Latest Cato Research on Universal Health Care en The Government’s COVID-19 Failures Are an Argument Against Medicare for All Charles Silver, David A. Hyman <div class="lead mb-3 spacer--nomargin--last-child text-default"> <p>Some&nbsp;have said the failure of America’s medical system to handle the surge in demand caused by COVID-19 is proof that the country needs Medicare for All. They couldn’t be more wrong.</p> </div> , <div class="mb-3 spacer--nomargin--last-child text-default"> <p>Many countries with nationalized, single‐​payer schemes, including England, France, Italy, and Spain, have seen their health‐​care systems stretched past the breaking point by the pandemic. More importantly, the responsibility for America’s lack of preparedness lies squarely with our dysfunctional government. The real lesson to be learned from our botched response to COVID-19 is that giving the government control of the entire health‐​care system would be an enormous mistake.</p> <p>No system that is sensibly designed to meet our normal needs for goods and services can respond instantly to a&nbsp;massive surge in demand. That’s why stores ran out of toilet paper, bottled water, face masks, antibacterial wipes, and other items when panicked shoppers went on buying sprees after the pandemic first hit. To increase production, manufacturers must acquire additional supplies, hire more workers, add shifts, expand facilities, make shipping arrangements, and so forth. Because doing these things takes time, in the short run supply is fixed.</p> </div> , <aside class="aside--right aside--large aside pb-lg-0 pt-lg-2"> <div class="pullquote pullquote--default"> <div class="pullquote__content h2"> <p>No one should want to nationalize the health‐​care system after this pandemic.</p> </div> </div> </aside> , <div class="mb-3 spacer--nomargin--last-child text-default"> <p>The health‐​care system also faces short‐​term supply constraints. It takes years to produce the thousands of new doctors, nurses, pharmacists, and EMTs that are needed when a&nbsp;crisis hits. It takes time to make more hospital beds, ventilators, ambulances, and personal protective equipment too. That we ran short of these resources when the coronavirus reached our shores is not a&nbsp;sign of a&nbsp;poorly run system, but of one governed by basic economic imperatives: Health‐​care businesses sensibly kept only enough resources on hand to deal with expected demand, because maintaining excess capacity was not worth the expense.</p> <p>The pandemic caused demand to skyrocket past expected levels, so, as typically happens with mass disasters, we’ve faced shortages. Some can be eased by importing goods and workers from outside the affected region — think of New York, which is now asking for help from doctors in other states. But others can only be addressed by ramping up production, which can take weeks, months, or even years.</p> <p>Since markets discourage businesses from maintaining too much excess capacity, how should we prepare for catastrophes like COVID-19? The usual answer is that government must do the heavy lifting. Unfortunately, the government’s record of preparing for disasters is poor.</p> <p>The response to the COVID-19 crisis is a&nbsp;case study in governmental ineptness. In 2006, the federal government estimated that 70,000 ventilator machines would be needed in a&nbsp;moderate influenza epidemic. Instead of going with a&nbsp;large, established device maker, in 2010 HHS hired Newport Medical Instruments, a&nbsp;small one, to build a&nbsp;fleet of inexpensive portable devices. Before production started, however, NMI was purchased by Covidien, a&nbsp;larger device maker. Eventually, Covidien&nbsp;<a href="" target="_blank">backed out of the contract</a>, no ventilators were delivered, and the government enlisted a&nbsp;new vendor in 2019. The government also allowed a&nbsp;contract dispute to interfere with the maintenance of the ventilators it already had. Consequently, when COVID-19 hit, the federal supply of ventilators was far too small and thousands of the machines the government did have didn’t work. Fourteen years after the call for ventilators went out, the federal government is just starting to fill the need.</p> <p>What about drugs? Scientists are now studying whether Remdesivir may be effective in fighting SARS‐​CoV‐​2, the virus that causes COVID-19. Remdesivir was developed six years ago to combat various viruses, including dengue fever, the West Nile virus, Zika, MERS, SARS, and Ebola. But it was never approved for use — apparently because Gilead Sciences (the patent holder) saw too little financial gain to warrant the cost of the FDA’s approval process. The result is that we are effectively starting from scratch in the search for a&nbsp;COVID-19 treatment.</p> <p>The federal government also botched the process for creating and administering coronavirus tests. Because SARS‐​CoV‐​2 is a&nbsp;new variant, a&nbsp;new test was needed to track its spread.&nbsp;<a href=";utm_campaign=wp_post_most" target="_blank">German researchers</a>&nbsp;developed one in mid‐​January, but the CDC decided not to use it, instead pressing ahead with the development of a&nbsp;separate test. When that test was released in late January, it proved&nbsp;<a href="" target="_blank">faulty</a>, and the FDA prevented private laboratories from developing tests of their own. The CDC also distributed its few test kits&nbsp;<a href="" target="_blank">equally</a>&nbsp;to labs across the country, without regard to the size of local populations. The result was a&nbsp;dramatic shortage of valid tests in populous areas, which created the false impression that the number of cases in the U.S. was low. In early March, facilities in the U.S. had administered&nbsp;<a href=";utm_campaign=wp_post_most" target="_blank">3,099 tests</a>. By comparison, South Korea, a&nbsp;much smaller country whose epidemic started the same day as ours, had administered more than 188,000.</p> <p>Even after the government‐​created bottleneck was broken, testing in the U.S. was still stymied by shortages of swabs, transport media, and reagents that are used to wash genetic material out of swabs for examination. Evidently, none of these items were stockpiled in sufficient quantities. Items needed to protect testers and health‐​care providers, such as N95 face masks, were also in short supply.</p> <p>The federal government’s Strategic National Stockpile is supposed to include such personal protective equipment, as well as antibiotics, vaccines, ventilators, and other supplies needed to deal with a&nbsp;pandemic. Since its creation in 1999, the SNS has proven its value in responding to Hurricane Katrina and the 2009 H1N1 swine‐​flu pandemic, among other disasters. But SNS stockpiles were depleted during the Obama presidency, and hadn’t been replenished by the time the current crisis began. Originally, the SNS got caught up in the fight between congressional Republicans and President Obama over spending, with neither side willing to bend enough to ensure that it was fully replenished. After that, Obama wasn’t willing to expend the political capital necessary to fix the problem, and President Trump hasn’t been willing to do so either.</p> <p>The U.S. spends almost $1 trillion a&nbsp;year on national defense, but it handles our security so poorly that a&nbsp;virus born in a&nbsp;provincial city in China has killed thousands of us, sickened hundreds of thousands more, and sent us into economic freefall in barely a&nbsp;month. With a&nbsp;record like that, no one should want the government to have more responsibility for the health‐​care system than it already does. Medicare For All won’t help the country in ordinary times or in emergencies — it will only make things worse.</p> </div> Tue, 14 Apr 2020 09:35:22 -0400 Charles Silver, David A. Hyman Do Local Governments Represent Voter Preferences? Evidence from Hospital Financing under the Affordable Care Act Victoria Perez, Justin M. Ross, Kosali I. Simon <div class="lead mb-3 spacer--nomargin--last-child text-default"> <p>One of the main reasons for the existence of local (as opposed to only state or national) governments is that they can better respond to differing preferences for the public provision of goods and services. However, scholars and practitioners have long expressed skepticism about whether decentralization works in practice, particularly because voters may not be able to monitor local government actors due to asymmetric information. Preemption policies (e.g., local tax and expenditure limits or Dillon’s Rule) that grant states the power to constrain local governments are arguably motivated by the perspective that local voters systematically lack the capacity to constrain the actions of their local governments for their own benefit.</p> </div> , <div class="mb-3 spacer--nomargin--last-child text-default"> <p>While much research in the political economy literature demonstrates government errors—particularly in the area of fiscal illusion, in which voters underestimate the cost of government spending—there is comparatively little research on government adherence to voter preferences. Another prominent critique of decentralization is that local governments will not be efficient providers of welfare or poverty assistance programs due to interjurisdictional competition: local governments compete for mobile actors who will support taxes only for services from which they directly benefit, hence it is argued that higher levels of government are better suited for the provision of social insurance programs. These competing concerns regarding the trustworthiness of local governments to support efficient and equitable societies are important determinants in a&nbsp;long‐​standing debate over the appropriate degree and scope of government decentralization.</p> <p>Local governments participate in the health care system as both health care providers and third‐​party payers. This paper provides evidence of local government adherence to voter preferences by treating state expansion of Medicaid under the 2010 Affordable Care Act (ACA) as an external price shock for public provision of health services. Specifically, by providing reimbursement to a&nbsp;previously uninsured pool of patients, the ACA allows local governments to reduce their financial role in supporting local hospitals and spend more on other public services or reduce tax burdens. Alternatively, the ACA represents an opportunity to expand local hospital provision given a&nbsp;new source of reimbursement for community health care activities that may not have been financially feasible prior to expansion.