Author Archive
Podcast: RomneyCare Free Riding and Fact Checking
In this podcast, I discuss the flap between Mitt Romney and Rick Santorum over RomneyCare‘s effect on free riding. I also talk about how some fact checkers misfired when looking into the issue.
Cannon’s Second Rule of Economic Literacy
…appears at the end of this a poor, unsuccessful letter I sent to the editor of the Washington Post:
After quoting a scholar who expresses the economic consensus that the rising cost of employer-purchased health benefits “means lower wages and salaries,” “New study shows health insurance premium spikes in every state” [Nov. 17] immediately contradicts that consensus by stating, “employers are attempting to shift health costs onto their workers” by “asking employees to shoulder a larger share of the premium.”
If workers bear the cost of employer-paid health benefits in the form of lower wages and salaries, then increasing the employee-paid portion of the premium is not a cost-shift. Workers would have borne those costs either way.
Employers cannot shift to workers a cost that workers already bear.
‘The Dangerous Gym Membership’?
Here’s a poor, unsuccessful letter I sent to the editor of the Washington Post:
“The dangerous gym membership” [Jan. 12] claims that in Medicare Advantage, “advertising a plan as the go-to health insurance source for marathoners could lure in a healthier subscriber base, disrupting the rest of the market place in the process.” Oh?
Does it disrupt the market for sneakers when running shops advertise themselves to marathoners? Since when does giving consumers something they want disrupt the market? That’s why markets exist.
What’s disrupting the market for seniors’ health insurance is government—in this case, Congress’ counter-productive attempt to cross-subsidize the sick via price controls that forbid carriers to consider each applicant’s risk when offering and pricing health insurance.
‘Virginia Shouldn’t Enable Federal Takeover of Health Care’
Bart Hinkle has an excellent column in the Richmond Times-Dispatch about why Virginia—and all states—should refuse to create one of Obamacare’s health insurance “exchanges”:
Any state exchange will have to abide by the Obama administration’s directives… If Washington is going to dictate the terms, why should Virginia foot the bill?
Romneycare & Free Riders
During last night’s GOP presidential debate, Rick Santorum and Mitt Romney had a polite disagreement over Romneycare’s impact on free-ridership in Massachusetts. The short version: Santorum was right. Romney and even FactCheck.org disputed Santorum’s claim, but they misunderstood it.
The exchange comes 2:15 into this video from Kaiser Health News:
Here’s the Kaiser Health News transcript:
SANTORUM: Just so I understand this, in Massachusetts, everybody is mandated as a condition of breathing in Massachusetts, to buy health insurance, and if you don’t, and if you don’t, you have to pay a fine.
What has happened in Massachusetts is that people are now paying the fine because health insurance is so expensive. And you have a pre-existing condition clause in yours, just like Barack Obama.
So what is happening in Massachusetts, the people that Governor Romney said he wanted to go after, the people that were free-riding, free ridership has gone up five-fold in Massachusetts. Five times the rate it was before. Why? Because…
ROMNEY: That’s total, complete…
SANTORUM: I’ll be happy to give you the study. Five times the rate it has gone up. Why? Because people are ready to pay a cheaper fine and then be able to sign up to insurance, which are now guaranteed under “Romney-care,” than pay high cost insurance, which is what has happened as a result of “Romney-care.”
ROMNEY: First of all, it’s not worth getting angry about. Secondly, the…
(APPLAUSE)
ROMNEY: Secondly, 98 percent of the people have insurance. And so the idea that more people are free-riding the system is simply impossible. Half of those people got insurance on their own. Others got help in buying the insurance.
‘We Are Not Deciding between Regulation and Autonomy, We Are Deciding Whether or Not We Want a Puppet Government’
That’s how Charlie Arlinghaus, president of New Hampshire’s Josiah Bartlett Center for Public Policy, describes the decision confronting states about whether to create an ObamaCare Exchange in this op-ed for the New Hampshire Union-Leader.
Filed under: General; Government and Politics; Health Care; Political Philosophy
Headline of the Week: “Consumer Chief Richard Cordray Promises Not to Abuse His Power”
From the Los Angeles Times.
It works on so many levels.
‘Romney vs. Obamacare: What the Presumptive Nominee Should Say’
Yuval Levin and Ramesh Ponnuru have a fantastic article on health care [subscription required] in the February 6 issue of National Review that, while not excusing RomneyCare, offers probably the best way that a compromised Mitt Romney could run against ObamaCare. If you don’t have a subscription, find a copy.
Personal Accounts–for Medicare
Last night, Newt Gingrich praised the Chilean Social Security system, which allows workers to save for their retirements in personal accounts, rather than contribute to the government pension scheme. Several of my Cato colleagues are far more qualified than I am to comment on that system, including Mike Tanner, Jagadeesh Gokhale, and Jose Pinera–who designed and implemented it. But personal accounts are as important for reforming compulsory health insurance schemes like Medicare as they are for reforming compulsory pension schemes.
In 2010, I traveled to Chile to deliver an address to the International Federation of Pension Fund Administrators (FIAP). I detailed the harms caused by compulsory health insurance schemes and explained how personal medical accounts would improve health care and generate wealth even for the poor:
In designing health care markets, perfection is not an option. Under any system, whether state-run or the free market, some patients will inevitably fall through the cracks.
