Round Up

Summer 2019 Insider

Round Up

Obamacare vs. Health Care, Welfare 
and Responsibility, Sunsetting Regulations, Capitalism Is Pro-Diversity

Aug 22, 2019 13 min read

Obamacare vs. Health Care
designer491/Getty Images

Protecting Obamacare is not the same as protecting health care. John Merline writes:

[O]nce Obamacare went into effect and premiums in the individual insurance market spiraled upward—doubling from 2013 to 2017, and up another 27 percent in 2018—the short-term insurance market exploded. It rocketed up by 121 percent in just Obamacare’s first two years. 

Rather than recognize this for what it was—a clear sign that Obamacare was failing—the Obama administration tried to kill this market off by limiting short plans to just three months. The rule mandating this didn’t go into effect until late 2016, and [President] Trump reversed it the first chance he got. 

Every study that’s looked into it concluded that Trump’s reversal would expand insurance coverage, with some estimates as high as 4 million. Unfortunately, several Democratic states reimposed the Obama limits. And those in the House want to do so nationwide.

The nonpartisan Congressional Budget Office says that if those House Democrats got their way, 1.5 million more people would be forced off plans they like.

No matter. Democrats say this is “junk insurance” that nobody should be buying.

But that, too, is a lie.

A new study from the Manhattan Institute found that short-term plans often provided better coverage at lower cost than comparable Obamacare plans.

In Fulton County, Ga., for example, an Obamacare silver plan will cost a 30-year-old non-smoker $467 a month, for a plan with $2,000+ deductible, and an almost $8,000 out-of-pocket maximum.

A comparable short-term plan—with a slightly higher deductible but a lower out-of-pocket maximum—has premiums of just $250 a month. That’s 46 percent cheaper.

The study also found that while most if not all Obamacare plans available in any given market are HMO plans—which provide no coverage for providers outside the plans’ narrow networks—many of the short-term plans are PPOs, which typically have much broader provider lists.

The study’s author, Chris Pope, goes on to say that short-term plans “cover a significantly larger share of medical costs than ACA exchange plans for the same premiums.”

What’s “junk” about that?

When The Washington Post looked into short-term plans, it came to a similar conclusion, finding them “more consumer-friendly and less like ‘junk’ insurance than Democrats originally charge.”

More importantly, the people buying these short-term plans don’t consider them “junk.” In fact, satisfaction rates are at 91 percent, according to eHealth, which is significantly higher than the 70 percent satisfaction rate among Obamacare enrollees (most of whom are getting generous premium subsidies). [John Merline, “Democrats Are Pro-Choice, Except When It Comes to Health Care,” Issues & Insights, May 22] 

The welfare state erodes responsibility. Nima Sanandaji writes:

The World Value Survey gives strong support for the claim that norms in the Nordic countries have eroded. In the 1981–84 survey, for example, 82 percent of Swedes agreed with the statement “Claiming government benefits to which you are not entitled is never justifiable.” In the 2010–14 wave, merely 55 percent held the same view. The pattern is found in the other Nordic nations as well. This fall in responsibility seems to be stabilizing lately, following tax cuts and significant reductions in welfare-state generosity.

A number of attitude studies in Sweden conclude that a significant portion of the population has come to consider it acceptable to live on sickness benefits even if you aren’t sick. A survey from 2002, for example, showed that 60 percent of Swedes believed that it was acceptable to claim sick leave when you were not sick. Four years later, a center-right government was elected on the promise to cut the welfare benefits and taxes significantly. In fact, Swedish governments on both the right and the left have reduced the generosity of the welfare system. Additionally, gatekeeping functions have been introduced, mainly for sick-leave claims, to limit over-utilization and outright cheating. [Nima Sanandaji, “The Swedish Lesson: Welfare States Create Moral Hazard,” National Review, May 17]

Idaho puts sunset rules in action. James Broughel writes:

Something rather remarkable just happened in Idaho. The state legislature opted to—in essence—repeal the entire state regulatory code. The cause may have been dysfunction across legislative chambers, but the result is serendipitous. A new governor is presented with an unprecedented opportunity to repeal an outdated and burdensome regulatory code and replace it with a more streamlined and sensible set of rules. Other states should be paying close attention.

