Archive for February, 2010
ObamaCare = Litigation Bonanza
At a recent conference, former Sen. Phil Gramm (R-TX) remarked, “The Democrats don’t have a health care bill. They have an empty shell.” At the time, I thought the shell would be filled through regulation. But in today’s Wall Street Journal, the Committee for Justice‘s Curt Levey reminds us it would also be filled through litigation:
By creating new federally enforceable rights and obligations, layers of complex federal regulations, and dozens of new programs and agencies—not to mention 50 newfangled “exchanges”—ObamaCare would guarantee a flood of litigation. That means more money wasted on attorney fees, physicians focused on legal rather than medical considerations, and growing delays in our already-overburdened courts…
Lawsuits claiming equal protection violations will be limited only by the human capacity to feel discriminated against…
Liberals who complained about the interference of federal courts in the Terri Schiavo case may wind up regretting their push to federalize health care…
Supporters of the legislation favored by the president and most of his party point to socialized medicine in Europe as evidence that federalizing health care won’t be the disaster that many predict. But European nations are not nearly as litigious as our own. The uniquely American combination of bureaucrats, trial lawyers, and judges running our health-care system will prove more costly and deadly than anyone can imagine.
Levey runs through a long list of issues that will be litigated in the courts — but he overlooked that there would be First Amendment litigation, too.
The Government Can Monitor Your Location All Day Every Day Without Implicating Your Fourth Amendment Rights
If you have a mobile phone, that’s the upshot of an argument being put forward by the government in a case being argued before the Third Circuit Court of Appeals tomorrow. The case is called In the Matter of the Application of the United States of America For An Order Directing A Provider of Electronic Communication Service To Disclose Records to the Government.
In that case, the Obama administration has argued that Americans enjoy no “reasonable expectation of privacy” in their—or at least their cell phones’—whereabouts. U.S. Department of Justice lawyers say that “a customer’s Fourth Amendment rights are not violated when the phone company reveals to the government its own records” that show where a mobile device placed and received calls.
The government can maintain this position because of the retrograde “third party doctrine.” That doctrine arose from a pair of cases in the early 1970s in which the Supreme Court found no Fourth Amendment problems when the government required service providers to maintain records about their customers, and later required those service providers to hand the records over to the government.
I wrote about these cases, and the courts’ misunderstanding of privacy since 1967′s Katz decision, in an American University Law Review article titled “Reforming Fourth Amendment Privacy Doctrine“:
These holdings were never right, but they grow more wrong with each step forward in modern, connected living. Incredibly deep reservoirs of information are constantly collected by third-party service providers today. Cellular telephone networks pinpoint customers’ locations throughout the day through the movement of their phones. Internet service providers maintain copies of huge swaths of the information that crosses their networks, tied to customer identifiers. Search engines maintain logs of searches that can be correlated to specific computers and usually the individuals that use them. Payment systems record each instance of commerce, and the time and place it occurred. The totality of these records are very, very revealing of people’s lives. They are a window onto each individual’s spiritual nature, feelings, and intellect. They reflect each American’s beliefs, thoughts, emotions, and sensations. They ought to be protected, as they are the modern iteration of our “papers and effects.”
This is a case to watch, as it will help determine whether or not your digital life is an open book to government investigators.
Fisking Gingrich & Goodman on Health Care Reform
I much prefer the ideas of Newt Gingrich and John Goodman to those of President Obama. But their recent oped in the Wall Street Journal shows why conservatives and Republicans still have a ways to go if they want to stop getting their clocks cleaned on health care. Here’s a fisk of the objectionable passages:
- “The current taxation of health insurance…giv[es] lavish subsidies…” There ain’t no such thing as a “tax subsidy.” Or a “tax expenditure.” If that’s what you call it when a tax break reduces federal revenue, don’t be surprised when politicians try to “reclaim” that “expenditure” (read: increase taxes) and spend it someplace else.
