Last week during one of their debates, all Democratic primary candidates supported government health care for illegal immigrants. This type of position is extremely damaging politically and, if enacted, would unnecessarily burden taxpayers for likely zero improvements in health outcomes. I expect the eventual Democratic candidate for president to not support this type of proposal, but it should be nipped in the bud.
After the debate, Democratic candidate Julian Castro argued that extending government health care to illegal immigrants would not be a big deal. “[W]e already pay for the health care of undocumented immigrants,” Castro said. “It’s called the emergency room. People show up in the emergency room and they get care, as they should.” It is true that some illegal immigrants use emergency room services thanks to the Emergency Medical Treatment and Labor Act and to Emergency Medicaid, but Castro leaned heavily into a stereotype often used by nativists. According to a paper published in the journal Health Affairs, illegal immigrants between the ages of 18–64 consumed about $1.1 billion in government healthcare benefits in 2006 – about 0.13 percent of the approximately $867 billion in government healthcare expenditures that year. That’s a fraction of the cost that would be imposed on American taxpayers by extending nationalized health care to all illegal immigrants. So, with all due respect to Mr. Castro, we do not already pay for their health care just because some illegal immigrants visit emergency rooms at government expense.
One of the reasons why immigrants individually consume so much less welfare than native‐born Americans is that many of them do not have legal access to these benefits. Cato scholars have proposed making these welfare restrictions even stricter to deny benefits to all non‐citizens and to not count work credit toward entitlements until immigrants are naturalized citizens – what the late Bill Niskanen called “build a wall around the welfare state, not around the country.”
Many American voters are concerned about immigrant consumption of welfare benefits. In a 2017 poll, 28 percent of Americans agreed with the statement that “Immigration detracts from our character and weakens the United States because it puts too many burdens on government services, causes language barriers, and creates housing problems [emphasis added].” That level of concern exists under current laws that restrict non‐citizen access to benefits and even chill eligible non‐citizen participation. I’d expect that poll result to worsen if new immigrants, especially illegal immigrants, were put on government health care program.
Extending government health care to illegal immigrants and other new immigrants would probably not improve healthcare outcomes for immigrants. According to the wonderful The Integration of Immigrants into American Society report published by the National Academies of Sciences, immigrants already have better infant, child, and adult health outcomes than native‐born Americans, while also having less access to welfare benefits like Medicaid. Immigrants also live about 3.4 years longer than native‐born Americans do. Illegal Mexican immigrants had an average of 1.6 fewer physician visits per year compared to native‐born Americans of Mexican descent. Other illegal Hispanic immigrants made an average of 2.1 fewer visits to doctors per year than their native‐born counterparts. Illegal immigrants are about half as likely to have chronic healthcare problems than native‐born Americans. Overall per capita health care spending was 55 percent lower for immigrants than for native‐born Americans.
Immigrants also lower the cost of other portions of the health care system. In 2014, immigrants paid 12.6 percent of all premiums to private health insurers but accounted for only 9.1 percent of all insurer expenditures. Immigrants’ annual premiums exceeded their health care expenditures by $1,123 per enrollee, for a total of $24.7 billion. That offset the deficit of $163 per native‐born enrollee. The immigrant net‐subsidy persisted even after ten years of residence in the United States.
From 2002–2009, immigrants subsidized Medicare as they made 14.7 percent of contributions but only consumed 7.9 percent of expenditures, for a $13.8 billion annual surplus. By comparison, native‐born Americans consumed $30.9 billion more in Medicare than they contributed annually. Among Medicare enrollees, average expenditures were $1,465 lower for immigrants than for native‐born Americans, for a difference of $3,923 to $5,388. From 2000 to 2011, illegal immigrants contributed $2.2 to $3.8 billion more than they withdrew annually in Medicare benefits (a total surplus of $35.1 billion). If illegal immigrants had neither contributed to nor withdrawn from the Medicare Trust Fund during those 11 years, it would become insolvent 1 year earlier than currently predicted – in 2029 instead of 2030.
