Maybe the Government Just Shouldn’t Ask People if They’re Uninsured

a_better_choice_180x270Sir John Cowperthwaite was the Financial Secretary of the British Colony of Hong Kong when it began to boom in the 1960s:

Asked what is the key thing poor countries should do, Cowperthwaite once remarked: “They should abolish the Office of National Statistics.” In Hong Kong, he refused to collect all but the most superficial statistics, believing that statistics were dangerous: they would led the state to to fiddle about remedying perceived ills, simultaneously hindering the ability of the market economy to work. This caused consternation in Whitehall: a delegation of civil servants were sent to Hong Kong to find out why employment statistics were not being collected; Cowperthwaite literally sent them home on the next plane back. (Alex Singleton, The Guardian)

What does this have to do with health insurance? The Wall Street Journal’s Jo Craven McGinty reports on the Census Bureau’s rejigging of its measurement of how many Americans are without health insurance:

Sometimes, fixing one statistical problem creates a new one.

For years, the Current Population Survey conducted by the U.S. Census Bureau overestimated the number of people without health insurance. Last year, the Census Bureau revised the survey to correct the error, which was likely caused by the way the government asked Americans about their coverage.

Part of the problem was the CPS intended to count people as uninsured only if they were without health insurance for an entire calendar year, while other surveys generally measure coverage at the time of the interview.

The more stringent standard should produce a lower estimate. Instead, the CPS estimates were often somewhat higher than other surveys, causing researchers to suspect the numbers were wrong, probably because some respondents answered incorrectly.

Who wouldn’t be confused, answering a question about our fragmented, government-heavy, health insurance. There is a big difference between being uninsured for one week and being uninsured for one year, but the surveys have bigger problems. Most importantly, they include Medicaid – a welfare program – as health insurance.

Government’s relentless obsession with mandating that everyone has health insurance, instead of protecting our liberty to acquire health goods and services of our own informed choice, has led to much mischief.

I expect that if Sir John Cowperthwaite were alive to advise Americans which statistics our government should be forbidden from collecting and analyzing, he might start with health insurance.

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For the pivotal alternative to Obamacare, please see the Independent Institute’s new book, A Better Choice: Healthcare Solutions for America, by John C. Goodman.


What Abercrombie and Fitch Can Teach Us about the Same-Sex Marriage Controversy

male modelWhen I was a young teenager, Abercrombie & Fitch was one of the “it” brands. Everyone in school wanted to wear it, and it was absolutely used to signal that one was up-to-date on recent trends. As the child of two schoolteachers, I learned very early in my life that paying $50 for a t-shirt I’d grow out of in six months was an absurd expense that would not be paid (you can imagine how well this line went over with a 12-year-old girl).

A few years ago, former Abercrombie & Fitch CEO Mike Jeffries and the company came under fire when Business Insider published a piece containing comments Jeffries had made in 2006. In the interview, Jeffries stated that he didn’t want fat or “uncool” people wearing the brand. In fact, the store carried ladies pants only up to size 10 and didn’t carry any women’s sizes above a “large.” Jeffries stated,

[W]e hire good-looking people in our stores. Because good-looking people attract good-looking people, and we want to market to cool, good-looking people. We don’t want to market to anyone other than that.

In every school there are the cool and popular kids, and then there are the not-so-cool kids. Candidly, we go after the cool kids. We go after the attractive all-American kid with a great attitude and lots of friends. A lot of people don’t belong, and they can’t belong. Are we exclusionary? Absolutely.

The company came under scrutiny once again after a lawsuit regarding its aesthetic guidelines, or “look policy,” for its employees, dictating everything from hair color to nail length. The outrage was immediate and intense. A variety of celebrities and talk shows discussed the story and called for a boycott of the brand. Another group began giving Abercrombie & Fitch shirts to homeless people.

Then, miraculously, something amazing happened. In 2013, Abercrombie & Fitch, in a complete departure from its standing practices, started stocking larger women’s clothing. Although the company continues to defend many of its policies for employees, it’s clear that Abercrombie has caved to the pressure and now encourages even “uncool” clientele to buy their products.