</p> <p>The value of the ACA as a&nbsp;way to investigate local government responses to incentives lies in its contentious political and legal history. In 2012, the U.S. Supreme Court ruled the Medicaid expansion provision of the ACA to be voluntary for individual states. To date, 31 states have elected to expand Medicaid. Other provisions of the ACA, such as the creation of an individual health insurance marketplace and extensions of employer‐​sponsored health insurance to young adults, were applied nationally. Subsequent state‐​level decisions to expand Medicaid under the ACA represent an arguably exogenous shock at the local government level. This expansion reduces the share of uninsured patients within local markets. We find that in 2013, county‐​level estimates of uninsurance among those meeting the Medicaid expansion provision’s income criteria ranged from 9&nbsp;to 65 percent of the population. Moreover, the federal government covered the cost in the initial years of the expansion, thus local governments acting to capitalize on this opportunity do not impose heavy costs on state budgets.</p> <p>From the perspective of a&nbsp;voter with preferences regarding local public goods and services, the Medicaid expansion provision of the ACA resembles a&nbsp;matching categorical aid grant to local governments in that it offers reimbursements for previously uncompensated hospital‐​care services. A&nbsp;median voter whose preferences include delivering services to poor community residents might encourage an expansion of these services as they become further subsidized through Medicaid. On the other hand, if voter demand for public‐​sector altruism is already satiated near current levels, then local governments may take this opportunity to retreat from their role of underwriting hospital provisions and spend on other public goods or reduce taxes to increase private consumption. How these different possible financial reactions actually net out is an empirical question addressed by this paper. Assessing the effect of state Medicaid expansion on relevant local government fiscal variables enables us to study the sensitivity of local government support for hospitals to alternative sources of payment.</p> <p>To test our central question of whether local governments behave in ways that are consistent with voter preferences, we split our sample based on whether the encompassing county voted for Barack Obama or Mitt Romney in the 2012 presidential election as a&nbsp;proxy for local voter preferences for the ACA and, more generally, for public intervention in the financing of health care. We believe that this proxy accurately reflects voter preferences for the local government response to ACA incentives because health care reform was the most divisive issue of the election. The assumption is that the propensity toward greater fiscal engagement with hospitals is greater in Obama‐​voting areas than in Romney‐​voting areas. Regardless of whether a&nbsp;state expanded Medicaid, in 2012 there was wide variation in the presidential preferences of individual local populations.</p> <p>We examine local government behavior in areas that had high uninsurance prior to 2014, as these were the areas that would financially gain the most from Medicaid expansion, compared with areas with low baseline rates of uninsurance. Using data from the U.S. Census of Governments for the years 2006–2015, we examine governments’ fiscal decisions, paying special attention to hospital‐​related expenditures and to revenue raised from property taxes. We find that, on average, there was no response to ACA state expansion in terms of local hospital spending decisions: states that expanded and states that didn’t expand saw similar changes post‐​2013. However, when we split our sample by 2012 presidential preferences, we find notable opposing effects: local governments in Obama‐​supporting areas increased their spending on local hospital services, whereas those in Romney‐​leaning areas reduced their spending and lowered property taxes. This pattern remains consistent among local governments with urban and rural designations. We also confirm that our findings are robust to controlling for other significant differences in demographic composition.</p> <p>Local governments primarily support their local public hospitals. Increased local government spending after the ACA could reflect an effort to support public hospitals subjected to “cream skimming” if now‐​profitable patients relocate to nonpublic hospitals. In order to rule out competing explanations for the results we observe, we supplement our study with an analysis of financial data for hospitals receiving government support as well as for other competing hospitals in the area. Examining hospital financial records to rule out this alternative explanation, we find that low profits for public hospitals following expansion do not account for our observed result. Indeed, we find that public hospitals experienced profit increases.</p> <p>Our study examines local government responsiveness to changes in the institutional setting (i.e., the exogenous incentive under Medicaid expansion), whereas prior work has examined cases in which government functions and purposes were realigned. That is, we study a&nbsp;moment when, due to a&nbsp;changing environment, local governments were presented with an opportunity in which they could respond in accordance with local voter preferences. Such a&nbsp;setting should carry greater external validity than the settings of previous case studies, since shifting vertical assignment functions within federalist systems are a&nbsp;less common occurrence than the many presumed environmental changes citizens expect their governments to respond to while representing their interests.</p> <p>Finally, in addition to contributing to our understanding of representative democracy, the course of this research contributes to a&nbsp;generally understudied stakeholder in the public health service economy (local governments), making it policy‐​relevant research. In the aggregate, local governments represent the majority contributor to public hospitals and to health‐​related services as measured by expenditures, as they have outspent state governments by about a $3-to-$2 ratio on hospitals and matched state spending on other public health care expenditures. While total spending is driven by a&nbsp;relatively small number of local governments (802 of 89,004), these entities serve one‐​third of the American population. Furthermore, hospitals are significant consumers of government inputs, with one‐​tenth of non‐​education‐​related local government employees working in hospitals. Despite this high level of fiscal involvement, almost no attention has been given to the public economics of health care delivery at the local government level. We thus include an additional analysis of hospitals’ profits, which separately contributes an empirical assessment of how publicly supported hospitals were affected by the ACA and state Medicaid expansion.</p> <p><strong>NOTE</strong>: <br> This research brief is based on Victoria Perez, Justin M. Ross, and Kosali I. Simon, “Do Local Governments Represent Voter Preferences? Evidence from Hospital Financing under the Affordable Care Act,” NBER Working Paper no. 26094, July 2019, <a href="" target="_blank">https://​www​.nber​.org/​p​a​p​e​r​s​/​w​26094</a>.</p> </div> Wed, 11 Mar 2020 00:00:00 -0400 Victoria Perez, Justin M. Ross, Kosali I. Simon Senator Sanders Is Wrong on Cuban Education and Healthcare Marian L. Tupy, Chelsea Follett <p><span>The current frontrunner among the contenders vying to become the Democratic Party’s presidential candidate, Senator Bernie Sanders (D-VT), sang Cuba’s praises in a&nbsp;recent <em>60 Minutes</em> <a href="">interview</a> on CBS. Senator Sanders applauded Cuba’s education and healthcare system. Potential Sanders supporters should know that Cuba’s literacy rate and healthcare system are nothing to lionize.</span></p> <p><span>First, consider literacy. According to Sanders, “When Fidel Castro came into office, you know what he did? He had a&nbsp;massive literacy program. Is that a&nbsp;bad thing?” Sanders is surely old enough to know that all communist dictatorships throughout history have ensured that their people were literate—in part so that the people might take in the disinformation printed by government propaganda ministries.</span></p> <p><span>Furthermore, a&nbsp;look at the data reveals that all of the progress regarding literacy that happened under communism in Cuba would almost certainly have happened under a&nbsp;different political and economic system. While trustworthy data, defogged of Cuban propaganda, are difficult to come by, the U.S. Department of State tried to do just that by comparing improvements in human well‐​being in Cuba between the 1950s (the last decade of the hated Batista regime) and 2000.</span></p> <p><span>Accordingly, Cuba’s literacy rate <a href="">rose</a> by 26 percent between 1950/53 and 2000. But literacy rose even more, by 37 percent, in Paraguay. Food consumption in Cuba actually <em>declined</em> by 12 percent between 1954/57 and 1995/97. It rose by 19 percent in Chile and by 28 percent in Mexico over the same time period. Between 1954/57 and 1995/97, the rate of change in car ownership per 1,000 people in Cuba declined at an annual rate of 0.1 percent. It increased at an annual rate of 16 percent in Brazil, 25 percent in Ecuador and 26 percent in Colombia.</span></p> <p><span>Next, consider healthcare. Sanders has repeatedly extolled Cuba’s healthcare system, opining that in Cuba the communist revolutionary and dictator Fidel Castro “gave them [the Cuban people] health care, totally transformed the society, you know?” Yet a&nbsp;recent <a href="">study</a> has found that Cuba’s seemingly impressive health performance is partly due to data manipulation and coercion.