The situation came about due to the somewhat unconventional nature of Idaho’s regulatory process. Each year, the state’s entire existing body of regulations expires unless reauthorized for an additional year by the legislature. In most years, reauthorization happens smoothly, but not this year.

Instead, the legislature wrapped up an acrimonious session in April without passing a rule-reauthorization bill. As a result, come July 1, some 8,200 pages of regulations containing 736 chapters of state rules will expire. Any rules the governor opts to keep will have to be implemented as emergency regulations, and the legislature will consider them anew when it returns next January.

Gov. Brad Little, sworn into office in January, already had a nascent red tape cutting effort underway, but the impending regulatory cliff creates some new dynamics. Previously, each rule the governor wanted cut would have had to be justified as a new rulemaking action; now, every regulation that agencies want to keep has to be justified. The burden of proof has switched. [...]

The Idaho case also highlights the power of sunset provisions—or automatic expiration dates built into laws or regulations. In the past, academic research has found that sunset provisions are sometimes ineffective. Legislatures and agencies often readopt regulations without much thought. To work well, sunsets may need to be structured such that large swaths of rules expire simultaneously, with reauthorization responsibilities falling to the legislature rather than regulators. Sunsets are perhaps most useful when rules are allowed to lapse and then forced back through the rulemaking process all over again. That way they can be subjected to public scrutiny, cost-benefit analysis, and perhaps even court challenges. [James Broughel, “Idaho Repeals Its Regulatory Code,” Mercatus Center, May 9]

Government-run health care gives you the right to be on a waiting list. Tim Evans writes:

Against the popular view that the [National Health Service] provides free and unlimited health care, history demonstrates that the supply of NHS services has always been limited in significant ways. Experience shows that people have never had an absolute right to free and equal treatment on demand.

What they have had instead is an unlimited right of access to a waiting list from which (with a few exceptions) they will not be excluded. This right of access is not equivalent to a right to treatment, as any notional right to treatment has little value in practice if it is available only at the end of a two-year waiting time. The right to health care is unlimited in the long term but is strictly limited in the short term when health care is actually required, at the very least, to relieve pain or discomfort.

Today, many hundreds of thousands of people are on NHS waiting lists, and countless tens of thousands are trying to get on a list. After decades of reforms and extra tens of billions of pounds invested, out of 4 million patients admitted to NHS hospitals for routine treatment in 2007,
more than half still
had to wait at home more than 18 weeks before receiving that treatment.

While government ministers frequently shy away from talking about the parlous realities of waiting times, figures indicate that 12 percent—almost half a million people—waited more than a year for their treatment and care during 2006 and 2007. [...]

While the number of people on NHS waiting lists dropped between 2008 and 2011, not least because greater collaboration with private hospitals enabled greater responsiveness, the waiting list for NHS treatment has grown since 2012. In summer 2018, the figure stood at 4.12 million people on waiting lists, up 3 percent from the year before, and up 59 percent from 2.42 million at the end of March 2010. According to research by the House of Commons Library, “Once estimates for missing data are included the waiting list is currently thought to be at 4.31 million—up 7 percent year-on-year and 42 percent over five years.” [Tim Evans, “London Calling: Don’t Commit to Nationalized Health Care,” The Heritage Foundation, May 3]

The Trump trade policy on China hasn’t figured out enforcement. Derek Scissors writes:

[E]nforcing acceptable Chinese behavior on intellectual property requires far stronger action than the United States has ever taken.

China is highly indebted. It will rapidly age over the next generation. Its natural resources are depleted. Its economy thus increasingly relies on innovation, as the Communist Party recognizes.

The catch is the party requires state-owned (near-)monopolies, in banking, oil, telecom, and many other sectors. Sheltered from competition, state enterprises have little reason to innovate. To spur growth in these areas, China leaves itself no choice but acquire foreign technology, by hook or crook.

