Opposite to the Stated Goal

Whenever government attempts something beyond the proper role of government (protection of life, liberty, and property), it causes unintended consequences—usually exactly opposite to the stated goals of the interference.

That is an axiom of the Spherical Model. It comes up often when we’re talking about government policies. Today we’ll look at an example from this past week.

This US Senate came out with their version of “repeal and replace,” which, pretty much like the House’s version AHCA (American Health Care Act), doesn’t repeal, and only slightly modifies the original, inaptly named Affordable Care Act.

The ACA—or Obamacare, since it’s on him—claims to want to provide more affordable health insurance for the uninsured. It did so by astronomically raising insurance costs, reducing choice, forcing Americans to make a purchase whether they would choose to or not, and added in forcing companies to pay for practices against their beliefs (which the courts have somewhat corrected after attacks on nuns and others whose religion finds abortion unconscionable). People lost the health insurance they had. People lost their doctors. People found health care scarcer and more expensive. And the whole system is spiraling downward.

Let’s add that the ACA claimed it had the right to force all citizens to purchase health insurance as “a legitimate exercise of its expressly delegated power to regulate commerce among the states. The trouble is that the mandate does not regulate commerce at all. Rather, it forces people into commerce on pain of a financial penalty,” quoting Robert George in the Prager U video "Why We're Losing Liberty." 

Another helpful video on today's topic is "Why Is Healthcare So Expensive?" A good 2 1/2-minute summary:

Meanwhile, since the ACA's partisan late-night scurrilous passage in March 2010, Republicans have been promising to repeal the whole of Obamacare and replace it with free-market reforms.

But now that they are in power, they hesitate—because the Democrats, amplified by the media, which is lopsided in favor of Obama and his ilk, announce that getting rid of the higher costs and less care of Obamacare means they want to kill thousands of people. Lies seem to have an effect on weak seekers of approval.

So, from the House we got the AHCA, American Health Care Act. At least they didn’t call it affordable. But it doesn’t actually provide health care either. It intended to adjust a few minor things. And it certainly wasn’t a repeal of the ACA as promised from 2010 through the election of 2016.

The freshly named BCRA, or Better Care Reconciliation Act, which is what the Senate is calling their version, does nothing to provide better care, or more affordable care—with a few provisos mainly put off until past some other election or decade. Nor would I say it reconciles reality with the pretended goal of more affordable health care for all. (The real goal of government, when it steps beyond its proper role is always to wield power.)

The BCRA will not pass with any help from Democrats. That means it requires all but possibly two Republicans to vote in favor. (There are 52 Republican Senators, plus VP Mike Pence to break a tie.) But Senators Ted Cruz, Rand Paul, Dean Heller, Ron Johnson, and Mike Lee all oppose it as currently written. Senator Heller thinks it needs more money going to Medicaid than any previous version, so let’s set him aside for now. The other four want to keep their promise to repeal the ACA and replace it with free-market ideas.

There are many who think they should just give up on their principles and go along to get along, even people I respect generally as conservative (Hugh Hewitt, for example).

I think it would be instructive to hear what these holdouts have to say. Together, they said this: "There are provisions in this draft that represent an improvement to our current health care system, but it does not appear this draft as written will accomplish the most important promise that we made to Americans: to repeal Obamacare and lower their health care costs."

Senator Cruz said, "Of course I'll compromise, if—and the 'if' is critical—we're moving in the right direction, if we are expanding freedom, if we are improving economic growth, if we are defending our nation."

Senator Lee wrote an op-ed giving his reasoning. I’ll just share parts of it:

No, the Senate healthcare bill released yesterday does not repeal Obamacare. It doesn’t even significantly reform American healthcare.

It cuts taxes. It bails out insurance companies. It props up Obamacare through the next election. It lays out plans to slow Medicaid spending beginning in 2025, but that probably won’t happen. And it leaves in place the ham-fisted federal regulations that have driven up family health insurance premiums by 140 percent since Obamacare was implemented.

As the bill is currently drafted, I won’t vote for it.

He’s not against compromise entirely; he’s been there done that:

[A]s one of the most conservative Republican Senators, I would have to compromise with the least conservative Republican Senators to get something done. And compromise I have!