- “Many health economists conclude that tax relief for health insurance should be a fixed-dollar amount…” Many economists also conclude that Medicare’s administrative costs are low, but that doesn’t make it true, nor does it mean Medicare is a good idea. If conservatives actually believe in limited government and they want to improve health care, they should advocate policies that will help eliminate tax breaks for health care. Targeted tax “breaks” are merely another example of destructive government meddling.
- “Employers should be encouraged to provide employees…” Nyet, comrades. That’s not the government’s job. Government should stop encouraging anyone to do anything in health care, unless it’s encouraging people to keep their promises (read: enforcing contracts) or encouraging producers not to hurt consumers (read: tort liability).
- “A good model for self-management is the Cash and Counseling program for the homebound disabled under Medicaid.” Sure it is — if you want to increase dependence on government.
- “We should also encourage health plans to specialize…For example, special-needs plans in Medicare Advantage actively compete to enroll and cover the sickest Medicare beneficiaries.” Re encouragement, I refer my right honourable friends to the answer I gave some moments ago. And do we really want to hold up Medicare Advantage — which is even more government-heavy than the Democrats’ health insurance exchanges — as a model for reform?
- “Don’t cut Medicare.” Really? And you’d prefer dealing with Medicare’s $80 trillion unfunded liability…how?
- “A viable bridge to Medicare can be built by allowing employers to obtain individually owned insurance for their retirees at group rates.” A Bridge To Medicare. Please let that be the slogan for Gingrich’s presidential primary campaign. Of course, that bridge would require more regulation.
- “Eliminate junk lawsuits. Last year the president pledged to consider civil justice reform. We do not need to study or test medical malpractice any longer.” For all their talk about limited government and the rule of law, conservatives and Republicans just can’t seem to stop advocating unconstitutional federal limits on med mal liability. Maybe they’ve convinced themselves that all doctors are angels and all trial lawyers are demons.
- “We can help prevent [health care fraud] by using responsible approaches such as enhanced coordination of benefits, third-party liability verification, and electronic payment.” We will prevent health care fraud when we get the government out of health care — not before. For a good take on the silliness of government fraud-prevention efforts, see David Hyman’s Medicare Meets Mephistopheles.
Whew, this list is longer than I thought it would be. Just two more:
- “Make medical breakthroughs accessible to patients…by cutting red tape before and during review by the Food and Drug Administration.” The FDA is constitutionally incapable of striking the right balance between speed and safety. It must be eliminated. Getting other reforms right first — reforming the tax code, reforming Medicare, allowing people to purchase insurance across state lines — will make eliminating the FDA easier.
- “The solutions presented here can be the foundation for a patient-centered system.” The authors must have in mind a different oped than the one I read.
To emphasize, there’s a lot that Gingrich & Goodman get right. But if conservatives and Republicans wonder why government already controls so much of America’s health care sector, and why the Left is so close to having government takeover the rest, they might consider some of their own misguided ideas about health care reform.
A Time for Less Government?
The public is unhappy with government. How could it be otherwise, given the mess our governors have made? Reports the Washington Post:
Two-thirds of Americans are “dissatisfied” or downright “angry” about the way the federal government is working, according to a new Washington Post-ABC News poll. On average, the public estimates that 53 cents of every tax dollar they send to Washington is “wasted.”
Despite the disapproval of government, few Americans say they know much about the “tea party” movement, which emerged last year and attracted voters angry at a government they thought was spending recklessly and overstepping its constitutional powers. And the new poll shows that the political standing of former Republican vice presidential nominee Sarah Palin, who was the keynote speaker last week at the first National Tea Party Convention, has deteriorated significantly.
The opening is clear: Public dissatisfaction with how Washington operates is at its highest level in Post-ABC polling in more than a decade — since the months after the Republican-led government shutdown in 1996 — and negative ratings of the two major parties hover near record highs.
Surely this is a moment for a true political entrepreneur, someone who believes in liberty–across the board–willing to challenge Washington’s bipartisan consensus that government should grow ever bigger and more expensive. Someone who opposes expensive, and often deadly, social engineering at home and abroad. Someone willing to simply leave the American people alone, rather than determined to conscript them into yet another annoying, intrusive, and expensive national crusade. Someone willing to back up his or her rhetoric about individual liberty with action.