American taxpayers should not have to pay for the health care costs of other Americans, let alone for non‐citizens. For those reading this post who are very concerned about the well‐being of immigrants, think of what would happen to public support for legal immigration if welfare benefits were extended in this way. Immigrants come here primarily for economic opportunity, not for government health insurance. They tend to be healthier than native‐born Americans and lower the price of health care for others as a result – but the point would likely change if the laws were different. Let’s not build public support for reducing legal immigration, or increase reluctance to expand it, by extending government health care, at enormous public cost, to people who don’t need it.
Some economists want to make it more expensive for the less well-off to enjoy a clear revealed pleasure: eating red and processed meat.
The average household in the poorest fifth of the income distribution dedicates 1.3 percent of spending towards it. That’s over double average household spending in the richest quintile. Yet meat is now a new “public health” target. Once, lifestyle controls stopped at smoking and drinking. They recently expanded to soda and even caffeine. Now, even the hallowed steak is not sacred.
Last week, a report by University of Oxford academics calculated supposedly “optimal tax rates” on red meat (lamb, beef and pork) and processed meats (sausages, bacon, salami etc.) For the U.S., the recommend rates were as high as 34 percent and 163 percent, respectively. Such taxes, the report claims, could save 52,500 American lives per year.
To an economist, this approach might make theoretical sense. If the World Health Organization is right that eating meat increases risk of heart disease, cancer, stroke and diabetes (in some cases, very much disputed claims), then consumption could increase healthcare costs. Some of these costs will be borne by others, through higher government spending or healthcare premiums. Imposing a tax equal to the true external costs of the next steak, lamb chop or burger patty one eats forces consumers to face the full social costs of their eating decisions. In turn, then, the tax will somewhat reduce consumption to a supposed “optimal” level.
Yet, in reality, the presence of external effects is no slam-dunk to justify taxes. One must also consider costs, unintended consequences and the ability of government to assess risk and harm accurately. In these areas, the meat tax advocates appear off-base. The result is their proposed tax rates look way too high, even in theory, and it's doubtful they are the best means of improving economic welfare.
First, the methodology appears to add up healthcare costs from extra meat consumption as if they are all costs imposed on others. But at least part of extra healthcare or medication costs of meat-eaters affected by disease would be personally financed, rather than funded through higher insurance premiums, or Medicaid or Medicare spending.
As a practicing physician I have long been frustrated with the Electronic Health Record (EHR) system the federal government required health care practitioners to adopt by 2014 or face economic sanctions. This manifestation of central planning compelled many doctors to scrap electronic record systems already in place because the planners determined they were not used “meaningfully.” They were forced to buy a government-approved electronic health system and conform their decision-making and practice techniques to algorithms the central planners deem “meaningful.” Other professions and businesses make use of technology to enhance productivity and quality. This happens organically. Electronic programs are designed to fit around the unique needs and goals of the particular enterprise. But in this instance, it works the other way around: health care practitioners need to conform to the needs and goals of the EHR. This disrupts the thinking process, slows productivity, interrupts the patient-doctor relationship, and increases the risk of error. As Twila Brase, RN, PHN ably details in “Big Brother in the Exam Room,” things go downhill from there.
With painstaking, almost overwhelming detail that makes the reader feel the enormous complexity of the administrative state, Ms. Brase, who is president and co-founder of Citizens’ Council for Health Freedom (CCHF), traces the origins and motives that led to Congress passing the Health Information Technology for Economic and Clinical Health (HITECH) Act in 2009. The goal from the outset was for the health care regulatory bureaucracy to collect the private health data of the entire population and use it to create a one-size-fits-all standardization of the way medicine is practiced. This standardization is based upon population models, not individual patients. It uses the EHR design to nudge practitioners into surrendering their judgment to the algorithms and guidelines adopted by the regulators. Along the way, the meaningfully used EHR makes practitioners spend the bulk of their time entering data into forms and clicking boxes, providing the regulators with the data needed to generate further standardization.
