Ted Cruz and Health Reform

Senator Ted Cruz has won the Iowa Republican caucuses. Over the weekend, Chris Wallace of Fox News challenged Sen. Cruz on his proposal “to sell health insurance across state lines,” citing my argument that federal action to mandate this would be ineffective. The argument in question appeared in an op-ed in The Hill last October, although I have made it previously elsewhere.

In fact, Sen. Cruz’s proposal to sell health insurance across state lines does not appear in his presidential campaign platform. It is in a Senate bill he proposed last March, in anticipation of the Supreme Court’s decision in King v. Burwell. That case was decided last summer in favor of the Obama administration. If it had gone the other way, Obamacare would have collapsed in most of the states (which have federally facilitated health insurance exchanges, i.e. healthcare.gov).

Few politicians in Congress prepared for this possibility. Sen. Cruz and a handful of his colleagues did. However, the Supreme Court got the case wrong, so any pressure on the administration to change Obamacare through legislation evaporated.

Mandated Paid Maternity Leave . . . Again

Time recently published an article discussing the ever-debated issue of mandated paid maternity leave. The article’s author, Belinda Luscombe, titled her article, “Please Stop Acting as if Maternity Leave is a Vacation.”

Included with the article were the standard statistics. The United States is the only OECD country to not offer guaranteed paid leave, etc. etc. But she added some additional “arguments” as well.

She discussed how many individuals reacted to Obama’s recent announcement that he would sign a memorandum offering federal employees a minimum of six weeks paid leave when a child arrives. She noted that many people stated something along the following lines, “if people want to have kids, we, the taxpayers, shouldn’t have to pay for their time off.” She describes such responses as “juvenile.”

She continues on, pointing out that the survival of our species depends on people having children and that family leave is, alas, not a vacation. She concludes her article by stating that “yes, parents choose to have children. But they’re doing it for all of us, like jury duty, or being the designated driver….they’re taking one for the team.”

Reflections on National School Choice Week

Last week was National School Choice Week, with more than 16,000 events from coast to coast shining a spotlight on effective education options for students.

Today, parental choice in education encompasses a variety of education options:

Eight states and the District of Columbia allow parents to enroll their children in any public school they wish, regardless of where they live.

Another 43 states and DC allow public charter schools. Altogether more than 6,700 charter schools enroll over 3 million students.

Public magnet schools, 3,200 nationwide, enroll over 2.6 million students in all 50 states and DC.

Parental choice in education also includes a growing number of private and online learning options as well:

Fully 27 states and DC offer private school parental choice programs, including publicly-funded voucher scholarships, privately-funded tax-credit scholarships, tax credits, and tax deductions. These programs are helping more than 1.2 million students and their families nationwide.

On Her 111th Birthday, Ayn Rand on Individual Rights, Liberty, and Government

Few people have been more controversial than Alisa Rosenbaum. But few have heard that name, because the apoplectic responses are reserved for the new name she gave herself after she left Russia for America—Ayn Rand.

Some people are devotees of everything Rand. Others use her name as a pejorative. Still others find some of her ideas insightful while rejecting others (e.g., philosophers who reject naturalism/atheism as incoherent, de-humanizing and self-refuting (see here, here, here, and here); Christian/theist libertarians who base their views on natural law and reject her philosophy, lifestyle and insistence on atheism; “anarcho-capitalists” who reject Rand’s “minarchism;” libertarians who reject the pro-warfarism of many of her followers (see here, here, and here); and others who reject Rand for creating a cult). Yet Rand’s influence is undeniable. She sold over 30 million books, and decades after her 1982 death, hundreds of thousands more annually. In a 1991 survey by the Library of Congress and the Book-of-the-Month Club, Atlas Shrugged was ranked behind only the Bible as the book that most influenced readers’ lives. (Incidentally and for the record, the libertarian-themed novels by Christian, natural-law authors C.S. Lewis and J.R.R. Tolkien have each sold over 150 million copies.)

Obamacare’s Cost per Beneficiary Explodes with Shrinking Enrollment

The Congressional Budget Office’s latest budget estimate shows Obamacare’s costs per beneficiary have exploded, as enrolment in Obamacare’s broken exchanges collapses. January’s update estimates 2016 exchange enrolment at 13 million people (p. 69). Although the president’s administration had previously downgraded its estimate of Obamacare enrolment, this is the first significant change by the non-partisan CBO.

As recently as March 2015, CBO was still assuming 21 million enrollees in Obamacare’s exchanges this year (Table 2). In the January update, it has changed its estimate only for 2016 enrollment, not for future years. Next March’s update will include a more thorough analysis including future years, and we can expect those estimates to be similarly downgraded.

What is shocking, however, is that the January update still estimates that tax credits, which subsidize insurers participating in exchanges, will cost taxpayers $56 billion this year (p. 182). That amounts to about $4,308 per enrollee (although not all are subsidized). Back in March 2010, CBO estimated that 21 million people would be covered in exchanges in 2016, for a total cost of $59 billion in tax credits (pp. 20-23). That would amount to about $2,810 per enrollee.

The Truth about Tesla Motors

During a January 19th panel discussion at the Federal Trade Commission (FTC), Tesla Motors general counsel Todd Maron said: “We make money from one thing: car sales and car sales alone.” In reality, electric vehicle (EV) manufacturer Tesla Motors loses more than $4,000 on every car it sells on a “full-cost” basis (keep in mind that some of Tesla’s costs are heavily subsidized). Tesla’s losses per vehicle are even greater using generally accepted accounting principles. CNBC and Reuters explained:

Tesla reports its finances in a different way from the Detroit automakers. Using the generally accepted accounting principles, or GAAP, used by GM or Ford, Tesla’s operating losses per vehicle have steadily widened to $14,758 from $3,794 in the second quarter of 2014.