Personal medical accounts can help fill in those cracks by enabling innovations that improve medical care and bring it within reach of the poor. Yes, some will not earn enough to provide for themselves. And when we are free to make our own decisions, a small number of people will make poor decisions. I believe we have a moral duty to care for patients who could not or would not provide for themselves. Personal medical accounts will make it easier for us to meet that moral duty.
Under compulsory health insurance schemes, those cracks widen, and more people fall through. Price and exchange controls block innovation. Governments waste resources on low-value medical care. Some would describe these as the unavoidable costs of creating an equitable society. But those wasted resources do not purchase solidarity. They purchase sickness and poverty.
FIAP turned my address into this book chapter, which also explains how to craft a system of personal medical accounts.
For current enrollees, who have not built up savings in a personal medical account, Congress should make Medicare look more like Social Security. That is, the government should subsidize Medicare enrollees by giving them cash, rather than creating a complex health-insurance scheme that effectively lets government officials shape the entire health care sector.
Filed under: Cato Publications; General; Government and Politics; Health Care
‘The White House Is Resorting to Unsubstantiated Happy Talk’ on ObamaCare
Last week, the White House claimed 28 states are “on their way” toward creating ObamaCare’s health insurance Exchanges. Here’s what Jim Capretta of the Ethics and Public Policy Center thinks about that:
[E]ven if one were to accept the White House’s accounting…that would mean that 22 states — roughly 40 percent of the country — are not “on their way” toward erecting the Obamacare exchanges. Isn’t that a problem? Further, upon closer inspection, it’s clear that many of the 28 states that are supposedly “on their way” really aren’t “on their way.”…
A more accurate description of what is going would go like this…the administration can rightly claim 15 states are more or less playing ball with them…
[T]here’s a very long list of states — nearly 30 — with strong Republican governors who have absolutely no interest in doing anything to solidify the position of Obamacare…
In other states, with mixed political control, it’s not entirely clear what direction they will go, as the legislatures and the governors are either at odds over the issue or have deferred taking any definitive steps…
So, a fair reading of what’s really going on is that the vast majority of states are not proceeding apace to implement Obamacare, and there’s no prospect of their doing so anytime soon…
Obamacare is under siege at this point. It is on shaky ground legally. It’s opposed by a plurality of voters. And there’s no real plan in view for actually implementing it, even if it were to survive the various challenges coming its way. No wonder the White House is resorting to unsubstantiated happy talk.
Read the whole thing.
WSJ Debate: Should the Government Require You to Purchase Health Insurance?
In today’s Wall Street Journal, I debate ObamaCare‘s individual mandate. Here’s the teaser:
Should Everyone Be Required to Have Health Insurance?
Yes, says Karen Davenport of George Washington University, because it’s the key to making health care more affordable and accessible. No, says Michael F. Cannon from the Cato Institute, because it will make health care more costly and scarce.
I did not write that unfortunate title, which uses the passive voice to conceal who’s doing the requiring. Hint: we ain’t talking about your conscience. I like to say that if we banned the passive voice–e.g., doctors are paid on a fee-for-service basis–it would take two minutes to realize that government creates most of our health care problems, and we would repeal all subsidies, mandates, and regulations within two hours.
Davenport’s article makes one claim to which I was not able to respond: that under ObamaCare, “global payment approaches and other payment changes are designed [gaa! passive voice!] to improve care for patients with chronic illnesses.” Fortunately for humanity, I already dispatched that claim last week in a blog post titled, “Oops, Maybe ObamaCare’s Cost Controls Won’t Work after All.”
So here are your assignments for today. Read both articles. Don’t forget to take the quiz. Then, watch the related 2008 video I posted under the title, “Does Karen Davenport Owe Me $40?“, and decide for yourself whether Karen Davenport does indeed owe me $40. If you think yes, be sure to tell her so in an email to the address provided at the end of her article.
How Sebelius Plans to Save Obamacare: Creating Dependence
By now, probably everyone has heard these old Obamacare saws:
March 9, 2010 - “We have to pass the bill so that you can find out what is in it.” (House Speaker Nancy Pelosi)
March 28, 2010 - “As more and more people get to understand what’s in this bill, people are going to like it.” (Pennsylvania Gov. Ed Rendell)
August 4, 2010 - “It’s very obvious that people have a lack of understanding of our health care reform bill… The more people learn about this bill, the more they like it… The trend is turning all over America today… Once you explain what’s in the bill, the American people of course like it.” (Senate Majority Leader Harry Reid)
Here’s how those predictions have borne out:
Thus supporters have now gone from claiming that of course the public will love Obamacare to declaring, We need to make people dependent on government for their health care pronto, or Obamacare is sunk:
January 19, 2012 - “The more we educate people about the law, the more they’ll be able to take advantage of the benefits. The more they take advantage of the benefits, the harder it will be for opponents to take those benefits away. Once you have something and you like it and you’re using it, you will fight with your own member of Congress to keep it.” (HHS Secretary Kathleen Sebelius)
Obamacare will not benefit people by lowering the cost of medical care, as even Sebelius must know by now. The only way Obamacare will “benefit” anybody is by making him or her the recipient of an explicit or implicit government transfer. That is, Obamacare is going to rob Peter to subsidize Paul. Obamacare’s survival depends on making Paul dependent on that government transfer. I’m just surprised Sebelius is being so up front about it.
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