In early June, we learned that over two million (of a total of eight million) Obamacare applications lacked income, citizenship, or immigration data to verify eligibility for Obamacare’s tax credits. In the middle of the month, the Obama administration began contacting “hundreds of thousands of people with subsidized health insurance to resolve questions about their eligibility, as consumer advocates express concern that many will be required to repay some or all of the subsidies.”

Now, the Inspector General (IG) of the U.S. Department of Health and Human Services has confirmed that the agency was lax in preventing ineligible enrollments: “The deficiencies in internal controls that we identified may have limited the marketplaces’ ability to prevent the use of inaccurate or fraudulent information when determining eligibility of applicants for enrollment…”

That’s putting it mildly. Far worse is that the IG is unable to investigate eligibility based on income or residency because the IRS and Social Security Administration appear not to be cooperating with the investigation (pp. iv-v):

During our fieldwork, questions arose concerning OIG’s access under the Internal Revenue Code to Federal taxpayer information that IRS provides to marketplaces. We sought authorization from IRS to access that information. Because the request was still pending when we had completed our data collection, we did not review supporting documentation for certain eligibility requirements, such as annual household income and family size, for the purpose of this report.3 As a result, we could not evaluate whether each marketplace determined the 45 sample applicants’ eligibility for advance premium tax credits and cost-sharing reductions according to Federal requirements.

Further, we did not determine whether information submitted by the 45 sample applicants at each marketplace was inaccurate or fraudulent because we could not independently verify the accuracy of data stored at other Federal agencies, e.g., IRS and SSA. Instead, we focused our review on determining the effectiveness of internal controls for processing that data and addressing inconsistencies in eligibility data when identified by the marketplace.

Insofar as mainstream economics may be said to make moral-philosophical assumptions, it rests overwhelmingly on a consequentialist-utilitarian foundation. When mainstream economists say that an action is worthwhile, they mean that it is expected to give rise to benefits whose total value exceeds its total cost (that is, the most valued benefit necessarily forgone by virtue of this particular action’s being taken). But nearly always the economists make no attempt to evaluate as part of their benefit-cost calculus any costs that might be incurred as a result of how and by whom the action is taken.

Often they verge on the assumption that benefits and costs exist apart from those who take the action, even though this assumption clashes with the foundational principles of their science. Thus, in benefit-cost calculations, economists often attach a value to certain expected benefits (e.g., the dollar value of lives saved as a result of a safety regulation) and compare this value to the dollar outlays by the government that imposes and enforces the regulation and by the private parties who are compelled to comply with it, often at great private expense.

I cannot recall, however, ever seeing a benefit-cost computation that attaches any cost valuation to the loss of freedom by the regulated parties. It is as if it matters not at all that an action is mandated, as opposed to freely chosen. Freedom itself is, in effect, considered worthless, and hence its loss entails no sacrifice regarded as worthy of receiving weight in the calculation.

Most states use contract prisons for some of their corrections needs, often in the hope of saving money, but is contracting out really all that worthwhile for states? The current debate about prisons and the private sector has often generated more heat than light. Fortunately, a new study from the Independent Institute answers the question by offering a new and improved method for calculating the fiscal benefits of breaking free of the public-prison monopoly.

Authored by two leading experts on public-private partnerships, economists Simon Hakim and Erwin A. Blackstone, Prison Break: A New Approach to Public Cost and Safety finds that using contract prisons often results in cost savings two or three times as large as the 5 to 10 percent minimum that some states require. In some cases, the long-run savings is much higher, such as in California (savings of 58.61% at one prison), Oklahoma (up to 36.77%), and Texas (up to 44.95%).

“Our study found that contracting out inmates to private prisons saved state governments money while maintaining performance at least at the same quality as public prisons,” Hakim and Blackstone write. “Indeed, public-private competition and cooperation could even be extended to further these fiscally responsible goals.”

Although thirty states used contract prisons in 2010, Hakim and Blackstone found it helpful to focus on ten: Arizona, California, Florida, Kentucky, Maine, Mississippi, Ohio, Oklahoma, Tennessee, and Texas. Employing state and federal cost data, as well as interviews with corrections officials, they compare the short-run and long-run avoidable costs of contract prisons with the costs of public prisons. In doing so, they raise the bar for studies on the economics of prisons. Interestingly, they note that states that contract for correctional services tend to employ a variety of alternatives to incarceration, such as sentencing reform, community-based corrections and reentry programs, and that private operators often partner with government agencies to provide such services.

