Topic: Health Care & Welfare

Urban Institute Study Only Counts Part of ObamaCare Premiums When Comparing Them to Employer Plans

In a new report, scholars from the Urban Institute claim ObamaCare premiums “are 10 percent below average employer premiums nationally.” There is variation among states. The authors report ObamaCare premiums are actually higher in 12 states, by as much as 68 percent. 

At Forbes.com, I explain the Urban scholars aren’t making the “apples to apples” comparison they claim to be:

The Urban Institute study instead engages in what my Cato Institute colleague Arnold Kling calls a game of “hide the premium.” As ACA architect Jonathan Gruber explained, “This bill was written in a tortured way” to create a “lack of transparency” because “if…you made explicit that healthy people pay in and sick people get money, it would not have passed.” When it did pass, it was due to what Gruber called the “huge political advantage” that comes from hiding how much voters are paying, as well as ”the stupidity of the American voter.”

That lack of transparency has allowed supporters to claim the ACA is providing coverage to millions who are so sick that insurance companies previously wouldn’t cover them, while simultaneously claiming Exchange coverage is no more expensive than individual-market coverage prior to the ACA or than employer-sponsored coverage. When we incorporate the full premium for Exchange plans, the smoke clears and we see Exchange coverage is indeed more expensive than employer-sponsored coverage. There ain’t no such thing as a free lunch.

If you think this is fun, just imagine the shell games we could play with a public option.

Read the whole thing.

Dose of Reality

From my new policy analysis (joint with Angela Dills and Sietse Goffard) on state marijuana legalizations:

In November 2012 voters in the states of Colorado and Washington approved ballot initiatives that legalized marijuana for recreational use. Two years later, Alaska and Oregon followed suit. As many as 11 other states may consider similar measures in November 2016, through either ballot initiative or legislative action. Supporters and opponents of such initiatives make numerous claims about state-level marijuana legalization.

Advocates think legalization reduces crime, raises tax revenue, lowers criminal justice expenditures, improves public health, bolsters traffic safety, and stimulates the economy. Critics argue that legalization spurs marijuana and other drug or alcohol use, increases crime, diminishes traffic safety, harms public health, and lowers teen educational achievement. Systematic evaluation of these claims, however, has been largely absent.

This paper assesses recent marijuana legalizations and related policies in Colorado, Washington, Oregon, and Alaska.

Our conclusion is that state marijuana legalizations have had minimal effect on marijuana use and related outcomes. We cannot rule out small effects of legalization, and insufficient time has elapsed since the four initial legalizations to allow strong inference. On the basis of available data, however, we find little support for the stronger claims made by either opponents or advocates of legalization. The absence of significant adverse consequences is especially striking given the sometimes dire predictions made by legalization opponents.

Is Mobility a Right or a Privilege?

Michael Lind, a co-founder of left-leaning New America, is urging the federal government to create universal mobility accounts that would give everyone an income tax credit, or, if they owe no taxes, a direct subsidy to cover the costs of driving. He argues that social mobility depends on personal mobility, and personal mobility depends on access to a car, so therefore everyone should have one.

This is an interesting departure from the usual progressive argument that cars are evil and we should help the poor by spending more on transit. Lind responds to this view saying that transit and transit-oriented developments “can help only at the margins.” He applauds programs that help low-income people acquire inexpensive, used automobiles, but–again–thinks they are not enough.

Lind is virtually arguing that automobile ownership is a human right that should be denied to no one because of poverty. While I agree that auto ownership can do a lot more to help people out of poverty than more transit subsidies, claiming that cars are a human right goes a little to far.

Micro-Housing, Meet Modern Zoning

Beginning in 2009, developers in Seattle became leaders in micro-housing. As the name suggests, micro-housing consists of tiny studio apartments or small rooms in dorm-like living quarters. These diminutive homes come in at around 150–220 sq. ft. each and usually aren’t accompanied by a lot of frills. Precisely because of their size and modesty, this option provides a cost-effective alternative to the conventional, expensive, downtown Seattle apartment model.

Unfortunately, in the years following its creation, micro-housing development has all but disappeared. It isn’t that Seattle prohibited micro-housing outright. Instead, micro-housing’s gradual demise was death by a thousand cuts, with a mushroom cloud of incremental zoning regulation finally doing it in for good. Design review requirements, floor space requirements, amenity requirements, and location prohibitions constitute just a few of the Seattle Planning Commission’s assorted weapons of choice.

