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Will Obamacare Collapse?

I wrote this comment to Dan Mitchell’s post, “Question of the Week: Will Obamacare Collapse?”

I think the Affordable Care Act will collapse because our government bureaucracy has finally found a law so complex and convoluted that they cannot translate it into workable government programs. Although I would enjoy a dramatic "Release the Kraken" collapse of the Affordable Care Act I am afraid we are destined to endure a "Erma Bombeck" type collapse. One day we will look at our newly planted garden and realize that the green stuff growing out there is just weeds and that may be we should restrict our future experiments in gardening to the vegetable section of the grocery store. The Affordable Care Act is just a bunch of weeds in our health care garden and no amount of weeding by our government bureaucracy is going to make it work better than our existing health care system. Ultimately the law fell prey to the main instigators of economic entropy, Murphy’s law and the Peter Principle. So let me count the ways the Affordable Care Act has failed us.

1. A remark by Juan Williams reminded me that there is an easy alternative to the Affordable Care Act. As a healthy person who purchases their health insurance through the individual market, I was better off with the health insurance I got before the Affordable Care Act. I can safely say that I would be much better off if the Affordable Care Act quietly disappeared. So I am quietly rooting for Team Murphy to triumph.

2. Although many people complain about the Individual Mandate there are very few people who can explain how this arbitrary method of cost shifting is better than the existing system. The problem is how does society pay for the health care of those who are uninsured and chronically ill. The Affordable Care Act solution is spread these costs over the smallest insurance group market, the individual health insurance market. In comparison the existing system is far more equitable since it spreads the costs over a larger population. When we realize that we are sacrificing one of our freedoms so that we can implement a less equitable cost sharing method, we come to the inevitable conclusion that the person who crafted this part of the law was in over their head. Way to go Peter!

3. The big question in 2014 is what will a bronze level plan cost? Will it cost closer to the individual market rate of $5,000 for a family or the large group rate of $15,000? There are several unions having a panic attack right now because they think it will be closer to $5,000. Businesses look at this price as a golden opportunity to dump their employees into the exchanges and get out of the health insurance business. I realize the long term goal for businesses was to get out of the health insurance business but I do not think the unions or businesses expected it to happen this quickly. This is as close to a "Release the Kraken" moment we are going to get. Chalk this one up to Team Murphy!

4. The employer mandate has been delayed for at least one year and Ezra Klein is arguing that the employer mandate shouldn’t be delayed, it should be repealed. If there is no employer mandate, the Affordable Care Act becomes an even a bigger mess to implement. One of the reasons some businesses were lobbying for Medicaid expansion was to reduce the size of their employer mandate penalty. I suspect they are no longer interested in Medicaid expansion. Good luck with that Medicaid expansion. Chalk this one up to Team Murphy!

5. So let’s not forget this Heritage Foundation list.

1. The CLASS Act: ABANDONED, THEN REPEALED

One Democrat famously called this new long-term care entitlement “a Ponzi scheme of the first order, the kind of thing that Bernie Madoff would have been proud of”””and so it proved. In the fall of 2011, the Department of Health and Human Services (HHS) admitted CLASS could not be implemented in a fiscally sound manner””and Congress eventually repealed the program outright.

2. Exchanges: MISSED DEADLINES

Most states resisted Obamacare’s call to create insurance exchanges, choosing to let Washington create a federally run exchange instead. However, a Government Accountability Office report released last month noted that “critical” activities to create a federal exchange have not been completed, and the missed deadlines “suggest a potential for challenges going forward.”

3. HHS mandate: DELAYED; UNDER LEGAL CHALLENGE

Last year, the Administration announced a partial delay for Obamacare’s anti-conscience mandate. However, many employers have filed legal actions against the mandate, which forces them to fund products they find morally objectionable or pay massive fines.

>>> Get the latest on Hobby Lobby’s case against the HHS mandate

4. Small business plan choice: DELAYED

The Administration announced in April that workers will not be able to choose plans from different health insurers in the small business exchanges next year””a delay that liberal blogger Joe Klein called “a really bad sign” of “Obamacare incompetence.”

5. Child-only plans: UNINTENDED CONSEQUENCES

A drafting error in Obamacare has actually led to less access to care for children with pre-existing conditions. A 2011 report found that in 17 states, insurers are no longer selling child-only health insurance plans, because they fear that individuals will apply for coverage only after being diagnosed with a costly illness.

6. Basic health plan: DELAYED

This government-run plan for states, created as part of Obamacare, has also been delayed, prompting one Democrat to criticize the Administration for failing to “live up” to the law and implement it as written.

7. High-risk pools: UNDERPERFORMING; FUNDING LOW

This program for individuals with pre-existing conditions faced higher costs and lower enrollment than advertised. Though it was originally projected to cover up to 700,000 individuals, only about 110,000 have enrolled””yet the Administration had to halt new enrollment and take other radical measures to prevent the $5 billion program from running out of money.