2019_06_0218_Summer2019Insider_2_Roundup_B.jpgDavid Becker/getty images

America can’t change this with enforcement offices or constant meetings. It requires retaliation against offenders severe enough to put them out of business, in order to deter others. In 27 months, the Trump administration has taken major (public) IP action against exactly one Chinese firm. We’ve failed to act on our own, and no deal with Beijing can make that more likely. [Derek Scissors, “A Better Approach to China Trade,” American Enterprise Institute, April 17]

Bad data are boosting Medicare for All proposal. The United States spends a lot more per person on health care than other economically advanced countries, yet has lower life expectancy and higher infant mortality rates than many of those countries. The problem, says Sen. Bernie Sanders and others, is that we don’t have Medicare for All. But, writes Robert Moffit, non-medical factors and bad statistics, are the real sources of these variations in outcomes:

In a 2017 study for the Journal of the American Medical Association, researchers found that 74 percent of American variation in life expectancy—indeed, the largest source of variation—was attributable to behavioral and metabolic risk factors.

The recent annual declines in American life expectancy, based on data from the Centers for Disease Control and Prevention, were largely attributable to increased drug overdoses (opioids) and suicides.  

Then, there is the special category of infant mortality. “Our infant mortality rate, kids and babies who are dying, is the highest,” says [Rep. Pramilla] Jayapal [D-Wash.].

The truth is more complicated. In their 2018 study, the JAMA researchers report that American infant mortality is indeed higher than in 10 other high-income countries. Notably, however, the researchers also found that when adjusting for low birth weights, the U.S. statistical ranking improves significantly.

They write: “When adjusting neonatal mortality to exclude deaths of infants born weighing less than 1,000g [about 2.2 pounds], the United States ranked fifth relative to the other countries, with 1.61 deaths per 1,000 live births, compared with a mean of 1.70 for all 11 countries.”

Comparisons of infant mortality between the United States and other countries are often flawed because definitions of terms and measurements are different.

As Sally Pipes, president of the Pacific Research Institute, notes, “The United States … counts every live birth in its infant-mortality statistics. But France only includes babies born after 22 weeks of gestation. In Poland, a baby has to weigh more than 1 pound, 2 ounces to count as a live birth.

“The World Health Organization notes that it is common practice in several countries, including Belgium, France, and Spain to ‘register as live births only those infants who survived for a specified period beyond birth.” 

Note also that the United States has high rates of pre-term births. American medical professionals, including those participating in Medicaid, will thus intervene in complex and difficult cases and literally spend hundreds of thousands of dollars to save the life of a premature infant.

Medical professionals in other countries do not necessarily make the same moral and financial commitments. [Robert Moffit, “Ignore Medicare for All Advocates’ Claims on Life Expectancy in US. Here Are the Facts.” The Daily Signal, April 18]

The movement that demands diversity thinks everybody should want the same things. Sen. Elizabeth Warren’s call to break up Amazon is a call to reduce consumer choice, writes James Hanley:

Amazon’s true value to consumers is not low cost and free shipping but the great variety of goods it makes available to people, both directly and from third-party sellers. [...]

The need for variety to meet human needs is rediscovered every time there’s value in discovering it. For example, in WWII, the U.S. Army discovered that there were no average pilots when it tried to design a standard cockpit to decrease pilot-error. Not even one of the thousands of pilots they measured was average on the 10 most important measures, so seats and control mechanisms had to be made adjustable to the variation in pilots’ torso, leg, and arm sizes. They learned something unwary clothing shoppers have learned time and again: One size fits all doesn’t.

What this example demonstrates is that the market does not provide splendid variety as a wasteful frivolity. Even in the absence of a profit motive, variety is necessary to accommodate human differences. [...]

Some will argue that there’s a difference between need and want, that shoes and aircraft safety are different than deodorant. Oddly, though, they never push this argument to its logical end and condemn variety in music. But as economist Art Carden recently wrote about the death of Keith Flint, the frontman for the British electronic band The Prodigy, “[e]conomic growth [...] means much more than material production.” How many styles of music do we need? Materially, none. Immaterially, as many as all those stressed out American workers want to help themselves relax after a hard day at work.