</span></p> <p><span>Life expectancy is the best proxy measure of health. According to Cuba’s official data, it <a href=";yf=1960&amp;yl=2017&amp;col=1">rose</a> by 25 percent between 1960 and 2017. Yet life expectancy increased even faster in comparable countries: in Mexico it improved by 35 percent, in the Dominican Republic by 43 percent, and in impoverished Haiti by 51 percent.</span></p> <p><span>The data make clear that Cuba’s education and healthcare system are unremarkable. Cuban‐​Americans and others familiar with Castro’s record are rightly appalled by Sanders’ apparent affection for socialism on the island.</span></p> <p><span>Castro committed numerous crimes against humanity. He <a href="">enslaved</a> thousands of Cubans in forced labor camps for being attracted to members of the same sex, harboring “counter‐​revolutionary” thoughts, practicing minority religions or even simply for looking unkempt (like a “hippie”). </span></p> <p><span>The slave labor of those Castro called “social deviants” provided an important source of income for the young communist regime, and any accomplishments of the regime must be viewed with that system of forced labor in mind.</span></p> <p><span>“We’re very opposed to the authoritarian nature of Cuba but you know, it’s unfair to simply say everything is bad,” Senator Sanders told <em>CNN</em>’s Anderson Cooper during the interview. We cannot help but wonder if the senator would offer a&nbsp;similarly nuanced portrayal of a&nbsp;right‐​wing dictator.</span></p> <p><span>The <em>60 Minutes </em>interview is only the most recent episode in Sanders’ lengthy history of acting as an apologist for socialism. From his infamous <a href="">honeymoon</a> in the Soviet Union that led him to extoll what he called “the strengths” of the communist system, to his 1980s <a href="">praise</a> for Castro’s Cuba and the Sandinista dictatorship in Nicaragua, Sanders has often had sympathetic words for left‐​wing dictatorships. </span></p> <p><span>As recently as February 2019, Sanders even <a href="">refused</a> to describe Venezuela’s Nicolás Maduro as a “dictator” (in the September Democratic debate, when pressed, Sanders <em>finally</em> <a href="">admitted</a> Maduro was a “tyrant”). </span></p> <p><span>Sanders, at age 78, should know better than to exalt the alleged accomplishments of communist dictatorships. Hopefully Americans&nbsp;will take a&nbsp;look at the data instead of taking Sanders’ claims about Cuba’s education and healthcare systems at face value.</span></p> Tue, 25 Feb 2020 13:52:27 -0500 Marian L. Tupy, Chelsea Follett Trump Clearly Doesn’t Care to Get His Facts Straight. Neither Do His Critics. Michael F. Cannon <p>The public debate over how to protect patients with expensive medical conditions is so muddled and uninformed that sometimes President Trump’s critics end up matching his ignorance and muddle‐​headedness.</p> <p>The most recent controversy concerns (what else?) a pair of missives by the Tweeter‐​in‐​Chief.</p> <p> <div data-embed-button="embed" data-entity-embed-display="view_mode:media.blog_post" data-entity-type="media" data-entity-uuid="50c5af3c-8bb3-4608-961a-e24dd3fd43e2" data-langcode="en" class="embedded-entity"> <div class="embed embed--twitter js-embed js-embed--twitter"> <blockquote class="twitter-tweet"><p lang="en" dir="ltr" lang="en" lang="en">Mini Mike Bloomberg is spending a lot of money on False Advertising. I was the person who saved Pre-Existing Conditions in your Healthcare, you have it now, while at the same time winning the fight to rid you of the expensive, unfair and very unpopular Individual Mandate.....</p>— Donald J. Trump (@realDonaldTrump) <a href="">January 13, 2020</a></blockquote> </div> </div> <div data-embed-button="embed" data-entity-embed-display="view_mode:media.blog_post" data-entity-type="media" data-entity-uuid="82212379-46ee-4f23-9712-a35c838a0ca1" data-langcode="en" class="embedded-entity"> <div class="embed embed--twitter js-embed js-embed--twitter"> <blockquote class="twitter-tweet"><p lang="en" dir="ltr" lang="en" lang="en">I stand stronger than anyone in protecting your Healthcare with Pre-Existing Conditions. I am honored to have terminated the very unfair, costly and unpopular individual mandate for you!</p>— Donald J. Trump (@realDonaldTrump) <a href="">January 13, 2020</a></blockquote> </div> </div> </p><p>It is hard to argue Trump’s words comport to reality. He seems to be taking credit for ObamaCare’s (<a href="">purported</a>) ban on insurers discriminating against enrollees with preexisting conditions. While he has seemed to suggest in the past that he likes those parts of the Affordable Care Act, his supporters have spun his remarks by saying, no, Trump wants to take care of people with preexisting conditions in a different way. Fine.</p> <p>The only credible claim Trump could make in this area, however, is that the changes his administration made to short‐​term, limited duration plans have improved access to care. But while such <a href="">renewable term health insurance</a> can make coverage <a href="">more secure</a> for those who develop expensive conditions in the future–and can therefore make the problem of preexisting conditions smaller–they can’t really help people who already have preexisting conditions, for the same reason fire insurance can’t really help someone whose house has already burned down. The phrase <em>preexisting conditions</em> rather unhelpfully clouds this fact that some medical conditions are simply not insurable. People who actually want to get sick people the health care they need should drop the phrase from their vocabulary and speak only of <em>insurable</em> versus <em>uninsurable </em>medical conditions.</p> <p>Trump’s critics are little better. A smattering:</p> <p> <div data-embed-button="embed" data-entity-embed-display="view_mode:media.blog_post" data-entity-type="media" data-entity-uuid="b201c75c-9a3b-42cc-a074-31cf05cdcbc1" data-langcode="en" class="embedded-entity"> <div class="embed embed--twitter js-embed js-embed--twitter"> <blockquote class="twitter-tweet"><p lang="en" dir="ltr" lang="en" lang="en">Glad to see you're watching our ads, <a href="">@realDonaldTrump</a>. I know management isn't your strong suit, so perhaps you don't know your Justice Department supports a suit that would undermine protections for pre-existing conditions. Now that you know, why not ask them to drop the suit?</p>— Mike Bloomberg (@MikeBloomberg) <a href="">January 13, 2020</a></blockquote> </div> </div> <div data-embed-button="embed" data-entity-embed-display="view_mode:media.blog_post" data-entity-type="media" data-entity-uuid="44e35636-5f03-4445-a85e-576ed34c5251" data-langcode="en" class="embedded-entity"> <div class="embed embed--twitter js-embed js-embed--twitter"> <blockquote class="twitter-tweet"><p lang="en" dir="ltr" lang="en" lang="en">130 million Americans live every day with pre-existing conditions. They depend on knowing their health care, secured by protections in the ACA, is there when they need it. <a href=";ref_src=twsrc%5Etfw">#ProtectOurCare</a></p>— Nancy Pelosi (@SpeakerPelosi) <a href="">January 13, 2020</a></blockquote> </div> </div> <div data-embed-button="embed" data-entity-embed-display="view_mode:media.blog_post" data-entity-type="media" data-entity-uuid="3ff616dd-f935-4d7e-beb1-6533ee50e5ac" data-langcode="en" class="embedded-entity"> <div class="embed embed--twitter js-embed js-embed--twitter"> <blockquote class="twitter-tweet"><p lang="en" dir="ltr" lang="en" lang="en">Rather than amplify a baldfaced lie just going to reiterate the truth: Republicans, including Donald Trump, have engaged in an unrelenting campaign to rip health insurance, including protections for preexisting conditions, from tens of millions of people.</p>— Ezra Klein (@ezraklein) <a href="">January 13, 2020</a></blockquote> </div> </div> <div data-embed-button="embed" data-entity-embed-display="view_mode:media.blog_post" data-entity-type="media" data-entity-uuid="c69f8357-964e-4f9c-98c2-4bae765d1afa" data-langcode="en" class="embedded-entity"> <div class="embed embed--twitter js-embed js-embed--twitter"> <blockquote class="twitter-tweet"><p lang="en" dir="ltr" lang="en" lang="en">Of all of Trump’s lies, his claim that Dems are trying to take away coverage for those with preexisting conditions is the most brazen. Whatever your view of policy, this is just trying to blunt a political weak point by pinning it on the other side. No one on his side flinches. <a href=""></a></p>— Orin Kerr (@OrinKerr) <a href="">January 13, 2020</a></blockquote> </div> </div> </p><p>Trump clearly does not care to get his facts straight. But neither do his critics. They ignore the critical distinction between insurable and uninsurable medical conditions. They ignore that markets have done a better job of <a href="">preventing preexisting conditions</a> than the government on which they pin their hopes for the sick. They ignore that the ACA’s (purported) protections for people with preexisting conditions literally <a href="">ration care</a> to the sick outside the law’s “open enrollment” period. They ignore that those same “protections” are forcing ACA plans into a <a href="">race to the bottom</a> on coverage for multiple sclerosis and other illnesses. Finally, they ignore that <em>Democrats are literally trying to throw people with preexisting conditions out of their health plans and leave them with no coverage for up to 12 months</em>, while Republicans have prevented Democrats from throwing people with preexisting conditions out of their health plans. I wrote about those efforts in the <em><a href="">Wall Street Journal</a> </em>in 2018. The <em>New York Times </em>reports on those efforts <a href="">here</a>.</p> <p>Like I said, it’s a muddle. Trump makes so many errors because he just assumes he’s right. Trump’s critics make so many critical errors because that’s how orthodoxy works. So long as everyone you like agrees, you don’t have to think too much. Which is really not all that different from Trump’s approach.</p> Tue, 14 Jan 2020 11:28:08 -0500 Michael F. Cannon Republican Study Committee Proposes an $11 Trillion Tax Cut Michael F. Cannon <p>The Republican Study Committee, a&nbsp;group of conservative House Republicans, has issued a&nbsp;health reform proposal. It’s not the first thing on <a href="">the RSC web site</a>, but scroll down and you’ll find it. The proposal has much to commend it.