8. Early retiree reinsurance: BROKE

The $5 billion in funding for this program was intended to last until 2014””but the program’s money ran out in 2011, two years ahead of schedule.

9. Waivers: UNINTENDED CONSEQUENCES

After the law passed, HHS discovered that some of its new mandates would raise costs so much that employers would drop coverage rather than face skyrocketing premiums. Instead, the Administration announced a series of temporary waivers””and more than half the recipients of those waivers were members of union health insurance plans.

10. Co-ops: DEFUNDED

Congress blocked additional funding to this Obamacare program in January, and with good reason: In one case, a new health insurance co-op was called “fatally flawed” by Vermont’s state insurance commissioner.

11. “Employee free choice”: REPEALED

This provision, which would have allowed certain workers to use contributions from their employers to buy exchange health plans, was repealed in April 2011, as businesses considered it too complex and unworkable.

12. Medicaid expansion: REJECTED BY MANY STATES

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On what do health economists agree?

Austin Frakt wrote a post, “On what do health economists agree?”, that got me thinking about what most people agree about the Affordable Care Act. John Goodman beat me to the punch with his post, “I Edit Austin Frakt’s List”, but it still spoke generically about health care reform and not specifically about the Affordable Care Act. Health care reform is nice but the Affordable Care Act is law. So here’s my take on the provisions of the Affordable Care Act that both sides agree upon.

  1. The employer mandate is a bad policy that was poorly implemented. Are there any conservatives arguing with Ezra Klein’s claim that the employer mandate shouldn’t be delayed, it should be repealed?
  2. The individual mandate is a bad policy that was poorly implemented. The individual mandate is bad on so many levels it is hard to find someone willing to defend any part of it. Even its supporters are skeptical that it will work. So why do we continue with the charade? The success of the individual mandate hinges on convincing young, healthy people to buy health insurance they did not want when it cost half as much. If that wasn’t bad enough the IRS was chosen to enforce the law. This is a lethal political concoction. It is no surprise that poll after poll says the people hate the Individual Mandate. Undoubtedly the Affordable Care Act supporters would have a much easier time drumming up support for the rest of the law if the individual mandate would quietly disappear.
  3. The cost for a bronze level health insurance plan is a lot closer the eHealthinsurance.com’s price than it is the price paid by large group plans. This revelation occurred when California posted the proposed prices for health insurance prices available on its health exchange. Kaiser Health News promptly changed their insurance cost estimator and the Roofer’s union had a panic attack. If an employer was paying  $15,022 for a family policy that your employee can get for $5,000 on the health exchange, what do you think an employer is likely to do? The Roofers have seen the future and they don’t like it. For states with high health insurance costs like Massachusetts, you have a problem!
  4. Most people’s health insurance plans were better before the Affordable Care Act. Today I  heard Juan Williams complain on a Sunday morning talk show that Republicans did not have an alternative to the Affordable Care Act. Since most people are healthy and have health insurance, the Affordable Care Act has done little for them except increased their costs and anxiety. Sorry, Juan, my old plan was just fine and I would like to keep it just the way it was. The same goes for the Roofer’s union. The Affordable Care Act is merely a shell game with the health care funds for the people who are uninsured and chronically sick. All of this effort for a minimal decrease in the number of people without health insurance. Since most people are healthy they do not see a reform. Their only contact with health insurance reform is through how much they are paying for insurance and it continues to go up at the same pace. Maybe we should start treating the chronically and critically sick who do not have insurance as a health care spending problem rather than a problem that can be solved with more health insurance revenue.
  5. Businesses want out of the health insurance business. When I started working in 1976 health insurance was an affordable employee benefit. For the employee it was so cheap you did not think about it. For the employer it was so cheap and simple to manage, they did not think about it either. In forty years it has gotten severely out of control. It has gotten so expensive that it poses a real risk to the business. It is not surprising that when small businesses feel threatened with health insurance risk they are resorting to their dropping health insurance plans or going to defined contribution plans.
  6. All health care is local health care. The optimum health care plan involves your local doctor and hospital. How a federal plan, the Affordable Care Act, became the best option to accomplish this local health care goal confuses me. Like federal education programs it does seem to be the wrong tool for a local problem. There are alternatives. Here is an article by Sarah Kliff, Is this the end of health insurers?, describing a growing trend of health insurance being offered by local hospitals.
  7. Health care cost accounting matters. It is hard to see an improvement in health care occurring without a tremendous improvement in cost accounting. Stephen pointed out the problem in his article, “ Bitter Pill: Why Medical Bills Are Killing Us”.
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If Delaying The Employer Mandate Is Such A Good Idea, Can Delaying The Individual Mandate Be Far Behind?

