-one, above-the-fold: “In Mass., Romney reversed his reform: Governor backtracked on nonpartisan system of judicial appointments,” which continues over the entire back page of the A section under the headline “As governor, Mitt Romney backtracked on promised reforms in appointing judges.” Well into the story we learn that in making judicial appointments Romney had to deal with a Governor’s Council, all of whose members were Democrats, which alone goes far toward explaining why Romney “backtracked.” Most readers will not go that far into the piece, of course. Nevertheless, the headlines will serve nicely to seat the impression the Post seems to want to convey. And the piece appeared on the very morning that the Obama campaign turned its attention to Romney’s record as governor, with David Axelrod speaking from the steps of the Massachusetts capitol. A coincidence? Perhaps.

If this were an isolated lapse from even-handed reporting in this election year, one could dismiss it as such. But it closely follows Jason Horowitz’s infamous 5,000-word “haircut” story and many others in the same vein, all of which stand in stark contrast with the Post’s far gentler treatment of Obama, as VandeHei and Allen point out. Add to that the “Outlook” section’s two recent page-one Norman Ornstein/Thomas Mann pieces, the first headlined “Let’s just say it: The Republicans are the problem,” Robert Kaiser’s glowing review of their new book, plus so much more, and it hardly surprises that even POLITICO felt the need to take note of it, and no one can charge POLITICO with being in the tank for Romney. So yes, the mainstream media is tilting against Romney. To quote the Post: “Let’s just say it.”

These Reports Prove Aid Doesn’t Fuel Tuition Inflation…Except They Don’t

Today we are once again treated to a declaration that there is simply no way the crazy Bennett Hypothesis – the theory that student aid helps fuel college price inflation – is true. This time, the end-all-debate pronouncement comes from David L. Warren, president of the National Association of Independent Colleges and Universities, who cites three apparently definitive reports as proving aid is not “driving up” costs.

Aside from the problem that the argument is really that aid fuels price increases rather than driving them – the aid is the gasoline, the colleges the car drivers – what do the studies offered by Warren really tell us?

First is the 2001 federal report everyone who wants to declare the Bennett Hypothesis dead loves to cite: “Study of College Costs and Prices, 1988-89 to 1997-98,” from the National Center for Educational Statistics. As Warren accurately cites, the report does say:

Regarding the relation between financial aid and tuition, the regression models found no associations between most of the aid packaging variables (federal grants, state grants, and loans) and changes in tuition in either the public or private not-for-profit sectors.

But, then, it also says this:

[T]here are considerable data limitations in these models: for example, the availability of only one year of financial aid data and a lack of comparably recent financial data (especially for private not-for-profit institutions). IPSFA data on loans include all sources of student loans; federal subsidizedand unsubsidized, institutional, and private loans cannot be disaggregated. In addition, the IPSFA aid variables focus on the packaging of various forms of student aid in terms of the percentage of students receiving aid and the average amount received, and therefore cannot be used to explore the possibility of a revenue interaction at the institutional level between federal aid and institutional aid. Due in large part to the accounting standards used by the institutions themselves, information on financial aid collected through the IPEDS system for the available years is incomplete, especially regarding student loan volume, which cannot be isolated from tuition revenue in the IPEDS Finance survey data. Finally, financial data such as instruction expenditures cannot be isolated to undergraduate students, making any comparison with undergraduate tuition inexact.

Essentially, the report contains a regression based on a change in student aid for just one year and can’t adjust for a whole bunch of important things. In other words, it tells us little and in no way closes the door on Bennett.

Next, Dr. Warren cites a February 1998 commission report in which the commission purports not to have found any evidence that student grants effect college prices, and no “conclusive” evidence that loans enable rising prices. Then again, the Commission did no meaningful empirical analysis of the question, and as dissenting member Francis McMurray Norris objected, “issues such as tenure, cost and value of research, duplication of facilities, teaching loads, and relationship of student loan programs and rising costs have not been addressed.” [Italics added]

Grounds for putting the Bennett Hypothesis in a pine box? Hardly.

Finally, Dr. Warren cites a 2011 GAO report that looked only at the effect of an increase in the federal student loan limit for first- and second-year students, and only tracked three years of prices and enrollment. It concluded that enrollment and prices rose at rates generally consistent with recent “prior years.” Of course, looking at the effect of such a narrow change in overall aid over such a short time period without controlling for myriad variables that impact prices tells us basically bupkis.

