The Independent Institute


Bureaucratic Insolence at the Border: Five Haiku

49949787_MLSyrian Christians

Must not enter US church

Might be terrorists

Computer whizzes

From India and China

H-1B required

Parents in Thailand

Sorry Charlie, no quota

State before mother

Good friends in Iran

Stay away you mad bombers

US picks my friends

Who chooses for me?

Bureaucrats in Washington

Arrogant “experts”

Why Aren’t Consumer-Driven Health Plans More Popular?

51173645_MLIn a recent post I discussed new evidence that so-called consumer-driven health plans (CDHPs) reduce health spending one-eighth among employer-sponsored group plans run by national health insurance companies.

CHDPs are defined as High-Deductible Health Plans coupled with Health Savings Accounts (or Health Reimbursement Arrangements). These plans became available in 2005. However, they appear to cover only a little over one-quarter of employed people or their dependents who are enrolled in their benefits.

The case for CDHPs is that consumers (patients) will spend their health dollars more prudently than insurers or employers will. So: Why is such a small proportion of people enrolled in CDHPs despite over a decade of evidence supporting the case that they cut the growth rate of health spending?

Can Christian Adherents of the Freedom Philosophy Support Trump?

There has been much chatter recently about whether Christians with libertarian or conservative convictions can, in good conscience, support Trump.

At the American Conservative, Rod Dreher says no.

Over at Chronicles Tom Piatak challenges Dreher’s reasoning.

Walter Block, who is behind the Libertarians for Trump movement, says that “The Donald is the most congruent with our perspective” (meaning the freedom philosophy–not necessarily a Christian worldview).

This, in my opinion, is a matter where we must give our friends on the Right much leeway. One’s pulling or refraining from pulling the lever for Trump should not be a litmus test for who is a “true” libertarian or conservative (of the non-neocon variety).

The New Testament paints with broad strokes how Christians are supposed to respond to government. Romans 13 teaches that the institution of government is something that God ordains because of evil in the world. We owe respect to the governing authorities to the extent they do not contradict God’s decrees. In light of a Christian’s duties towards government, it naturally follows that when we have a chance to influence government in elections or otherwise, we should seek the good. But what is the good?

A believer could reason that Trump, for all his faults, is the lesser evil than Hillary and thus cast his ballot for the Donald. A Trump administration would not be as hostile to orthodox Christian tenets about marriage, sex, etc., as a Clinton administration. It also would probably be less likely to involve us in foreign wars and nation-building.

But under the broad canopy of reasonableness it is also possible to conclude that Trump’s vulgarity, licentiousness, and claim that he needs no forgiveness from God, prevent a Christian from casting a ballot for him. One can make a case that Christians should disassociate from such a man and that we cannot trust his judgment on important matters of state.

For Christian conservatives and libertarians, this election is not an easy call. With the post-modern destruction of western society, perhaps we have the two candidates we deserve. Let each of us make decisions on this election in good conscience and without demonizing a fellow traveler who makes a different decision in this unusual political season.

SCOTUS, the Presidential Debate, and The Formula

33263124 - supreme court buildingThe Supreme Court will be a major issue in tonight’s presidential debate. Justice Scalia’s seat is just part of the story. At 83 years old, rumors have long been swirling about the health of Ruth Bader Ginsburg, a solid vote for the liberals. Moreover, Anthony Kennedy, a Reagan appointee who often votes with the left-wing of the Court, is 80. Thus, the next president will likely appoint three justices.

Trump will argue that if he is allowed to fill these seats with reliable jurists who believe in judicial restraint and strict construction of the Constitution, then a conservative majority might exist for the foreseeable future. (Of John Roberts, Samuel Alito, and Clarence Thomas, the latter is the oldest, at the relatively young age of 67). Say good-bye to the 5-4 losses that Trump will promise, and say hello to 6-3 victories. But the GOP does not have a good track record of nominating justices favoring judicial restraint and strict construction. Harry Blackmun, David Souter, and Anthony Kennedy are the most glaring failures of Republican presidents in the last 50 years.

