Media Coverage of the Health Care Overhaul
Over the course of the health care debate, the media often reported and editorialized — and sometimes it was impossible to tell the difference — quite favorably on the Democratic proposals running through Congress. While some upheld their journalistic responsibility to scrutinize and offer objective analysis of the legislation, many did not.
It was not surprising to read stories almost daily about how Obamacare would lift millions of poor, elderly, sick, and generally down-trodden Americans out of financial and medical crisis, and even go so far as to singlehandedly save the lives of hundreds of thousands of Americans over the course of the next decade. (It would even provide one free turkey for Thanksgiving to every family living 400 percent below the poverty level.)
This morning, however, the headlines read something like this:
- “Rasmussen: Public Favors Repeal 58%-38%” (Rasmussen Polls)
- “Lawmakers, Staff May Lose Coverage” (New York Times): Adds the Times, “The confusion raises the inevitable question: If they did not know exactly what they were doing to themselves, did lawmakers who wrote and passed the bill fully grasp the details of how it would influence the lives of other Americans?”
- “Healthcare Law Could Boost Costs For Less Healthy Americans” (New York Times)
- “Healthcare Law Unlikely To Curb Premium Increases” (Los Angeles Times)
My question is this: where were these reporters before the passage of the health care bill?
By Pulling His Punches, Bernanke Shatters ObamaCare’s Credibility
Federal Reserve Chairman Ben Bernanke gave a speech in Dallas yesterday where he inadvertently discredited claims that ObamaCare would reduce health care costs and the federal deficit. According to The Washington Post:
Federal Reserve Chairman Ben S. Bernanke warned Wednesday that Americans may have to accept higher taxes or changes in cherished entitlements such as Medicare and Social Security if the nation is to avoid staggering budget deficits that threaten to choke off economic growth…
While the immediate audience for the speech was the Dallas Regional Chamber, his message was intended for Congress and the Obama administration…
Bernanke has urged Congress to address long-term fiscal imbalances in congressional testimony before, but usually only when he is asked about them by lawmakers. His speech Wednesday aimed to reach a broader audience, steering away from technical economic speak and using plain, sometimes wry, language — a rare thing for a Fed chairman.
The non-partisan Congressional Budget Office projects the annual federal deficit will be at least $700 billion in each of the next 10 years. Deficit spending is a form of taxation without representation, because it increases the tax burden of generations who cannot yet vote (often because they are as yet unborn). Bernanke wants us to end deficit spending. Kudos to him.
But consider the timing of his speech. Why wait until April 7, 2010, to deliver that message directly to the public? Why not give that speech in January? Or February? Or any time before March 21?
The reason is obvious: Bernanke held back to appease his political masters.
Regulation and the Knowledge Problem
Glenn Reynolds, a law professor at the University of Tennessee but better known as Instapundit, writes in the Washington Examiner that the controversy over big corporations’ reporting the impact of the new health care legislation on their tax bills illustrates the “Knowledge Problem” identified by Nobel laureate F. A. Hayek in “The Use of Knowledge in Society” and other writings. Hayek pointed out that the information needed to run an economy doesn’t exist in any one database or agency. It is scattered among millions of people and made available to others by means of the price system. Planning and regulation do away with the information embodied in prices and try to improve on market outcomes by making use of far less information.
Reynolds writes, “Recent events suggest that it’s not just the economy that regulators don’t understand well enough — it’s also their own regulations.”
The United States Code — containing federal statutory law — is more than 50,000 pages long and comprises 40 volumes. The Code of Federal Regulations, which indexes administrative rules, is 161,117 pages long and composes 226 volumes.
No one on Earth understands them all, and the potential interaction among all the different rules would choke a supercomputer. This means, of course, that when Congress changes the law, it not only can’t be aware of all the real-world complications it’s producing, it can’t even understand the legal and regulatory implications of what it’s doing.
The new health care bill is going to increase the tax burden on large corporations that provide prescription drug benefits for their retirees. Companies are required by Generally Accepted Accounting Principles and Securities and Exchange Commission regulations to report any adverse changes in their expected tax liabilities. So several companies did so, producing headlines that weren’t favorable to Obamacare. Rep. Henry Waxman, chairman of the House Energy and Commerce Committee, is summoning the CEOs of those companies to a show trial in Washington to intimidate other CEOs from announcing the costs of Obamacare — at least until after the election.
