A Fatuous Defense of the Affordable Care Act

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“There are three kinds of lies: lies, damned lies, and statistics.” – Benjamin Disraeli

The L.A. Times provides a nice set of cherry picked data to justify the Affordable Care Act. The author is also fond of the word fatuous to describe Republican plans to repeal and replace Obamacare, so I feel compelled to maintain usage of the word my thoughts on the matter.Ignoring the long descent that healthcare has been on for decades now, and then claiming that slowing the growth rate of healthcare spend, while it still moves above the general rate of inflation and much of the decrease in observed to expected growth is related to the recession, is analogous to giving a kid a blindfold and a bat and told to hit the piñata in the tree in your backyard, meantime you have tied the piñata to a forest in the park two miles away. When the kid swings and misses, you take the blindfold off and tell him to try again, and declare success when he at least swings level at the air. The point being, even if Obamacare impacted these selective statistics, it is still miles from being where it needs to be.

To wit, there is many citations of costs decreasing, but the author conveniently ignores that those costs are going back up and projected to once again hit their stride of 6% a year, double the rate of inflation, for the foreseeable future. The recession was a temporary halt in healthcare spend, so it is really convenient to leave that fact out. Consider that in 1946 the average inflation adjusted hospital stay was $30 per day whereas today it is an astounding $2,200, a 70-fold increase. Trumpeting a modest decrease in this awful record is quite a bit like missing the forest for the trees.

Plus, while there is a lot of current debate about the tactics of repeal and replace given the slim Senate majority and how to use arcane Senate rules on budget reconciliation, Paul Ryan and others have come up with plans on replacing Obamacare, all under the banner of the Better Way moniker, which I detail in further detail elsewhere. Apparently this journalist is too lazy to look that up. But yes, I do hope that Republicans don’t take the risk of getting repeal without replace and do both at once. I honestly am not holding my breath given Republican ineptitude in the past.

It’s nice that the uninsured rate is going down, but of course a federal mandate to buy health insurance upon pain of hefty tax penalties is going to increase insurance rates. Would you praise a parent who upon their child spilling a drink or dropping food forced them to do 40 push-ups before eating again and then declaring to Facebook, “my child can do 40 pushups!”? No, I think not. At any rate, the real question is whether this metric on its own is the most important one and decoupled from the irrefutable evidence that healthcare costs and insurance premiums continue to skyrocket at a double-digit pace. Plus, recent research from economist Mark Warshawsky indicates that skyrocketing health insurance premiums have held down take home wages, as health insurance coverage has gone up for the lower and middle classes as a percentage of their total compensation from 4% to 12% in just a couple of decades – meaning they are not getting raises in take home pay because it is getting swallowed up in health insurance. Since inequality is a focus these days, look at the failures in our government run healthcare system as a main culprit.

If we are concerned with people not seeing the doctor, providing a stipend for catastrophic insurance and flexible Health savings accounts would have done the same thing without the enormous bureaucratic bloat that has led to skyrocketing premiums. And uncompensated care is an important gap to close, but this is all a bunch of cost shifting. What used to be covered through disproportionate share payments at the county and state levels, where great board oversight could be applied with local knowledge, is now being soaked up by cross-subsidies through the federal tax code – out of sight, out of mind, no accountability, and requiring hospitals to create a new administrative burden to work through the ACA and all its complexity.

This also ignores the many blatant failures of Obamacare, which I helpfully capture here. https://wordpress.com/post/gymnasiumsite.wordpress.com/117

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Let’s repeal Obamacare and replace it with something more consumer-centric

At long last, Republicans have started to coalesce their various one-off healthcare reform ideas from the past 6 years into a semblance of a comprehensive Obamacare repeal and replace proposal. There is much to appreciate in this proposal, which includes oft-repeated catchy taglines of, “a better way,” “patient-centered,” and my personal favorite, “backpack.” I will discuss more on the backpack later. The whole presentation, which I have linked above, can be watched in a recent AEI video.