I Told You So?
The story that images of a film star produced by whole-body imaging were copied and circulated among airport personnel in London are a little too good to be true for critics of the technology. It may yet be proven a joke or hoax, and airport officials are denying that it happened, saying that it “simply could not be true.”
But if Bollywood star Shah Rukh Khan was exposed by the technology, it validates more quickly than I expected the concern that controls on body scanning images would ultimately fail.
Here’s how I wrote about the fate of domestic U.S. proscriptions on copying images from whole-body imaging machines in an earlier post:
Rules, of course, were made to be broken, and it’s only a matter of time — federal law or not — before TSA agents without proper supervision find a way to capture images contrary to policy. (Agent in secure area guides Hollywood starlet to strip search machine, sends SMS message to image reviewer, who takes camera-phone snap. TMZ devotes a week to the story, and the ensuing investigation reveals that this has been happening at airports throughout the country to hundreds of women travelers.)
I have my doubts that this incident actually happened as reported, but it is not impossible, and over time misuse of the technology is likely. That’s a cost of whole-body imaging that should be balanced against its security benefits.
Maybe Greece Should Go Bankrupt
The fiscal crisis in Greece is fascinating political theater, in part because the Balkan nation is a leading indicator for what will probably happen in many other countries. The most puzzling feature of the crisis is the assumption in other European capitals, discussed in the BBC article below, that a Greek default is the worst possible result. It certainly would not be good news, especially for investors who thought it was safe to lend money to the government, but there are several reasons why the long-term pain resulting from a bailout would be even worse.
- Bailing out Greece will reward over-spending politicians and make future fiscal crises more likely. In a four-year period between 2005 and 2009, Greek politicians expanded the burden of government spending from an already excessive level of 43.8 percent of GDP to an even more excessive level of 51.3 percent of GDP. Subsidies are rampant, the public sector is bloated, civil service pay is way too high, and entitlements are wildly unsustainable. A fiscal crisis – with no escape options – is probably the only hope of reversing these disastrous policies. So why, then, would it make sense for Germany and other nations to provide an escape option?
- Bailing out Greece will reward greedy and short-sighted interest groups, particularly overpaid government workers. Greece is in trouble because the the people riding in society’s wagon assumed that there would always be enough chumps to pull the wagon. In reality, Greece is turning into a real-world version of Atlas Shrugged. Government has become such a burden that the job creators and wealth generators have given up and/or moved their money out of the country. Should taxpayers in other nations reward the greed and narcissism of Greece’s interest groups by being forced to pull the wagon instead?
- Bailing out Greece will encourage profligacy in Spain, Italy, and other nations. The hot acronym in public finance circles is PIIGS, which is shorthand for Portugal, Ireland, Italy, Greece, and Spain. Greece is getting all the attention now, but these other countries have the same problems of excessive spending, bloated and dysfunctional public sectors, and unsustainable finances. What happens in Greece will send a very clear signal to the politicians in these nations, much as a parent who lets the oldest child run rampant is sending signals the younger siblings. Does anybody doubt that a bailout of Greece will discourage the other PIIGS from undertaking needed reforms?
- Bailing out Greece is not necessary to save the euro. This is the most puzzling feature of this Greek tragedy (sorry, I couldn’t resist). There is a pervasive assumption that a default somehow would cripple the common currency of most European Union nations. But why would a default in Greece undermine the euro? If California went under, after all, that would not cripple the US dollar. There are unpleasant things that would probably happen following a Greek default, but the stability and strength of a currency is a function of central bank behavior. And so long as the European Central Bank does not crank up the proverbial printing press to monetize Greece’s debt, the euro should be fine.
In my darker moments, I have sometimes warned audiences of what will happen when a majority of voters in a country or a state become dependent on government. In such an environment, it obviously becomes much more difficult to put together an electoral coalition that will lead to fiscal changes that shrink the burden of government and curtail the predatory state. This is what has happened to Greece, and what is soon going to happen in other European nations (and, barring reform, what will eventually happen in the United States). The irony of this situation is that even the folks riding in the wagon should favor reform. After all, a parasite needs a healthy host.
