A Better Way to Cut Medicare Spending

23972583_SOver the next 10 years, the Affordable Care Act (Obamacare) is scheduled to cut Medicare spending by $716 billion, primarily by reducing payments to doctors and hospitals. Further, those cuts in spending will continue indefinitely into the future. By 2060, one-fifth of Medicare will be gone. The Medicare actuaries and others have warned that these cuts will reduce access to care for seniors.

Fortunately, there is a better way ― proposed by Liqun Liu, Andrew J. Rettenmaier, Thomas R. Saving and Zijun Wang in a study for the National Center for Policy Analysis: The reform consists of two changes to current law: (1) raising the Medicare eligibility age to the same age as Social Security (and thereafter indexing it to increases in longevity), and (2) requiring higher-income seniors to pay a greater share of their medical costs (or so-called means testing). This reform ensures that low-income workers receive full benefits (defined as the average benefits retirees would receive if the ACA’s cost-cutting provisions are not realized) upon attaining the new eligibility age. Once seniors reach the new eligibility age:

  • Individuals in the lowest 30 percent of the lifetime income distribution would receive 100 percent of full benefits (net of premiums).
  • Medium income workers (at the 50th percentile of lifetime income) would receive 87 percent of full benefits—significantly higher than the benefits they would receive under the Affordable Care Act.
  • However, individuals in the higher lifetime income groups would be required to pay a greater share of their health care costs and as a result receive a reduction in net benefits under current law.

* * *

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

[Cross-posted at Psychology Today and John Goodman's Health Policy Blog]

Unlearning Liberty to the Detriment of Us All

9781594037306_p0_v2_s260x420A nation that does not educate in liberty will not long preserve it and will not even know when it is lost.” —Alan Kors

Since my days as an undergraduate, I’ve been a major supporter of the Foundation for Individual Rights in Education (FIRE) and its tireless efforts in defending the academic freedom of students and faculty alike regardless of cause. In this day and age where illiberal attitudes on campuses are the norm and not the exception, FIRE president Greg Lukianoff’s new book Unlearning Liberty: Campus Censorship and the End of American Debate could not be more timely.

A self-described atheist and “lifelong Democrat,” Lukianoff has written an exposé that cannot be easily dismissed as a right-wing tirade against political correctness run amok. Anyone who spends the slightest amount of time in higher education these days could lament the sad state of discourse. Instead of a freewheeling environment where controversial ideas can be advocated and debated, students and faculty taking the “wrong” stance can expect to be punished. Lukianoff cites a disturbing 2010 study by the American Association of Colleges and Universities that surveyed 24,000 college students and 9,000 faculty, and found that 35.6 percent of students and only 16.7 percent of the faculty strongly agreed with the statement: “It is safe to hold unpopular positions on campus.” With this kind of hostile environment, it comes as no surprise that the nation’s colleges and universities are full stories of censorship, deprival of due process, politically motivated “investigations,” forced ideological indoctrination, and other shameful episodes that would shock people of all persuasions.

Unlearning Liberty reveals a wide range of incidents from the laughably absurd to the truly frightening:


A Snapshot of the Health Care Workforce

How is the health care workforce changing under Obamacare? This month’s jobs report from the Bureau of Labor Statistics gives us a snapshot of employment in health care versus the rest of the economy. The table below shows the details.

Despite the widely touted notion that Obamacare is putting hospitals out of business, hospital employment barely budged from February 2013 through February 2014. There are still almost five million workers in hospitals, which are often the largest employer in any district. This makes them a political force to be reckoned with.

However, employment growth in health care has come from various ambulatory settings. This may be a good sign, if it indicates patients are using lower-cost outpatient care—especially convenient clinics in shopping centers and pharmacies—instead of overpriced hospital services. On the other hand, it could reflect increased demand for medical-office staff to deal with the unprecedented compliance requirements of Obamacare.


Challenge of Liberty Student Seminars—Application Deadline: March 31

higgs_robert2The Challenge of Liberty Student Seminars are returning for another exciting season!

Thanks to the generous support of donors, we will hold two seminars for college students—one at the University of Denver (June 16–20) and one at the University of California, Berkeley (July 7–11)—and one seminar for high-school students at the Independent Institute’s headquarters in Oakland, Calif. (July 14–18).

Our seminars offer an interdisciplinary approach to the study of liberty, with a focus on economics, history, the rule of law, property rights, free trade, environmentalism, and government regulation. But most importantly we emphasize the role of moral character and individual responsibility as the foundation of a free and prosperous society. Students will spend five intensive days with our top-notch faculty and enjoy making new friends from around the country and abroad.

This year we are happy to welcome as new faculty Christopher Coyne, Michael Thomas and Abby Hall, who will join returning faculty Robert Higgs, Ivan Pongracic, Ben Powell, Alex Padilla, Anthony Gregory, Fred FoldvaryJosé Yulo, Greg Rehmke, and Mike Winther.

Scholarships are available to cover books, lodging, and food. Students who qualify will be responsible only for their travel. Students may also attend after paying full tuition.

