Archive for March, 2010
A Tale of Two Frauds
The President has announced a government crackdown on Medicare and Medicaid fraud. The effort appears to be an attempt to make it easier for Americans to swallow the health care “reform” he’s trying to shove down their throats. As House Republican leader John Boehner correctly asked, “Why can’t we crack down on fraud without a big-government takeover of health care?”
As I’ve noted before, improper payments made by Medicare and Medicaid is may well be $50 billion more than the already appalling $100 billion annual figure the president cited. Administrative efforts to rein in fraud and abuse are welcome, but they won’t solve the huge and fundamental inefficiencies of these programs. Because the law requires government health care programs to quickly get payments out the door, Uncle Sam will always be engaged in a costly game of “pay and chase.”
The broader problem is that government programs aren’t subject to market discipline. Policymakers and administrators have little incentive to be frugal because they face few or no negative consequences when playing with other people’s money.
Most of us have noticed how good private companies can be at reducing fraud. I recently received a call about questionable charges on my Discover credit card. After quizzing me on a list of purchases made with my card in the past 24 hours, it became clear that someone had gotten control of my account. Discover immediately closed the account, opened an investigation, and removed me from any liability for the fraudulent charges.
What amazed me is that I only had about $300 worth of charges on my card. It’s not a big account and thus not a big money maker for Discover. Yet, within 24 hours of a string of suspicious charges, the company was right on top of it before I even realized anything nefarious was going on. Private markets don’t always work this well, but government programs almost never do.
What Is ‘Meaningful’ Health Insurance? Who Decides?’
Noting that premium increases, such as Anthem’s proposed 39-percent hike in California, have caused individuals and employers to purchase less coverage, Kaiser Family Foundation president Drew Altman writes:
Rising health care costs and insurance company practices are leading not just to more expensive premiums, but to skimpier, less comprehensive coverage as well; slowly redefining what we have known as health insurance. To be sure, some economists argue that this is precisely what should happen…But this is not likely how regular people see it. Appropriate cost sharing is one thing, but we may be reaching the point in the individual market where the policies many people have simply cannot be considered meaningful coverage.
Of course, this is the whole idea behind President Obama’s proposed tax on high-cost health plans: higher prices will cause people to purchase less coverage, which will temper health care spending.
But whether Altman is correct depends on what the meaning of “meaningful” is. When individuals pare back the amount of insurance they purchase, they are revealing what they consider to be meaningful coverage. (The same is true when employers opt for less-comprehensive coverage, though employers’ revealed preferences are obviously a poor proxy for what their workers value.)
If Altman thinks the coverage that individuals are choosing “cannot be considered meaningful coverage” (note the passive voice), he is implicitly stating that individuals are not the best judges of their own welfare. And the only way to devise an alternative definition of meaningful coverage is through the political process.
It is difficult to argue that the political process does a better job of selecting meaningful coverage. That process forces many consumers to purchase coverage that they don’t find meaningful (e.g., chiropractic, acupuncture, circumcision), that they find offensive (e.g., abortion, contraception, in-vitro fertilization), or for treatments that are downright harmful (e.g., high-dose chemotherapy combined with autologous bone-marrow transplant for late-stage breast cancer).
Letting consumers reveal their preferences is possibly the worst way to define “meaningful coverage.” Except for all the others.
The Standards Themselves Are, Frankly, Irrelevant
Three days ago I reported that draft, grade-by-grade, national curricular standards would soon be released by the Common Core State Standards Initiative. Yesterday, they were. (If you want to get a sense for what the proposed standards are follow the link to them. Don’t bother with the appendices, though, unless you really want to get into the weeds.)
Naturally, in the coming days lots of people will be offering heaps of commentary about what the standards do or do not contain. That’s not my main concern (though reading through the English standards I am dubious that mastery of them could be easily or consistently assessed). You see, the content of the standards is largely irrelevant because the main problem isn’t what the standards are, but standardization itself.