What this proposal does not promote is my own personal preferences of a drastically reduced role for health insurance, a product that should be beaten back into its proper place for coverage of catastrophes only. The price-obfuscating impacts of coverage for every service and the price-decreasing impact that would ensue if consumers were able to see prices and outcomes more transparently by paying more directly out of their pockets is not part of this proposal. Nor does it address the supply-side needed reforms such as lifting the competition stifling (and therefore price increasing) impacts of the various regulatory mandates and rent-seeking political lobbying of regional monopoly hospitals that prevent new hospitals and clinics from opening. Finally, while it promotes Medicare and Medicaid reform, it leaves Medicare, which is mostly a middle class welfare and wealth transfer that has a naturally price inflating impact, largely intact. These are my caveats for why I don’t consider this a perfect proposal. That being said, the main themes presented certainly stanch the government takeover of healthcare bleeding and presents significant and politically feasible patient-centric reforms in place of the current construct of byzantine, dizzying, and unsustainable complex web of government controls and mandates. For this fact alone, this substantial reform proposal should be applauded and supported as a significant improvement to the status quo that just might get enough electoral support if Americans pay attention to it and can keep from being distracted by the ongoing Trump/Clinton circus. As a former boss of mine used to tell me, “don’t let perfect be the enemy of good.”

The focus is clearly on consumer choice, portability, decentralization of decisions to state and local levels, and sustainability of Medicare. It is this concept of portability that is referenced as a backpack of items that will allow consumers to move across companies and states and maintain their same coverage and access to health services. Paul Ryan opened the session indicating that Obamacare is singularly focused on quantity of people insured, while ignoring the staggering costs in the system that Obamacare caused that are, in his words, causing the act to collapse under its own weight. Not to mention the tremendous loss of individual freedom and choice that resulted from centralized decision making and mounds of mandates arising out of D.C. Allowed to blossom, these are salient points that I believe will resonate with a public that has been remarkably skeptical and loathing of Obamacare. The marketing pitch is clear – consumers, take back your choice and freedom to choose the health plans that are right for you and not dictated by a government bureaucrat. Perhaps it is more appropriate to say take it back from thousands of bureaucrats, as one Congressman indicates in the video, there are fully 159 agencies and commissions currently involved in interpreting and implementing the dictates of Obamacare.  Several congressmen, including Budget Committee Chairman Tom Price (R-GA), Education and the Workforce Committee Chairman John Kline (R-MN), Energy & Commerce Committee Chairman Fred Upton (R-MI), and Ways & Means Committee Chairman Kevin Brady (R-TX) took turns articulating the proposal once Ryan got off the dais. Below, I have summarized the important components of the proposal, ranked in order of my opinion on which are the most important to least important.

  • Extending the health insurance tax break to individuals that businesses currently receive, and capping the amount that businesses can receive tax breaks. This concept will sever the link that causes Americans to be solely dependent on their employer for health insurance and promotes portability and accessibility of insurance. Hopefully, it results in more people taking the initiative to get insurance on their own and subsequently bargaining for higher direct compensation from their employers. The capping of tax breaks for businesses is intended to serve as a cost inflation and “over-insurance” containment provisions. Coupled with the ending of specific coverage mandates, also part of the proposal, this could go a long way towards incenting people to get more affordable coverage that makes sense for their life situation and promote innovative models such as high deductible plans, insurance coupled with wellness programs that promote actual health and wellness, and insurance that covers catastrophes only complemented with health savings accounts. These forces could make a major dent in insurance cost inflation and concomitantly overall health cost inflation.
  • Free up insurance purchasing across state lines – this simple and sensible act will drive up competition and will do much more to drive consumer choice and put downward pressure on prices than the continually failing exchanges and insurance co-ops (most of which have declared bankruptcy by now) could ever do, even though that was their ostensible original purpose. The challenge is that it is impossible to drive choice and cost containment when you also force standardized minimum levels of coverage and mandated cross-subsidization of high risk individuals.
  • Promotion of Health Savings Accounts – Provisions of Obamacare amazingly and wrong headedly penalize HSAs through the tax codes. This proposal would wisely end those disincentives and work to actively promote their use. HSAs are popular despite their government created disadvantages.. Furthermore, usage of HSAs promotes pricing transparency and healthcare service usage portability and flexibility.
  • Medicare Reform – The proposal kills off the unpopular and unaccountable Independent Payment Advisory Board and promotes consumer choice through expansion of the popular Medicare Advantage Program.
  • Provide state block grants for Medicaid – this will provide greater flexibility at the state level to craft cost saving programs at the localized level.
  • Provide for ability of Small Business Group Purchasing Associations – the proposal would allow for small businesses to band together for group purchasing of insurance coverage. While I prefer a high degree of an individualized market(which hopefully the tax breaks to consumers will promote), the fact is that most employees now expect and HR departments like to offer health insurance as a hiring incentive. Allowing small businesses to band together and to receive the same tax incentives as larger businesses will promote further consumer access with the nice boon to small business employment. Currently, Obamacare punishes small businesses through a web of complex rules that force them to either cover employees on increasingly expensive and bloated plans or pay a tax penalty per employee that they do not cover.
  • Protection of Pre-Existing conditions coupled with state incentives to create risk pools. While I would submit that a free-market system that promoted insurance for catastrophic conditions only would solve for this without the need for regulatory enforcement, this provision that is currently part of Obamacare is one of the few things that is actually politically popular. Thus, it is important from a politically feasible standpoint to keep it. One way of potentially holding down cross-subsidization amongst premiums and spiking premium costs for the average holder is to also create risk pools for certain conditions as a backstop to insurance coverage. The concept of risk pools is also promoted in the proposal.

