“Ad Audit” Audit

Kaiser Health News has launched a new “Ad Audit” series that critiques the TV ads that various groups are airing both to promote or hinder the health care reforms moving through Congress.  KHN correspondent Jordan Rau makes two solid contributions to the series.  Two other audits leave something to be desired, however, while a fifth audit is just…well, you decide.

One lackluster audit examines an ad by the health-insurance lobby, AHIP.  KHN dings AHIP for making bland statements in support of “bipartisan reforms” and “universal coverage” without offering “policy specifics about what these statements mean.”  But the AHIP ad does make two policy statements that are susceptible to analysis:

If everyone’s covered, we can make health care as affordable as possible. And the words “pre-existing condition” become a thing of the past.

How is covering everybody supposed to make health care more affordable?  Might there be a downside to requiring insurers to cover pre-existing conditions?  KHN provides no analysis of the former statement.  And rather than analyze the latter, KHN offers a spat between a left-leaning analyst and an AHIP lobbyist (I suppose that’s considered a balanced discussion) over whether AHIP’s proposed price controls go far enough.

Another lackluster audit examines an ad by Healthy Economy Now, a coalition comprised of “the Pharmaceutical Research and Manufacturers of America (PhRMA), AARP, the American Medical Association, the Advanced Medical Technology Association, Business Roundtable, Families USA and the Service Employees International Union.”  This ad also provides fertile ground for analysis:

If we don’t act, medical bills will wipe out their savings…she’ll be denied coverage because of a pre-existing condition and he won’t get the chemotherapy he needs…health care costs will rise 70 percent…But we can act. The president and Congress have a plan to lower your costs and stop denials for pre-existing conditions.

Medical bills are wiping out many people’s savings – but would the Democrats’ legislation put an end to that?  Again, are there any trade-offs involved in forcing insurers to cover pre-existing conditions?  Might insurers stint on things like chemo because that would spur cancer patients to switch to other insurers (where they would bring down the competition’s bottom line)?  Would health care costs grow more or less rapidly under the Democrats’ reforms?  What does the Congressional Budget Office have to say?  In place of such useful analysis, KHN merely reports that the ads are meant to influence the Blue Dogs, who had been holding up the Democrats’ health plans.  (Of course, that in itself is interesting: why are these disparate groups so unified in their desire to see the Democrats’ reforms enacted?  It’s a wonderful opportunity to test out the “bootleggers and Baptists” theory of regulation.  But KHN…not interested.)

Yet the worst “audit” has to be KHN’s treatment of an ad by the group Conservatives for Patients’ Rights.  KHN provides all the reasons that people should be suspicious of the ad and its sponsors: CPR was founded by a rich guy, who was ousted from his former gig as a hospital CEO amid fraud investigations, and who hired the “Swift Boat” crew to do his PR.  Fair enough.

KHN goes off the rails, however, when it critiques the ad’s content.  The ad states:

Some of Congress’ health care plans could squeeze you four ways. It could raise taxes by $600 billion—even taxing soda. It could add a trillion to the federal deficit. New rules could hike your health insurance premiums 95 percent. You still might end up on their government-run health plan.

KHN reports, “the facts are largely taken out of context, come from biased industry groups or have been discredited.”

KHN quotes the Urban Institute’s John Holahan as saying, “There’s absolutely nothing here that’s right. It’s unbelievable.”  But regarding the $600-billion figure, KHN then writes, “Holahan says that number could turn out to be right, but it likely will be less.”  Well, which is it?  CPR says the tax hike could reach $600 billion.  Holahan says it could, too.  So how is it that CPR’s claim is absolutely, unbelievably not right?  How could KHN not notice that contradiction?

“And,” KHN ads, “a soda tax is just one of many proposed revenue-raisers, including a cap on the tax deductibility of insurance premiums, a tax on the wealthy and an alcohol tax.” So what?  Does that make the soda-tax claim untrue?  Or even misleading?