So why should we care about a change in policy for some clothing company?

We should care because it’s a marvelous example of market forces at work. The CEO of Abercrombie chose to indulge his preferences, what some have called “fat shaming” or “fat-bias.” He chose to restrict his company’s product to particular groups and exclude others. As a result, he not only eliminated a potentially large source of revenue, but turned many potential customers away from his brand as they found the policies offensive. Jeffries’ firm suffered the consequences as a result. Their popularity waned, their profits declined, and eventually Jeffries stepped down as CEO.

Often when discussing issues of discrimination and exclusion, there are immediately calls for government to “do something” to remedy it. “Congress should pass a law,” “government should ban,” “retailers should be required to…” The list goes on and on.

But note here that Congress didn’t have to pass a law stating that Abercrombie & Fitch had to create clothes for larger women or let chess-team captains shop in their stores. No committees needed to be formed. No bureaus were created to advance the cause of “ugly people.” Instead, it was individuals, their choices, and profit and loss incentives that put a check on poor business decisions. Jeffries and Abercrombie made choices that cut against many people’s ideals—and suffered the consequences.

Such a case and the logic behind it are important to remember when discussing a variety of current issues. Several weeks ago, I discussed one such issue surrounding same-sex marriage. In particular, I made the argument that businesses should be allowed to serve whatever clientele they wish. That is, if a bakery or photographer has moral or other qualms about providing their services to a same-sex couple, they should be allowed to decline their services. I made the case that vendors choosing not to serve same-sex couples would suffer the consequences of such a policy, whether positive or negative.

The case of Abercrombie & Fitch is one example of how the market enforces social norms. If people think discriminating against overweight, ugly, or “uncool” people is wrong, then letting a company like Abercrombie demonstrate its preferences against these groups unleashes the wrath of the consumer. In the same way, allowing vendors to openly indulge their preferences on same-sex marriage will let market forces work. Those who find such policies offensive won’t buy, and those who agree will continue to support the business.

So perhaps it’s time to stifle our moral outrage and quit calling on the government to “fix” these kinds of problems and instead let the market do its job.

Hackers Stole Data from Whom? An Example of Media Bias

THEIRSThis story’s headline reports, “Hackers Stole Data From More Than 100,000 Taxpayers, IRS Says.” The headline is wrong. Hackers stole data from the IRS, not from taxpayers. This is an example of the subtle kind of media bias that minimizes government shortcomings, in this case by pointing the finger at taxpayers. This particular headline was reported by NPR.

The story reports that the hackers gained access to taxpayer accounts through the Get Transcript online service. Again, notice the use of language. The story does not report that hackers gained access to IRS computers. It said they gained access to taxpayer accounts, as if they were gaining access to something owned by taxpayers rather than something owned by government.

As any taxpayer knows, the government mandates that taxpayers not only pay their taxes but also forces taxpayers to turn over their personal information. Government acquires this information by force, and then when the information the government has taken by force is stolen from them, the media incorrectly reports that it was stolen from the taxpayers who were forced to turn it over to their government.

If any information was actually stolen from taxpayers in this incident, it was stolen by the IRS when taxpayers were forced by their government to give it up. This Orwellian article falsely reports that information was stolen from taxpayers, when it was actually stolen from government.

Commonwealth Fund: “Underinsurance” Unchanged under Obamacare

Yet another pro-Obamacare organization has had to publish a study indicating that Obamacare is failing to achieve its objectives. I recently discussed Families USA’s report that one-third of low-income families cannot afford care under Obamacare.

This time it is the Commonwealth Fund, inventor of the notion of “underinsurance,” which is defined as out-of-pocket health costs (excluding premiums) comprising at least 10 percent of household income, or five percent if household income is less than 200 percent of the Federal Poverty Level.