As a result of the exacting new regulations placed on tiny homes, Seattle lost an estimated 800 units of low-cost housing per year. While this free market (and free to the taxpayer) solution faltered, Seattle poured millions into various housing initiatives that subsidize housing supply or housing demand, all on the taxpayer’s dole.

Sadly, Seattle’s story is anything but unusual. Over the past almost one hundred years, the unintended consequences of well-meaning zoning regulations have played out in counterproductive ways time and time again. Curiously, in government circles zoning’s myriad failures are met with calls for more regulations and more restrictions—no doubt with more unintended consequences—to patch over the failures of past regulations gone wrong.

In pursuit of the next great fix, cities try desperately to mend the damage that they’ve already done. Euphemistically-titled initiatives like “inclusionary zoning” (because who doesn’t want to be included?) force housing developers to produce low-cost apartments in luxury apartment buildings, thereby increasing the price of rent for everyone else. Meanwhile, “housing stabilization policies” (because who doesn’t want housing stabilized?) prohibit landlords from evicting tenants that don’t pay their rent, thereby increasing the difficulty low-income individuals face in getting approved for an apartment in the first place.

The thought seems to be that even though zoning regulations of the past have systematically jacked up housing prices, intentionally and unintentionally produced racial and class segregation, and simultaneously reduced economic opportunities and limited private property rights, what else could go wrong?

Perhaps government planners could also determine how to restrict children’s access to good schools or safe neighborhoods. Actually, zoning regulations already do that, too.

Given the recent failures of zoning policies, it seems prudent for government planners to begin exercising a bit of humility, rather than simply proposing the same old shtick with a contemporary twist.

After all, they say that the definition of insanity is doing the same thing over and over and expecting different results.

Using Antitrust Law to Protect the Right to Earn a Living

Teladoc, Inc. is a health services company that provides access to state-licensed physicians through telecommunications technology, usually for a fraction of the cost of a visit to a physician’s office or urgent care center. Teladoc sued the Texas Medical Board—comprised mostly of practicing physicians—because the board took steps to protect the interests of traditional physicians by imposing licensing rules such as requiring the in-person examination of patients before telephonic treatment is permitted.

Because the board isn’t supervised by the Texas legislature, executive, or judiciary, Teladoc argues that its self-dealing violates federal antitrust laws—and the federal district court agreed. The Texas Medical Board has now appealed to the U.S. Court of Appeals for the Fifth Circuit, where Cato filed an amicus brief urging the court to affirm the lower-court ruling and protect the fundamental right to earn a living.

Our brief argues that the Supreme Court has consistently held that the right to earn a living without unreasonable government interference is guaranteed by the Constitution, and that this protection dates back much earlier, to Magna Carta and the common law. Indeed, the right to earn a living is central to a person’s life and ability to pursue happiness. As Frederick Douglass wrote in his autobiography, “To understand the emotion which swelled in my heart as I clasped this money, realizing that I had no master who could take it from me—that it was mine—that my hands were my own, and could earn more of the precious coin—one must have been in some sense himself a slave… . I was not only a freeman but a free-working man.”

Licensing laws, which can be valid if protecting a legitimate public interest, are a tool of the state often employed by private market participants to restrict competition. By creating barriers to entry, existing firms or practitioners mobilize the state to wield monopoly power. This results in higher prices and fewer choices for consumers and diminished opportunities for entrepreneurs and workers.

While it may be appropriate to create a regulatory body exempt from antirust laws to achieve a specialized purpose, it’s inappropriate to grant private actors populating a licensing board limitless ability to claim such state-action immunity unless they are appropriately supervised by state officials. Without active supervision, private parties may wield state regulatory power purely for their own self-interest.

The Supreme Court has said that this active supervision standard is “flexible and context-dependent,” N.C. State Bd. of Dental Exam’rs v. FTC (2014), but not flimsy and porous. Moreover, there are other ways for states to obtain the specialized knowledge of professionals without creating regulatory bodies that rubber-stamp the assertions of active practitioners.

Teladoc offers an innovative service that makes obtaining healthcare easier and more affordable. The Fifth Circuit should protect its right to do so and the right of all persons to pursue a trade or career without onerous government-backed constraints instituted by private actors. 