Regulations interacting with each other with unanticipated effects — that’s the topic Jeffrey Friedman wrote about recently in Cato Policy Report, with regard to the financial crisis:
You may think that the government caused the financial crisis. But you don’t know the half of it. And neither does the government….
The regulators seem to have been as ignorant of the implications of the relevant regulations as the bankers were….
Omniscience cannot be expected of human beings. One really would have had to be a god to master the millions of pages in the Federal Register — not to mention the pages of the Register’s state, local, and now international counterparts — so one could pick out the specific group of regulations, issued in different fields over the course of decades, that would end up conspiring to create the greatest banking crisis since the Great Depression. This storm may have been perfect, therefore, but it may not prove to be rare. New regulations are bound to interact unexpectedly with old ones if the regulators, being human, are ignorant of the old ones and of their effects….
This premise would be questionable enough even if we started with a blank legal slate. But we don’t. And there is no conceivable way that we, the people — or our agents in government — can know how to solve the problems of modern societies when our efforts have, in fact, been preceded by generations of previous efforts that have littered the ground with a tangle of rules so thick that we can’t possibly know what they all say, let alone how they might interact to create another perfect storm.
In substance, there is a striking similarity between social democracy and the most utopian socialism. Whether through piecemeal regulation or central planning, both systems share the conceit that modern societies are so legible that the causes of their problems yield easily to inspection. Social democracy rests on the premise that when something goes wrong, somebody — whether the voter, the legislator, or the specialist regulator — will know what to do about it. This is less ambitious than the premise that central planners will know what to do about everything all at once, but it is no different in principle.
More on the (Un)Constitutionality of Obamacare
Earlier this week, I reacted to reports that the University of Washington couldn’t find any legal scholars willing to question Obamacare’s constitutionality by issuing a challenge: I will debate the constitutional merits of Obamacare against anyone, anytime, anywhere (as long as the sponsoring group/individual covers my travel expenses). Here’s a video version of my challenge:
Cato adjunct scholars Dave Kopel and Ilya Somin, blogging at the Volokh Conspiracy, go into much greater depth on the myth of an expert consensus.
And if you’re tired of hearing the debate about the debate and want to hear the latest on why the individual mandate is unconstitutional, listen to my colleague (and Cato’s chairman) Bob Levy’s podcast.
Constitution, Schmonstitution — The Law Is What I Say It Is
The health care debate has illuminated how little regard many members of Congress have for the U.S. Constitution.
First, Rep. Alcee Hastings (D-FL) said, “There ain’t no rules here… When the deal goes down … we make ‘em up as we go along.”
Then, House Judiciary Committee chairman John Conyers (D-MI) claimed that the Constitution’s non-existent “Good and Welfare clause” grants Congress the power to compel Americans to purchase health insurance.
Now, Rep. Phil Hare (D-IL) admits he doesn’t really care whether the Constitution grants Congress that power:
Off-camera: Where in the Constitution…
Rep. Hare: I don’t worry about the Constitution on this, to be honest.
Off-camera: [Laughter.] Jackpot, brother.
Rep. Hare: What I care more about — I care more about the people that are dying every day that don’t have health insurance.
Off-camera: You care more about that than the U.S. Constitution that you swore to uphold!
Rep. Hare: I believe that it says we have the right to life, liberty, and the pursuit of happiness. Now you tell me…
Off-camera: That’s the Declaration of Independence.
Rep. Hare: It doesn’t matter to me. Either one…
[Lots of childish sniping.]
Off-camera: Where in the Constitution does it give you the authority to…
Rep. Hare: I don’t know. I don’t know.
Off-camera: That’s what I thought.
Of course, that doesn’t really capture how annoying both the congressman and his interrogators are. So here’s the video:
Will Debate Constitutionality of Obamacare Anytime, Anywhere
Zaid Jilani at the Center for American Progress put up a blog post titled, “College debate organizers unable to find any law professors to argue health reform is unconstitutional.” Indeed, it seems that none of the four panelists at the University of Washington Law School event had any issues with Obamacare.
Maybe the UW organizers, who couldn’t find anyone with the opposing view, are talking to the same folks who told John Conyers about the “Good and Welfare Clause.” Because, as I said before, it’s not that hard to find constitutional scholars who have problems with this legislation.