In 2014, the proportion of so-called “uninsured,” aged 18 to 64, was 23 percent — exactly the same as in 2012 and just one percentage point more than in 2010.


I am not going to spend too much time on the numbers, because I find the whole concept of “underinsurance” arbitrary and misleading. As Greg Scandlen pointed out, the average Medicare beneficiary is well on the wrong side of the line, according to this measurement.

Further, it is wrong to compare the current year’s income to current year’s health spending. The whole point of benefits like Health Savings Accounts is to allow a person whose health spending is a trivial share of income in most years to save money so that he has a significant balance to spend when he falls sick. This minimizes the friction and bureaucracy of health insurance.

Nevertheless, it is interesting to note the composition of the so-called “uniderinsured.” Exhibit 2 shows that those with employer-based coverage, the individually insured (which now includes those insured via Obamacare exchanges), and those under 65 on Medicare, have about the same proportion of “underinsured” people as in 2010. The Medicaid population has significantly fewer. I’d bet that this is because Obamacare’s sales and marketing efforts have recruited more healthy people into Medicaid.

But the real zinger is 2003: Employer-insured and individually insured populations had significantly fewer “underinsured” than in 2010 or 2014, while Medicaid and Medicare had effectively the same proportion of “underinsured.”

So, wouldn’t it make more sense for the Commonwealth Fund to advocate that health policy return to where it was in 2003, rather than continue down the path of Obamacare?

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For the pivotal alternative to Obamacare, please see the Independent Institute’s new book, A Better Choice: Healthcare Solutions for America, by John C. Goodman.

Planned Rate Hikes Presage a Health Insurance ‘Death Spiral’

Money-Spiral-Image-for-PostThe Wall Street Journal has reviewed health plans’ rate filings for 2016 in Obamacare exchanges:

In New Mexico, market leader Health Care Service Corp. is asking for an average jump of 51.6% in premiums for 2016. The biggest insurer in Tennessee, BlueCross BlueShield of Tennessee, has requested an average 36.3% increase. In Maryland, market leader CareFirst BlueCross BlueShield wants to raise rates 30.4% across its products. Moda Health, the largest insurer on the Oregon health exchange, seeks an average boost of around 25%.

All of them cite high medical costs incurred by people newly enrolled under the Affordable Care Act. (Louise Radnofsky, “Health Insurers Seek Healthy Rate Boosts,” May 21, 2015)

The article also notes that Insurance Commissioners in some states have the power to roll back rates hiked too high (and the U.S. Secretary of Health & Human Services also asserts a similar power, although there is no legal basis for it). It is unlikely that Insurance Commissioners can protect people from these rate hikes: Excessive rollbacks will merely cause health plans to exit the market, which would be catastrophic for Obamacare’s political future.

Readers of this blog knew that this death spiral was coming. What is remarkable is that it is happening now. Things must be worse than insurers are disclosing to make them jack rates so high, so soon.

Think about it: Obamacare is the best possible scenario for health insurers. Obamacare is still very much at risk from the Supreme Court’s decision in King v. Burwell and Republican politicians who remain united in pledging to repeal and replace it with patient-centered health reform.

If anything, health plans should want to move public opinion in favor of Obamacare by keeping rate hikes low. Indeed, they should (collectively) be prepared to lose money in exchanges until Obamacare is secure. (The exchanges are still a small part of their book of business. They can subsidize losses in exchanges for a while without risking their solvency.)

A lot of the cost of the rate hikes will be borne by taxpayers instead of enrollees, because Obamacare’s tax credits to insurers operating in exchanges are based on the benchmark (second cheapest silver plan) and limited by beneficiaries’ household income. Nevertheless, that is also hardly good news for Obamacare’s political future, either.

Announcing these rate hikes in the summer of 2015 (and, likely, the summer of 2016) indicates that health plans’ experience in Obamacare exchanges is painfully expensive.

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For the pivotal alternative to Obamacare, please see the Independent Institute’s new book: A Better Choice: Healthcare Solutions for America, by John C. Goodman.