On The Gender Pay Gap, I’m Not With Her

As a young professional woman myself, lately I’ve grown fatigued by the media’s on-going portrayal of women as victims of circumstance. Media messaging on one topic in particular – the gender pay gap – is especially discouraging because it’s assembled on the basis of flimsy facts. Although it necessitates a voyage outside my traditional topical expertise, setting the record straight seems a sufficiently worthwhile activity as to require it.

Let’s begin with the numbers. Hillary Clinton and others allege that women get paid 76 cents for every dollar a man gets paid – an alarming workplace injustice, if it’s true.

The 76 cent figure is based on a comparison of median domestic wages for men and women. Unfortunately, comparing men’s and women’s wages this way is duplicitous, because men and women make different career choices that impact their wages: 1) men and women work in different industries with varying levels of profitability and 2) men and women on average make different family, career, and lifestyle trade-offs.

For example, BLS statistics show that only 35% of professionals involved in securities, commodities, funds, trusts, and other financial investments and 25% of professionals involved in architecture, engineering, and computer systems design are women. On the other hand, women dominate the field of social assistance, at 85%, and education, with females holding 75% of jobs in elementary and secondary schools.

An August 2016 National Bureau of Economic Research study, Does Rosie Like Riveting? Male and Female Occupational Choices, suggests that industry segregation may not be structural or even coincidental. According to the authors of the study, women may select different jobs than men because they “may care more about job content, and this is a possible factor preventing them from entering some male dominated professions.”

Another uncomfortable truth for the 76-cent crowd: women are considerably more likely to absorb more care-taker responsibilities within their families, and these roles demand associated career trade-offs. Sheryl Sandberg’s Lean In describes 43% of highly-qualified women with children as leaving their careers or off-ramping for a period of time. And a recent Harvard Business Review report describes women as being more likely than men to make decisions “to accommodate family responsibilities, such as limiting (work-related) travel, choosing a more flexible job, slowing down the pace of one’s career, making a lateral move, leaving a job, or declining to work toward a promotion.”

It’s fair to assume that such interruptions impact long-term wages substantially. In fact, when researchers try to control for these differences, the wage gap virtually disappears. A recent Glassdoor study that made an honest attempt to get beyond the superficial numbers showed that after controlling for age, education, years of experience, job title, employer, and location, the gender pay gap fell from nearly twenty-five cents on the dollar to around five cents on the dollar. In other words, women are making 95 cents for every dollar men are making, once you compare men and women with similar educational, experiential, and professional characteristics.

It’s worth noting that the Glassdoor study could only control for obvious differences between professional men and women. It’s likely that other, more nuanced but documented differences, like spending fewer hours on paid work per week would explain some of the remaining five percent pay differential.

Now, don’t misunderstand. Certainly somewhere a degenerate, sexist, hiring manager exists. Someone who thinks to himself: you’re a woman, so you deserve a pay cut. But rather than that being the rule, this seems to be an exception. In fact, the data seems to indicate that the decisions that impact wages are more likely due to cultural and societal expectations. A recent study shows that a full two-thirds of Harvard-educated Millennial generation men expect their partners to handle the majority of child-care. It’s possible that women would make different, more lucrative career decisions given different social or cultural expectations.

Or maybe they wouldn’t. But in the meantime, Hillary’s “equal pay for equal work” rallying cry is irresponsible, in that it perpetuates a workplace myth: by painting women as victims of workplace discrimination, when they’re not, it holds my sex psychologically hostage by stripping us of the very confidence we need to succeed. It also unhelpfully directs our focus away from dealing with the real barrier to long-term earning power – social and cultural pressures – in favor of an office witch hunt.

And that’s why, on the gender pay gap, I’m not with her.

Iceland Could Be the Next Site for a Basic Income Experiment

Iceland will hold early elections in October following the resignation of former Prime Minister Gunnlaugsson. One aggregation of polls has the upstart Pirate Party in the lead by four percentage points, and the party may be in prime position to form Iceland’s next government. They have an eclectic suite of policies in their party platform, some of them interesting and not all of them desirable. In a narrow sense, their elevation could lead to the development of a basic income experiment due to the shortcomings they perceive in Iceland’s current welfare system. Another pilot program for a basic income could help find more answers to the many questions that still surround the idea.

Last year the party’s MPs introduced a proposal calling for the government to form a working group to investigate the feasibility of shifting to a basic income that would “replace, or at least simplify” their current system. As with most discussions about the desirability of such a shift, the details are incredibly important, and to a large extent these proposals cannot be evaluated until more elements of the plan are decided.