The deadline for applying, March 31, is approaching fast.


President Obama’s Investment Skills

GMAfter the Obama administration bailed out General Motors by purchasing a 60.8% ownership share in the company for $49.5 billion, President Obama said, “We expect taxpayers will get back all the money my administration has invested in GM.” (I do like the way the president takes responsibility for the investment.) Now, the president’s administration has sold all of its ownership in GM and taken a $10 billion loss.

It is worth noting that what the president called an investment on behalf of the taxpayers lost 20% of its value, and that the president’s expectations on the investment his administration made did not pan out.

I don’t know whether the president actually believed the GM bailout would yield a profit or whether that was just political rhetoric he hoped people would forget over the years. Either way, it turned out not to be true.

The loss on the GM investment did not attract much notice, especially compared to other investments the president has made on behalf of the taxpayers, such as the $500 million it lost on the Solyndra loan guarantees. Interesting, considering that the GM loss was 20 times larger.

Zeke Speaks Out on McCain and Health Reform

11935359_SNormally, I don’t think Zeke Emanuel has much to say that is both true and interesting. But this insider’s view of the making of ObamaCare is fascinating. Apparently there were people inside the White House who wanted to adopt John McCain’s approach to health reform. We ended up with only a timid step in that direction ― mainly so the president could save face after all the demagogic ads he ran attacking McCain during the campaign:

In 1954, the Internal Revenue Service created a tax exclusion for health insurance premiums, which is why health benefits offered through an employer aren’t subject to income or payroll taxes. This makes an additional dollar of health insurance (which isn’t taxed) more valuable than an additional dollar of wages (which is).

Economists—liberal and conservative alike—overwhelmingly denounce the tax exclusion. It drives costs higher while keeping wages down, it is regressive, and it is a major drag on the federal budget—lowering revenue by a whopping $250 billion a year.

During the 2008 presidential campaign, Senator John McCain proposed eliminating the exclusion and replacing it with a $5,000 tax credit to help families buy health insurance. The Obama campaign ran more than $100 million worth of ads pounding McCain, accusing the GOP nominee of “taxing health benefits for the first time ever.”


NSA Chief Recommends Severely Curtailing Spying. Obama Won’t.

The worldwide heat map from the NSA's data visualisation tool BOUNDLESSINFORMANT, showing that during a 30-day period, 97 billion internet data records (DNI) and 124 billion telephony data records (DNR) were collected.

The worldwide heat map from the NSA’s data visualisation tool BOUNDLESSINFORMANT, showing that during a 30-day period, 97 billion internet data records (DNI) and 124 billion telephony data records (DNR) were collected: largely on Americans in America.


A few weeks ago, Obama triumphantly announced NSA spying “reforms” that got lots of front page coverage, but amounted to: Absolutely No Change.

Further, his speech carried his full endorsement of the sweeping collection and storage in bulk of private phone calls, emails, email address books, online transaction information, location data, and more, on millions of Americans neither guilty nor even suspected of anything.

More recently, NSA’s outgoing director, General Keith Alexander, testified quite differently before the Senate:

The remarks by NSA Director Gen. Keith Alexander were striking because the government’s justification for the data-collection program has been that the NSA needs the full database of Americans’ call records to uncover otherwise unknown terrorist connections.

But Gen. Alexander instead signaled that the information the NSA needs about terrorist connections might be obtainable without first collecting what officials have termed “the whole haystack” of U.S. phone data.

Explaining the option, he told the Senate Armed Services Committee that intelligence agencies could “look at what data you actually need and get only that data.”

What a concept! Don’t tap everyone’s cell phones, email accounts, computers, capture and store every personal tidbit, to be perused when and if you might like to. Only gather information on those suspected of wrong-doing (and, hey, if you’re feeling really generous: get a warrant)!

Interestingly, the General’s testimony didn’t make the front page, and President Obama hasn’t acknowledged the recommendation.

Instead, as observed by the New Yorker:

Obama won’t dismantle a single N.S.A. program, not even those that have been involved in spying on the leaders of America’s allies and hacking into the databases of companies like Google and Facebook without any court approval. He won’t end the practice by which the N.S.A and other government agencies, such as the Federal Bureau of Investigation, can obtain access to Americans’ data records simply by issuing a so-called National Security Letter, which doesn’t require the rubber stamp of the FISA court.

... Anthony D. Romero, the executive director of the American Civil Liberties Union, told the Times, “the President will go down in history for having retained and defended George W. Bush’s surveillance programs rather than reformed them.”

He ought more accurately to have said, “and expanded” Bush’s surveillance programs.

So why won’t the President pay any attention to the recommendations of the General put in charge of the NSA—wouldn’t Obama expect Gen. Alexander to know whereof he speaks?

Because, as has been known since time immemorial, and as our Founders sought to guard this republic against: power corrupts and no politician vested with power will willingly surrender one jot or one tittle of it.