KHN then challenges CPR’s “could add a trillion to the federal deficit” claim again by quoting Holahan:

It’s almost impossible to both say that you’re going to raise taxes by $600 billion and increase the deficit by $1 trillion—that means there’s no savings at all anywhere. That can’t be right.

First, that’s not what the ad claims.  The ad claims only that either could happen.  Second, given the difficulties that Democrats are having in paying for their reforms, and the tendency of government health programs to exceed spending projections, it’s not that unreasonable to think that both could happen.

Regarding the “could hike your health insurance premiums 95 percent” claim, KHN quotes Holahan as saying, “premiums are ‘almost guaranteed’ to grow 95% over a 10 year period” anyway.  CPR’s claim has to do with the effects of imposing price controls on health insurance premiums (i.e., banning exclusions for pre-existing conditions), which would increase premiums for the healthy.  Holahan does not refute CPR’s claim so much as confuse that effect with overall premium growth.  In fact, price controls could very well increase healthy people’s premiums by 95 percent, and then overall premium growth could cause those premiums to rise another 95 percent over the next 10 years.

This is getting exhausting, so I’ll wrap up by noting that KHN’s refutation of CPR’s “You still might end up on their government-run health plan” claim was also a non-refutation.  After insinuating that the Lewin study CPR cites is either biased, discredited, or both, KHN merely notes that the study produced multiple estimates of how many Americans would end up in a new government program.  Oh, and different ways of creating a new program will influence that number.  Well, no duh.  And how on Earth does that impugn CPR’s claim?

KHN was not the only one asleep at the switch here.  My friend Jonathan Cohn also missed the contradictions, shell games, and non sequiturs in this audit when he uncritically blogged about it over at The New Republic.

To sum up the situation, I can’t improve on Cohn’s closing line: “Sadly, it’s pretty typical of what we’ll be seeing and hearing…over the next few weeks.”

No, Please Don’t Think Outside the Box

National Journal’s CongressDaily reports ($$) on a speech by Department of Homeland Security secretary Janet Napolitano:

“We need to be looking at [cybersecurity] not from a traditional standpoint of how we do law and order, but how we need to do it in a new and evolving world,” Napolitano said during the keynote speech at a cybersecurity conference hosted by the Secret Service. “We need to be thinking outside our traditional boxes. We need to be thinking ahead,” Napolitano said … .

Security expert Bruce Schneier sees it differently: “Securing our networks doesn’t require some secret advanced NSA technology. It’s the boring network security administration stuff we already know how to do: keep your patches up to date, install good anti-malware software, correctly configure your firewalls and intrusion-detection systems, monitor your networks.”

Entrepreneurial government officials would like you to think cybersecurity is big and new and all-different—a game-changer. But while there are some real challenges, it’s not anything so different that we need to “think outside of the box,” especially not the box that keeps government in its properly scoped law enforcement and national security roles.

Pessimism About Afghanistan

Despite the happy talk from some government officials, the American people see the situation in Afghanistan as more likely to deteriorate than improve.  Rasmussen Reports tells us:

Voters are less hopeful about the war in Afghanistan these days.

 A new Rasmussen Reports national telephone survey finds that only 22% expect the situation there to get better, down seven points from a month ago.

 The plurality (41%) says things will get worse in the coming months, an increase of two points since the beginning of July. Another 24% say the situation will stay about the same during that time, up from 21% in the previous survey.

 Forty-three U.S. soldiers and 31 soldiers from other Western allies were killed in Afghanistan in July, the highest monthly total for both groups in the eight-year-old war. President Obama began shifting more U.S. troops to Afghanistan shortly after taking office because he contends that the country is the central front in the war on terror.

Unfortunately, there is much to be pessmistic about, as Cato’s Malou Innocent has been reporting.