Brase provides wide-ranging documentation of the way this “meaningful use” of the EHR has led to medical errors and the replication of false information in patients’ health records. She shows how the planners intend to morph the Electronic Health Record into a Comprehensive Health Record (CHR), through the continual addition of new data categories, delving into the details of lifestyle choices that may arguably relate indirectly to health: from sexual proclivities, to recreational behaviors, to gun ownership, to dietary choices. In effect, a meaningfully used Electronic Health Record is nothing more than a government health surveillance system. As the old saying goes, “He who pays the piper calls the tune.” If the third party—especially a third party with the monopoly police power of the state—is paying for health care it may demand adherence to lifestyle choices that keep costs down.
All of this data collection and use is made possible by the Orwellian-named Health Insurance Portability and Accountability Act (HIPAA) of 1996. Most patients think of HIPAA as a guarantee that their health records will remain private and confidential. They think all those “HIPAA Privacy” forms they are signing at their doctor’s office is to insure confidentiality. But, as Brase points out very clearly, HIPAA gives numerous exemptions to confidentiality requirements for the purposes of collecting data and enforcing laws. As Brase puts it,
It contains the word privacy, leaving most to believe it is what it says, rather than reading it to see what it really is. A more honest title would be “Notice of Federally Authorized Disclosures for Which Patient Consent Is Not Required.”Read the rest of this post »
The Philadelphia City Council has voted to become the second city in the United States to impose a tax on the sale of particular types of sweetened beverages. The tax applies to sugared soda, diet soda, sports drinks and more, while excluding drinks that are more than half milk or fruit, as well as drinks to which sugar is added such as coffee. The tax will be 1.5 cents per ounce, amounting to 18 cents per standard size can of soda or $1 per two-liter bottle.
Public health advocates often propose taxes on sugary drinks, colloquially known as “soda taxes,” as a means of improving public health outcomes. They argue that such beverages disproportionately cause obesity and that consumers of sugary beverages impose external costs on others through higher medical costs associated with obesity.
The evidence supporting the disproportionate effect of sugar beverages on obesity is not powerful. An article in Obesity Review concluded, “The current evidence does not demonstrate conclusively that nutritively sweetened beverage consumption has uniquely contributed to obesity or that reducing NSB consumption will reduce BMI levels in general.”
And the externalities of the obese also appear to be minimal. “The existing literature . . . suggests that obese people on average do bear the costs and benefits of their eating and exercise habits.”
But for purposes of discussion assume that consumption of such beverages does result in obesity and its health effects, which, in turn, create costs for others. Are the taxes a good corrective?
Fresh off his resounding victory in the West Virginia primary, Senator Bernie Sanders has intimated that he has no intent of dropping out of the race any time soon, even though he trails his rival Hillary Clinton significantly in pledged delegates. One of the cornerstones of the Sanders campaign has been his health care plan, which would replace the entirety of the current health care system with a more generous version of Medicare. His campaign has claimed the plan would cost a little more than $13.8 trillion over the next decade, and he has proposed to fund these new expenditures with a clutch of tax increases, many of them levied on higher‐income households. At the time, analysts at Cato and elsewhere expressed skepticism that the cost estimates touted by the campaign accurately accounted for all the increases in federal health expenditures the plan would require, and incorporated costs savings estimates that were overly optimistic. Now, a new study from the left‐leaning Urban Institute corroborates many of these concerns, finding that Berniecare would cost twice as much as the $13.8 trillion price tag touted by the Sanders campaign.
The authors from the Urban Institute estimate that Berniecare would increase federal expenditures by $32 trillion, 233 percent, over the next decade. The $15 trillion in additional taxes proposed by Sanders would fail to even cover half of the health care proposal’s price tag, leaving a funding gap of $16.6 trillion. In the first year, federal spending would increase by $2.34 trillion. To give some context, total national health expenditures in the United States were $3 trillion in 2014.
Sanders was initially able to restrict most of the tax increases needed to higher‐income households through income‐based premiums, significantly increasing taxes on capital gains and dividends, and hiking marginal tax rates on high earners. Sanders cannot squeeze blood from the same stone twice, and there’s likely not much more he could do to propose higher taxes on these households, which means if he were to actually have to find ways to finance Berniecare, he’d have to turn to large tax increases on the middle class.