</p> <p><strong>Freeing Consumers from Harmful Regulations</strong></p> <p>Notably, it would repeal the Affordable Care Act’s <a href="https://0776ee3c-67a0-42b8-9612-92234ccfdd01/health%20care%20survey%20cato%202017">consistently</a> <a href="">unpopular</a> preexisting‐​conditions provisions, which not only <a href="">make coverage worse for the sick</a> but <a href="">leave <em>every </em>ACA enrollee with inadequate coverage</a>. (Can you say, “junk insurance”?) One of the reasons Republicans <a href="">suffered losses</a> in the 2018 mid‐​term elections was their failure to expose how those <a href="">supposed consumer protections</a> are harming the very patients they purport to help. Had they done so, they could have turned independents and even many Democrats to their side.</p> <p>Ironically, after launching a&nbsp;full‐​throated denunciation of those provisions, the RSC plan then turns around and proposes to apply a&nbsp;modified version of them to consumers who switch from one private health insurance plan to another.</p> <p>One can perhaps forgive this harmful inconsistency, though, because the RSC plan would codify the Trump administration’s <a href="">rules regarding short‐​term plans</a>. Embedding those rules in statute would free consumers to avoid the RSC plan’s harmful regulations; allow consumers to purchase affordable, <a href="">renewable term health insurance</a>; and improve the functioning of that market by providing regulatory certainty to insurers.</p> <p><strong>A Missed Opportunity on Government Spending</strong></p> <p>The RSC plan gets stuck in the mud when it proposes to repackage the ACA’s Exchange subsidies and Medicaid spending into per‐​capita “block” grants, which states could use to expand Medicaid or to create high‐​risk pools for consumers with preexisting conditions.</p> <p>Turning an existing stream of federal spending (the Exchange subsidies) into an intergovernmental transfer (the per‐​capita grants) is a&nbsp;bad move. It diffuses responsibility for that spending and the taxes (or deficits) that fund it. It is likely that spending would grow at a&nbsp;much faster rate under the RSC plan, as states are much more powerful/​sympathetic/​effective lobbyists than the private insurance companies that receive Exchange subsidies. As much as insurers abuse that stream of federal spending, the abuses will only get worse under the RSC proposal.</p> <p>A per‐​capita block grant, moreover, is not a&nbsp;block grant at all. It would preserve the existing Medicaid matching grant system’s incentives to increase enrollment, because expanding enrollment is how states would get more money from the federal government.</p> <p>Congress should eliminate that spending, or at the very least use it to reform Medicaid with a&nbsp;system of zero‐​growth block grants as a&nbsp;step toward eliminating it. States that want such programs should fund them with their own tax revenues and bear full responsibility for the results.</p> <p><strong>A Transformational Tax Cut</strong></p> <p>The RSC also includes a&nbsp;sleeping giant of a&nbsp;proposal, one that would deliver the largest effective tax cut any living American has ever seen, on the order of $11 trillion over the next decade..</p> <p>A quirk in the federal tax code (the tax exclusion for employer‐​paid health premiums) allows employers to control <a href="">roughly $15,000</a> of the earnings of workers with family coverage and <a href="">$6,000</a> of the earnings of employees with self‐​only coverage. Those numbers represent the average amounts employers pay toward health benefits for their workers. Even though employers are signing the checks, those funds <a href="">come out of workers’ wages</a>. Absent the exclusion, labor markets would force employers to provide those funds to workers as cash or other forms of compensation. Under the current exclusion, if workers insist on receiving that compensation as cash wages, they must pay income and payroll taxes on it. In effect, the tax exclusion for employer‐​paid health premiums penalizes anyone who does not purchase a&nbsp;government‐​approved health plan.</p> <p>Across all workers with employer‐​sponsored health insurance, that’s a&nbsp;lot of employee earnings the exclusion allows employers to control: <a href="">$828 billion</a> in 2019 alone, or nearly one‐​quarter of total U.S. health spending. Over the next decade, it adds up to nearly <a href="">$11 <em>trillion</em></a>. (If you want to know why the U.S. health care sector is so <a href="">expensive and unresponsive to consumers</a>, consider who is controlling the money. Spoiler alert: government directly controls <a href="">a&nbsp;further one‐​half</a> of national health expenditures.)</p> <p>The RSC proposal would free workers to control <em>their</em> $14,000 for the first time ever. It would do so by <a href="">expanding tax‐​free health savings accounts (HSAs)</a>.Workers could use that money to purchase medical care, to purchase the health plan of their choice, or to save for future medical expenses, all tax‐​free. Over the next decade, it would return <em>$11 trillion </em>to the workers who earned it. Giving consumers control of the nearly one‐​quarter of U.S. health care spending that employers currently control cannot help but make the markets for health insurance and medical care more responsive to consumers. It would also represent an effective tax cut 38 percent larger than President Reagan’s tax cuts and <em>four times </em>the size of President Trump’s tax cuts.</p> <p>The RSC has not yet indicated how it would keep this proposal budget‐​neutral, which regrettably puts them in the same camp as Medicare for All supporters like Democratic presidential candidate Sen. Elizabeth Warren (D-MA).</p> <p>Even so, the RSC proposal creates a&nbsp;stark contrast going into the 2020 election cycle.&nbsp;Medicare for All supporters want to give that $11 trillion to the federal government. ‘Large’ HSAs would give it back to the workers who earned it.</p> Wed, 23 Oct 2019 16:05:44 -0400 Michael F. Cannon The Democrats’ Health Care Plan Is a Unicorn Unfit for the US Michael D. Tanner <div class="lead mb-3 spacer--nomargin--last-child text-default"> <p>We’ve now entered the unicorn phase of the political season, the time when candidates promise us everything we could possibly desire and explain that it not only won’t cost us anything, it will actually save us money. And there is no unicorn anywhere bigger than health care reform. Candidates are falling all over each other in their rush to tell us how they will cover everyone, provide more benefits, improve quality and reduce the cost of care all at once.</p> </div> , <div class="mb-3 spacer--nomargin--last-child text-default"> <p>But before we start building the corral for our unicorn, we should remember that the government already pays for more than 45 percent of health care in this country. If the government was really able to reduce health care spending, it would have done so.</p> <p>There are good reasons that there is no easy way to provide more health care for less money. Of course, the United States already spends more on health care than any other industrialized country both in dollars per capita and as a&nbsp;share of GDP. Waste and inefficiencies abound. And overutilization is a&nbsp;continuing issue.</p> <p>Yet there is no magic elixir for change.</p> <p>Contrary to the angry diatribes from Bernie Sanders or Elizabeth Warren, high health care costs are not the result of greedy insurance and pharmaceutical executives.</p> </div> , <aside class="aside--right aside pb-lg-0 pt-lg-2"> <div class="pullquote pullquote--default"> <div class="pullquote__content h2"> <p>Contrary to the angry diatribes from Bernie Sanders or Elizabeth Warren, high health care costs are not the result of greedy insurance and pharmaceutical executives.</p> </div> </div> </aside> , <div class="mb-3 spacer--nomargin--last-child text-default"> <p>Yes, those are profitable companies and their executives are well compensated. No one is crying any tears for them.</p> <p>But health insurance companies’ profit margins range between 4&nbsp;to 5.25 percent, well within the mainstream of US companies and below that of industries such as oil/​gas (9.23 percent) or life insurance (11.24 percent).</p> <p>Pharmaceutical companies fare slightly better, with a&nbsp;profit margin of 10.94 percent but still rank behind financial services (20.1 percent) or legal services (15.4 percent).</p> <p>Surprisingly much of the cost of health care is due to labor costs. We may not think of it that way, but health care is a&nbsp;very labor‐​intensive industry. In fact, 56 percent of health care spending is for wages and benefits. Health care workers make up nearly 12 percent of the US workforce, and increases in productivity have not nearly offset labor costs. That’s one reason why increases in health care costs have largely tracked increases in wages, a&nbsp;phenomenon observed in other labor‐​heavy industries like education.</p> <p>At the same time, the cost of technology‐​based goods and services is dropping, making it appear that health care costs are rising even faster than they are. Ironically, candidates’ proposals to increase the minimum wage or otherwise raise the cost of employment are likely to drive the cost of health care even higher.</p> <p>It is also important to realize that we spend a&nbsp;lot of money on health care in this country simply because we can. Economists consider health care to be a “superior good,” meaning that spending rises as incomes rise. At the same time, there are natural limits to how much we can consume.</p> <p>For instance, no matter how wealthy we become, we can only eat so much more food. There are far fewer limits when it comes to health care. We all want to live forever and will consume as much health care as it takes. That is why, across all countries, wealthier people devote a&nbsp;greater share of wealth to health care.</p> <p>Looking at other countries, with their government‐​run health‐​care systems, provides no easy answers. Yes, as noted, other countries spend less than we do, but that is for the most part because they started at a&nbsp;lower base. If you look at year‐​over‐​year spending increases, the growth in US health care expenditures has been roughly in the middle of the pack over the last 20&nbsp;years.