For background info, here’s an excerpt from the BBC article:
Despite heavy rain, there have been rallies across Greece throughout the day, with thousands of striking workers and pensioners gathering in the capital, Athens. …The unions regard the austerity programme as a declaration of war against the working and middle classes… “It’s a war against workers and we will answer with war, with constant struggles until this policy is overturned,” said Christos Katsiotis, a union member affiliated to the Communist Party, at the Athens rally. …On Tuesday, Prime Minister George Papandreou’s socialist government announced that it intends to raise the average retirement age from 61 to 63 by 2015 in a bid to save the cash-strapped pensions system. …Mr Papandreou has already faced down a three-week protest by farmers demanding higher government subsidies. …The markets remain sceptical that Greece will be able to pay its debts and many investors believe the country will have to be bailed out. The uncertainty has recently buffeted the euro and the problems have extended to Spain and Portugal, which are also struggling with their deficits. The possibility of Greece or one of the other stricken countries being unable to pay its debts – and either needing an EU bailout or having to abandon the euro – has been called the biggest threat yet to the single currency. Ahead of the talks between EU leaders in Brussels on Thursday, some business media reported that Germany is preparing to lead a possible bail-out, supported by France and other eurozone members.
Legislative Sausage
How can any member of Congress be expected to cast an intelligent vote on a hodgepodge like this? And how can any voter make a rational judgment about a member of Congress who voted for or against this mess?
A major test of whether Obama’s new strategy will yield legislative results could come when the Senate takes up a job-creation bill, which Senate Majority Leader Harry M. Reid (D-Nev.) had hoped to introduce last week but which was sidetracked by a snowstorm….
The proposed package is expected to cost about $85 billion and would include a payroll tax break for companies that hire new employees, extensions of a variety of expiring tax breaks, and help for small businesses seeking loans. The measure also would extend unemployment insurance and COBRA health benefits by three months and provide a temporary adjustment in Medicare payment rates to physicians to prevent a scheduled cut.
The bill being crafted would reauthorize the Highway Trust Fund for one year, provide money for Build America Bonds and extend the USA Patriot Act, which is scheduled to expire at the end of February. The package also is expected to include $1.5 billion in agriculture assistance sought by Sen. Blanche Lincoln (Ark.), one of the most endangered Democrats facing reelection in November.
The bill is full of things that would make good 30-second ads — “mean-spirited Senator Jones voted against unemployment insurance!” — and it may even include some necessary measures. But really, how can it be responsible legislative practice to put into one bill
- extensions of expiring tax breaks,
- extension of unemployment insurance,
- a better deal for doctors under Medicare,
- a year’s reauthorization of the Highway Trust Fund,
- more money, more money, more money,
- an extension of the Patriot Act (!),
- a $1.5 billion favor to endangered Sen. Blanche Lincoln,
- and all for the low low price of just $85 billion in the face of a $1.6 trillion deficit?
Senator Reid should be embarrassed. But this is the way Congress works once it decides to ignore the Constitution and legislate on virtually everything.
Dr. Frankenstein on His Creation: It’s All The Monster’s Fault
As I have explained on numerous occasions, supporters of the Student Aid and Fiscal Responsibility Act (SAFRA) – which would end federal guaranteed student loans, turn everything into lending direct from Uncle Sam, and spend the resulting savings and way much more — have often shamelessly promoted the bill as a boon to taxpayers when it will almost certainly cost them tens-of-billions. Where they have generally been right is in rebutting criticisms that SAFRA would be a federal takeover of a private industry. With lender profits all but assured under federal guaranteed lending, the vast majority of student loans haven’t been truly private for decades.
