Friday, March 24, 2017
I will have comments on health care reform very soon.
Friday, March 17, 2017
Steele auf Deutsch
A quick note: my comment for Heartland on what Donald Trump's electoral victory might mean for energy policy was picked up and translated by a German website devoted to climate and energy. I just came across this. All readers of Unforeseen Contingencies are strongly urged to go to the page immediately and read. What better time than now to work on one's German?
Thursday, March 09, 2017
Heartland press release: Steele's comments on AHCA
“I’m skeptical of the House Republican plan. It seems to be a modification of the ACA, keeping some of the Obamacare features and replacing the subsidies with tax credits. But the tax credits seem less than the likely premium increases, at least for older purchasers of insurance. It replaces the penalty for being uninsured with a penalty surcharge for the uninsured who eventually take up insurance. This seems like an incentive not to purchase insurance until one needs health care. I’m not sure why this plan would be more sustainable than the ACA.
“In my view, the real problem with all the plans cooked up by Washington D.C. are that they focus almost entirely on the demand side, on how to help people pay for health care. They also impose complex schemes, rather than market-based approaches. While the health insurance market is a mess that needs fixing, the real gains that might be made are on the supply side. These insurance fixes – the ACA and the Republican proposal – do nothing for the supply of health care. At best what they can do is increase demand for health care services while doing little to promote innovation and entrepreneurship in health care, pushing prices up. The entire approach is wrong. What’s called for is a free market in health care.”
I am measured and polite and guarded in the above comments. But come on. The more I hear and read about this plan, the more outrageous it seems. Here is a major problem: it creates an obvious incentive for adverse selection, which will destroy insurance markets. Under the ACA (Obamacare), the exchanges were to provide insurance to people without coverage. Under the "pre-existing conditions" provision, no one can be refused insurance, and there's no limit to how much an insurance company might be compelled to pay out. So, for example, if one asks to buy a policy costing $6,000 and has a health problem that will cost $100,000 to treat, the insurance company must sell it, at a guaranteed loss of $94,000.
Given this, no healthy person has any incentive to buy insurance, only sick people enter the pool, and insurance prices begin soaring to the heavens. To avoid this, Obamacare mandated insurance; everyone was required to buy it. The mandate involved a small fine, errr, "tax," that proved to be ineffective. The Obamacare pools consist of sick people and are collapsing as premiums skyrocket.
The Republican solution is to eliminate the mandate.
Good lord! This reduces the incentive for healthy people to buy insurance. This proposal will accelerate adverse selection. It will accelerate the skyrocketing of premiums. It is not sustainable. It will lead to increasing premiums,higher deductibles, and shrinking networks for everyone.
There's plenty more wrong with it, but this is enough to make AHCA worse than the dreadful Obamacare. It accelerates the wrecking of health insurance and does nothing at all to move us toward a free market, and nothing at all to expand the supply of healthcare. GOP needs to retract this dishonest and destructive plan and repeal Obamacare, not tweak it. They need to get a new Speaker while they are at it.
Tuesday, March 07, 2017
Republican Congress lies
This strikes me as an utterly fraudulent "plan." If ACA doesn't work (and it doesn't, it's collapsing) why should this work better? I suspect that when CBO scores it, it will look very bad. Robert Laszewski calls it "mind-boggling" and explains why it won't work. He also links to Sarah Kliff's clear and non-partisan summary of the proposal on Vox. And here's something a little more partisan, Daniel Horowitz' scathing analysis on Conservative Review. All agree, this is a bad proposal.
As I wrote to a colleague, this is just what I was afraid of. I'd repeatedly said I didn't believe the Republicans wanted to get rid of Obamacare, that they'd always have an excuse..."we can't do anything until we control the Senate,"... "yes, we now have the Senate but can't do anything until we have the presidency". Now it's, "yes, we can't do anything."
This monstrosity is possibly worse than the current ACA; it is probably less financially sound (yikes!) and might do even more to encourage adverse selection. I hope this asinine proposal doesn't pass, but if it does the wrecking of private health insurance seems assured.
This is just what I expected of the GOP leadership, of course. I remember all these GOP *^@$^#*(! excoriating Ted Cruz for trying to defund Obamacare..."terrible strategy, Ted, you must wait until we have both houses and the presidency. You are a traitor who will sabotage our clever PRACTICAL strategy for repealing Obamacare."
There were also the phony repeal votes, which Cruz characterized this way: "We'll have a vote on repealing Obamacare," he said. "The Republicans will all vote yes; the Democrats will all vote no. It will be at a 60-vote threshold. It will fail. It will be an exercise in meaningless political theater."
And now that Republicans have both houses and the presidency, we see that, as Cruz warned us and Horowitz now puts it, "they lied all along."
I made a few comments on all this for a Heartland Institute release. Once they are up I will link to them or post here.
Thursday, March 02, 2017
Murray Rothbard's Birthday!
Happy Rothbard's Birthday to all of "our" readers!
P.S. (Note: modified from original to be more polite. I did not like my previous tone. I've also added some additional thoughts.)
The comments section on the American Spectator piece attracted the anarcho-capitalists who treat the ideas as a religion, as expected. I find this somewhat entertaining because it is so predictable, but it's also instructive. In my piece I pointed out, correctly, that the primary argument in economics for a state is the public goods argument and that Rothbard didn't refute it but sidestepped it. I did not say the public goods argument is correct (I think it isn't). But one of the earliest commenters labelled my statement "false" and began making a claim that the free market can solve free rider problems via "dominant assurance contracts," (DAC) a hypothetical non-existent kind of contract.
The DAC is an interesting idea. It's almost certainly wrong to say it solves the public goods problem. It does not eliminate the free rider problem, although it might reduce it should it ever exist somewhere besides an academic blackboard (it's a hypothetical), but that's irrelevant to my point. This idea is not Rothbard's theory, and Rothbard fails to seriously address the public goods problem -- that's my point.
But even better, I point out it's silly when Rothbard claims that private defense agencies would never behave in predatory fashion or fight with each other. (I'm more polite than this in the piece, but it really is a silly point.) I use Al Capone and the St. Valentine's Day massacre as one example, and Hitler invading Poland as another. People with armed might who are in an anarchic situation will use it if they think the benefits outweigh the costs. The same commenter objects to my argument because Al Capone's gang gained its wealth during guvamint Prohibition and Hitler was a politician. I see... so the state made Al Capone commit murders, but in an anarchic society he and his gang would never even think of killing competitors? This is not a rational argument. I expected it and prepared. When the commenter "explains" Hitler by saying he was a "politician," commenter falls into the trap I set: "There’s nothing special about whether we call an organization a “state” or not that changes the benefit-cost analyses of the leaders in these matters."
I included that line precisely because whenever one points to how people in anarchic relations actually behave, a standard anarcho-capitalist response is that the state currently exists so this can't be considered anything like the way people would behave in anarchic relations if there were no state -- people would behave entirely differently. I.e. they simply repeat Rothbard's claim. They add to the silliness of the argument by saying that certain people's behavior can't be counted, because they are statists, politicians, criminals, etc. These "answers" make no sense as responses to logical arguments from critics. They make more sense if one realizes they are affirmations of faith made in the face of nonbelief.
The anarcho-capitalism of most Rothbardians I've encountered is not political theory, it's religion.