At the beginning of this process, I wanted a full repeal of Obamacare. Despite campaigning on that very thing for eight years, my Republican colleagues disagreed.

So then I called for a partial repeal, like we passed in 2015—and which conservatives were promised by our leaders in January. A partial repeal would at least force Congress to start over on a new system that could work better.

Again, no.

So then I advocated repealing Obamacare’s regulations, which have been the primary drivers of spiking premiums. I repeated this suggestion at every single meeting of the working group, and at every members’ lunch for several weeks. Yet when the Better Care Reconciliation Act was unveiled yesterday, the core Obamacare regulations were largely untouched.

What would make this clearly bad bill palatable to vote for?

Conservatives have compromised on not repealing, on spending levels, tax credits, subsidies, corporate bailouts, Medicaid, and the Obamacare regulations. That is, on every substantive question in the bill.

Having conceded to my moderate colleagues on all of the above, I now ask only that the bill be amended to include an opt-out provision, for states or even just for individuals.

Here’s his reason:

The only hope for actually solving the deep, challenging problems in our health care system is to let people try out approaches other than the ones a few dozen politicians thought up inside the D.C. bubble.

And so, for all my frustrations about the process and my disagreements with the substance of BCRA, I would still be willing to vote for it if it allowed states and/or individuals to opt-out of the Obamacare system free-and-clear to experiment with different forms of insurance, benefits packages, and care provision options. Liberal states might try single-payer systems, while conservatives might emphasize health savings accounts. Some people embrace association health plans or so-called “medishare” ministry models. My guess is different approaches will work for different people in different places—like everything else in life….

To win my vote, the Republican health care bill must create a little space for states and individuals to sidestep Washington’s arrogant incompetence, and see if they can do better.

Recent history suggests they couldn’t possibly do worse.

Just make a little room for choice. Allow a free market to try to find solutions. It doesn’t seem like that much to ask. And maybe he’ll get it.

I don’t know how to get policy passed that would do what is needed—but I do know what is needed. If we want affordable health care, we need government out of the way. The free market eventually leads to innovation and lower costs. Every time it’s tried. If only we tried it more often.

Calculating

Have you tried the calculations yet to see what kind of impact Obamacare would have on your finances? I don’t mean have you suffered through the glitchy Healthcare.gov website signup, which wastes your time while collecting your personal data; I suggest you avoid that indefinitely. No, I mean have you used the Kaiser site, just to do the calculations. 



The Kaiser ACA Calculator

My son Political Sphere gave it a try. Actually, he went two place online: both the Kaiser calculator, which has some limitations, and the Healthcare.gov site, but only using the "view plans now" option, rather than actually trying to sign up. So, hopefully, that means no permanent data collection. Anyway, here are the results.

He has been going without health insurance for some time. He and family are that combination of healthy and poor, making up the large majority, I’m guessing, of the purposely uninsured. This does not mean they get no health care; they just pay for it, in cash, when they need it. This included even the birth of Little PS2, with the help of a midwife. (Little PS1 was born with the help of the same midwife, but finances at that time led Mr. Spherical Model to pay that bill out of pocket, so he claims his granddaughter belongs to him—bought and paid for. We humor him.)

Now that Political Sphere is in law school, he is required not to be working. Mrs. Political Sphere works part time at a fast food restaurant and also takes college courses. There’s a scholarship that is covering law school tuition this year, and then there’s a sizable student loan to cover such amenities as school books, rent, food, and clothing for growing children. Things are tight, as you can imagine.

So Political Sphere goes to the calculator websites and inputs that data. It turns out, as you’d expect, their income is so low (well under 50% of the poverty line), they can’t be expected to pay ACA marketplace prices. They are turned over to Medicaid. But then things get kind of ironic.

You know that big student loan for living expenses? The one they’ll be paying interest on for years to come, but was a necessary cost of the schooling investment? Yeah, that counts as “income” according to Medicaid. For Medicaid purposes, taking out a loan that you have to pay for with interest is considered being what you might call “flush with cash.” The federal government agrees they’re way too poor to be buying health care; nevertheless, negative income (debt) makes them too rich to be receiving Medicaid. [Aha moment: government thinks debt is income—that explains a lot.]