As I’ve blathered about on numerous occasions, it makes little sense to expect all kids to master all the same things at the same rates. All kids are different – they have different talents, desires, and abilities — and to impose one, “best” progression on them is simply illogical.
Another problem with imposing a single standard nationwide — and yes, this will be imposed, unless states suddenly decide they don’t like getting their citizen’s tax dollars back from Uncle Sam – is that it prevents competition between curricula. And that, in turn, kills innovation, the lifeblood of progress. So unless these standards have achieved perfection — and I’m pretty sure they haven’t — it’s a very dangerous thing to make them the end-all and be-all.
Finally, no matter how brilliant the draft standards, there is no reason to believe that they will drive meaningful educational improvement. Government schools will still be government schools, and the people employed by them will still have very little incentive to push kids to excellence, and every incentive to game the system to make the standards toothless. And no one yet has offered a decent proposal, other than school-choice supporters, for getting around that very inconvenient, public-schooling truth.
All of these problems help to explain why there is no convincing empirical evidence that national standards drive superior educational outcomes. Unfortunately, most national-standards advocates will talk themselves blue in the face about what’s in the standards, but avoid at all costs the question of whether standardization makes sense in the first place.
Questions for Thoughtful ObamaCare Supporters
What does it say that the American polity has consistently rejected a wholesale government takeover of health care for 100 years?
What does it say that public opinion has been consistently against the Democrats’ health care takeover since July 2009?
What does it say that Democrats are having this much difficulty enacting their health care legislation despite unified Democratic rule? Despite large supermajorities in both chambers of Congress, including a once-filibuster-proof Senate majority (see more below)? Despite an opportunistic change in Massachusetts law that provided that crucial 60th vote at a crucial moment? Despite a popular and charismatic president?
What does it say that 38 House Democrats voted against the president’s health plan?
What does it say that Massachusetts voters elected, to fill the term of Ted Kennedy, a Republican who ran against the health care legislation that Kennedy helped to shape?
What does it say that the only thing bipartisan about that legislation is the opposition to it?
What does it say that 39 senators voted to declare that legislation’s centerpiece unconstitutional?
What does it say that health care researchers — a fairly left-wing lot — think the Senate bill is unconstitutional?
What does it say that the demands of pro-life and pro-choice House Democrats, each of which hold enough votes to determine the fate of this legislation, are irreconcilable?
What does it say that House Democrats are actually contemplating a legislative strategy that would deem the Senate bill to have passed the House — without the House ever actually voting on it?
Given that ours is a system of government where ambition is made to counteract ambition, what does it mean that the only way to pass this legislation is for the House to trust that the Senate will keep the House’s interests at heart?
Gun Control After McDonald
I recently appeared on the Patt Morrison Show in southern California opposite Paul Helmke of the Brady Campaign to Prevent Gun Violence in a segment that begs the question of what gun control laws will look like if the Supreme Court incorporates the Second Amendment with the McDonald v. Chicago case. The audio of the program is here, but the issue merits a more detailed discussion than I could get into on the radio.
The litigation over the boundaries of the Second Amendment in the District of Columbia previews the kinds of gun laws that will face court scrutiny.
First, certain restrictions on the purchase of firearms will likely be overturned. California maintains a “safe gun roster” of handguns that manufacturers have successfully submitted for safety testing. Following the Heller decision, the District adopted California’s roster. The roster is very specific, and handgun models are certified “safe” right down to the color. The District rejected applications to register two-tone guns, discontinued models, and guns not on the California roster. Three plaintiffs filed suit, alleging that this policy violated constitutional protections against irrational administrative regulations. The District relented, expanding its roster to include the “safe handguns” listings for Maryland and Massachusetts.
California courts are likely to reach similar conclusions. The Calguns Foundation has a plaintiff who wants to register a Glock handgun. The state has certified the right-handed but not the ambidextrous version, and the Calguns plaintiff was born without a right arm below the elbow. This compelling case, along with others parallel to the DC plaintiffs, will force California to open up its roster.