The reactions from the progressive side of the fence to Burwell v. Hobby Lobby Stores, Inc. was stunning.  The spin is that American women have been stripped of fundamental constitutional protections. Sandra Fluke at The Washington Post’s blog claimed that “[t]he Hobby Lobby case is an attack on women.”  The White House lamented that the decision “jeopardizes the health of women employed by these companies.” Ilyse Hogue, president of NARAL Pro-Choice America, according to CBS News, opined that “[t]his ruling goes out of its way to declare that discrimination against women isn’t discrimination.”

So in what nefarious way did Hobby Lobby and other Christian-owned businesses conspire with five members of the Supreme Court to discriminate against women and impair their health? The business owners simply objected to paying for health insurance coverage for four birth control methods that prevent a fertilized egg from developing by inhibiting its attachment to the uterus. Because they believe that life begins at conception, the Christian business owners felt that they would be aiding and abetting the murder of unborn children if they funded these methods. The owners are not against all contraception and voiced no objection to the 16 other FDA-approved birth control methods that health insurance plans must provide under Obamacare. In essence, these Christian villains simply objected to being forced to provide what they viewed as abortifacients.

In interpreting the Religious Freedom Restoration Act (“RFRA”), the Court simply held that the Christian business owners do not have to pay for the four methods that they believe induce abortion.  The Court assumed that the government had a compelling interest in providing cost-free contraceptives but found that the mandates of Obamacare were not the least restrictive means in furthering that interest.  This is that statutory test that Congress requires in a RFRA analysis.

Ralph Nader’s new book, Unstoppable, describes a convergence of ideas on the political left and political right against the corporate state.  The book says there is a broad consensus, from socialists to libertarians, who oppose government policies that provide corporate welfare and bailouts for the economic elite and impose the costs on everyone else.  This widespread opposition to corporatism manifests itself in political groups ranging from the Occupy Wall Street movement to the Tea Party.

I’ve noticed the same thing, and a few months ago commented in The Beacon about the similar conclusions Joseph Stiglitz, on the left, and David Stockman, on the right, drew about how government policies favored the cronies — the 1 percent — over everyone else.  And shortly before that, I noted my nearly complete agreement with self-described Progressive Cynthia Tucker’s column critical of government policies that favor the well-connected elite over the general public.

Like Nader, I am encouraged when I am able to agree with people whose political views differ substantially from mine.

It’s true that people from one end of the political spectrum to the other oppose corporatism, at least in the abstract.  When we get to specific cases, that opposition is not so clear.  Corporate bailouts were supported by Presidents Bush and Obama, and by a compliant Congress.  Green energy subsidies are popular with certain groups, and business investment and job creation incentives are popular with other groups.

Ezra Klein challenges the notion that patients in the United States get better cancer treatment than patients in other developed countries. Klein was writing in response to the Commonwealth Fund’s comparison of health systems in eleven developed countries. As I noted previously, one problem with this survey is that there is no apparent relationship between ranking on the survey and health outcomes. Although the United States does poorly in the survey, it does well in health outcomes, especially cancer outcomes.

Or maybe not, according to Klein:

Most of the studies that highlight America’s skill in treating cancer do so by measuring survival rates—that is to say, they measure how many people survive for a certain number of years after the cancer is diagnosed. So if a certain cancer kills 50 percent of people within five years, then the five-year survival rate is 50 percent.

The problem here is simple: survival rates don’t necessarily measure when people die. They also measure when they’re diagnosed—and sometimes, that’s all they measure.

“Let’s say there’s a new cancer of the thumb killing people,” writes Aaron Carroll, a professor of pediatrics and assistant dean at Indiana University’s School of Medicine. “From the time the first cancer cell appears, you have nine years to live, with chemo. From the time you can feel a lump, you have four years to live, with chemo. Let’s say we have no way to detect the disease until you feel a lump. The five year survival rate for this cancer is about 0, because within five years of detection, everyone dies, even on therapy.”

Carroll goes on to imagine a remarkable machine: “a new scanner that can detect thumb cancer when only one cell is there.” Congress immediately orders that every American be scanned for thumb cancer. “We made no improvements to the treatment,” he writes. “Everyone is still dying four years after they feel the lump. But since we are making the diagnosis five years earlier, our five year survival rate is now approaching 100%!” That’s how survival rates can mislead.

I don’t know if you are as popular with the political insiders as I am, but already today I have received emails from Joe Biden, Nancy Pelosi, and Debbie Wasserman Schultz.  In fact, I’ve received more than a dozen emails today alone from either the Democratic Party, Democrats involved in election campaigns, or Democratic interest groups.

The Democrats aren’t the only ones who email me.  I’ve also received emails today from Republicans and Libertarians, though not as many.