Which is why it won’t help to elect a “good guy” (or gal) next time. The ring, once held, enchants.

We must wrest it from their grasp, throw it into the fire, and never allow it to be so accrued again.

Take the Money and Run? GAO Reports Significant Dropping Out of Government Electronic Health Records Program

9513068_SA previous blog entry noted that Veterans Affairs and the Department of Defense have utterly failed to execute a plan to develop an interoperable Electronic Health Record (EHR), despite five million beneficiaries receiving health benefits from both bureaucracies.

Despite its inability to manage this for two closely related federal departments, the federal government decided to try the same thing for private hospitals and physicians nationwide. The 2009 HITECH Act authorized billions of taxpayer dollars be spend to pay hospitals and physicians “incentives” to adopt EHRs. The Congressional Budget Office estimates that the total tab will be $30 billion from 2011 through 2019.

The Government Accountability Office has just reported on the results. Not surprisingly, with so much money being spent, there was a lot of uptake. 45 percent of eligible hospitals had EHRs in 2011, versus 64 percent in 2012. For physicians and allied professionals, the share went up from 21 percent to 48 percent.

Hospitals and physicians did not get paid just to buy EHRs and leave them in a closet. They had to demonstrate “meaningful use.” However, we are still in stage 1 of meaningful use, which demands only that 30 percent of patient records be entered by computerized order entry.


Intergenerational Transfers and Political Support for the Welfare State

groovy-manSupporters of the welfare state might see it as a mechanism for transferring income from rich to poor with the idea of helping those at the bottom end of the income distribution, but in the United States, the welfare state is increasingly transferring income from the young to the old, regardless of the wealth or income of the transfer recipients.

Obviously, this is the case with Social Security and Medicare, the federal government’s two biggest expenditure programs, because only old people are eligible, and there is no means test to determine eligibility for the transfer. And, not only are the old wealthier than the young, the wealth gap between the old and young is growing.

These programs transfer resources from the young to the old, but also, on average, from the poor to the rich.

Add to these long-standing programs Obamacare, which charges the young rates above what it costs to insure them so that the old can pay rates below what it costs to insure them. The program’s designers made no secret of the fact that the program was intended to impose costs on young Americans to transfer benefits to the old.

Obamacare makes the intergenerational transfer even greater. Thus, it is somewhat paradoxical that young voters have increased their support for the welfare state even as old voters have decreased theirs.

The transfer recipients, who are older and wealthier than average, and who will be dead when the true cost of the current welfare state must be paid, increasingly oppose the transfers. Meanwhile, young voters increasingly support these programs that cannot possibly provide them with the same level of benefits they now approve paying to their elders.

The young and old are, on average, both moving away from supporting policies that are in their narrow interests.

The most paradoxical part of this paradox is that the policies the young support not only work against their current interests, but also against everyone’s interests in the future because the high cost of funding these programs will slow economic growth. Today the old benefit from those transfer programs; in the future, everyone, both young and old, will be worse off because of them.

Wars on Everything

23908615_SThis year marks half a century since Lyndon Johnson declared a war on poverty. The rhetoric of war harkened back to Franklin Roosevelt’s declaration of war against the Great Depression, in which he demanded all the executive power the president would have against a foreign foe. Johnson’s Great Society inaugurated many billions of dollars worth of social infrastructure. Neighborhoods were torn down and rebuilt. People were forced out of their homes by eminent domain. Trillions of dollars have been spent, mostly on bureaucracies staffed by middle class employees. A fortune has been diverted to favored corporate interests. And crushing poverty persists, inequality has increased, the war on poverty has not succeeded.

This year marks a century since the federal government first got significantly involved in prohibiting drugs. It targeted heroin and cocaine in the Harrison Narcotics Act of 1914. Under the Nixon and Reagan administrations, federal drug policy became a war on drugs. This domestic war has not been metaphorical. Militarized police break down doors every day. The government has taken prisoner millions of people, people who have not committed violence against person or property, and the US now boasts the largest incarceration rate in the world. Prohibition has corrupted police departments, clogged the courts, and fueled most gang violence in the United States. Tens of thousands have died on the Mexican border, and the US can’t even keep drugs out of its prisons. If the goal was to curb addiction, the war on drugs has failed.

This year marks half a decade since Obama first declared that the war on terror was over—but most of the policies have remained. This US government has invaded and occupied two countries and bombed several more. It has institutionalized torture and detentions without due process and created a mass surveillance state. Every time you go to the airport, you are treated as a criminal suspect. The militarization of law enforcement has accelerated since 9/11. If the war on terror protects American freedom, it has certainly failed.

Politicians love war rhetoric, because it facilitates the dramatic expansion of state power, typically at the expense of liberties. America’s been in a state of perpetual foreign war, with domestic counterparts, for generations, and the results are generally not pretty.

Last year we saw some reasons for hope when Obama tried to start a US war with Syria and the public shouted him down. Let’s hope this trend continues. Next time a politician declares a war on something—anything—let’s hope the public demands that instead, we give peace a chance.