</p> <p>Systems commonly cited by advocates of single‐​payer health care have actually been growing faster than the United States. For example, from 2000 to 2015 (the last year for which comparable data is available), health care spending in the United States grew by an annual average of 5.1 percent. That’s considerably less than the 6.8 percent average in the United Kingdom or the 6.4 percent average in Sweden.</p> <p>US spending did grow slightly faster than Germany (4.7 percent) but slower than the Netherlands (6 percent), Japan (5.8 percent) and Norway (5.4 percent).</p> <p>None of this means that our health care costs are not distributed in ways that cause hardship for many Americans, that our spending is used in the most efficient and effective manner or that we always receive value commensurate with our spending. We can and should try to do better. In this regard, there are many good proposals for reform from both the left and right.</p> <p>But when candidates promise a&nbsp;system that will cover every American with benefits far more extensive than dreamed of in other countries for less money than we spend today … well, I&nbsp;would like my unicorn to have purple stripes please.</p> </div> Sat, 21 Sep 2019 08:45:46 -0400 Michael D. Tanner ObamaCare’s Medicaid Deception Brian Blase, Aaron Yelowitz <div class="lead mb-3 spacer--nomargin--last-child text-default"> <p>ObamaCare wasn’t supposed to give free health insurance to everybody. The Affordable Care Act’s authors expected the poor would enroll in Medicaid, while those with higher incomes would buy coverage through the new insurance exchanges, with subsidies that decrease as income rises.</p> </div> , <div class="mb-3 spacer--nomargin--last-child text-default"> <p>It isn’t working. A&nbsp;<a href=";utm_medium=email&amp;utm_source=ntwg1&amp;mod=article_inline" target="_blank">study</a>&nbsp;published this week by the National Bureau of Economic Research finds that in several Medicaid‐​expansion states most people who gained coverage have enrolled in Medicaid regardless of their income. In practice, ObamaCare has turned Medicaid into an entitlement program for the middle class.</p> <p>Using data from U.S. Census Bureau’s American Community Survey, the authors assessed coverage changes from 2012–17&nbsp;in nine states that expanded Medicaid vs. 12 states that didn’t. They uncovered a&nbsp;huge problem. In 2017 alone, in those nine states, “around 800,000 individuals … appeared to gain Medicaid coverage for which they were seemingly income‐​ineligible.”</p> <p>ObamaCare is supposed to make Medicaid available to households with incomes below 138% of the poverty line, or nearly $36,000 for a&nbsp;family of four. In the nine states—Arkansas, Kentucky, Michigan, Nevada, New Hampshire, New Mexico, North Dakota, Ohio and West Virginia—the authors found that among households with incomes 138% to 250% of the poverty line (about $65,000 for a&nbsp;family of four), some 78% that gained coverage had improperly enrolled in Medicaid. That was also true of 65% of the population above 250% of poverty that gained coverage.</p> <p>This isn’t a&nbsp;matter of growing pains. Improper enrollment has increased over time. It was two to three times as prevalent in 2017 as in 2014. It’s a&nbsp;systematic problem with ObamaCare in practice.</p> <p>These estimates likely understate the true problem. People tend to minimize total income when responding to surveys. The authors chose these nine states because they adopted the ObamaCare expansion in 2014 and didn’t previously cover any able‐​bodied, working‐​age people in Medicaid. The nine account for less than 20% of the total population living in expansion states.</p> <p>There’s evidence of massive improper enrollment in other states. According to 2018 reports by the Inspector General’s Office at the Department of Health and Human Services, 25% of Medicaid expansion enrollees were likely ineligible in both California and New York.</p> <p>A state audit in Louisiana found 82% of expansion enrollees were ineligible at some point during the year they were enrolled. The central problem appears to be the state’s reliance on the federal exchange website to determine eligibility. People who entered no income simply to explore their options were automatically enrolled in Medicaid. Eligibility works the same way in another seven states.</p> <p>The number of ineligible enrollees in these three states alone almost certainly exceeds one million people. These findings should alarm Americans across the political spectrum. They show that complicated government programs often bear little resemblance to planners’ designs. ObamaCare has turned out to be a&nbsp;giant welfare program, with millions of working‐ and middle‐​class Americans improperly receiving Medicaid—a reflection of the unpopularity of the exchange policies and incompetence of government oversight.</p> <p>States that opted not to expand Medicaid have been much better able to preserve private coverage. Employer‐​sponsored coverage has steadily grown in nonexpansion states with virtually no growth in expansion states.</p> <p>The Centers for Medicare and Medicaid Services need to do much more. While CMS cannot undo the structural flaws at the core of ObamaCare, they can use their oversight and enforcement powers to minimize the massive improper and fraudulent expansion enrollment. Medicaid needs to be protected and taxpayer dollars preserved for the disabled and low‐​income children, pregnant women and seniors.</p> </div> Wed, 14 Aug 2019 14:42:26 -0400 Brian Blase, Aaron Yelowitz Cato Institute book, Patient Power: Solving America’s Health Care Crisis, is cited on The Sean Hannity Show Thu, 27 Jun 2019 11:33:00 -0400 Cato Institute Jeffrey A. Singer discusses health care on WWL’s First News with Tommy Tucker Thu, 16 May 2019 11:33:00 -0400 Jeffrey A. Singer Josh Blackman discusses the latest challenge to the ACA on KUT Radio Thu, 02 May 2019 13:33:00 -0400 Josh Blackman Michael D. Tanner discusses the article “The Questions Medicare for All Supporters Must Answer” on KBUL’s Montana Talks Wed, 24 Apr 2019 12:27:00 -0400 Michael D. Tanner Michael D. Tanner discusses the article, “The Questions Medicare for All Supporters Must Answer,” on KHOW’s The Ross Kaminsky Show Wed, 17 Apr 2019 12:45:00 -0400 Michael D. Tanner The Questions Medicare for All Supporters Must Answer Michael D. Tanner <div class="lead mb-3 spacer--nomargin--last-child text-default"> <p>Vermont senator and Democratic presidential candidate Bernie Sanders has officially unveiled the latest version of his plan for a&nbsp;government‐​run health‐​care system. This year, his Medicare for All legislation is co‐​sponsored by at least five of his fellow presidential contenders: Senators Corey Booker, Kamala Harris, Kirsten Gillibrand, and Elizabeth Warren, and Representative Eric Swalwell. Several other prominent Democrats have voiced their support for the concept, if not Sanders’s specific version of it. And the polls show that voters might be receptive.</p> </div> , <div class="mb-3 spacer--nomargin--last-child text-default"> <p>What’s more, there is a&nbsp;genuine need for health‐​care reform. Obamacare remains deeply troubled, with costs rising, choices restricted, and its promise of universal coverage unrealized. Meanwhile, Republicans are divided, dispirited, and largely clueless — opposed to Obamacare, but unable to formulate a&nbsp;plan of their own.</p> <p>Medicare for All, to a&nbsp;large extent, has filled the vacuum created by that inability. But before we take it too seriously, there are a&nbsp;few questions that supporters must answer:</p> <p><strong>How will you pay for it?</strong> We don’t yet know exactly how much Sanders’s plan will cost, but the price is bound to be high: Previous versions of the plan were estimated to cost $32–38 trillion over the next ten years, and the senator’s latest version would provide even more generous benefits. In fact, both the legislation and the Sanders campaign’s summary of it are extremely detailed about all the benefits the plan would provide. It would cover virtually all hospital and physician care, preventive services, mental‐​health services, dental and vision care, prescription drugs, and medical devices. And, except for brand‐​name drugs, there would be absolutely no deductible, co‐​payment, or other out‐​of‐​pocket expenses. The plan would not only provide far more extensive benefits than private insurance plans or today’s Medicare; it would provide benefits in excess of those offered by other national‐​health‐​care plans around the world.</p> <p></p> </div> , <aside class="aside--right aside pb-lg-0 pt-lg-2"> <div class="pullquote pullquote--default"> <div class="pullquote__content h2"> <p>Bernie Sanders may currently be riding a&nbsp;wave of political momentum, but his new health‐​care plan remains untested.</p> </div> </div> </aside> , <div class="mb-3 spacer--nomargin--last-child text-default"> <p>But when it comes to paying for all these goodies, Sanders is exceedingly vague. Neither the legislation nor his summary includes a&nbsp;funding mechanism. Instead, Sanders calls for “a vigorous debate as to the best way to finance our Medicare for All legislation.” As far as I&nbsp;know, vigorous debates don’t pay the government’s bills.</p> <p>Sanders does provide a&nbsp;helpful list of possible tax hikes that could be considered: a&nbsp;7.5 percentage point increase in the payroll tax; an income‐​based premium paid by all Americans (roughly a&nbsp;4 percent income tax); significant increases in tax rates for those earning more than $250,000 per year; increased corporate taxes; big increases in the capital‐​gains tax; and a&nbsp;new wealth tax. Of course, some of the new taxes would be offset by the legislation’s elimination of insurance premiums and out‐​of‐​pocket costs. But most middle‐​income families would likely end up as net losers — and that’s without taking into account the drag on economic growth and job creation that would result from taxing risk‐​taking and entrepreneurship.</p> <p><strong>If you like your insurance, will you be allowed to keep your insurance?