I am somewhat interested in getting the emails just because I’m curious about what they are saying (besides “Send Me Money”), but the Democrats are trying my patience with their huge volume of daily spam.  I think it’s amusing, for example, to get an email that says I should donate because “We have to defeat the Koch brothers.”  I didn’t know the Koch brothers were running for anything.

But really, how effective can these emails be when more than a dozen arrive every day?  Today’s volume of political spam is not unusual for me; it’s just the day I decided to blog about it.

A couple of months ago, the Bureau of Economic Analysis told us that first quarter Gross Domestic Product (GDP) was going to decline by one percent, prevented from tanking only by explosive growth in health spending.

However, the final estimate of real first quarter GDP has thrown everyone for a loop, reporting an annualized decline of 2.9 percent. It was the hugest revision in years.

The huge error in the earlier figure was almost entirely driven by a poor estimate of the effect of Obamacare by the Bureau of Economic Analysis (BEA):

The downward revision to consumer spending was mostly to services, especially to health care services. The revision to health care services reflected the incorporation of newly available Census Bureau quarterly services survey (QSS) data for the first quarter. The QSS data reflect the revenues of for-profit and nonprofit hospitals, physician offices, nursing homes, and other health care providers and the expenses of nonprofit hospitals and other nonprofit health care providers. Prior to receiving the Census QSS data, BEA used information on Medicaid benefits and on Affordable Care Act insurance exchange enrollments to prepare the previously published estimates of health services.

In other words, the BEA thought that Obamacare enrollees would immediately start consuming lots of medical services. In fact, consumption of health services declined in the first quarter.

July 2 marks the 50^th anniversary of the most famous Civil Rights Act in U.S history. Passed after the longest debate in congressional history, the Civil Rights Act (CRA) promised to secure justice for all regardless of race, color, creed, sex, or national origin. As I wrote in Race and Liberty: The Essential Reader, the law “was understood to mean ‘colorblindness’ by nearly every observer at the time.” The plain meaning of the act might be summed up as: “Nondiscrimination. Period.”

Supporters of the Civil Rights Act did everything in their power to make the language plain, clear and strong: one key clause stated:

“Nothing contained in this title shall be interpreted to require any employer . . . to grant preferential treatment to any individual or to any group because of race, color, religion, sex, or national origin . . . .”

A chief sponsor of the law, Senator Hubert Humphrey (D-MN), rejected the “bugaboo” of preferences or quotas by stating “If the senator [opposing the act] can find . . . any language which provides that an employer will have to hire on the basis of percentage or quota related to color, race, religion, or national origin, I will start eating the pages one after another, because it is not in there.”

In 1964, opponents predicted that a governmental push for racial outcomes was bound to occur, regardless of the plain language of the act. After all, the principle of a government limited by respect for individual liberty had always been flouted by those in power—including segregationist opponents of the law who now acted “shocked! shocked!” that the government might treat individuals differently based on race. This was sheer hypocrisy coming from those who defended racial discrimination by state governments.

Alicia Mundy writes in the Wall Street Journal of June 24, 2014, that a coalition of environmentalists and at least some of the many corporate cronies of the federal government are pressing a proposal to require private business entities to account for and to report to shareholders the risks to which they are exposed by looming “climate change”.

Never mind that the scientific evidence of “climate change” is debatable, not because average temperatures may or may not be rising globally, but because answers to questions about mankind’s contribution to that change are uncertain. After all, the hottest period on Planet Earth occurred during the Middle Ages, hardly a time of vigorous industrial activity.

The report released by the self-styled Risky Business coalition claims that its purpose is to depoliticize the climate change debate by transforming it into an economic issue focusing on the future consequences of not dealing now with the future (and speculative) financial costs imposed on private businesses by higher temperatures, rising sea levels, more violent weather events (hurricanes and tornadoes) and other dire straits into which America’s business sector could be plunged by the coming climate catastrophe. One estimate claims that the United States will lose $100 billion worth of coastal property if the worst of the climate-change scenarios materialize.

It turns out, however, that the Risky Business coalition is nothing but one more example – if one were needed – of ordinary special-interest politics at work. Fronted by former treasury secretary Henry Paulson (he of the treasury’s unholy alliance with Wall Street’s Goldman Sachs) and former New York City mayor Michael Bloomberg (he of the infamous “Big Gulp” tax), the lobbying group’s “bipartisan” committee counts among its most prominent members Tom Steyer, described in Ms. Mundy’s article as a “hedge-fund billionaire” as well as “a powerful voice on the environmental left and an increasingly important source of funds for Democrats.”