The fact is that several empirical studies do show student aid enabling schools to raise their prices, and I have listed many of them. It is also the case, as most studies point out, that it is very difficult to definitively isolate the effects of aid when so many factors – from school type to student characteristics – are in play. That’s when basic logic also has to come in: People in colleges are like everyone else, and will be happy to take more money if it’s available. Aid makes it available.

One thing that cannot be supported is insisting, as Mr. Warren does, that we know for certain there is no connection between student aid and rising prices. That is something that truly has been disproven.

Corporate Welfare vs. Entrepreneurship

I testified today to Paul Ryan’s House Budget Committee regarding corporate cronyism and the opposite policy of free-market entrepreneurialism. Also testifying was former Florida Governor Jeb Bush.

There were lots of partisan jabs made during the hearing by members, but I tried my best to criticize both parties. Here’s some of my written testimony (co-authored by Tad DeHaven):

Business subsidy programs attract corruption like garbage dumps attracts rats, and that has always been the case in Washington. For example, federal subsidies for the first transcontinental railroad, the Union Pacific, led to the Credit Mobilier scandal of the 1870s, which involved payoffs to dozens of members of Congress. In recent decades, scandals stemming from corporate welfare have been a bipartisan problem, as these examples illustrate:

HUD Subsidies under Reagan. President Ronald Reagan’s Department of Housing and Urban Development overflowed with corruption in the 1980s under Secretary Sam Pierce. Pierce routinely dished out grants, loans, and other sorts of subsidies to friends and business associates. And HUD created programs that involved large subsidies to mortgage lenders, developers, and other businesses, with Republican Party contributors as frequent beneficiaries.

Commerce Subsidies under Clinton. President Bill Clinton’s Commerce Secretary, Ron Brown, used federal business subsidies as a fund-raising tool for the Democratic Party in the 1990s. Corporate executives who played the game were given access to export promotion trips and loans from OPIC. In subsequent investigations, U.S. District Judge Royce Lamberth found that Commerce officials concealed and destroyed documents relating to the scandal, and he compared the officials to “con artists” and “scofflaws.” 

Enron Subsidies under Clinton and Bush. Enron Corporation is a poster child for the harm of business subsidies, particularly with regard to its disastrous foreign investments. Enron lobbied government officials to expand export subsidy programs, and it received billions of dollars in aid for its foreign projects from the Ex-Im Bank, OPIC, the U.S. Trade and Development Agency, the U.S. Maritime Administration, the Commerce Department, and the U.S.-backed World Bank. Enron received about $3.7 billion in financing through federal government agencies. These subsidies induced Enron to make exceptionally risky foreign investments, and the resulting losses were an important factor in the company’s implosion.

To sum up, the way to spur economic growth is not through business subsidies, but through breaking down barriers to entrepreneurs. Let’s give entrepreneurs a crack at postal services, air traffic control, passenger trains, and other monopoly industries. Let’s pursue tax and regulatory reforms to maximize the flow of financing to new and growing businesses. And let’s stop demonizing entrepreneurs who succeed and the financial system that allows them to grow. If we want to exorcize some demons, we should end the corporate welfare system that is corrupting our government and the American economy.

Obama and the Youth Vote

At the Huffington Post I have an article on President Obama’s prospects this fall with young voters. I note that:

He’s stumped the country promising to keep interest rates low on student loans, and every voter likes free money. And then perhaps more importantly, he re-established his cool by endorsing gay marriage. Hope and change are back. For many young voters, this reconnected them to the hip young Obama of 2008.

But those aren’t the only issues. Citing surveys from Gallup and Harvard, I ask what young voters think about his policies on war, the war on drugs, jobs, and the massive debt he’s leaving them. Today’s dismal unemployment numbers, of course, just reinforce the point that

President Obama’s policies have produced the slowest economic recovery in history. An analysis from the Center for Labor Market Studies at Northeastern University found that more than half of young college graduates were unemployed or underemployed last year.

Read it all.

This Bit of Wisdom Shouldn’t Stay in Vegas

Andy Matthews, president of the Nevada Policy Research Institute, offers an astute, concise analysis of the Romney campaign’s education plan. In a post titled “Great ideas… from the wrong level of government,” Matthews writes:

When you’re considering the merits of a policy proposal, there are three important questions to ask. One, is the policy constitutional? Two, is this the lowest level of government that can enact the policy? And three, will the policy work?
If he wins in November, let’s hope Gov. Romney realizes that, while his education plan would be great for a governor to implement, it’s not the right one for a president to push — for constitutional as well as practical reasons.

I offered much the same advice to President G. W. Bush when he was advocating private school choice at the national level, based on education policy precedents from around the world and across history. Those lessons still apply.