There are different reasons Berniecare would increase federal health spending so significantly. The most straightforward is that it would replace all other forms of health care, from employer sponsored insurance to state and local programs, with one federal program. The second factor is that the actual program would be significantly more generous than Medicare (and the European health systems Sanders so often praises), while also removing even cursory cost‐sharing requirements. In addition, this proposal would add new benefits, like a comprehensive long‐term services and support (LTSS) component that the Urban Institute estimates would cost $308 billion in its first year and $4.14 trillion over the next decade. These estimates focus on annual cash flows over a relatively short time period, so the study doesn’t delve into the longer‐term sustainability issues that might develop from this new component, although they do note that “after this 10‐year window, we would anticipate that costs would grow faster than in previous years as baby boomers reach age 80 and older, when rates of severe disability and LTSS use are much higher. Revenues would correspondingly need to grow rapidly over the ensuing 20 years.”
Even at twice the initial price tag claimed by the Sanders campaign, these cost estimates from the Urban Institute might actually underestimate the total costs. As they point out, the authors do not incorporate estimates for the higher utilization of health care services that would almost certainly occur when people move from the current system to the generous, first‐dollar coverage in the more generous version of Medicare they would have under this proposal. They also chose not to incorporate higher provider payment rates for acute care services that might be necessary, and include “assumptions about reductions in drug prices [that] are particularly aggressive and may fall well short of political feasibility.”
Berniecare would increase federal government spending by $32 trillion over the next decade, more than twice as much as the revenue from the trillions in taxes Sanders has proposed. And this might not be underselling the actual price tag, and only considers the cash flow issues in the short‐term. There could be even greater sustainability problems over a longer time horizon. One thing is for certain the plan would require even more trillions in additional tax hikes.
It is always refreshing to see journalists draw attention to the incredible decline in world poverty. An article that did just that appeared yesterday in the Christian Science Monitor. The piece shines a spotlight on three heartening facts in particular.
First, poverty is decreasing. Not only have poverty rates fallen, but the total number of people in poverty has decreased. This is incredible when one considers population growth—there are more people alive today who aren’t in poverty than ever before. The Brookings Institution projects poverty will be practically eliminated by 2030.
Second, average incomes are rising. World per capita GDP, adjusted for inflation and differences in the cost of living, has never been higher. And average income growth is not limited to developing countries: the average American has more disposable income left after basic expenses.
Finally, humanity is healthier. Globally, average life expectancy is at an all‐time high, largely due to plummeting infant mortality rates. More people have enough to eat and enjoy access to clean drinking water and improved sanitation facilities. The developed world has also seen health gains, with cancer death rates falling for both men and women in the OECD countries.
The article attributes improvements in well‐being to three main factors: the fall of communism, the rise of trade and globalization, and the courage of those who stood up against tyranny.
While the CSM article gives some credit to international aid programs, it is important to recognize that aid is not a good driver of economic development. Even vocal aid‐proponent Bono acknowledges that international aid and charity pale in comparison to the prosperity‐creating power of people engaging in market exchange.
When given the freedom to do so, it is truly remarkable what ordinary people can achieve. Consider the utter transformation of Singapore from poverty to riches – that is the power of economic freedom!
In his 1999 book The Age of Spiritual Machines, the famed futurist Ray Kurzweil proposed "The Law of Accelerating Returns." According to Kurzweil’s law, “the rate of change in a wide variety of evolutionary systems (including but not limited to the growth of technologies) tends to increase exponentially.” I mention Kurzweil’s observation, because it is sure beginning to feel like we are entering an age of colossal and rapid change. Consider the following:
According to The Telegraph, “Genes which make people intelligent have been discovered [by researchers at the Imperial College London] and scientists believe they could be manipulated to boost brain power.” This could usher in an era of super-smart humans and accelerate the already fast process of scientific discovery.
Elon Musk’s SpaceX Falcon 9 rocket has successfully “blasted off from Cape Canaveral, delivered communications satellites to orbit before its main-stage booster returned to a landing pad.” Put differently, space flight has just become much cheaper since main-stage booster rockets, which were previously non-reusable, are also very expensive.