Unfortunately, SAFRA advocates are just as clueless — or, more likely, rhetorically unbridled — about what constitutes a private entity as are status-quo supporters. Case in point, an article in today’s Huffington Post that, along with U.S. Secretary of Education Arne Duncan, attempts to portray the suddenly rocky road ahead for SAFRA as a result of evil lender lobbyists dropping boulders in the selfless legislation’s way:
Taking aim at Sallie Mae, the largest student lender in the country and a driving force behind the lobbying effort, Education Secretary Arne Duncan on Tuesday accused the company of using taxpayer funds to lobby and advertise, and cast its executives as white-collar millionaires uninterested in serious education reform.
“Sallie Mae executives have paid themselves hundreds of millions of dollars in the last decade while teachers, nurses, and scientists — the backbone of the new economy — face crushing debt because of runaway college tuition costs,” Duncan said.
Here Sallie Mae is painted in the same ugly hues as Lehman Brothers, AIG, and all the other supposedly rapacious, unscrupulous companies whose unchecked greed, we’re told, brought the American economy to its knees. (We also get the baseless but obligatory pronouncement about “crushing debt” for teachers and other toilers for the “public good.”)
But wait! Doesn’t ”Sallie Mae” sound a lot like”Fannie Mae” and “Freddie Mac”? Of course! That’s because just like Fannie and Freddie, Sallie was created by the federal government, only with Sallie’s job being to furnish lots of cheap college loans. And guess what? Just like Fannie and Freddie, Sallie became by far the biggest kid on her block because her huge federal creator fed her and protected her for decades, not setting her off on her own until 1996. But that part of her story doesn’t fit anywhere into the evil corporation narrative, so it’s just not mentioned. All we need to know is Sallie is private, her owners and employees make a lot of money, and that is why she is evil and dangerous.
And so the politics of demonization and denial, a staple of the recession blame game, continues. Private institutions are portrayed as malevolent predators and government as a warm, pure, protective father-figure. But there is much more accurate imagery possible when it comes to Sallie Mae: Egomaniacal Dr. Frankenstein furiously blaming the monster he created for doing exactly what he built it to do.
And some wonder why there’s such widespread outrage — the real reason SAFRA is in trouble – about ever-expanding federal power?
Vote Now: Is Obama Failing?
Closing statements are posted at the Economist debate, “This house believes that Barack Obama is failing.” Currently, Obama leads in the voting by a bit less than the margin by which American voters oppose his health care plan. But there’s still time for a rally! So vote now.
I conclude my closing statement this way:
Has Mr Obama failed? Of course it’s too early to say that. But is he headed that way? Let’s go to the tape: His policies are bad for the country; they expand government, reduce freedom and slow the economic recovery. The policies that he cannot implement by executive order have become bogged down in Congress as public opposition mounts. Since he was elected, his party has lost three elections for governor and senator. Public opinion has shifted so sharply against him that last week pundits began speculating that the Republican Party might take back the Senate. Mere months after an outpouring of articles hailing the end of Reaganism and the return of activist government, he has caused the resurgence of small-government attitudes. He aspired to be a transformational president who would “remake this nation”. He may well be doing so in two ways: giving us a substantially larger government, and simultaneously reviving free-market, limited-government ideology among a broader public.
That doesn’t sound like success.
Since I wrote the statement, a few more items relating to Obama’s political decline: The Marist poll now finds that 57 percent of independents disapprove of his performance, sharply down even from December and a sign of his continuing decline among swing voters. A new Washington Post-ABC News poll shows voters trust Obama over congressional Republicans by 47 to 42 percent. Not so bad. Better to be five points ahead than five points behind the opposition. But as Byron York notes, “In November, in the same poll, Obama led by 15 points. Last July, he led by 23 points. And last February, he his lead was 55 points. So in the course of a single year, Obama’s lead over Republicans has shrunk from 55 points to five.
Vote here. Vote now. (Click on “Vote now or add your view,” and a voting box should appear. You’ll have to register, though.)
Libertarian Summer Seminars
Students: Apply now for 11 weeklong, interdisciplinary seminars on liberty in its various aspects, hosted by the Institute for Humane Studies at locations around the country.
And don’t forget: Students and everyone else are invited to Cato University in beautiful Rancho Bernardo, California, the last week of July.