I was surprised the Obama Administration decided to delay the “Employer Mandate”. I understand the “technical” reasons for the delay but my gut feeling is that they delayed it because this policy had a very limited effect on health care and was quite unpopular with businesses. It was all pain and no gain. That is a bad combination in any year but especially during an election year.

So if we follow the Administration’s reasoning to avoid unnecessary pain in an election year, it would be logical for them to delay enforcing the individual mandate, too. It would make sense for the Administration to wait for the IRS scandals to settle down before they ask the IRS to enforce an unpopular program of questionable benefit. It is pretty amazing that “over the next decade, the nonpartisan Congressional Budget Office estimates the IRS will need up to $10 billion more in funding as a result.” My inner engineer says that we are spending $10 billion on something we got for free before the Affordable Care Act.

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This Is What Richard Feynman Would Probably Say About Climate Change

In honor of President Obama’s speech on climate change I found this quote by Richard P. Feynman.

It doesn’t matter how beautiful your theory is, it doesn’t matter how smart you are. If it doesn’t agree with experiment, it’s wrong.

 

Read more at http://www.brainyquote.com/quotes/quotes/r/richardpf160383.html#rIdatdxb1DQUYzz4.99

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Does the US Government View Us at the Enemy?

I saw this on the Campaign for Liberty blog. It reminded of the legal difficulties posed by a treason charge that I pointed out in my post, Pentagon Papers Revisited. As I said in that post the Justice department could be sensing a little déjà vu with their treason case against Mr. Snowden. Here is the statement posted on Dr. Paul’s Facebook page:

My understanding is that espionage means giving secret or classified information to the enemy. Since Snowden shared information with the American people, his indictment for espionage could reveal (or confirm) that the US Government views you and me as the enemy.

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How Does The Economy Grow with Immigration Reform?

I just don’t get this dynamic scoring that Cato is so enthusiastic about. I have a particular problem understanding how it will grow the economy. Back in 2006 before the immigration system got really screwed up we hired a guest worker, Pedro, from Mexico. Since I was somewhat familiar with the tradeoff of illegal immigrants to guest workers for small businesses, I went through the calculations again. We hired Pedro to replace two and a half teenage girls on our payroll. From an efficiency standpoint this worked out for our farm since Pedro could easily do the work the girls were doing. Since he wanted his wages to competitive with the prevailing wages of local illegal immigrants, we raised his salary to cover his portion of the taxes. Using today’s numbers the total tax burden with unemployment and workers compensation insurance would amount to $3,213 or additional 23% burden over an illegal immigrant. So if we assume that the 8.6+ million immigrants are not paying payroll taxes now, when we convert them into quasi-guest workers the employees and employers will transfer some of their spending power to the country in the form of payroll taxes. Whether the extra burden is paid by the employer or the employee, consumer spending is going down. The only winner is the government. The logical conclusion is that if we reduce consumer spending and increase taxes, it will grow the economy. Huh!? This dynamic scoring idea is more political than pragmatic. It sure sounds like they borrowed the idea from Obamacare and global warming.

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Is the USA Looking for a Few Good Men in the NSA?

Every time I hear a official explain the NSA surveillance program I am reminded of the climatic scene in the movie, “A Few Good Men”. In this scene Kaffee is pressing Colonel Jessup as to whether he ordered his men to conduct an illegal training exercise, a “Code Red”, that resulted in the death of a marine, Santiago.

Col. Jessep: I’ll answer the question!

[to Kaffee]

Col. Jessep: You want answers?

Kaffee: I think I’m entitled to.

Col. Jessep: *You want answers?*

Kaffee: *I want the truth!*

Col. Jessep: *You can’t handle the truth!*

[pauses]

Col. Jessep: Son, we live in a world that has walls, and those walls have to be guarded by men with guns. Who’s gonna do it? You? You, Lt. Weinburg? I have a greater responsibility than you could possibly fathom. You weep for Santiago, and you curse the Marines. You have that luxury. You have the luxury of not knowing what I know. That Santiago’s death, while tragic, probably saved lives. And my existence, while grotesque and incomprehensible to you, saves lives. You don’t want the truth because deep down in places you don’t talk about at parties, you want me on that wall, you need me on that wall. We use words like honor, code, loyalty. We use these words as the backbone of a life spent defending something. You use them as a punchline. I have neither the time nor the inclination to explain myself to a man who rises and sleeps under the blanket of the very freedom that I provide, and then questions the manner in which I provide it. I would rather you just said thank you, and went on your way, Otherwise, I suggest you pick up a weapon, and stand a post. Either way, I don’t give a damn what you think you are entitled to.

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Why Does the NSA Use Contractors?