</strong> Roughly 91 percent of Americans have health insurance today, and polls suggest that most Americans are generally satisfied with their coverage. For example, Gallup reports that 69 percent of Americans are satisfied with their current insurance plan. Satisfaction runs even higher for Americans who receive employer coverage. But Sanders’s plan would summarily kick every American off their current plan and dump them into the new government‐​run system. In an interview for CBS News, Sanders gleefuly suggested that private insurance would be reduced to paying for “nose jobs.” Of course, the proposal’s backers can try to argue that in exchange for giving up their current plans, Americans will get something better. But voters may not believe them. Similar arguments didn’t fly with those who lost their insurance through Obamacare.</p> <p>At its heart, Sanders’s plan is fundamentally anti‐​choice. It is a&nbsp;one‐​size‐​fits‐​all, government‐​knows‐​best concept. Americans may have a&nbsp;problem with that.</p> <p><strong>What about your doctor?</strong> Most of the cost estimates above assume that the new system will adopt Medicare’s price controls. But Medicare already provides extremely low reimbursements for many services, in some cases below cost. In fact, Sanders’s plan depends on a&nbsp;cut of up to 40 percent from the reimbursement that doctors currently receive through private insurance.</p> <p>Providers have traditionally shifted some of their costs to private insurance. Others have simply refused to accept Medicare patients, or limited the number they do take. But those options would no longer be available under Sanders’s plan, which could lead many physicians, especially older and more experienced ones, to leave the profession.</p> <p>It’s not just physicians that are likely to be hit by Medicare for All’s price controls. Research and development could be slowed or, in some cases, abandoned, too. That would mean fewer medical breakthroughs. Just think what would have happened if we had imposed medical‐​price controls across the board in, say, 1920. How much medical progress would have been lost?</p> <p><strong>What will happens after you wipe out the insurance industry?</strong> It is obvious that Sanders despises the insurance industry. Still, there would be real collateral damage from his plans to carpet‐​bomb the industry. Estimates suggest that as many as 1.8 million jobs in the insurance, benefits, and human‐​resources industries could be at risk. The median wage for these jobs runs in excess of $55,000 per year. These are the “good jobs at good wages” that the Democratic presidential candidates talk so much about. And while some might be absorbed into the new government bureaucracy, hundreds of thousands of others would likely have to find new work.</p> <p>It is not generally the government’s job to protect people from changes in the economy, but, even so, the government should generally try to avoid deliberately wiping out entire industries all by itself. Sanders and his backers have seemed strangely unconcerned with that prospect so far.</p> <p>Most coverage of the health‐​care debate has focused on the vulnerability and ineptitude of Republicans. That coverage is largely deserved. But sooner or later, Medicare for All supporters will be pressed to answer questions about their own plans. And at that point, they might find that voters become much less receptive to what they’re selling.</p> </div> Wed, 17 Apr 2019 10:07:00 -0400 Michael D. Tanner Michael D. Tanner discusses the latest on Obamacare on KDMT’s Business for Breakfast with Jimmy Sengenberger Wed, 03 Apr 2019 13:05:00 -0400 Michael D. Tanner Michael F. Cannon discusses Trump’s renewed attempt to repeal Obamacare on KURV’s The Drive Home Thu, 28 Mar 2019 10:40:00 -0400 Michael F. Cannon Obamacare’s Enemy No. 1 Says This Is the Wrong Way to Kill It Michael F. Cannon <div class="lead mb-3 spacer--nomargin--last-child text-default"> <p>In a&nbsp;dramatic reversal, the Trump administration has asked a&nbsp;federal appellate court to uphold a&nbsp;lower‐​court ruling striking down all of ObamaCare as unconstitutional.</p> </div> , <div class="mb-3 spacer--nomargin--last-child text-default"> <p>You might expect me to be happy. The New Republic calls me “ObamaCare’s single most relentless antagonist.” The Week says I’m “ObamaCare’s fiercest critic.” Give me five minutes, and I’ll explain how the so‐​called “Patient Protection and Affordable Care Act” ironically makes health insurance less ­affordable and reduces protections for the sickest patients. I&nbsp;seethed when the US Supreme Court unilaterally rewrote ObamaCare first in 2012 and again in 2015.</p> <p>But rather than experience elation at this latest ruling, I’m seething again, and for the same reason. In Texas v. Azar, federal judge Reed O’Connor did ­exactly what Chief Justice John Roberts did at the high court: jettison the rule of law to achieve a&nbsp;politically desired outcome.</p> <p></p> </div> , <aside class="aside--right aside pb-lg-0 pt-lg-2"> <div class="pullquote pullquote--default"> <div class="pullquote__content h2"> <p>If opponents want to strike down ObamaCare, they need better legal arguments than what Judge O’Connor offered in Texas v. Azar, which is no different from what Chief Justice Roberts did in his own rulings. Two wrongs don’t make a&nbsp;right.</p> </div> </div> </aside> , <div class="mb-3 spacer--nomargin--last-child text-default"> <p>O’Connor followed the John Roberts playbook all the way down to the tortured reasoning. He pretended the ObamaCare law still mandates the purchase of health ­insurance, when it no longer does. He pretended this phantom mandate injures the plaintiffs, when it clearly does not. And he pretended Congress considered the mandate inseverable from the rest of ObamaCare, even though Congress itself had already severed the two.</p> <p>To set the table, ObamaCare originally said taxpayers “shall” obtain health insurance or else pay a “penalty” of potentially thousands of dollars per year. A&nbsp;command plus a&nbsp;penalty equals a&nbsp;mandate. Right there in the statute, Congress claimed its authority to impose those provisions come from its constitutional power “to regulate Commerce.” The Supreme Court nearly struck down the whole law in 2012, when a&nbsp;five‐​justice majority concluded the Constitution’s Commerce Clause grants Congress no such power.</p> <p>The statute survived because one of those five justices — Roberts — argued that one can interpret this penalty “as a&nbsp;tax . . . on those without health ­insurance” and therefore a&nbsp;constitutional use of Congress’ taxing power. Roberts thus voted with four other justices to ­uphold ObamaCare.</p> <p>He was so busy rewriting the statute to achieve his desired outcome that Roberts failed to notice the Constitution forbade such a&nbsp;tax.</p> <p>Back in 2009, ObamaCare’s authors initially sought to impose a “tax” on those who failed to purchase health insurance. But when they realized such a&nbsp;tax would have prevented the bill from passing, they ­replaced it, invoking the Commerce Clause to issue a&nbsp;command backed up by a “penalty.” A&nbsp;tax that can’t satisfy the Constitution’s bicameralism requirement is no more constitutional than, and cannot confer any legitimacy upon, the exercise of an unenumerated power.</p> <p>When a&nbsp;Republican Congress reduced the mandate penalty to zero in 2017, Republican state ­attorneys general saw an opportunity in Roberts’ tortured reasoning. They and a&nbsp;few individual plaintiffs filed Texas v. Azar, in which they claim that since ObamaCare no longer imposes a&nbsp;penalty on those who fail to purchase health insurance, the mandate can no longer be seen as an exercise of the taxing power. Under Roberts’ 2012 ­decision, they reason, the mandate must fall as an unconstitutional use of Congress’ power to regulate commerce.</p> <p>Texas v. Azar has so many problems, O’Connor should have immediately tossed the case out of court. To challenge a&nbsp;federal law, plaintiffs must demonstrate it causes them a&nbsp;concrete injury. Since Congress zeroed out the mandate penalty, the mandate no longer injures anyone. Indeed, there is no longer a&nbsp;use of governmental power for plaintiffs to challenge.</p> <p>O’Connor nevertheless granted standing to the ­individual plaintiffs on the grounds that they “feel compelled to comply” with this powerless command, which he then struck down as an unconstitutional use of Congress’ power to regulate commerce.</p> <p>As if to outdo himself, O’Connor then struck down the rest of the law, too, on the grounds that Congress wanted the mandate to be inseverable from the rest of the statute. Someone should have told Congress, which severed the mandate from the rest of ObamaCare when it zeroed out the mandate penalty in 2017.</p> <p>If opponents want to strike down ObamaCare, they need better legal arguments than what Judge O’Connor offered in Texas v. Azar, which is no different from what Chief Justice Roberts did in his own rulings. Two wrongs don’t make a&nbsp;right.</p> </div> Thu, 28 Mar 2019 09:48:00 -0400 Michael F. Cannon Trump’s Latest Attack on Obamacare Damages the Justice Department Josh Blackman <div class="lead mb-3 spacer--nomargin--last-child text-default"> <p>Since the inception of the Affordable Care Act, President Barack Obama served as its legal guardian. In the span of five years, his administration defended the law before the Supreme Court in four high‐​profile cases. The Trump administration, however, quickly abandoned that role. In 2018, then‐​Attorney General Jeff Sessions argued that key portions of Obamacare were unconstitutional following the tax‐​cut legislation. Now, the Justice Department&nbsp;<a href="" target="_blank">contends</a>&nbsp;that the entire ACA must go.</p> </div> , <div class="mb-3 spacer--nomargin--last-child text-default"> <p>The strategy is patent: Incinerate the law so a&nbsp;new, greater health‐​care reform can rise from the ashes. President Trump&nbsp;<a href="" target="_blank">stated</a>&nbsp;the matter bluntly: “If the Supreme Court rules that Obamacare is out, we’ll&nbsp;have a&nbsp;plan that is far better than Obamacare.”</p> <p>In the short term, this position will have little impact on the ACA litigation. Other parties, including the House of Representatives, can defend the entire law. But in the long run, this move is counterproductive. The Justice Department has amassed a&nbsp;treasure trove of goodwill and credibility among federal courts over the years. But going forward, judges may be less willing to afford the executive branch this unique type of deference. Because of this hard‐​to‐​justify decision, the Trump administration will have an even harder time prevailing in other cases.