What’s wrong with the business economists? Have they forgotten everything they learned in Econ 101?

Casey Mulligan explains it for the umpteenth time:

As far as I know, before this month the only place that one could read about the Affordable Care Act’s new employment tax was in this paper by David Gamage, in posts I have written for this blog, in my 2012 book or in a 2013 paper. Even though the consequences of the law have been debated at least as far back as 2009, the law’s advocates have yet to acknowledge the new implicit employment tax, let alone estimate the number of people who will face it.

But in a recent paper, the Congressional Budget Office has joined me in explaining that it’s not just the implicit income tax that will contract the labor market. As the paper puts it, “The loss of subsidies upon returning to a job with health insurance is an implicit tax on working,” adding that the effect of the new tax is “similar to the effect of unemployment benefits” (see Page 120).

Once we consider that the new law has an employer penalty, too, the labor market will be receiving three blows from the new law: the implicit employment tax, the employer penalty and the implicit income tax. Regardless of how few economists acknowledge the new employment tax, it should be no surprise when the labor market cannot grow under such conditions.

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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.

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

California Assembly Speaker John A. Perez

From the “you-can’t-make-this-stuff-up” file, California Assembly Speaker John A. Perez (D-Los Angeles) is sponsoring a bill to create an Office of Farm to Fork. AB 2413, which was introduced February 21, would create a new office within the California Department of Food and Agriculture to promote “healthy food access,” especially in “underserved” areas, and seek “partnerships” between public health agencies, farmers, schools, nonprofits, and others.

The price tag for this new bureaucracy has not yet been determined, but be assured it will be in the millions to expand government agencies, and subsidize NGOs, farmers, and retailers. Hopefully the legislature will kill this unnecessary bill.

Most frightening, however, is that Perez wants to be California’s next Controller, the state’s chief fiscal watchdog.

When announcing his candidacy for Controller, Perez said:

I will continue to advance smart investment decisions that help businesses, create jobs, and unleash California’s full potential.

If Perez thinks an Office of Farm to Fork is a “smart investment decision” worthy of taxpayer support, you can be certain that as Controller he will mismanage public funds and treat taxpayers with disdain.

President Obama and Congressional Democrats have a standard talking point when defending Obamacare these days: no longer can insurance companies cancel your insurance after you get sick. They are lucky they are not subject to the same FTC regulations that apply to commercial businesses. This practice has been illegal under federal law since the presidency of Bill Clinton, and it has been illegal in most states long before that.

There is one tweak in the ACA that pertains here. In the past, if an applicant gave false information when applying for insurance, the insurer could later cancel the insurance and refuse to pay medical bills. These are called “rescissions.” How often did this happen? Industry sources report that it happened in about ½ of 1% of all polices. See Austin Frakt’s summary. Under the new law, the misrepresentation has to be “intentional.” “Is this a big deal?” asks Frakt. Probably not.

But here is what is a big deal, even though Austin ignores it: The president is using the problems of a tiny fraction of the population to justify draconian regulation of the health insurance of everyone in America! That’s outrageous. The change in the ACA pertaining to rescissions required a one-line piece of legislation. The bill we are living with is 2,700 pages long.

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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.

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

So far, Maine has resisted the temptation to grab new federal Medicaid dollars dangled by Obamacare. However, due to relentless lobbying by hospitals and other interest groups that profit from taxpayers’ dollars, leaders in the legislature are threatening to interfere with executive authority by introducing a bill to cancel a contract with a consultant who told the truth about the damage Medicaid is doing to Maine’s prosperity.

Expanding MaineCare (as Medicaid is called there) will not only burden state taxpayers; it will also increase inappropriate use of emergency rooms, decrease access to care for Maine’s most vulnerable residents, decrease private coverage, and even increase unemployment.

Today, 61.55 percent of MaineCare is federally funded. For the newly eligible population, the federal government would pay 100 percent of costs through 2016, then drop its contribution to 90 percent.

This offer is understandably tempting. But chasing after federal dollars has always driven states to increase their own spending, not reduce it. This is clearly shown in a thorough analysis of the costs of expanding MaineCare that the state’s Department of Health & Human Services commissioned from the Alexander Group. The Alexander Group is led by Gary Alexander, who succeeded in reducing costs and increasing quality when he reformed Medicaid in Rhode Island.