2019_06_0218_Summer2019Insider_2_Roundup_C.jpgSmith Collection/Gado/getty images

Amazon has made its fortune on offering the great variety of goods that the varying millions of individual purchasers want. Warren’s call for breaking up Amazon, like Sanders’s complaint about deodorants and sneakers, although nominally aimed at the corporation, effectively targets individuals for their decisions to choose goods and services that they decide best meet their personal needs and desires. [James E. Hanley, “Save Amazon from Elizabeth Warren,” Foundation for Economic Education, April 1]

After you bribe your way into school, then what? Thomas Lindsey writes that the admissions scandal “has depended for its success on the ‘other’ college scandal: rampant grade inflation”:

As one writer wondered, “Wouldn’t admission under false pretenses result in the kids flunking out? Wouldn’t their lack of merit be revealed by the simple pressure of the schooling?”

2019_06_0218_Summer2019Insider_2_Roundup_D.jpgActress Lori Loughlin arrives at the John Joseph Moakley U.S. Courthouse in Boston on April 3, 2019. Loughlin and her husband are among dozens of parents facing charges in a college admissions cheating scandal. Pat Greenhouse/The Boston Globe via Getty Images

In a better world, the answer to both of these questions would be “Yes.” But we live in the world higher education has created, where the “pressure of schooling” is virtually no pressure at all.

Consider these facts: A 50-plus-year nationwide study of the history of college grading finds that, in the early 1960s, an A grade was awarded in colleges nationwide 15 percent of the time. But today, an A is the most common grade given in college; the percentage of A grades has tripled, to 45 percent nationwide. Seventy-five percent of all grades awarded now are either Aes or Bs. The National Association of Colleges and Employers reported in 2013 that “66 percent of employers screen candidates by grade point average (GPA).”

As I recounted here, employers have known about grade inflation for years, which is why their most common complaint to me is that college transcripts have become less and less meaningful. After all, virtually all new college graduates sport nothing but Aes or Bs on their transcripts. For the same reason, grade inflation also hinders the ability of graduate school admissions boards to differentiate meaningfully among student transcripts.

So, the answer to the question, “How did these unqualified students manage to graduate from these elite institutions?” is straightforward: When an A is the most common grade given in college, how hard is it to graduate? [Tom Lindsay, “The ‘Other’ College Scandal: Grade Inflation Has Turned Transcripts into Monopoly Money,” Forbes, March 30]

Europe doesn’t have wealth taxes anymore. Such taxes, European policymakers have learned, raise little money but cost a lot in compliance, writes Chris Edwards: 

More than a dozen European countries used to have wealth taxes, but nearly all of these countries repealed them, including Austria, Denmark, Finland, France, Germany, Iceland, Ireland, Italy, the Netherlands, Luxembourg, and Sweden. Wealth taxes survive only in Norway, Spain, and Switzerland.

Before repeal, European wealth taxes—with a variety of rates and bases—tended to raise only about 0.2 percent of gross domestic product in revenue, based on Organization for Economic Cooperation and Development data. That is only 1/40th as much as the U.S. federal income tax raises.

Yet for little revenue, wealth taxes are difficult to administer and enforce. They may require taxpayers to report the values of financial securities, homes, furniture, artwork, jewelry, antiques, vehicles, boats, pension rights, family businesses, farm assets, land, intellectual property, and much else. But owners do not know the market values of many assets, and values change over time, so costly wealth-tax compliance would only make accountants wealthy.

And what about wealth held abroad? There is no way the Internal Revenue Service would be able to track down and value everything U.S. residents owned on a global basis.

In the 1970s, the British Labour government pushed for a national wealth tax and failed. The minister in charge, Denis Healey, said in his memoirs, “We had committed ourselves to a Wealth Tax; but in five years I found it impossible to draft one which would yield enough revenue to be worth the administrative cost and political hassle. [Chris Edwards, “Why Europe Axed Its Wealth Taxes,” Cato Institute, March 27]   

ROUND UP highlights key work produced by conservative and classical liberal think tanks. Submit ideas at insider@heritage.org