What is more interesting (at least to me) is that libertarians and conservatives (of the non-neocon variety) have been told election after election that, yes, Bob Dole, George Bush, John McCain, and Mitt Romney are not perfect paragons of limited government and individual liberty, but that because the Supreme Court is so critical, we must hold our noses and pull the lever for the GOP candidate. The lesser of two evils and control of the Court was “The Formula” used to encourage us not to vote for third parties despite our disdain for the GOP nominee. (I personally rejected The Formula some years ago and have been voting for third parties in presidential elections as a matter of principle and catharsis.)

The Last of Those Entertaining Presidential Debates

48513132_MLWatching the presidential debates is like watching the aftermath of an automobile accident. You’ve all seen it: people holding up traffic as they gawk at the wreckage, trying to get a glimpse of someone else’s misfortune. The presidential debates hold the same fascinating horror, except that the gawkers share in the misfortune.

There’s something wrong with a political system that offers voters the choice of two candidates, both of whom are viewed as more unfavorable than favorable by voters. And yet, I find myself in odd agreement with the main messages both candidates are trying to convey to viewers.

The main message Trump has tried to convey in the first two debates is that Clinton is unfit for the presidency, and the main message Clinton has tried to convey is that Trump is unfit for the presidency.

I often disagree with politicians, but in this case their messages are very convincing.

New Book Reveals the Timely Wisdom of America’s First Constitution

PrintIs the U.S. Constitution the best possible charter a nation could ever conceive? Many people seem to think so, but some of the greatest patriots of the Founding Era would have disagreed—vehemently. Indeed, men like Patrick Henry, George Mason, and Richard Henry Lee (among others) thought the Constitution’s flaws would become the republic’s undoing. In fact, many of their predictions have come true: Americans labor under a bloated and abusive federal bureaucracy, the national debt has grown to ominous levels, and many people believe the system is “rigged.”

The forgotten insights and proposals of the Constitution’s early critics—and their current relevance—come alive in the new Independent Institute book, Crossroads for Liberty: Recovering the Anti-Federalist Values of America’s First Constitution, by William J. Watkins, Jr.

The “crossroads” in the book’s title are the Philadelphia Convention of 1787 and the state ratifying conventions. In the 1770s and 1780s, the Anti-Federalists (so called because they opposed the Federalist Party and its vision of a “strong” national government) feared the Constitution would weaken political representation and liberties for ordinary citizens. Some urged the adoption of the Bill of Rights—although other Anti-Federalists worried that the inclusion of those ten amendments opened the door to a power-hungry and pernicious central government. Their original hope was to amend the nation’s first constitution, the Articles of Confederation, not end it.

Crossroads for Liberty offers a fresh perspective on a misunderstood turning point in American history. More than this, it celebrates the achievements of the Articles of Confederation (including its role in winning the American Revolution) and reveals the worldly wisdom of the Anti-Federalists. Those patriots, Watkins explains, gave the nation scores of concrete proposals that, more than two centuries later, offer the best hope for curing our political malaise and reviving the seeds planted by the Declaration of Independence.

“Their principles can guide us back to stability and limited government,” Watkins writes. “Let us open our ears and hear what they have to say.”

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This piece first appeared in the 10/18/16 issue of The Lighthouse. To subscribe to this free weekly newsletter or other notices from Independent Institute, enter your email address here.

Good and Bad News on Generic Drug Approvals

44323995 - medicines arranged in shelves at pharmacyA solution to expensive patented medicines is generic competitors. The United States has struck a pretty good balance between innovation and low prices through the Hatch-Waxman (1984) Act, which specified patent terms for newly invented medicines, and a pathway for generic competitors to enter the market after a period.

One obstacle to generic entry in recent years was a very slow approval process at the Food and Drug Administration. This led to a backlog, which was unexpected because one important benefit of Hatch-Waxman was that generic competitors did not have to replicate the expensive clinical trials that innovative drug-makers had to carry out to receive the FDA’s approval.