After several days in hiding, Leopoldo López, one of the leaders of Venezuela’s resistance movement, turned himself in at a massive protest rally and proclaimed: “If my imprisonment serves to wake up people…it will have been worth it.”

The Chavista dictatorship headed by Nicolás Maduro has charged him with acts of violence related to recent protests. Actually, as multiple testimonies and large amounts of graphic evidence demonstrate, the violence has been perpetrated by the paramilitary groups, known as “colectivos”, that the government has armed and eulogized as protectors of the Bolivarian revolution.

These militias are similar to the ones the Cuban government routinely employs against its critics. It shouldn’t come as a surprise. Cuba is closely involved with the Venezuelan regime and has played a key role in the design and operation of the security apparatus. Maduro’s ties to Havana go back to the 1980s, when he was trained at the infamous Escuela Superior del Partido Comunista, also known as “Ñico López.” Defectors from the intelligence services have stated that he has had close connections with Castro’s America Department, charged with spreading the revolution across Latin America.

Why is Leopoldo López so dangerous?  For several reasons.

In the Wall Street Journal this week, Dr. Scott Gottlieb discussed (gated, by subscription only) a worrying trend in the Food and Drug Administration’s regulation of medical devices. Increasingly, the FDA is demanding that device makers conduct trials of new devices by randomly assigning patients to the new device . . . or to a sham surgery without the new device.

In the example cited by Dr. Gottlieb, patients were assigned to sham surgery instead of to a real surgery that inserted a device that ablates (destroys) small nerves in arteries, a procedure that reduces high blood pressure. At great expense, these patients’ arteries were cut open, poked, and prodded, but no functioning device was inserted. The point was to determine whether the device actually worked or whether a placebo effect caused a positive outcome.

What is especially unfortunate about this development is that the traditional clinical trial of such medical devices is a “non-inferiority study,” a study in which the new device is tested against an already approved device. If the new device is at least as good as the incumbent, it is approved.

It is hard to see how the emerging approach is ethical. Patients who would have received an older, proven device are now increasingly subjected to sham surgeries instead. I have heard anecdotes of surgeons refusing to participate in such procedures.

Patients, payers, and regulators should be thrilled that device makers are content to conduct studies that compare effective devices against each other. In contrast, pharmaceutical companies are very reluctant to conduct trials that compare safe and effective drugs against each other. In the pharmaceutical context, such trials are used not to demonstrate non-inferiority, but to show whether the new drug is superior to the old drug.

In these cases, they are called head-to-head trials, and many self-styled patient advocates have lobbied to demand that drug makers conduct such trials. A few years ago, I wrote an article explaining how head-to-head trials for the purpose of demonstrating superiority are much more expensive and difficult to interpret than placebo trials for drugs. (In the latter, patients in the control group are given a sugar pill.)

How strange then that the FDA seeks to prevent device makers from conducting trials of two competing, effective technologies, in favor of sham surgeries. It appears to be another case of regulatory overreach that puts many patients in harm’s way.

Paul Howard and Yevgeniy Feyman in Health Affairs:

Meningitis is a terrible disease that can kill its victims in a single day. About 4,100 new cases are diagnosed annually in the U.S., with a mortality rate of more than 10 percent. Even with treatment, survivors are often left with serious side effects that can include brain damage and limb loss…

Swiss drug manufacturer Novartis has developed a vaccine — Bexsero — that specifically targets this strain of meningitis; the drug has already been approved for use by the European Medicines Agency (EMA), the European Union’s equivalent of the Food and Drug Administration (FDA). And within about nine months the FDA allowed Princeton University to offer the vaccine on campus to its students.

But the drug is not available elsewhere in the U.S. And it won’t be until Novartis completes a costly phase III trial. The authors ask:

The natural question to ask is why the FDA shouldn’t just approve a product already approved for the European Union, Canada, and Australia, while monitoring the vaccine (as all vaccines are already monitored — Bexsero is being actively monitored in the E.U.) through postmarket surveillance records? (Indeed, the more than 5,000 patients vaccinated at Princeton are close to the total number of patients tested in the EMA required trials.)

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

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For more on the health hazards of current FDA practices, see FDAReview.org. For the pivotal alternative to Obamacare, please see the Independent Institute’s widely acclaimed book: Priceless: Curing the Healthcare Crisis, by John C. Goodman.