The obvious but unstated answer by most pundits is that you can fire contractors. As our experience with the IRS and State Department has shown us, firing government employees is just not done. Most of the time they are put on paid leave. If the government employee is particularly bad, you promote them to a position where they can do less harm. Hopefully they will get bored or disenchanted and seek employment elsewhere.

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Did the IRS Confuse the Tea Party with the NAACP?

Recently I did some research and figured out the NAACP is probably the best example of political activism by a 501(c)3/501(c)4 organization. While the national organization is a 501(c)3 organization, the local affiliates are 501(c)4 organizations. The national organization has strict requirements on its political activism so it is up to the local affiliates to promote voting in the black communities. When you use the 2012 presidential election voting demographics to compare the organizational effectiveness, the Associated Press concluded in its study of the 2012 election that for the first time black voter turnout rate exceeded the white turnout rate. When you look at this result the NAACP can claim that they were more successful than the conservative organizations at getting their constituency out to vote. They also successfully fought off the IRS investigations into their tax exempt status in 2004. Their “Election Year DOs and DON’Ts” document is an example of excellent, proactive instructions to their affiliates that should keep the organization safe from IRS scrutiny. In the case of political activism by a non-profit, the NAACP is arguably the best in the class. They successfully avoided extra IRS scrutiny while showing a measurable success on the voter turnout issue.  From this point of view it would not be surprising that “Tea Party” and other organizations interested in increasing the vote within their constituency would copy the organizational structure and some of the tactics used by the NACCP to improve their organizational effectiveness while staying compliant with IRS regulations. Although students of organizational effectiveness might say some non-profit organizations are “NAACP-like”, the average man or woman would never use “NAACP-like” to describe the “Tea Party” organizations. It is equally unlikely they would use “Tea Party” as shorthand  to describe the NAACP. Are we to believe that the IRS personnel commonly used the term “Tea Party” to describe the political activity by the NAACP? According to Ms. Paz that is exactly what the IRS did. If her statement is true, the IRS is naïve and probably incompetent. If the IRS was using a shorthand for politically active tax exempt organizations then the term “NAACP-like” would be a more logical shorthand term. It has more syllables but it is the organization all politically active tax exempt organizations are trying to copy. It has the additional advantage that when IRS personnel say they are scrutinizing political activities in “NAACP-like” organizations since it recognizes that the NAACP is the model everyone is following and it would be difficult for the average person to conclude that the IRS was targeting “Tea Party” organizations. The simplest solution would have been for the IRS to spend an extra second on a few extra syllables and use the term “politically active tax exempt organizations” to describe the organizations they were targeting. If Ms. Paz’s statement is false, then she is lying and attempting to cover up the IRS targeting of conservative groups in direct violation of IRS policy.

Instead, Paz described an agency in which IRS supervisors in Washington worked closely with agents in the field but didn’t fully understand what those agents were doing. Paz said agents in Cincinnati openly talked about handling "tea party" cases, but she thought the term was merely shorthand for all applications from groups that were politically active ”” conservative and liberal.

Read more: http://www.businessinsider.com/fired-irs-supervisor-in-dc-contradicts-claim-tea-party-targeting-was-isolated-to-cincinnati-office-2013-6#ixzz2WTMqteJe

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Pentagon Papers Revisited

This Wonkblog article, No, Edward Snowden probably didn’t commit treason, got me thinking about the Pentagon Papers. The circumstances of these two events are eerily similar but I needed to refresh my memory since it occurred a long time ago. Yes, we have been down this path before. Here is the relevant part from the Pentagon Papers Wikipedia article about the  that would be pertinent to a potential Snowden treason charge.

Before publication, The New York Times sought legal advice. The paper’s regular outside counsel, Lord Day & Lord, advised against publication,[5] but house counsel James Goodale prevailed with his argument that the press had a First Amendment right to publish information significant to the people’s understanding of their government’s policy.

President Nixon’s first reaction to the publication was that since the study embarrassed the Johnson and Kennedy administrations, not his, he should do nothing. However, Kissinger convinced the president that not opposing publication set a negative precedent for future secrets.[5] The administration argued Ellsberg and Russo were guilty of a felony under the Espionage Act of 1917, because they had no authority to publish classified documents.[17] After failing to persuade the Times to voluntarily cease publication on June 14,[5] Attorney General John N. Mitchell and Nixon obtained a federal court injunction forcing the Times to cease publication after three articles.[5] Times publisher Arthur Ochs Sulzberger said:

Newspapers, as our editorial said this morning, we’re really a part of history that should have been made available, considerably longer ago. I just didn’t feel there was any breach of national security, in the sense that we were giving secrets to the enemy.[18]

Daniel Ellsberg was eventually indicted on charges of stealing and holding secret documents. The trial ended in a mistrial. The administration was in the midst of the Watergate scandal so the charges were eventually dismissed. The Justice department could be sensing a little déjà vu with their case against Mr. Snowden.