So what is the government’s solution? Go to the Healthcare.gov website and find yourself a policy for, oh, say, $272-$432 a month for catastrophic coverage only. (The Kaiser calculator only gives averages by level and does not include catastrophic coverage as an option.). Catastrophic coverage means you pay 100% of the costs of your medical needs except for a list of serious expenses. Or you can go up to $334-$592 for the Bronze level coverage (that price is based on just two parents receiving coverage, assuming the children are already on Medicaid). At the Bronze level, you pay 40% of your medical bills. For additional money (this is general information from the Kaiser site), you can step up to the silver plan, where you pay 30% of your medical costs. All of these, according to a note on the Kaiser site, come with the proviso that out-of-pocket medical expenses (over and above premium costs, if I'm understanding correctly) can top out at $12,700 a year, which may exceed 100% of your annual income. Such a deal!

How do you pay those premiums? Maybe they assume getting additional loans of up to $600 a month is no problem, but it kind of is for people in the real world. So maybe they expect the family to just live on the streets instead of paying rent, which is about an even exchange, cost-wise. They have made it a law that you must buy insurance, but they have not made it a law that you must house your family.

They require everyone to buy insurance, because the whole “even the playing field” idea doesn’t work unless you force young healthy people to pay as much as older unhealthy people pay. And we need to be “fair,” after all.

Or PS and family can be sensible and continue doing what they’re doing—paying cash when they need to take the kids in for checkups, and ignore the mandate. That first year the fine is relatively low. It gets collected out of tax refunds—which you don’t pay when your income is that low. However, the government “returns” several thousand dollars more as a “tax refund” when you’re that poor, so this means they’ll "collect the fines" by paying any poor family that ignores the mandate a little bit less.

The second year fines go up, but by then there’s only one more year until law school is over, and it might be possible to consider buying healthcare coverage. We’ll see.

Still, at that point, wouldn’t a health savings account be a much better deal for a healthy young family than being forced to subsidize someone else during their very early career years? Assume they pay a few hundred a year in medical costs, as they’ve been doing (and paying cash up front does get you the best deals), and they pay $5000 into a health savings account, instead of into a policy. By the next year, that $5000 is earning interest. They do it again; by the end of two years, they have a health savings account with $10,000, plus interest. Just a few years of paying themselves without having to pay out, and they can self-insure. And if they were worried about catastrophic coverage, they could buy that at a free-market rate of around $100 a month (pre-Obamacare market pricing) and still have most of that money left for the health savings account.

On this past Saturday’s Wonderful World of Stu show (Stu Berguiere on The Blaze TV), he went through a list of why Obamacare isn’t the great deal it was said to be. Here are a few:

·        You can’t keep your plan after all—40-67% will have to change, because any tiny change eliminates the “grandfather” protection, and the law forces plans to change. [Political Sphere told me that when Obama said, "You can keep your plan. Period," he actually meant "asterisk." I thought that was clever and I was going to quote him, but he said he heard it on radio and doesn't remember which radio host to credit.]

·        Saying that those in the “individual” market are only a few is disingenuous: government estimates that number at 93 million Americans, with some more accurate estimates saying it’s at least 129 million people. Numbers go higher when people lose their employer coverage by losing their jobs, or when employers find it a better deal to pay a fine than to pay for more expensive plans.

·        The price for the whole of Obamacare was sold to voters as $900 billion over 10 years (without counting the first 4 years). But it’s really more like $1.88 trillion.

·        The average family was supposed to see premiums go down by $2500, but the average family actually has premiums going up by $3000. So the government “misunderestimated” costs to families by $5500 a year--and we could add that Affordable Care Act is a sadly ironic name.

·        Obamacare, according to Pelosi, was to be a great jobs creator—4 million new jobs, with 400,000 of those right away. In real world math, Obamacare will cause a loss of 800,000 jobs.

You get the idea that all those planners involved in this whole ACA mess don’t like to be bothered with details like math (or truth). That’s something third graders might get away with, but it’s really not acceptable from the calculating tyrannists insisting we give up our freedoms, because they claim they know better than we do how to make our personal spending decisions.