</p> <p></p> </div> , <aside class="aside--right aside pb-lg-0 pt-lg-2"> <div class="pullquote pullquote--default"> <div class="pullquote__content h2"> <p>The decision to jettison the entire ACA crosses a&nbsp;new legal Rubicon.</p> </div> </div> </aside> , <div class="mb-3 spacer--nomargin--last-child text-default"> <p>This story begins in 2012, during the first constitutional challenge to Obamacare. Recall that five justices&nbsp;<a href="" target="_blank">ruled</a>&nbsp;that Congress lacked the power to compel people to buy insurance. But Chief Justice John G. Roberts Jr. found a&nbsp;way to save the ACA by construing the penalty, which raised revenue, as a&nbsp;tax.</p> <p>Fast‐​forward to 2017. The GOP‐​controlled Congress&nbsp;<a href="" title="" target="_blank">reduced</a>&nbsp;the penalty to $0. Did that change kick the legs out of Roberts’s saving construction? Texas and a&nbsp;host of other red states thought so. They filed suit and argued that the individual mandate was unconstitutional. But the states didn’t stop there. They argued that if the mandate fell, the entire law must fall — from the protections for people with preexisting conditions, to the Medicaid expansion, to regulations on medical devices. Everything.</p> <p>Generally, the executive branch has an obligation, where possible, to defend the constitutionality of federal laws. And if part of the law is constitutional, the executive branch usually tries to salvage the remainder of the statute. Sessions took a&nbsp;different path. In June 2018, he&nbsp;<a href="" target="_blank">informed</a>&nbsp;Congress that the Justice Department would no longer defend the constitutionality of the individual mandate. I&nbsp;<a href="" target="_blank">agreed</a>&nbsp;with his decision — the $0 penalty can no longer be saved as a&nbsp;tax. The attorney general has an independent duty to assess the constitutionality of federal laws, based on binding Supreme Court precedent. Sessions acted within the bounds of permissible discretion.</p> <p>However, Sessions made another judgment call: If the court declared the mandate unconstitutional, then the court must also set aside the protections for preexisting conditions. I&nbsp;<a href="" target="_blank">disagreed</a>&nbsp;with this decision, but found that it still had a&nbsp;patina of defensibility. In 2012, the Obama administration also argued that the mandate could not be separated — or severed — from the preexisting condition protections.</p> <p>Fast‐​forward to December 2018.&nbsp;A&nbsp;federal district court judge in Texas&nbsp;<a href="" target="_blank">found</a>&nbsp;that the individual mandate was unconstitutional. He also agreed with Texas’s proposed remedy: The entire ACA must be set aside. On appeal, I&nbsp;expected the Justice Department to file a&nbsp;half‐​measure brief: The lower court’s ruling should be reversed in part, such that only the mandate and the preexisting condition protections are set aside. But the government changed course again. Now, the executive branch argued that the trial court’s decisions should be affirmed in its entirety. The entire Affordable Care Act must go. This decision was shocking.</p> <p>At a&nbsp;minimum, Attorney General William P. Barr should do what his predecessor did — explain&nbsp;<em>why</em>&nbsp;he is no longer defending other portions of the law. That task may be hard. According to reports from&nbsp;<a href="" target="_blank">Politico</a>, the White House pushed this position over Barr’s objection. Even if the attorney general can make the case, there still may be fallout.</p> <p>In litigation, lawyers have a&nbsp;duty to advocate for their client, often to the point of making borderline frivolous arguments. Courts are well aware of this phenomenon and treat the advocates accordingly. The Justice Department, however, stands in a&nbsp;different stead. Traditionally, the federal government will vigorously advance a&nbsp;cause but hold back certain arguments that go too far. That role usually includes a&nbsp;robust defense of federal laws.</p> <p>Reasonable people can disagree about where that line should be drawn. But that line exists. The decision to jettison the entire ACA crosses a&nbsp;new legal Rubicon. This move will invariably weaken the deference that courts usually afford to the Justice Department. And in the long term, that new posture will make it harder for the administration to defend its other policies.</p> </div> Wed, 27 Mar 2019 08:48:00 -0400 Josh Blackman Josh Blackman participates in an AEI event, “Sense and severability: If one part of the Affordable Care Act is ruled unconstitutional, what is the proper remedy or resolution?,” on C-SPAN 2 Fri, 15 Feb 2019 10:42:00 -0500 Josh Blackman Why Repeal of the Individual Mandate Hasn’t (Yet) Brought Obamacare’s Death Spiral Michael D. Tanner <div class="lead mb-3 spacer--nomargin--last-child text-default"> <p>As you file your tax returns this year, you will be asked whether or not you had health insurance during 2018. If your answer is “No,” you could be subject to a&nbsp;penalty of up to $2,085 per family.</p> </div> , <div class="mb-3 spacer--nomargin--last-child text-default"> <p>Fortunately, this will be the last year that Americans will face punishment for failing to comply with ObamaCare’s individual mandate. That’s because President Trump’s 2017 tax reform effectively ended the mandate, starting next year. In typical Washington fashion, Congress didn’t exactly repeal the mandate, instead setting the penalty at zero starting in 2020.</p> <p>The individual mandate was always the least popular part of ObamaCare, and with good reason. The idea that government can force Americans to buy a&nbsp;product is offensive to American liberty. And the mandate itself leads to a&nbsp;host of problems, such as forcing Americans into expensive insurance plans with benefits that they may not want or need.</p> <p>But repealing the individual mandate while leaving the rest of ObamaCare intact also demonstrates the incoherence of Republican efforts to reform health care. That’s because the individual mandate was part of ObamaCare in the first place primarily as a&nbsp;mechanism for dealing with problems stemming from a&nbsp;much more popular aspect of ObamaCare — its ban against denying coverage for preexisting conditions.</p> <p>“Preexisting condition” is simply another name for “people who are already sick.” Insurers will necessarily lose money by providing benefits to those sick people. Therefore, they must offset those losses by charging healthy people higher premiums than they otherwise would.</p> <p>That’s one reason why average premiums shot up under ObamaCare. But faced with these excessively high premiums, younger and healthier Americans may choose to forgo insurance altogether. That could destabilize insurance markets, causing an “adverse selection death spiral” of rising premiums and a&nbsp;smaller, sicker pool of the insured.</p> <p>ObamaCare’s “solution” was to force the young and healthy to buy the overpriced insurance, even if they didn’t want it.</p> <p>There are other — better — ways to help people with preexisting conditions, but Republicans, wilting in the face of Democratic attack ads, wanted no part of that debate. Thus, they repealed the unpopular mandate but kept the popular preexisting‐​condition provisions. You don’t have to be a&nbsp;health care expert to see the incoherence of this approach.</p> <p>Even before the mandate formally expires, young and healthy Americans have begun to abandon the costly ObamaCare plans they never wanted. The number of people signing up for ObamaCare plans on state exchanges has declined nearly 12 percent since 2017, though some of that may be because the economic recovery has shifted some people to employer coverage.</p> <p>New York is an exception. Enrollment on New York’s exchange is up 10 percent, most likely owing to the state’s aggressive outreach efforts.</p> <p>Insurance companies have ­responded exactly as you would expect: by raising premiums. The death spiral is showing possible signs of accelerating.</p> <p>Democrats have pounced, blaming the GOP for premium increases while simultaneously accusing Republicans of secretly wanting to do away with the preexisting‐​condition provisions. Health care was almost certainly a&nbsp;key factor in the Democrats’ recapture of the House in November. But the Democrats don’t have a&nbsp;solution for ObamaCare’s failures either.</p> <p>Even before the ­Republican repeal of the mandate, the young and healthy were resisting the dubious appeal of ObamaCare plans. Roughly 40 percent of new enrollees needed to be ages 18 to 34 to maintain the market’s stability, but less than 30 percent actually were. As a&nbsp;result, insurance premiums were rising at ­record rates and insurance companies were abandoning the market. Repeal of the individual mandate may speed up the death spiral, but it was already well ­underway. Fast or slow, it gets you to the same place.</p> <p>Republicans have made some modest positive ­reforms. ­Expanding short‐​term insurance and association health plans, which allow insurers to escape some of ObamaCare’s onerous regulations, have provided consumers with new, less expensive options. The White House estimates that these two reforms alone could save consumers nearly $15 billion by 2021. Still, these are tweaks at the margins, not the fundamental reform we were promised — or that Trump implies he has achieved.</p> <p>Meanwhile, leading Democrats have largely left the wreckage of ObamaCare in the rearview mirror. A $32 trillion single‐​payer system is the latest shiny object to catch their attention.