These are simply the highlights. I will need to dig into the documented details of the plan to provide additional thoughts, but I certainly appreciate the direction this is heading.

Republicans need to expand their appeal

Election Results

This interactive graph from Nate Silver’s statistics and prediction organization, FiveThirtyEight, projects forward different voting blocs into 2016 and how they could affect the election if they vote in the percentages and turnouts as they did in 2012. The tool also factors in demographic changes since 2012 and is a tremendously powerful and insightful tool.

For someone that considers himself a small-government libertarian/conservative, the demographic trends that continue to favor Democrats is alarming. This has to serve as a clarion call that the xenophobic wing can’t extract that much more blood of the white vote turnip, even if it ultimately proves to be a winning formula in 2016, the victory could prove short-lived and perhaps even pyrrhic if it entrenches a culture that can’t make necessary changes for the long run. Growth within the Latino, Black, and Asian American voting blocs is an imperative for long-term viability. This can only come from sensible policies in immigration reform as well as making the compelling case that limited government coupled with welfare and entitlement reform that focuses on jobs and skills growth, criminal justice reform, and support of small business constitute the most effective forms of public policy and that the alternative heavy hand of large government is antithetical to liberty and ultimately the goal of economic progress for these communities.

Indeed, the Paul Ryan and Tim Scott led Summit on Poverty is a step in the right direction, putting much needed conservative focus on the issue of how to reform entitlements so that they are truly oriented towards helping the destitute. There is undoubtedly tremendous scope in the remit of our government to redirect entitlements away from middle class income redistribution and towards a helping hand and economic and job promoting subsidies to the poor.  Notably absent from Ryan’s summit out of the current crop pf 2016 Republican candidates were Donald Trump and Ted Cruz, who are apparently banking on the ability to win solely on the back of the white base. Good luck with that.

Paul Ryan opposes Ex-Im bank with superb speech

Paul Ryan Opposes Ex-Im: http://feedproxy.google.com/~r/CafeHayek/~3/_6zdUZfQ1pE/paul-ryan-opposes-ex-im.html

Huzzah! Ryan’s statements are brilliant. I can’t believe this is being resurrected. By so called adherents to the free market no less.

Ryan’s speech in full below:

Mr. Speaker, I want to express my strong disapproval for this bill for the Export-Import Bank.

This is a pretty profound debate we are having. It’s about what kind of economy we’re going to have. Are we going to reward good work or good connections?

I think there are plenty other ways to expand opportunity in this country, and corporate welfare is not one of them. The biggest beneficiaries of this bank, two-thirds of their money go to 10 companies. Forty percent goes to one company.

And this bank does cost money—just ask the Congressional Budget Office when they use real scorekeeping. Remember Fannie Mae? Remember their accounting? Remember when they told us they weren’t going to cost any money—until they did? And it cost us billions.

The other excuse that I just don’t buy is, ‘other countries do this, so should we.’ We shouldn’t acquire other countries’ bad habits. We should be leading by example. We should be exporting democratic capitalism, not crony capitalism.

There is this criticism by those against the free enterprise system who compare it to competition, like a sport. Where the critics of free enterprise say there’s a winner and there’s a loser, just like a boxing match or a football game. Well, that’s true when it comes to crony capitalism. That is the case when it comes to corporate welfare. Because in that case, the winner is the person with connections. It’s the company with power. It’s the company with clout.

The loser is the person who is out there working hard, playing by the rules, not knowing anybody, not going to Washington, hoping and thinking that the merit of their idea and the quality of their work is what will win the day. That’s what is rewarded under a free enterprise system.

Free enterprise is more about collaboration. It’s more about transactions of mutual benefit where everybody benefits, and the rising tide lifts all boats. Equality for all. Equal opportunity. That’s free enterprise. That’s small d, democratic capitalism. This thing is crony capitalism, and I urge it be rejected.

