Category: Law
Further wounds for Obamacare
UnitedHealth may exit the provision of ACA plans:
The nation’s largest health insurance provider, UnitedHealth Group, dealt a blow to the Affordable Care Act on Thursday when it warned it may stop offering coverage to individuals through public exchanges after taking a big hit to the bottom line from disappointing enrollment and the law’s unexpected effects.
The insurer’s withdrawal from the Obamacare exchanges would force some 540,000 Americans to find coverage from another provider.
UnitedHealth (UNH) downgraded its earnings forecast, bemoaning low growth projections for Obamacare enrollment and blaming the federal health care law for giving individuals too much flexibility to change plans.
People who purchase insurance through the public exchanges are typically heavy users of their plans, draining insurers’ profits, analysts say.
In a sharp reversal of its previously optimistic projections, UnitedHealth suspended marketing of its Obamacare exchange plans for 2016 — which the company has already committed to offer — to limit its exposure to additional losses.
“We see no data pointing to improvement” in the financial performance of public-exchange plans, UnitedHealth CEO Stephen Hemsley said on a conference call, though he added that “we remain hopeful” the market will recover.
The move comes amid indications that insurers are absorbing steeper costs than they expected from plans offered to individuals through the public exchanges, which are purchased online.
The average premium for medium-benefit plans offered to 40-year-old non-smokers is set to rise 10.1% in 2016, according to the Kaiser Family Foundation.
…Even though UnitedHealth wasn’t a major player yet on the ACA exchanges, the fact that it priced plans conservatively and entered cautiously made its statements more significant, said Katherine Hempstead, who heads the insurance coverage team at the Robert Wood Johnson Foundation.
“If they can’t make money on the exchanges, it seems it would be hard for anyone,” Hempstead said.
But that is not all the news. There is also:
In many Obamacare markets, renewal is not an option
Shopping for health insurance is the new seasonal stress for many
Health care law forces business to consider growth’s costs
Many say their high deductibles make their health insurance all but useless
and my own Obamacare not as egalitarian as it appears
All five are from the NYT, the first three being from the last two or three days, the other two from last week. They are not articles from The Weekly Standard…
To put it bluntly, I don’t think the mandate part of the bill is working. These are mostly problems which decay and get worse, not problems which self-correct.
On UnitedHealth, here is commentary from Megan McArdle. Here is Bob Laszewski. Here is Vox.
Can this be true?
Between 1989 and 2010, U.S. attorneys seized an estimated $12.6 billion in asset forfeiture cases. The growth rate during that time averaged +19.4% annually. In 2010 alone, the value of assets seized grew by +52.8% from 2009 and was six times greater than the total for 1989. Then by 2014, that number had ballooned to roughly $4.5 billion for the year, making this 35% of the entire number of assets collected from 1989 to 2010 in a single year. According to the FBI, the total amount of goods stolen by criminals in 2014 burglary offenses suffered an estimated $3.9 billion in property losses. This means that the police are now taking more assets than the criminals [emphasis added].
That is from Martin Armstrong, via Noah Smith and Michael Hendrix. While private sector robberies are underreported by a considerable amount, this is nonetheless a startling contrast.
Can this be true?
Whistleblowers for Innovation
We reward whistle blowers who help to prosecute people who are defrauding the government by giving them a share of the proceeds. Bradley Birkenfeld, for example, provided evidence to the US government that the Swiss bank UBS was illegally enabling US tax evaders. The case led to a $780 million dollar fine against UBS and Birkenfeld collected a sweet cut, $104 million.
Derek Khanna at the R Street Institute suggests a similar system to reward innovators (pdf).
Imagine a research team developed a cancer drug that could save the federal government $1 billion a year. Under the innovation savings program, a portion of those savings would flow back to the researchers themselves, in exchange for their not patenting the technology. In order to be eligible for a prize payout, the innovation would need to meet a minimum cost-savings threshold established by Congress (e.g., $100 million). Since the researchers would be paid out of funds already authorized by Congress, there would be no additional cost to taxpayers, who instead would expect to see still additional savings.
…This idea is directly inspired by the centuries-old concept of “qui tam” claims. Qui tam statutes allowed a private citizen to bring action on behalf of a government to recover a penalty….
But programs that seek only to stamp out waste, fraud and abuse do little to encourage the kinds of innovations that would reduce costs on the “front end.” That’s the goal of the innovation savings program: to provide a profit mechanism, separate and apart from patents and direct subsidies, to encourage innovations that could revolutionize such fields as medical technology, energy efficiency and payment processing
The benefits of such a system are not only that it avoids some of the costs of patents but that it would also work when patents are not available. It only works when the government is a big player but that’s a huge share of the economy.