</p> </div> Mon, 11 Feb 2019 10:23:00 -0500 Michael D. Tanner Michael D. Tanner discusses his new book, “The Inclusive Economy,” on The Libertarian Christian podcast Tue, 22 Jan 2019 12:19:00 -0500 Michael D. Tanner Josh Blackman discusses a Texas court overruling Obamacare on NPR’s All Things Considered Wed, 19 Dec 2018 18:45:00 -0500 Josh Blackman Ilya Shapiro discusses a Texas court overruling Obamacare on WNIS’ The Mike Imprevento Show Wed, 19 Dec 2018 18:40:00 -0500 Ilya Shapiro Josh Blackman discusses a Texas court overruling Obamacare on The Washington Times’ Mack on Politics Mon, 17 Dec 2018 17:39:00 -0500 Josh Blackman Josh Blackman discusses a Texas court overruling Obamacare on WWL’s First News with Tommy Tucker Mon, 17 Dec 2018 17:29:00 -0500 Josh Blackman Reasons Why Congress Must Revisit Preexisting Conditions Michael F. Cannon <div class="lead mb-3 spacer--nomargin--last-child text-default"> <p>According to conventional wisdom, the recent congressional elections demonstrate that the Affordable Care Act’s rules requiring insurers to cover people with preexisting conditions are politically untouchable. Democrats made preserving those rules their number‐​one campaign issue. Voters responded by handing Democrats control of the House of Representatives.</p> </div> , <div class="mb-3 spacer--nomargin--last-child text-default"> <p>This assessment might be correct—if the election had clearly presented voters both the costs and benefits of those rules. Unfortunately, that did not occur. Democrats touted a&nbsp;fantasy where those rules produce benefits but carry no costs, and Republicans let this fantasy go completely unchallenged. Since neither side bothered to educate voters about the costs of the ACA’s preexisting‐​conditions provisions, the election says nothing about whether voters support them.</p> <p>The reality is that ACA’s preexisting‐​conditions provisions make tradeoffs that were deeply unpopular with voters in 2010 and remain so today. The ACA has survived solely because its architects carefully crafted the law in a&nbsp;manner that hides those tradeoffs from voters. Political support for the ACA’s preexisting‐​conditions provisions can and will fall, but only if opponents make those tradeoffs clear.</p> <p></p> </div> , <aside class="aside--right aside pb-lg-0 pt-lg-2"> <div class="pullquote pullquote--default"> <div class="pullquote__content h2"> <p>The reality is that ACA’s preexisting‐​conditions provisions make tradeoffs that were deeply unpopular with voters in 2010 and remain so today.</p> </div> </div> </aside> , <div class="mb-3 spacer--nomargin--last-child text-default"> <p>The largest and most unpopular tradeoffs the ACA strikes surround its centerpiece: the supposedly popular requirement that insurers cover all applicants, and charge everyone of a&nbsp;given age the same premium, regardless of preexisting conditions.</p> <p>Those rules are merely government price controls, which have a&nbsp;terrible reputation among economists. As former Clinton and Obama economic adviser Larry Summers explains, “Price and exchange controls inevitably create harmful economic distortions. Both the distortions and the economic damage get worse with time[, while] attempts to preserve price controls induce otherwise avoidable rationing schemes and goods shortages.”</p> <p>These price controls are no exception. For starters, they increase insurance premiums for the healthy. This in turn necessitates both the premium subsidies for lower‐​income enrollees—and the higher taxes that fund those subsidies.</p> <p>The ACA’s preexisting‐​conditions provisions then ration care to the sick in ways that cause informed voters to turn against them. Economic theory predicts, and economic research confirms, that these rules punish high‐​quality coverage and reward lousy coverage. They have forced ACA plans to exclude top hospitals and limit physician choice. They are increasingly forcing insurers to limit coverage for multiple sclerosis, rheumatoid arthritis, and other expensive conditions. They prohibit consumers from purchasing coverage for nine months out of every year—a nine‐​month‐​long rationing period that inevitably denies care to patients who otherwise could have purchased coverage before falling ill.</p> <p>Voters rejected these tradeoffs when Congress was debating the ACA, and reject them today. Architects of the ACA have known this from the beginning, so they deliberately crafted the law to hide these tradeoffs from voters.</p> <p>The ACA’s architects knew, for example, that if the law’s new taxes and new government spending were transparent, voter outcry would have been so severe that Congress never would have approved the bill. They therefore hid those taxes in the form of…those very price controls we call the ACA’s preexisting‐​conditions provisions. Requiring insurers to cover healthy and sick patients for the same price imposes a&nbsp;hidden tax on the healthy, in the form of higher premiums, to finance hidden subsidies for the sick, in the form of lower premiums.</p> <p>When ACA architect Jonathan Gruber quipped that the ACA passed due to “the stupidity of the American voter,” he was admitting that voters oppose the tradeoffs the ACA forces on them, and boasting that voters never caught on to the ruse.</p> <p>Polling shows voters oppose the tradeoffs those rules strike with regard to the quality even more. When polls ask voters solely about the benefits of the ACA’s preexisting‐​conditions provisions—i.e., sick people getting coverage at lower premiums—voters support them 65 percent to 32 percent. But when polls ask whether those benefits are worth the reductions in quality that economists confirm are happening right now—i.e., when polls tie the benefits of those provisions to their unavoidable costs—support flips to opposition. Informed voters oppose the ACA’s preexisting‐​conditions provisions by 51 percent to 44 percent. Nearly 30 percent of Democrats to drop their support.</p> <p>Those numbers come from a&nbsp;poll conducted just days before this year’s mid‐​term elections. But there is nothing new about this finding. Polls conducted in 1994, 2013, and 2017 consistently find voters want to make health care more widely available to the sick—but not at the expense of quality.</p> <p>You would never know any of this from listening to the ACA’s Republican opponents. In the recent election, Republicans said not a&nbsp;peep about how the ACA’s preexisting‐​conditions provisions are the main driver behind soaring Exchange‐​plan premiums. Nor did Republicans educate voters about how these rules are making health insurance worse for many sick patients. I&nbsp;have yet to see an attack ad stating, “Congressman X&nbsp;denied treatments to MS patients. He voted to penalize insurers that cover the expensive drugs MS patients need,” even though Congressmen X&nbsp;did exactly that. Instead, Republicans generally embraced Democrats’ rhetoric and, in some cases endorsed the ACA’s preexisting‐​conditions rules.</p> <p>The mid‐​term elections thus had almost nothing to do with the ACA. Democrats campaigned, and Republicans allowed them to campaign, not on the ACA as it exists in the real world, but on a&nbsp;mythical law whose core provisions are a&nbsp;warm, fuzzy, compassionate, progressive free lunch.</p> <p>Republicans even failed to defend their own health‐​reform gains. In August, the Trump administration issued new rules allowing consumers to purchase so‐​called “short‐​term” plans that cover consumers throughout the ACA’s closed‐​enrollment (read: rationing) period. Short‐​term plans are statutorily exempt from the ACA’s preexisting‐​conditions provisions. As a&nbsp;result, they often cost 50 percent less and offer broader choice of doctors and hospitals than ACA plans can. The new rules will bring health insurance to an estimated 2&nbsp;million previously uninsured Americans.</p> <p>When voters learn only about the benefits of the new rules governing short‐​term plans, they support them 77 percent to 18 percent. But even after they learn about the costs of those new rules—i.e., that consumers might purchase less coverage than ACA plans require, and that the rules could cause ACA premiums to rise—voters still support them by nearly two‐​to‐​one (59 percent to 35 percent).</p> <p>In the recent election, Republicans could have taken credit for free‐​market health care reforms whose benefits are so popular, voters would have continued to support them even amid a&nbsp;Democratic counterattack. They could have undermined Democrats’ main campaign theme and turned the public against the ACA’s harmful preexisting‐​conditions rules. Instead, they let Democrats continue to deceive the public about those rules. Some Republicans even apologized for not supporting Democratic policies that voters hate.</p> <p>Republicans have even been silent when Democrats actively deny care to the sick. Shortly before the election, the U.S. Senate voted on legislation introduced by Sen. Tammy Baldwin (D) that would have thrown patients with preexisting conditions out of their health plans and left them with nothing.</p> <p>Baldwin’s legislation sought to rescind the new short‐​term‐​plans rule, and revert to the old rules that set the maximum duration of such plans at three months. If a&nbsp;short‐​term plan enrollee received a&nbsp;cancer diagnosis in January, Baldwin’s legislation would have thrown her out of her health plan no later than April, and would have left her with no insurance to cover months and months of expensive cancer care. Those rules threw 61‐​year‐​old Jeanne Balvin out of her health plan and left her to pay $95,000&nbsp;in medical bills with no health coverage.</p> <p>Democrats framed this legislation as protecting patients with preexisting conditions by eliminating “junk” insurance plans. Yet it is undeniable that this legislation would have thrown patients like Jeanne Balvin out of their health plans and left them with no coverage for up to nine months.</p> <p>Every single Senate Democrat voted for Baldwin’s legislation. Democrats in California, Delaware, and other states have recently enacted similar legislation that either curtails or completely outlaws short‐​term plans. Those laws undeniably will ration care to the sick.</p> <p>Where are the Republicans? I&nbsp;have yet to find a&nbsp;single Republican who called Democrats to account for actively trying to throw patients with preexisting conditions out of their health plans and leave them with nothing.</p> <p>Contrary to conventional wisdom, the ACA remains politically vulnerable. Whether it remains the law or not depends on whether its opponents learn the real lesson of this election: You can’t win if you don’t fight.</p> </div> Wed, 05 Dec 2018 09:51:00 -0500 Michael F. Cannon