Archives: 01/2013

Olga’s Soulmate

The welfare state creates some amazing individuals:

But I’ve never found a match for Olga, a Greek woman who thinks it is government’s job to take care of her from cradle to grave.

At least not until now. I’m excited to announce that Olga has a soulmate named Natalija. She’s from Lithuania, but she now lives in England, and she doubtlessly will inspire Olga on how to live off the state.

UK Welfare Horror StoryHere’s some of what The Sun reports on Natalija:

Natalija Belova, 33, told The Sun how she spurns full-time work — yet can afford foreign holidays and buys designer clothes. The Lithuanian said: “British benefits give me and my daughter a good life.” She has milked soft-touch Britain for £50,000 in benefits and yesterday said: “I simply take what is given to me.”

And what is given to her? Quite a lot.

The graduate, who became a single mum after she arrived here, rakes in more than £1,000 a month in handouts — £14,508 a year — to fund her love of designer clothes, jaunts to the Spanish sun and nightclubbing. She bragged: “I have a lovely, fully-furnished flat and money to live properly on. …Her handouts total £279 a week — with housing benefit contributing £183, child tax credit adding £56, child benefit £20 and her council tax being paid to the tune of £20.

Obama’s Stark Vision of the World

Charles Krauthammer zeroes in on the stark worldview expressed in President Obama’s inaugural address:

Obama is the apostle of the ever-expanding state. His speech was an ode to the collectivity. But by that he means only government, not the myriad of voluntary associations — religious, cultural, charitable, artistic, advocacy, ad infinitum — that are the glory of the American system.

For Obama, nothing lies between citizen and state. It is a desert, within which the isolated citizen finds protection only in the shadow of Leviathan. Put another way, this speech is the perfect homily for the marriage of Julia — the Obama campaign’s atomized citizen, coddled from cradle to grave — and the state.

“Nothing lies between citizen and state.” Exactly. That’s why Obama can say things like

No single person can train all the math and science teachers we’ll need to equip our children for the future. Or build the roads and networks and research labs that will bring new jobs and businesses to our shores.

Well, of course not. No one thinks a single person could. It takes many people, working together. But even Krauthammer misses the point that it takes businesses, coordinated by prices and markets. Krauthammer correctly chides Obama for thinking that collective action means only the state and not voluntary associations. But most of our needs are met, most of our progress is generated, by neither the state nor charities.

We are fed, clothed, sheltered, informed, and entertained by individuals, working together with other individuals, mostly in corporations, with their activities coordinated by the market process. As I’ve said before, libertarians “consider cooperation so essential to human flourishing that we don’t just want to talk about it; we want to create social institutions that make it possible. That is what property rights, limited government, and the rule of law are all about.”

What kind of a bleak worldview is it that can look at the bounty provided by business enterprises and charitable associations and see a barren wasteland enlightened only by the activities of the federal government? President Obama’s worldview, apparently. And Hillary Clinton’s.

My further thoughts on Obama’s collectivist speech in this 10-minute audio podcast.

Will ObamaCare’s Exchanges Be Ready in October? Will Anyone Show Up?

From the January 7 edition of Health Plan Week:

Ahead of 2014 and to get ready for open enrollment this fall, insurers are gauging their interest in participating in certain markets based partly on how [the U.S. Department of Health and Human Services] writes regulations governing the exchanges set to open on Jan. 1, 2014.

Roy Ramthun, president of Maryland-based HSA Consulting Services, tells HPW that the biggest challenge health insurers face in 2013 is the uncertainty inherent in regulations governing exchanges. “The uncertainty comes on two fronts: (1) state insurance exchanges and (2) rules for qualified coverage and selling insurance [e.g., essential benefits, actuarial value, rating rules, etc.],” he says. “On the exchange front, you have only about 15 states moving forward on developing their own exchanges. For every other state, we are waiting to learn what the federal exchanges will look like. And this all has to be in place for enrollment beginning Oct. 1, 2013. I am not sure what carriers can do to overcome this other than lend their expertise to the development of exchanges while perhaps pushing or hoping for delay of the Jan. 1, 2014, ‘go live’ date.”

For example, Ramthun says, “It is hard to develop insurance products for sale when you don’t have all the details about what can be offered…”

Dan Mendelson, president of consulting firm Avalere Health, LLC in Washington, D.C., tells HPW that the biggest challenge insurers face in 2013 is deploying new, profitable products for use in exchanges. “This is a massive jump ball, and complicated by the fact that plans don’t have a clear actuarial history for the population that will be buying insurance in this way. Two other important challenges will be responding to Medicaid expansions, and increasingly integrating quality into systems to enable pay for performance,” he says.