The FDA’s Office of Generic Drugs (OGD) considers approving generic copies of drugs upon receipt of an Abbreviated New Drug Application (ANDA) from the manufacturer. The approval system changed under a law passed in 2012, the Generic Drug User Fee Act (GDUFA). Recent data show improvement:

OGD’s final numbers for approvals and receipts and a few other metrics for the full FY 2016 were released today. OGD approved 51 ANDAs in September for a total of 651 for FY 2016, an average of 54.25 ANDA a month. This represents the largest number of approvals in a fiscal year in (at least) the last 8 years (and likely longer) and is the most approved under GDUFA I (previous GDUFA high was 492 which was achieved in FY 2015 and 517 in FY 2012 prior to GDUFA). That’s the good news! The bad news is that OGD received a total of 853 ANDA (71/ANDAs/mo) in FY 2016 which is 202 more ANDA than it approved. It is true there were also 184 tentative approvals in FY 2016 but that still leaves OGD a little short on the balance sheet.

Doctors Leaving Private Practice for Hospitals

37885304 - doctor talking to his female patient at officeA new survey by the Physicians Advocacy Institute and Avalere Health, a consulting firm, shows a significant increase in the number of physicians leaving independent practice and joining hospital-based health systems:

  • From July 2012 to July 2015, the percentage of hospital-employed physicians increased by almost 50 percent, with increases in each six-month period measured over these three years.
  • In 2012, one in four physicians was employed by a hospital.
  • By 2015, 38 percent of physicians were employed by hospitals.

Good or bad? Well, color me skeptical. This acquisition spree is driven by new payment models which seek to reward providers for “accountable” care (which I suppose is better than unaccountable care). So far, the results of payment reform in Medicare have been trivial.

And the change does not appear to be solving an eminently solvable problem, the growing problem of “surprise” medical bills. These occur when a patient undergoes surgery in a hospital in his insurer’s network, but is then surprised by an expensive bill from an out-of-network anesthesiologist, pathologist, or other specialist who attended him in the hospital.

These misfortunes would not persist in any property functioning market. However, new research from the Brookings Institution suggests the problem is getting worse. Obviously, it should be diminishing if hospital ownership of physicians is growing and making care more “accountable.”

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For the pivotal alternative to Obamacare, please see the Independent Institute’s widely acclaimed book, Priceless: Curing the Healthcare Crisis, by John C. Goodman.

Obstructions of Trade and Migration: Who Is Hurt?

528661 - crgo ship under bay bridge with san francisco on backgroundThe natural answer, the one most people would give, is that trade restrictions hurt foreigners who want to sell their goods and services to Americans. After all, politicians, including the two major-party candidates now seeking election to the presidency, tell us every day that they will demand various sorts of concessions from or impose various sorts of penalties on—that is, hurt—the foreigners, especially the Chinese exporters, who wish to bring their goods into the USA for sale. And surely it is the case that such hurt would be one result of the higher tariffs, import restrictions, currency revaluations, and other politically popular actions now being bandied about by candidates and the public.

But this hurt would be far from the only kind. Also harmed would be Americans of many sorts. Most important are American consumers, who will gladly purchase products made abroad if those products can make it across the hurdles thrown up by the U.S. government. It should go without saying that depriving American consumers of opportunities to purchase goods that, all things considered, suit them better than domestic alternatives causes them harm. For more than two centuries economists have been laboriously demonstrating how trade restrictions harm consumers in general and benefit protected domestic special interests in particular. And for just as long, of course, many if not most Americans have failed to understand the lesson or have chosen to disregard it, being bamboozled by the privileged special interests, their lobbyists, and their kept politicians.

When Government Fails, Papa John’s Delivers

35936226_ML (1)Parts of the southern United States were hit particular hard by hurricane Matthew last week. Between the wind and the rain, flooding and power outages took place from Florida up through the Carolinas.

For many of us, things like losing power are minor inconveniences. For others, however, this is not the case. Losing power can not only leave someone in the dark, but can utterly disconnect them from loved ones and the rest of the outside world.

Such was the case for one Florida grandmother, 87-year-old Claire Olsen. During the storm, Olsen lost power.

Her family didn’t hear from her for two days.

Her grandson, Eric Olsen, who lives in Omaha, Nebraska, became progressively worried about his grandmother. He stated in an interview that he kept calling the police and fire departments in his grandmother’s town, trying to get someone to check on her. These attempts were unsuccessful.