The Twilight Zone World in Which it is Difficult to Elevate Paul Ryan as House Speaker

http://www.cnn.com/2015/10/20/politics/paul-ryan-house-speaker/

What kind of Twilight Zone political world are we living in which Paul Ryan, an accomplished, respected, wonkish, intelligent, and virtuous man is not deemed worthy to serve as Speaker of the House by a small but vocal and obstructive portion of the Republican wing of Congress? What erratic things must be going on where an ideologically sound man such as Ryan reluctantly steps into the ring and has to set out conditions for serving (conditions that I view as entirely within reason and to ensure he is not being set up to fail by a recalcitrant and needlessly obstructive backbench) for one of the most powerful and traditionally respected positions in the American government? The Speaker of the House is third in line to become President, and nobody really wants the job. That should tell us something about the current state of the dysfunction in the party that I think many of us actually expect to lead under the divided government that Americans seem fond of.

In case it is not clear, I believe Ryan would make a wonderful Speaker of the House. I thought he would have made a great Vice President, and it would have been a good thing to put him on a path to becoming a Presidential candidate. He is a fine statesmen with the type of high-minded character we should want in individual in higher office, whether of the right or left bent.

Alas, in an era of protected and gerrymandered uncompetitive districts coupled with a restive population as a result of years of economic malaise and administrative mismanagement (in both the executive and legislative branches), it seems that what a substantial portion of the population is reduced to clamoring for their representative to be “a fighter,” whatever the term actually means and even if it ends in nihilistic demagoguery and ignominious defeat that results in nothing getting truly accomplished. What used to be valued traits in possessing the ability to engage in thoughtful policy crafting coupled with the ability to compromise and find ways to move a conservative agenda forward, even if in increments, has given way to fighting for fighting sake, even if the end result of failure is assured.

The Freedom Caucus group of 40 or so representatives railing against John Boehner, Kevin McCarthy, and now Paul Ryan for not taking enough bold stances throughout the duration of the Obama administration is a fight about style and tactics and not a fight over policy substance. It must be clear that most on the right side of the political divide agree on most of the philosophical principles. All of these aforementioned men have proven careers promulgating and advancing conservative policy. I imagine their scorecards of actually getting beneficial laws passed eclipse by a wide margin their detractors in the Freedom Caucus, whose relative youth and espousal of a forceful and vocal form of obstruction render them largely ineffective parvenus given the Democratic control over the executive branch.

Against this backdrop is the immutable force of the U.S. Constitution and the intent of the framers of that venerable document as laid out extensively by John Madison, Alexander Hamilton, and John Jay in The Federalist Papers. Advancing legislation and decisions slowly, incrementally and based on consensus was precisely what the Founders had in mind when crafting the separation of powers across branches of government as well as the separation of power fostered in a federalist system of state and central government. Thus, the critique of the Freedom Caucus of the  incremental and compromising approach is ultimately a critique leveled and squarely aimed at James Madison and the other framers of our Constitution. Alexis de Tocqueville, in Democracy in America, would describe the potential of the majority to ride roughshod over the rights of minorities (defined in this case as those who did not currently hold the levers of government) as the “tyranny of the majority.” As a bulwark against this fear of coercive power being enacted by an entrenched and tyrannical majority, the Founders deliberately constructed a government system in which advancing legislation quickly by design is in fact difficult to do. The guiding implicit principle behind this is that the minority opinions of today can quickly become the majority opinions of tomorrow and hence the framers of the constitution deliberately constructed a system such that the potential whims of the current day would not be legislated until they were a proven and sustainable desire of the people. This may harm us in the short-run as individuals and as interest groups when it comes to getting things done efficiently, but it also protects the rule of law and from poor decisions being made hastily for the sake of expediency and for what is currently popular at the time. The Founders greatly favored slow change, overwhelming support for ideas, and compromise. As a result, the founders expected statesmen to engage in the proposing of ideas and to win over the population through the strength of an idea and the strength of an argument rather than a war using arcane legislative procedural processes that confound and anger the public at large.

The final point I would make is that if the Freedom Caucus can’t put forward a viable candidate on their own (which they can’t) then it is time to support a leader that they philosophically agree with on substance, and start spending their time making the case to the American public why they need to elect a Republican for President in order to truly enact the reform that they want to enact rather than wasting their energies on internecine fratricide. To adapt an old military adage I am rather fond of: either lead, follow or get out of the way.