Learn about liberty! Enjoy beautiful weather! Meet your favorite libertarian thinkers! Make lifelong friends! And all for the low low price of — well, the IHS seminars are free. There’s a charge for Cato University, and some student scholarships are available.
McArdle on Whether Health Insurance Affects Health
I’ve blogged previously about the tempest that Ezra Klein stirred up in the teapot of the health care debate when he suggested that Sen. Joe Lieberman “seems willing to cause the deaths of hundreds of thousands of people” by holding up ObamaCare.
In the latest issue of The Atlantic magazine, Megan McArdle notes that the economic literature doesn’t quite support Klein’s assumption that covering the uninsured would save lives:
Quite possibly, lack of health insurance has no more impact on your health than lack of flood insurance…
Government insurance should have some effect, but if that effect is not large enough to be unequivocally evident in the data we have, it must be small…
[W]e should have had a better handle on the case for expanded coverage—and, more important, the evidence behind it—before we embarked on a year-long debate that divided our house against itself. Certainly, we should have had it before Congress voted on the largest entitlement expansion in 40 years. Unfortunately, most of us forgot to ask a fundamental question, because we were certain we already knew the answer.
Healthcare Fraud Summit
U.S. Department of Health and Human Services Secretary Kathleen Sebelius and Attorney General Eric Holder recently convened a “National Summit on Health Care Fraud.” The two-hour event can be viewed at C-SPAN’s website.
There was a lot of talk about protecting taxpayers, and it was clear that HHS is putting a great amount of resources into the problem. The federal lawyers and accountants speaking at the event who are tasked with rooting out abuse seem to be a very dedicated and intelligent group. But this is one of the sad things about complex big government programs—they need intelligent people to administrate them, and that saps the private economy of intellectual resources.
HHS Secretary Sebelius mentioned that funding for anti-fraud measures would go up 80 percent under the president’s new budget. HHS intends to spend money on technology that would do a better job of sifting through the data to detect potential fraud and abuse. But that’s the Catch 22: more taxpayer money has to be spent to “save” taxpayer money.
On Thursday, the head of the House Energy and Commerce Committee, John Dingell (D-MI) had a telling exchange with Sebelius. From Nextgov.com:
“I have wrestled with a number of department agencies over the past [about] their adequacy . . . to upgrade these matters,” Dingell said. “They’ve had good motivation, noble intentions, but the implementation was also lacking, causing substantial waste and confusion.”
When he asked Sebelius whether the $110 million would be a one-time investment, she said, “This is a multiyear strategy to actually build a 21st century information and data system.”
“Should we anticipate that you will be coming back up here to continue to move toward adequate resources to sustain this project over the years?” Dingell asked.
Sebelius said she would see the project through and later added the department has a new information officer, who is not directly connected to CMS, who is assisting with project supervision. She assured Dingell that HHS would provide proper oversight of vendors and federal employees working on the project.
Dingell’s candor is refreshing, and it serves as a reminder that government officials always promise to “fix” problems if they just get new technology and more money. Instead, the “fix” often ends up getting bogged down in bureaucracy and cost overruns due to poor oversight of contractors.
The fundamental problem with giant government healthcare programs is simple: when you have a giant pot of honey, you attract ants. And when that honey is guarded by someone who didn’t pay for the honey, there’s little incentive for that person to guard it as it were their own.
This difference in incentives was evident when the CEO of a private insurer spoke at the summit. The CEO, James Roosevelt of Tufts Health Plan, pointed out that the chief priority for Medicare/Medicaid is to pay claims as quickly as possible. Public programs lack the capabilities of their private sector counterparts to not only stop improper payments from being made, but also detecting such payments after the fact. Moreover, private insurers aren’t encumbered by the massive bureaucracy and congressional meddling that inhibits the government’s ability to adapt and react to ever evolving fraud schemes.
See this essay for more on fraud and abuse in government programs. See here for recent examples of fraud and abuse in government healthcare programs.
Cato on Facebook
Cato on Twitter
Cato on Google+
Cato on YouTube