Second, jurisdictions will be forced to allow some form of handgun carry, either open or concealed. Outright bans on concealed carry cited in cases from the mid-1800’s come from a time when it was assumed that only brigands carried handguns concealed, and it was an unquestioned right of the people to carry arms openly wherever they went. States and localities will not be able to delete the right to bear arms from the right to keep and bear arms.
My colleague Tom Palmer is currently litigating this issue in the District of Columbia (complaint here), and states will have to confront the plain text of the Second Amendment and clear historical recognition of a right to be armed outside the home.
California allows open carry as long as the handgun is unloaded, but Los Angeles and other jurisdictions in the state refuse to issue concealed handgun permits. California will probably opt for concealed carry when push comes to shove. Public views have shifted to an “out of sight, out of mind” mentality, and concealed carry is the rule in most states. A California police officer recently put a comment up on Facebook that proposes intimidating open carriers with violence. “Haha, we had one guy last week try to do it! He got proned out and reminded where he was at and that turds will jack him for his gun in a heartbeat!” Turds indeed.
This brings us back to the Starbucks controversy that prompted the radio segment. Gun control proponents asked Starbucks to ban firearms from their coffee shops, and gun rights activists asked that they continue their current policy of following the law of the jurisdiction where each franchise is located.
The call-ins to the radio show expressed a willingness to boycott Starbucks if it keeps its “follow the law” policy, but that’s a rationale to boycott gas stations, grocery stores, and restaurants across the nation. If self-defense scares you that much, the best advice is to stay home. Or venture out and be a good victim.
Callers also expressed concerns about off-duty cops brandishing guns while intoxicated, and this is something we should take seriously. As I’ve said before, no magical powers accrue to a sworn officer. That’s a great case for barring everyone from carrying and drinking in public, law enforcement officers included. Federal law does this – the Law Enforcement Officers Safety Act allows current and retired law enforcement officers to carry concealed nationwide but requires that they not be under the influence while doing so. The same can’t be said for some state laws that make law enforcement officers a higher class of citizens than everyone else. Virginia allows retired law enforcement officers from any jurisdiction to imbibe while armed, but citizens with concealed handgun permits must transition from concealed carry to open carry when entering an establishment that serves alcohol for on-premises consumption. Better to treat permit holders and officers alike, and allow carry in restaurants but bar alcohol consumption while armed.
It’s unclear what the patchwork of gun laws across the nation will look like in ten years, but Eugene Volokh gives a framework for analysis in this article. Cato held an event the day before oral argument of the McDonald case, and our brief is available here. Ilya Shapiro and Josh Blackman discussed the application of the Privileges or Immunities Clause in this excellent article, and provided some post-argument commentary.
Hate Register?
In my policy analysis “Attack of the Utility Monsters,” I wrote that one problem with hate speech laws is that the longer they stay on the books, the more they can encourage outrage over increasingly petty offenses. Here’s a story from the United Kingdom I’d certainly have included if I were writing that paper today:
A ten-year-old boy from Weston Super Mare has been put on a school “hate register” after he allegedly made a homophobic insult in the playground.
Peter Drury, a pupil of Ashcombe Primary School, is believed to have called one of his friends a “gay boy,” according to his mother.
The boy’s mum says she was called into her son’s school to be told by head teacher that another mother had heard him using homophobic language.
She claims she was told the incident would be registered and his file monitored while he was at the school.
“He doesn’t even understand about the birds and the bees, so how can he be homophobic?”
Schools are reportedly being given advice that offensive comments made by children as young as five should be recorded and kept on record until the pupil leaves secondary school.
Kids can be incredibly cruel, in both word and deed. But if we were to put every child who ever said something hurtful on a “hate register,” just how many kids would we have to register? All of them? What good would that do us?