What Memorial Day Should Mean

MiltonFriedmanThis Memorial Day we remember and honor our fellow citizens who were willing to defend our American liberties to the death.

Nobel Prizewinning economist Milton Friedman was a leading proponent of ending military conscription, or the draft, because forced military service is incompatible with a free society. Thanks in no small part to his opposition, the United States ended the draft in the early 1970s.

But Friedman’s contributions don’t end with economic policy or ending the draft.

Friedman was also a leading proponent of parents’ right to choose their children’s schools, and an emerging policy that traces its origins to Friedman’s work is educational savings accounts, or ESAs.

The concept behind ESAs is simple. Parents who don’t prefer that their children attend government-run public schools would get a portion of what their respective states would have sent to district public schools to enroll their child, deposited into ESAs instead. With those funds parents can pay for private school tuition, tutoring, online courses, or advanced placement testing, among other options. Any leftover funds can also be used for future educational expenses such as college tuition.

As a military spouse myself, one of the leading concerns I hear from military families is that those who served have earned education benefits through the GI Bill or Post 9-11 GI Bill, but they cannot pass on those benefits to their elementary or high-school-aged children or grandchildren.

Recall, military benefits are not entitlements—they are EARNED benefits. Yet there’s a very strict use-it-or-lose-it policy applied to service members’ education benefits. The question I hear most from parents and grandparents who have served our country is, “Whatever happened to all the funds I earned but did not need because my spouse and/or I have earned the college degrees we needed? Why can I not pass on my earned education benefits to my grandchildren, nieces, nephews, or other deserving children of my choice, through an education savings account?”

Sadly, I have not been able to answer those questions. Earned funds that are not used as specified revert back from whence they came. Where those earned benefits go, is anybody’s guess.

ESAs would be a much better policy approach.

Members of our military should be able to deposit their earned education benefits into military ESAs. They should be free to direct those funds to whomever they wish: their spouses, college-age children, or school-age children, grandchildren, or any beneficiary of their choice. After all: it’s THEIR money.

A leading benefit of such a policy would be that no matter where military service members were stationed in the world their spouses and their children could use their earned education benefits as they saw fit. A key—and growing—concern within the military community is the fact that families are sorely constrained regarding where they can live.

Families are stationed throughout the country, with little or no regard for the quality of the schools their children will be attending. What’s more, children of military parents have higher rates of special educational needs, making the choice of schools that much more pressing.

For all the talk we’ll be hearing over the coming days about honoring veterans, one of the greatest signs of appreciation we can offer is the gift of educational freedom for them and beneficiaries of their choice—and not just reform for their college-age children.

Education Savings Accounts are the latest innovation in parental choice in education. To those who’ve sacrificed so much for our liberty and rights as Americans, the least we can do is offer unfettered educational freedom—using the money that they’ve earned.

Parental Choice Could Help Curb Willful Defiance in School

school-choice-300x199Students attending Oakland Unified Public Schools will no longer be suspended for willful defiance, a broad category of misbehaviors such as swearing at teachers, texting in class, or refusing to take off hats in the classroom. A number of other California schools districts, including those in San Francisco and Los Angeles, are also dropping willful defiance from their lists of suspendable offenses, according to published reports.

The decision is being hailed by some civil rights groups, who note that African-American students are disproportionately suspended from school for such offenses. These groups and others also argue that alternative discipline policies that do not interrupt students’ learning time should be explored instead.

To be sure, discriminatory discipline policies should never be tolerated in school; however, the discipline struggles confronting government-run schools are largely a problem of their own making—particularly in California where parents’ choices over where their children attend school is sorely constrained.

Ideally, all parents—regardless of income or address—should be free to choose the education provider they believe is best for their child. Parents choose schools based on academics, an educational approach that reflects their beliefs, and safety, which includes school climate and discipline.

By artificially constraining parents’ choices over where their children attend school, assigned schools lose one of the leading supports to schools’ and students’ success: parental support.