Ecuador Copies Venezuela on Press Freedom

Ecuadorean President Rafael Correa announced Monday that his government is reviewing the broadcast licenses of radio and television stations and that it is finding “irregularities” to which sanctions will be applied, including revoking licenses. “Some sacred cows will fall,” he warned. The measures could affect hundreds of stations. The announcement was made just days after President Hugo Chavez of Venezuela also used an administrative pretext to close down 34 radio stations critical of his regime. Last week the Venezuelan congress began considering a press crimes law that would criminally penalize with prison sentences of up to four years members of the media “or any other person that expresses himself through any medium of communication” for reporting news that is false, harmful to mental health, or that produces instability. It’s not clear that Correa will also copy Chavez on a press censorship law or that he will close as many stations. But at the very least, Correa is seeking to significantly muzzle the independent press through intimidation and self-censorship.

The Folly of Hate Crime Laws

That’s the title of Richard Cohen’s op-ed in yesterday’s Washington Post. Cohen highlights the futility of using a hate crime to prosecute the Holocaust Museum shooter:

In von Brunn’s case, the hate-crime counts are an obscenity. To suggest that the effects of this attack were felt only by the Jewish or the black communities – and not, for instance, by your average Washington tourist – ghettoizes both its real and purported victims. It’s a consequence that von Brunn himself might applaud.

I couldn’t agree more.

Another Reason We Don’t Want Government Rationing Health Care

Although “rationing” of health care, like any scarce resource, is inevitable, there are a lot of good reasons for not allowing government to decide who gets what.  First among them is the fact that individuals have a basic right to make basic life choices themselves.

Moreover, irrespective of the rhetoric of self-interested politicians seeking votes, government does not have the interest of patients first and foremost in mind.  Indeed, in Great Britain the primary interest of the National Health Service these days appears to be saving money by reducing care.

Reports the Daily Telegraph:

The Government’s drug rationing watchdog says “therapeutic” injections of steroids, such as cortisone, which are used to reduce inflammation, should no longer be offered to patients suffering from persistent lower back pain when the cause is not known.

Instead the National Institute of Health and Clinical Excellence (NICE) is ordering doctors to offer patients remedies like acupuncture and osteopathy.

Specialists fear tens of thousands of people, mainly the elderly and frail, will be left to suffer excruciating levels of pain or pay as much as £500 each for private treatment.

The NHS currently issues more than 60,000 treatments of steroid injections every year. NICE said in its guidance it wants to cut this to just 3,000 treatments a year, a move which would save the NHS £33 million.

But the British Pain Society, which represents specialists in the field, has written to NICE calling for the guidelines to be withdrawn after its members warned that they would lead to many patients having to undergo unnecessary and high-risk spinal surgery.

Somehow this doesn’t look like the sort of “change” most Americans were voting for last November.

(H/t Matthew Vadum.)

Sarbanes-Oxley’s Harms Are Magnified by the PCAOB’s Unconstitutional Structure

Passed with scant deliberation amid a stock market panic, the Sarbanes-Oxley Act of 2002 vastly expanded the federal government’s role in regulating corporate governance and the accounting industry. As part of that effort, Congress created a new agency to “audit the auditors.” Known as the Public Company Accounting Oversight Board, the agency has broad rulemaking and enforcement powers to set accounting standards, investigate accounting firms, punish criminal violations, and make whatever rules “may be necessary or appropriate in the public interest or for the protection of investors.”

Remarkably, the PCAOB (pronounced “peek-a-boo”) also has the power to fund its own budget by levying taxes on publicly traded companies. Despite giving the PCAOB all this power, however, Congress insulated it entirely from presidential oversight. Unlike with an ordinary “independent agency,” the president has no power whatsoever to appoint or remove PCAOB officials. Those officials may be removed only “for cause” by the SEC, not the president; and SEC officials may themselves be removed only for cause.

The Free Enterprise Fund challenged the constitutionality of the PCAOB and appealed to the Supreme Court. Cato’s supporting brief focuses on the PCAOB’s practical policy consequences, illustrating how the PCAOB’s unconstitutional structure has created incentives for out-of-control spending, agency aggrandizement, and lack of coordination between regulators. Our brief also highlights the PCAOB’s efforts to impose American accounting standards abroad, which has caused confusion and invited retaliation from foreign regulators.

I previously blogged about this case here and here.