Peter Hayes, principal at consulting firm Healthcare Solutions in Scarborough, Maine, says diversification is the largest issue for health insurers to tackle in the near term, stressing that new market rules are going to make it tough for traditional lines of business to create acceptable profit margins. “Aetna has already declared that they do not believe their future is selling health insurance coverage in an environment where margins and profits are regulated by an 85% medical loss ratio [MLR]. They believe their revenues and earnings growth will be from the sale of their intellectual and system assets to the ACOs [accountable care organizations] and exchanges and from offshore opportunities. Cigna has expressed similar strategies,” he tells HPW.

This rethinking process may leave some plans on the sidelines for exchanges, Hayes adds.


Don McGahn and Ray LaRaja on Citizens United

Don McGahn is a member and former chair of the Federal Election Commission. He has many years’ experience practicing election law, and he has thought a lot about both the law and politics of his subject. The other day, after the Cato conference on Citizens United, he sat down with Cato’s Caleb O. Brown to discuss that famous decision and its aftermath. McGahn’s thoughts are worth your time:

At the same conference, University of Massachusetts political scientist Ray LaRaja discussed his research on the impact of Citizens United on elections, spending, and the political parties. For my money, LaRaja is among the best of the young scholars working on campaign finance.

‘Unthinkable, Draconian’ Spending Cuts

It’s my job to advocate for spending cuts. It’s a job I’ve been doing in one form or another for over a decade. If I’ve ever experienced a victory, it must have been a pretty small one, because I can’t recall any.

So why do I persist?

For one, I’m a naturally optimistic person. And fueling that optimism is the press. I’m constantly reading about the possibility of spending cuts, and those articles usually say that the cuts would be major … or massive … or severe … or even draconian! The possibility sends a thrill up my leg.

Alas, the “draconian” spending cuts invariably turn out to be not-so-draconian after all. In fact, it’s often the case that reporters are talking about smaller spending increases rather than real spending cuts. Other times, the cuts are likely to only be temporary or come after years and years of increases.

In today’s example, a National Journal article reports that the “unthinkable” could happen: the fiscal 2013 sequestration cuts–just reduced and postponed by the fiscal cliff deal–might actually go into effect March 1st as scheduled:

Republicans and Democrats in the Senate appear to be coming to the same conclusion on spending, namely that once unthinkable, draconian cuts designed to force a more reasonable compromise may be much harder to undo than anyone ever imagined.

How “draconian” would these “unthinkable” cuts be? About $85 billion. To put that in context, the federal government will spend around $3,500 billion ($3.5 trillion) this year. The deficit alone is likely to approach or exceed $1 trillion (the federal government has run a deficit in excess of $1 trillion for four straight years).

If that’s draconian, what would the press call cutting enough spending just to balance the budget?

As we’ve been trying to demonstrate at, spending cuts would be good for the country. I encourage journalists who cover federal policy to check out the site to see what real spending cuts are all about. It might cause you to have to find new adjectives to use to describe what Republicans and Democrats are really doing, but your readers would be better served–especially the wild-eyed optimists like me.

Seneca Falls, and Selma, and Stonewall, Cont’d

Like my colleague Michael, I found “Seneca Falls, and Selma, and Stonewall” the best moment in President Obama’s address. It was unifying: by going far enough back in time, it summoned up (as a recitation of current controversies would not) a sense that in historical perspective, nearly all present-day Americans have come to agree on crucial fundamentals about not using the law to mistreat each other. I especially liked the touch of geographical obscurity. It makes me imagine a million explanatory conversations going on this week from Kalamazoo to Karachi: “Okay, so *that’s* why Americans still talk about Selma and Stonewall. Now what was Seneca Falls about?” That could be time well spent.

More on the Filibuster

My opinion piece defending the filibuster appeared today in the Philadelphia Inquirer just as Senate leaders were reaching a deal that largely preserves the rule.

I would like to explicate this sentence in the op-ed:


In a polarized time, the filibuster tends to make Senate actions more representative of the nation as a whole.

Here’s the reasoning behind that conclusion. Assume the electorate forms a normal distribution with regard to policy preferences. Normally both parties would compete to attract the vote of the median voter thereby winning an election. In a polarized time for whatever reason, both parties might have programs some distance from the median voter. If a governing party acted on such non-median preferences, the resulting law would ignore the wishes of a substantial number of voters in the middle or “thick” part of the distribution. A filibuster would either 1) prevent a law from passing or 2) force a majority to accommodate the views of the most right- or left- leaning legislators in the minority party. The views of the legislators required by the filibuster would presumably reflect the views of many voters in the thick part of the distribution. In this way, the filibuster would require laws to become closer to what a majority wanted than the laws that a filibuster-free majority would have passed.

Of course, with regard to the theory, it makes no sense that polarization would exist to begin with: if either party varied from the wishes of the median voter, the other would swoop in and pick up those votes. However, polarization exists so I assume both parties govern somewhat off the median.