Worthwhile Canadian Initiative (really)
Canada recently became the first country in the world to legislate a cap on regulation. The Red Tape Reduction Act, which became law on April 23, 2015, requires the federal government to eliminate at least one regulation for every new one introduced. Remarkably, the legislation received near-unanimous support across the political spectrum: 245 votes in favor of the bill and 1 opposed. This policy development has not gone unnoticed outside Canada’s borders.
Canada’s federal government has captured headlines, but its approach was borrowed from the province of British Columbia (BC) where controlling red tape has been a priority for more than a decade. BC’s regulatory reform dates back to 2001 when a newly elected government put in place policies to make good on its ambitious election promise to reduce the regulatory burden by one-third in three years. The results have been impressive. The government has reduced regulatory requirements by 43 percent relative to when the initiative started. During this time period, the province went from being one of the poorest-performing economies in the country to being among the best. While there were other factors at play in the BC’s economic turnaround, members of the business community widely credit red tape reduction with playing a critical role.
Can we determine how honesty varies across countries?
The paper is by David Hugh-Jones, and this is from the research summary:
The study examined whether people from different countries were more or less honest and how this related to a country’s economic development. More than 1500 participants from 15 countries took part in an online survey involving two incentivised experiments, designed to measure honest behaviour.
Firstly, they were asked to flip a coin and state whether it landed on ‘heads’ or ‘tails’. They knew if they reported that it landed on heads, they would be rewarded with $3 or $5. If the proportion reporting heads was more than 50 per cent in a given country, this indicated that people were being dishonest…
The countries studied – Brazil, China, Greece, Japan, Russia, Switzerland, Turkey, the United States, Argentina, Denmark, the United Kingdom, India, Portugal, South Africa, and South Korea – were chosen to provide a mix of regions, levels of development and levels of social trust.
The study’s author Dr David Hugh-Jones, of UEA’s School of Economics, found evidence for dishonesty in all the countries, but that levels varied significantly across them. For example, estimated dishonesty in the coin flip ranged from 3.4 per cent in the UK to 70 per cent in China. In the quiz, respondents in Japan were the most honest, followed by the UK, while those in Turkey were the least truthful. Participants were also asked to predict the average honesty of those from other countries by guessing how many respondents out of 100 from a particular country would report heads in the coin flip test. However, participants’ beliefs about other countries’ honesty did not reflect reality.
This is interesting:
“Differences in honesty were found between countries, but this did not necessarily correspond to what people expected,” he said. “Beliefs about honesty seem to be driven by psychological features, such as self-projection. Surprisingly, people were more pessimistic about the honesty of people in their own country than of people in other countries.
And consider this from Hugh Jones:
“I suggest that the relationship between honesty and economic growth has been weaker over the past 60 years and there is little evidence for a link between current growth and honesty,” said Dr Hugh-Jones. “One explanation is that when institutions and technology are underdeveloped, honesty is important as a substitute for formal contract enforcement. Countries that develop cultures putting a high value on honesty are able to reap economic gains. Later, this economic growth itself improves institutions and technology, making contracts easier to monitor and enforce, so that a culture of honesty is no longer necessary for further growth.”
The research paper is here, and for the pointers I thank Charles Klingman and Samir Varma.
Jones, by the way, makes it clear there are a variety of kinds of honesty, and inferences from any single test should be limited. For Japan in particular the measured level of honesty depends critically on which test is applied. The real lesson of the study may simply be that most groups are dishonest, and people are not even honest with themselves about their views of the dishonesty of others. Honesty depends a good deal on context too. On some of these questions, see some skeptical comments from Kevin Drum.
If you are looking for simple correlations: “…at individual level, there is no evidence that religious adherence is associated with honesty.” How about having a Ph.d.?
Hard to do large clinical trials
That is the title of an Arnold Kling blog post, it runs like this (I am not adding an extra layer of indentation):
Speaking this week at the EmTech conference in Cambridge, Massachusetts, Editas CEO Katrine Bosley said the company hopes to start a clinical trial in 2017 to treat a rare form of blindness using CRISPR, a groundbreaking gene-editing technology.
…The condition Editas is targeting affects only about 600 people in the U.S., says Jean Bennet, director of advanced retinal and ocular therapeutics at the University of Pennsylvania’s medical school.
I don’t think that the FDA is prepared for what is coming.”