Message to Republicans: Stop Hiding Behind the Troops
In what can only be described as a cheap partisan attack masquerading as patriotic chest-thumping, House Republicans this morning issued a statement opposing Ohio Representative Dennis Kucinich’s resolution for the withdrawal of troops from Afghanistan because… [drum roll please] the Republicans strongly support the troops in Afghanistan.
In a statement of Republican policy forwarded to GOP politicians and their staffers, the House Republican Leadership and the House Committees on Foreign Affairs and Armed Services Republicans write, ”Since the President’s speech, more United States Armed Forces have been deployed to the Afghanistan theatre in support of the implementation of our nation’s counterinsurgency strategy. Many of them leave behind family and friends for the second, third, and fourth time. They have been engaged in the largest offensive since the beginning of the war there, and they have done a magnificent job. House Republicans are mindful these troops and their families will be watching this debate and remain committed to working towards swift and clean action when the resources impacting their military readiness, operational needs, and family support is debated and passed this spring.”
The GOP has got to stop hiding behind the troops. As I mention in a recent article, our brave servicemen and women are being deployed to prop up a regime Washington doesn’t trust, for goals our president can’t define. Sadly, the war not only provides a potent recruiting tool for militants, but it’s clear that it does little to appreciably protect America. As aptly demonstrated by the Christmas Day crotch bomber, the old argument of “We fight them there so we don’t have to fight them here” is complete and utter hogwash.
A $1.1 Billion Re-Election Campaign. For the Senate.
When Rep. Collin Peterson (D- Minn. and Chairman of the House Agriculture Committee) pronounces that a farm program is too generous, you know you’ve crossed a line.
But that’s what happened recently after Sen. Blanche Lincoln (D-Ark), Senate Agriculture Committee Chairwoman and — oh, hey, how about that? — facing a tough re-election battle in November proposed an extra $1.1 billion in emergency farm aid be added to a jobs/tax/unemployment/kitchen sink bill going through the Senate this week. These extra handouts would flow despite the fact that the 2008 farm bill contained ”reforms” (the so-called ”permanent disaster” program) ostensibly to put an end to politically-motivated ad hoc emergency aid of just the type that Senator Lincoln is pushing now.
For those who can stomach it, this excellent article by Dan Morgan, one of the nation’s best agriculture journalists, contains plenty of background information.
Fannie, Freddie, Peter, and Barney
Last week, after Rep. Barney Frank (D-MA) said that holders of Fannie Mae and Freddie Mac’s debt shouldn’t be expected to be treated the same as holders of U.S. government debt, the U.S. Treasury took the “unusual” step of reiterating its commitment to back Fannie and Freddie’s debt.
If ever there was case against allowing a few hundred men and women to micromanage the economy, this is it.
Fannie and Freddie, which are under government control, are being used to help prop up the ailing housing market. If investors think there’s a chance Uncle Sam won’t back the mortgage giants’ debt, mortgage interest rates could rise and demand for housing dampen. Therefore, Frank’s comments caused a bit of a stir. However, with the government bailing out anything that walks or crawls, investors apparently weren’t too concerned with Frank’s comments as the spread between Treasury and Fannie bonds barely budged.
As I noted a couple weeks ago, the Treasury is in no hurry to add Fannie and Freddie’s debt and mortgage-backed securities to the budget ($1.6 trillion and $5 trillion respectively). Congress certainly isn’t interested in raising the debt ceiling to make room. And as Arnold Kling points out, putting Fannie and Freddie on the government’s books would actually force the government to do something about the doddering duo.
All of which points to what an unfunny joke budgeting is in Washington. Take a look at what current OMB director Peter Orszag had to say about the issue when he was head of the Congressional Budget Office:
Given the steps announced by the Treasury Department and the Federal Housing Finance Agency on September 7, it is CBO’s view that the operations of Fannie Mae and Freddie Mac should be directly incorporated into the federal budget. The GSEs’ revenue would be treated as federal revenue and their expenditures as federal outlays, with appropriate adjustments for the manner in which credit transactions (like a mortgage guarantee) are reflected in the federal budget.