Unique Markets

During last week’s Supreme Court oral arguments concerning Obamacare, last Tuesday the discussion covered why health insurance would be a unique market and therefore in need of government intervention. So we’ve been discussing this definition at home the last few days. And my son Political Sphere, as an exercise, took the definition for unique market and applied it to yet another “unique” market. Let’s lay some groundwork for the definition first. Page numbers refer to the official transcript.

Verrilli (the government lawyer defending Obamacare) says healthcare insurance unique because it is characterized by the fact that virtually everybody “is either in that market or will be in that market, and the distinguishing feature of that is that they cannot—people cannot generally control when they enter that market or what they need when they enter that market (p. 5).

Justice Roberts answers:

Well, the same, it seems to me, would be true, say, for the market in emergency services: police, fire, ambulance, roadside assistance, whatever.

You don’t know when you’re going to need it; you’re not sure that you will….

So, can the government require you to buy a cell phone because that would facilitate responding when you need emergency services? (pp. 5-6).

Verrilli responds that the difference is that insurance is a market, which isn’t a particularly helpful distinction. So Justice Alito adds another analogy:

Do you think there is a market for burial services?.... Suppose that you and I walked around downtown Washington at lunch hour and we found a couple of healthy young people and we stopped them and said: You know what you’re doing? You are financing your burial services right now because eventually you’re going to die, and somebody is going to have to pay for it, and if you don’t have burial insurance and you haven’t saved money to pay for it, you’re going to shift that cost to somebody else. (pp. 7-8)

Justice Scalia helps refine the definition by asking about food: “Could you define the market—everybody has to buy food sooner or later, so you define the market as food, therefore, everybody is in the market; therefore, you can make people buy broccoli” (p. 13).

Verrilli responds that, while everyone participates, “it is not a market in which your participation is often unpredictable and often involuntary” (p. 13).

A couple of pages down, Verrilli responds overall to these other markets: Verrilli (p. 15-16):

I would have thought that your answer—can the government, in fact, require you to buy cell phones or buy burial that, if we propose comparable situations, if we have, for example, a uniform United States system of paying for every burial such as Medicare Burial, Medicaid Burial, Ship Burial, ERISA Burial and Emergency Burial beside the side of the road, and Congress wanted to rationalize that system, wouldn’t the answer be, yes, of course, they could (pp. 15-16).

So, in sum, the health care market is unique because

·         Everyone participates at some point.

·         Timing of need is not necessarily predictable.

·         There is a primary system of paying for the product/service, which is therefore subject to commerce regulation.

·         There are free-riders who affect the cost for participants in the market.

If healthcare insurance is unique, then it is the only market that meets the criteria, so we wouldn’t have to worry about encroachment of government in other markets. But Verrilli already admitted other markets could be construed to also be unique.

So, here is Political Sphere’s application  of the definition on yet another market: housing.

Does the housing market have free-riders? Absolutely, in more numerous ways than the health care market. You have various versions of squatter laws; you have rent controls limiting price increases on those already renting; you have delinquencies and defaults on mortgages. And laws generally make it a long process to kick out someone that has current residence in a property.

Does almost everyone use it at some point in their life? Again this is an obvious yes, perhaps even more true than health care, because even people who, by choice, live on the streets often lived in a house once.

And because these two items are true, what can be mandated? The payment mechanism for the majority of housing (all housing, not just private residences) is to have a mortgage. So by this argument, if the Congress can mandate that everyone has health insurance to pay for their health care, then it only stands to reason that Congress can mandate everyone have a mortgage to pay for their housing.

Since there are four items on the list, let me add, just to be thorough, that choice about needing shelter can also be somewhat unpredictable, even for the homeless; severe weather makes the need urgent, and weather, while seasonable, can be unpredictable. But since ancient times, shelter has been considered a basic need, up there with air, water, food, and clothing. You can choose to go without for a while, but when the blizzard hits, you might suddenly find camping under open skies untenable.

Unique still means one of a kind, unike all others, right? As Inigio Montoya would say, “You keep using that word. I do not think it means what you think it means.”

Eventually, Justice Kennedy pointed out our mistrust of the “unique market” argument: “And the government tells us that’s because the insurance market is unique. And in the next case, it’ll say the next market is unique” (p. 104).