We value what we choose more than what’s foisted upon us. When parents can’t (or don’t have to) actively choose their children’s schools, many of them may simply start believing that education—and the good behavior required for children to learn—is somebody else’s problem.

In a competitive education climate, schools feel powerful pressure to distinguish themselves. Not only does such pressure include promoting their particular curricula and teaching approaches, it also includes their disciplinary policies.

Some parents may prefer stricter disciplinary policies, which could include school uniforms and signed codes of conduct. Other parents may prefer a more relaxed disciplinary approach, which involves more meetings with counselors or school staff.

Regardless of the preferred approach, were parents freer to choose their children’s schools, if and when student behavioral problems arose, then parents, teachers, and school officials would be more likely to be on the same side, all working together for the benefit of the student.

That scenario, far more than recurring drastic shifts between zero-tolerance and kumbaya, let’s-all-just-get-along approaches, would prevail—to the benefit of everyone involved, students first and foremost.

As public school districts struggle to adapt to shifting mores about appropriate student discipline policies, officials should be advocating for greater parental choice in their children’s education.

At a time when public school civil rights complaints are at an all-time high, it’s worth considering the contribution that parental choice in education can make toward equitable, actionable, school disciplinary policies in California and nationwide.

“Rape Culture” and the Implications for Liberty on College Campuses

FSU_Seal_NewColors_0-230x230College campuses are placing a stronger emphasis on reducing sexual assault. Unfortunately, universities and colleges often adopt heavy-handed policies to punish alleged offenders based on abstractions or simplistic understandings of college student attitudes and behavior. One of the more problematic overgeneralizations is the concept of the “rape culture”, and the pervasive use of the term interferes with our understanding of the nature of campus sexual assault and identifying practical solutions that are more consistent with individual liberty.

Rape culture” posits that our colleges and universities are dens for sexual predators that promote violence against women and, more importantly, that this violence is institutionally supported. Since the problem is cultural, rather than individual, the solution is institutional–categorical policies that provide little room for context or individual circumstance. Also, because the problem is systemic, extraordinary means can be justified to bring it under control, including abrogating due process, tilting adjudication in favor of the accuser rather than the accused, and implementing draconian measures despite a lack of evidence to support the allegations. Emily Yoffe at does a nice job of laying out these dangers as does Christina Hoff Sommers of the American Enterprise Institute.

But what if a rape culture doesn’t exist?


High U.S. Health Prices from Market Power?

a_better_choice_180x270The National Academy of Social Insurance (NASI) recently published a consensus report on healthcare-provider consolidation. Basically, we have a growing problem in that hospitals are buying up each other and also physician practices, which leads to reduced competition and higher prices.

The report was promoted with an op-ed in The Hill by the esteemed Robert A. Berenson (Urban Institute) and G. William Hoagland (Bipartisan Policy Center):

The use of market power — or the ability to raise and keep prices higher than would prevail in a competitive market – is the key reason the United States spends so much more on healthcare than other countries.

For policymakers, tackling the lack of competition is like climbing a mountain. Even the initial steps — creating more competition — may be difficult, but they must be explored before more regulatory action further down the path is considered.

These are remarkable statements — and difficult to accept.


Progressivism: Rhetoric versus Reality

ProgressivismContemporary supporters of an expanded role for government are increasingly moving away from calling themselves liberals and toward referring to themselves Progressives, so it is worth considering what the ideology of Progressivism entails.

Progressivism began in the late 1800s as a political movement that advocated expanding the role of government. Before the Progressive era, Americans viewed the role of government as protecting individual rights. The Progressive ideology argued that the proper role of government should go beyond protecting individual rights to include looking out for people’s economic well-being.

Progressivism is explicitly designed to use the force of government to take from some to give to others. In its early days, Progressives envisioned the state reining in the economic power of people like Rockefeller and Vanderbilt to prevent them from exploiting those with less economic power. Even this vision makes clear that the goal of Progressivism is to impose costs on some for the benefit of others.