OK, look, I’ll make it easier: I hereby announce that I am willing to travel anywhere at anytime to debate the constitutionality of Obamacare. Whoever sets up the debate has to pay my travel expenses, but that’s it. Any takers?
ObamaCare: Still a Bad Deal for Young Adults
The Associated Press reports that young adults will face higher premiums under ObamaCare:
Beginning in 2014, most Americans will be required to buy insurance or pay a tax penalty. That’s when premiums for young adults seeking coverage on the individual market would likely climb by 17 percent on average, or roughly $42 a month, according to an analysis of the plan conducted for The Associated Press. The analysis did not factor in tax credits to help offset the increase.
The higher costs will pinch many people in their 20s and early 30s who are struggling to start or advance their careers with the highest unemployment rate in 26 years.
The article cited additional studies estimating premiums increases young adults as high as 50 percent. That was essentially the message of my recent Cato briefing paper, “ObamaCare: A Bad Deal for Young Adults.”
Supporters claim the new law provides subsidies that would help people afford the higher premiums. As I write in my paper, however:
The money for those subsidies has to come from somewhere, though. Presumably, some of it would come from young adults themselves in the form of higher taxes or the tax penalties imposed on those who do not purchase insurance…So the presence of subsidies does not necessarily mean that young adults would come out winners. Ironically, all the complexity may actually help the legislation pass Congress precisely because it obscures whom the legislation would tax.
Supporters also claim that although the higher premiums might be actuarially unfair for people who are young and healthy today, those people will eventually be old and unhealthy. Over the course of a lifetime, they reason, such policies would be closer to actuarially fair.
The problem is that we’ve heard this line before. Inter-generational redistribution is fundamentally unfair to the young because it creates a situation where the old, who vote, have incentives to ratchet up benefits – and to ratchet up taxes on the young, who don’t vote. Social Security collects from the young and gives to the old, and is clearly a net tax on the young. As Jonathan Gruber reports, the young have very little confidence – deservedly so – in Social Security’s implicit promises. Experience shows that whatever new taxes ObamaCare imposes on the young will grow over time.
Regardless, most young uninsured people already obtain insurance as they get older. As I report in my paper, 30.4 percent of those age 20-29 were uninsured in 2008 (including 33.8 percent of 23-year-olds), but only 13.4 percent of those aged 50-64 years were uninsured. So a significant number of uninsured young adults naturally transition into insured older adults. The main effect of the new law will be to take young adults who think health insurance is a bad deal at today’s prices and force them to health insurance at even higher prices.
ObamaCare’s New Entitlement Spending “Sows the Seeds” of a Budget Crisis
From Robert J. Samuelson’s column in today’s Washington Post:
When historians recount the momentous events of recent weeks, they will note a curious coincidence. On March 15, Moody’s Investors Service — the bond rating agency — published a paper warning that the exploding U.S. government debt could cause a downgrade of Treasury bonds. Just six days later, the House of Representatives passed President Obama’s health-care legislation costing $900 billion or so over a decade and worsening an already-bleak budget outlook.
Should the United States someday suffer a budget crisis, it will be hard not to conclude that Obama and his allies sowed the seeds, because they ignored conspicuous warnings. A further irony will not escape historians. For two years, Obama and members of Congress have angrily blamed the shortsightedness and selfishness of bankers and rating agencies for causing the recent financial crisis. The president and his supporters, historians will note, were equally shortsighted and self-centered — though their quest was for political glory, not financial gain.
I hope Samuelson is wrong, but it’s probably a good idea to behave as if he’s right, and repeal ObamaCare’s new entitlement spending.
Medicare Fraud: 1, Anti-Fraud Measures: 0
As the nation contemplates the new health care entitlements that Congress and President Obama just created, it is worth noting an article in today’s Washington Post, which reports on the performance of past efforts to eliminate fraud in another health care entitlement:
More than a decade ago, Congress set out to squeeze the fraud out of Medicare billing at nursing homes, requiring more precise justifications for costs. It created new “ultra-high” billing categories intended to be used for only 5 percent of the patients needing highly specialized care and rehabilitation.
But within a few years, nursing homes flooded the ultra-high categories with patients, contributing to $542 million a year in potential overpayments, federal analysts found.