Note that Orszag wrote that statement less than two years ago. And since then, the bond between the government and the mortgage giants has only gotten tighter.
The same people that say Fannie and Freddie shouldn’t be on the government’s books are often the same people who once dismissed concerns that the two companies were headed toward financial ruin. In 2002, Orszag co-authored a paper at Fannie’s behest that concluded that “the probability of default by the GSEs is extremely small.”
Another one of those persons, Congressman Frank, has his fingerprints all over the housing meltdown. In 2003, a defiant Frank stated that “These two entities – Fannie Mae and Freddie Mac – are not facing any kind of financial crisis.” Frank couldn’t have been more wrong. Yet there he remains perched on his House Committee on Financial Services chairman’s seat, his every utterance so important that they can move interest rates.
O’Reilly: No Freedom, No How
Bill O’Reilly teases an interview with John Stossel this way:
Should Americans be able to use their body for any purpose? John Stossel says yes and joins us to explain!
And Bill O’Reilly says no! No to legal prostitution, no to polygamy, no even to legal markets for vitally needed organs. Check it out:
More Stossel videos on personal freedom here. Cato research on organ markets here. And don’t forget to watch John Stossel every Thursday night at 8 on the Fox Business Network.
Diane Ravitch: Expert Historian, Policy Tyro
Diane Ravitch is a leading education historian. Her work in that field is characteristically thorough and well-researched, and her books The Troubled Crusade and The Great School Wars, in particular, made significant contributions to our understanding of U.S. education history.
On the presumption that Ravitch is as much an expert on policy as she is on history, her latest book, recounting her change of heart on certain policy questions, has garnered enormous media attention. I suggest, with all due respect, that this presumption is a mistake. Unlike her thorough and rigorous historical writing, Ravitch’s policy opinions were never grounded in a systematic and comprehensive review of the relevant evidence. They should never have been given credence in the first place.
Consider Ravitch’s 1995 book National Standards in American Education, which endorsed the policy. When I was reviewing evidence on education standards for a chapter in my 1999 book Market Education, Ravitch’s book was still the preeminent source on the subject. After her historical work, it was a disappointment. Quoting Ravitch (p. 25), I wrote the following:
The most common claim made in support of government curricula is that: “Standards can improve academic achievement by clearly defining what is to be taught and what kind of performance is expected.” Unless readers are willing to accept this claim on faith, they can safely ignore it, because there is no compelling evidence that it is true. In her book National Standards in American Education, respected education historian and government standards advocate Diane Ravitch discusses many arguments pro and con, but does not demonstrate that government curriculum guidelines raise student achievement.
So far as I know, Ravitch never conducted a systematic review of the empirical evidence for national standards. Nor has she ever systematically and comprehensively reviewed the research comparing different kinds of public and private schools systems. She is not an authority on these matters.
If I’m mistaken on this point, I would appreciate a reference to any such works. If not, the media and policymakers would do well to stop according her opinions in these areas a weight they do not merit.
The National Broadband Plan Is Bad. Period.
I’ve seen plenty of stories and gotten a fair number of calls from reporters about the national broadband plan. They generally want to get some insight from down in the weeds of the communications world. What do you think of this part? What do you think of that?
But I’m keeping my eye on the ball: This is another industrial-policy boondoggle. It’s a government spending program, created by the so-called “Recovery Act,” that will distort the communications marketplace, and it comes at the cost to taxpayers of having their resources taken from them and handed out to the firms that are best equipped to lobby for government succor.
I don’t care which community gets 1-gigabit connections. The money to pay for it should have been left with the American people to spend as they choose—on 1-gigabit connections if they choose. The debt overhang produced by all this spending makes us worse off, not better off, and the shiny bauble of hi-def, two-way video doesn’t change that.
The Federal Communications Commission should be shuttered. That’s the gist of what I have to say about the “National Broadband Plan.”
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