In a previous post I reported that health benefits for government workers cost 40 percent more than benefits for private-sector workers. This extra cost imposes a significant burden on taxpayers. Researchers at the Pew Charitable Trusts have now answered another, related question: How does spending on health benefits for state and local government workers compare with spending on Medicaid?

In a recent report, the researchers conclude that state and local spending on government workers increased by 444 percent in real, inflation-adjusted terms from 1987 through 2012. Spending on Medicaid grew by 375 percent.

That is, spending on government workers increased almost 20 percent more than spending on Medicaid. Free-market reformers continuously promote the idea of getting people off Medicaid, which is a bloated welfare program. However, we should be increasingly concerned with spending on government workers.

In a recent coming-out piece for the longtime anonymous blogger behind the site “Taking Sense Away”, “Dear America, I Saw You Naked. And yes, we were laughing. Confessions of an ex-TSA agent,” Jason Edward Harrington details his six years as a TSA agent at Chicago’s O’Hare airport.

We knew the full-body scanners didn’t work before they were even installed. Not long after the Underwear Bomber incident, all TSA officers at O’Hare were informed that training for the Rapiscan Systems full-body scanners would soon begin. The machines cost about $150,000 a pop.

Our instructor was a balding middle-aged man who shrugged his shoulders after everything he said, as though in apology. At the conclusion of our crash course, one of the officers in our class asked him to tell us, off the record, what he really thought about the machines.

“They’re s***,” he said, shrugging. He said we wouldn’t be able to distinguish plastic explosives from body fat and that guns were practically invisible if they were turned sideways in a pocket.

Mr. Harrington also offers a behind-the-scenes profile of these men and women in blue, the forefront of America’s security against domestic terrorism: their primary occupation is ogling attractive females, and making fun of the unattractive—especially fat people; they racially profile; and they routinely retaliate against people whose attitudes they don’t like by “randomly” selecting us for “enhanced” screening.

And, as I have detailed previously, TSA agents share scientists’ concerns of the safety of these unlicensed radiation machines, calibrated and operated by incompetents—their concerns disregarded equally as those of us travelers:

Many of my co-workers felt uncomfortable even standing next to the radiation-emitting machines we were forcing members of the public to stand inside. Several told me they submitted formal requests for dosimeters, to measure their exposure to radiation. The agency’s stance was that dosimeters were not necessary—the radiation doses from the machines were perfectly acceptable, they told us. We would just have to take their word for it. When concerned passengers—usually pregnant women—asked how much radiation the machines emitted and whether they were safe, we were instructed by our superiors to assure them everything was fine.

The article is a valuable addition to our body of knowledge—which is vast and unequivical. But of course it will do no more to abolish the TSA and surveillance state than the numerous other whistleblowing and exposés until those whose culture and liberty is being undermined by fear-mongering grow up and decide to assert their God-give rights as a free people.

No elected “leader” is going to save us, folks: it’s up to each and every one of us—let’s go viral.

Last week I testified before the House Oversight committee on the “risk corridors” in the (ObamaCare) exchanges. Republicans claim that this is a device to bail out the insurance companies. Democrats, in the unusual position of defending the insurance companies, actually claimed that the government was going to make a “profit” because of it. I was in the uncomfortable position of not agreeing completely with either side.

The Affordable Care Act creates a new health insurance marketplace (the exchange). But because of the great uncertainty about what buyers will enter the market and who will buy what product, the law creates three vehicles to reduce insurance-company risk. Risk adjustment, a permanent feature of the exchange, redistributes money among the participating insurers, depending on the health status of the enrollees. That is, plans with healthier enrollees are “taxed” and plans with sicker enrollees are “subsidized.” Reinsurance allows insurers to hedge against the possibility of enrolling a very high-cost patient. This program lasts for only three years, and the funds come from an assessment on all non-grandfathered health insurance sold in the country. These two programs are both deficit neutral, in the sense that outflows equal inflows. See the explanations by Greg Scandlen and John R. Graham and the summary chart below.

The third vehicle is the risk corridor, which basically redistributes funds from profitable insurers to unprofitable ones. Unlike the first two vehicles, however, this adjustment is not revenue neutral. If the entire market turns out to be unprofitable, the federal government steps in to subsidize some of the losses. In fact, there is potentially an unlimited taxpayer liability here — at least for the next three years.