Since then, the numbers in the ultra-high categories have quadrupled, and the amount of waste and abuse could reach billions of dollars a year…
The article ends with the ominous implication that eliminating fraud in entitlement programs like Medicare will ultimately require government agencies to decide whether certain services are medically necessary.
Death panels, anyone?
Fidel Castro Endorses ObamaCare
As Dave Barry would say, I swear I am not making this up.
Yesterday, the Associated Press reported that the Western Hemisphere’s last unreconstructed communist dictator endorsed President Obama’s new health care law:
HAVANA (AP) — It perhaps was not the endorsement President Barack Obama and the Democrats in Congress were looking for.
Cuban revolutionary leader Fidel Castro on Thursday declared passage of American health care reform “a miracle” and a major victory for Obama’s presidency, but couldn’t help chide the United States for taking so long to enact what communist Cuba achieved decades ago.
“We consider health reform to have been an important battle and a success of his (Obama’s) government,” Castro wrote in an essay published in state media, adding that it would strengthen the president’s hand against lobbyists and “mercenaries.”…
“It is really incredible that 234 years after the Declaration of Independence … the government of that country has approved medical attention for the majority of its citizens, something that Cuba was able to do half a century ago,” Castro wrote…
Cuba provides free health care and education to all its citizens, and heavily subsidizes food, housing, utilities and transportation, policies that have earned it global praise. The government has warned that some of those benefits are no longer sustainable given Cuba’s ever-struggling economy, though it has so far not made major changes.
In recent speeches, Raul Castro has singled out medicine as an area where the government needs to be spending less, but he has not elaborated.
I’m sure the Obama administration and its echo chamber will nonetheless continue to claim that this is not socialized medicine.
Is the Health Care Lawsuit For Real?
The Hill asked me the following question:
Thirteen state attorneys general have filled a lawsuit claiming that the new healthcare reforms are unconstitutional. Is this a real legal challenge or a political stunt?
Here’s my response:
The challenge is very real—and necessary—but we are in uncharted territory here so it’s difficult to predict how courts will react.
The strongest and most important legal argument attacks the constitutionality of the individual mandate to buy a certain approved health insurance plan. Never before has the federal government—or any other—tried to force Americans to buy a particular good or service. Never before has it said that every man, woman, and child alive has to purchase a particular product, on penalty of civil or criminal sanction or forfeiture. And never before have courts had to consider such a breathtaking assertion of raw power — not even during the height of the New Deal, when the Supreme Court ratified Congress’ regulation of what people grew in their backyards on the awkward theory that such behavior affected interstate commerce.
The individual health care mandate is an even greater expansion of congressional power under the Commerce Clause. And it cannot be justified under the Necessary and Proper or General Welfare Clauses either, because these provisions guide the exercise of Congress’ enumerated powers without adding to them. In short, if the challenges to this health care “reform” fail, nobody will ever be able to claim plausibly that the Constitution limits federal power.
You can read here the responses of other pundits — including several non-lawyers, curiously.
A Glance into Costa Rica’s Health Care System
Costa Rica – my home country – has suddenly become part of the health care debate after celebrity radio talk show host, Rush Limbaugh said that he would move to Costa Rica go to Costa Rica for health care if ObamaCare were approved by Congress the federal government gets too involved in health care in the next few years.
Soon after Sunday’s vote in the House of Representatives, a website was set up to buy Limbaugh a one-way, first-class ticket to Costa Rica. Liberals were quick to point out that my country has a socialized health care system that is among the best in Latin America.
People claim that in Costa Rica health care is a right, not a commodity. The problem surfaces when you actually need to exercise your “right.”
Last July, La Nación newspaper carried a report about one hospital that had 5,000 people on a waiting list for surgery, some waiting up to a year. Among those on the list, 900 patients waited months to have possible cancerous tumors extracted. According to the head of the Oncology Department, “We know that 85% to 90% will be cancer cases based on previous medical tests.” For many of these patients, the wait is the equivalent of a death sentence.
Stories like this are common in the Costa Rican press.
Unfortunately, the current nationalized health care system and the state-owned monopoly in health insurance stifle the development of a viable, dynamic private health care system. Thus, many Costa Ricans can’t imagine life without “free” health care. That’s too bad since there’s nothing free about mandatory monthly contributions from workers and nothing just about being forced to pay for deadly delays in health care attention.
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