Tesla, instead, largely survives on government handouts.

In 2015, Tesla delivered 50,580 cars worldwide, with 25,700 going to U.S. customers. This is a trivial percentage of both the worldwide and U.S. auto markets. A record 17.5 million passenger vehicles were bought in the United States in 2015. Yet only 0.67 percent—or 116,548 vehicles—were all-electrics or plug-in hybrids, 6,500 fewer than in 2014. EVs account for 0.16 percent of the 250 million U.S. passenger vehicles on the road. The market for electric cars is trivial, despite massive government support.

Instead of making money from car sales, Tesla survives by participating in many government subsidy programs. One lucrative program is California’s zero-emission vehicle (ZEV) credit program. Phil Kerpen explained how the program works:

ZEV credits are a mandate dreamed up by the bureaucrats at the California Air Resources Board (CARB), which requires [auto] manufacturers to build and dealers to sell an arbitrary number of “zero-emission” vehicles each year. . . . Tesla’s Model S generates four credits per unit sold. This means the company can sell $20,000 in ZEV credits to other [auto] manufacturers for each Model S sold—a cost borne by purchasers of other cars.

ZEV credits, pioneered in California, have spread to nine other states. Tesla has collected more than $517 million from competing automakers by selling ZEV credits to those who fail to sell enough zero-emissions cars to meet arbitrary mandates.

Alcohol Prohibition and the Rise of KY Meth Labs

meth_MLSeveral months ago, I wrote on the decline in the number of meth labs in the United States. While many cheered at the news, I argued that economics, as it so often does, should lead us to be skeptical of the story. A decrease in the number of meth labs in the U.S. does not at all imply a decrease in meth use. As I discussed, many users have simply turned to substitutes. As opposed to buying  more expensive domestic drugs, many users now obtain their methamphetamine from cheaper Mexican suppliers.

Although the number of meth labs may be on the decline, they certainly have not disappeared. In some areas, meth continues to be manufactured at astonishing rates. My home state of Kentucky is a prime example. Between 2008 and 2009 the state saw a 73 percent increase in the number of labs.

The manufacture and use of meth has disastrous consequences for individuals, families, and whole communities. In 2009, meth labs cost the state of Kentucky some $30 million. More than 34,000 hours were spent cleaning up labs. A full quarter of all burn patients that year received their injuries as a result of meth production at an average cost of $229,000 per patient.

Private Sector Vigilance, Not Government Regulation, Protects Patients

Last July, I cheered Arizona for passing a law allowing patients to order blood tests without a doctor’s prescription. The company that lobbied for the change, Theranos, was also interesting because it posted its prices at venues where patients could get blood drawn. It had a widely promoted partnership with Walgreens, which has a strategy of using new technologies to deliver more value-added services in the retail environment.

Since then, Theranos has gotten into trouble for being opaque about how it actually conducts its tests when the samples get back to its labs. This has led to turmoil in the business media and among investors which are interested in backing entrepreneurs with new approaches to lab testing.

Another Reason to Scrap Obamacare’s Exchanges

New estimates project Obamacare will leave behind far more uninsured people than originally estimated. The Congressional Budget Office’s March 2010 estimate figured 26 million uninsured in 2015, while the March 2015 estimate figured 35 million uninsured in 2015.

So, Andy Slavitt, the Acting Administrator of the Centers for Medicare & Medicaid Services, recently announced steps to increase enrollment in Obamacare’s exchanges. One solution is counter-intuitive. He will tighten up the open season for enrollment. Because of the administration’s eagerness to enroll as many people as possible, deadlines for the first three open seasons have been moving targets. No more, according to Mr. Slavitt, who suggested that corruption among brokers was a motive:

Last month, we announced the elimination of the tax season special enrollment period; and this week, we will be announcing that we will be eliminating certain other select SEPs and making the language on others clearer to prevent bad actors from signing people up for insurance inappropriately.

The tax season special enrollment period was conjured up because people would do their tax returns in the spring and only to learn they were subject to Obamacare’s penalty for the previous year. So, the administration gave them a break to sign up late for the current year. “Bad actors” likely refers to applicants misrepresenting an event such as divorce or job loss so they could sign up for Obamacare outside open season, if they are diagnosed with expensive illnesses.

“El Chapo,” Cartels, and the Consequences of the War on Drugs

The drug kingpin Joaquín Guzmán Loera, more commonly known as “El Chapo,” (“Shorty”) was finally captured. That is, he was captured again. For more than six months, Mexican authorities have been tracking Guzmán after he escaped from Mexico’s most secure prison through a tunnel in his cell. Reports state that the tunnel was not a subtle undertaking. In fact, it was more than two feet wide and five feet tall. Guzmán could walk upright as he escaped through the tunnel, which was also equipped with lighting, a ventilation system, and a motorcycle on rails.

El Chapo’s reputation as a notorious drug lord is well deserved. Every year between 2009 and 2011, Forbes ranked him as one of the most powerful men in the world. In 2014, the magazine estimated that El Chapo’s Sinaloa cartel was responsible for a quarter of all illegal drugs entering the U.S. from Mexico. Conservative estimates placed the cartel’s annual revenue at more than $3 billion. His reputation even earned him a sort of perverted honor; he was named “Public Enemy No. 1” by the city of Chicago. Such a distinction has not been made since Al Capone.

Since Guzmán’s capture, many media outlets, public figures, and others have discussed what his arrest signifies. Some have focused on Chapo’s potential extradition to the United States to face trafficking charges. Mexican President Enrique Peña Nieto stated that El Chapo’s arrest “confirms that [Mexico’s] institutions have the necessary capacity to confront and overcome those who threaten the tranquility of Mexican families.”

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