An anti-corruption plan for Indonesia
Indonesia’s anti-drugs agency has proposed building a prison on an island guarded by crocodiles to hold death row convicts, an official said, an idea that wouldn’t be out of place in a James Bond film.
The proposal is the pet project of anti-drugs chief Budi Waseso, who plans to visit various parts of the archipelago in his search for fierce reptiles to guard the jail.
“We will place as many crocodiles as we can there. I will search for the most ferocious type of crocodile,” he was quoted as saying by local news website Tempo.
Waseso said that crocodiles would be better at preventing drug traffickers from escaping prison as they could not be bribed — unlike human guards.
There is more here, via Charles Klingman and Mark Thorson, try this Bond movie clip too.
The Tiebout model taken to an extreme
What if the entire town moves?:
When independent traders in a small Welsh town discovered the loopholes used by multinational giants to avoid paying UK tax, they didn’t just get mad.
Now local businesses in Crickhowell are turning the tables on the likes of Google and Starbucks by employing the same accountancy practices used by the world’s biggest companies, to move their entire town “offshore”.
Advised by experts and followed by a BBC crew, family-run shops in the Brecon Beacons town have submitted their own DIY tax plan to HMRC, copying the offshore arrangements used by global brands which pay little or no corporation tax.
The Powys tax rebellion, led by traders including the town’s salmon smokery, local coffee shop, book shop, optician and bakery, could spread nationwide.
The article is here, via John Chilton. Georgists of the world unite!
The digitization of immigration records
It is going slowly, to say the least:
Heaving under mountains of paperwork, the government has spent more than $1 billion trying to replace its antiquated approach to managing immigration with a system of digitized records, online applications and a full suite of nearly 100 electronic forms.
A decade in, all that officials have to show for the effort is a single form that’s now available for online applications and a single type of fee that immigrants pay electronically. The 94 other forms can be filed only with paper.
This project, run by U.S. Citizenship and Immigration Services, was originally supposed to cost a half-billion dollars and be finished in 2013. Instead, it’s now projected to reach up to $3.1 billion and be done nearly four years from now, putting in jeopardy efforts to overhaul the nation’s immigration policies, handle immigrants already seeking citizenship and detect national security threats, according to documents and interviews with former and current federal officials.
The article is here, hat tip goes to Felix Salmon.
Does the Obamacare mandate actually make people better off?
Here is my latest NYT Upshot column, on the topic of the Affordable Care Act. Here is what is to me the key excerpt:
But there is another way of looking at it, one used in traditional economics, which focuses on how much people are willing to pay as an indication of their real preferences. Using this measure, if everyone covered by the insurance mandate were to buy health insurance as the law dictated, more than half of them would be worse off.
This may seem startling. But in an economic study, researchers measured such preferences by looking at data known as market demand curves. Practically speaking, these demand curves implied that individuals would rather take some risk with their health — and spend their money on other things — partly because they knew that even without insurance they still would receive some health care. These were the findings of a provocative National Bureau of Economic Research working paper, “The Price of Responsibility: The Impact of Health Reform on Non-Poor Uninsureds” by Mark Pauly, Adam Leive, and Scott Harrington; the authors are at the Wharton School at the University of Pennsylvania.
One implication is that the preferences of many people subject to the insurance mandate are likely to become more negative in the months ahead. For those without subsidies, federal officials estimate, the cost of insurance policies is likely to increase by an average of another 7.5 percent; even more in states like Oklahoma and Mississippi. The individuals who are likely losers from the mandate have incomes 250 percent or more above the federal poverty level ($11,770 for a single person, more for larger families), the paper said. They are by no means the poorest Americans, but many of them are not wealthy, either. So the Affordable Care Act may not be as egalitarian as it might look initially, once we take this perspective into account.
I should stress that, at this point, I don’t see any realistic alternative to trying to improve ACA. Still, I find it distressing how infrequently this problem is acknowledged or dealt with, probably from a mix of epistemic closure, a “health insurance simply has to make people better off” attitude, and a dose of “let’s not give any ammunition to the enemy.” In fact, I think a lot of Democratic-leaning economists and commentators are doing a real disservice to their own causes on this one.
It’s worth noting that Kentucky, one of the best-functioning ACA state exchanges, just elected a Republican governor who very explicitly pledged to tank the current set-up as much as possible, Medicaid too. I think it’s time to admit this is not just Tea Party activism or Hee Haw political stupidity, rather a large number of the people subject to the mandate simply are not better off as would be judged by their own preferences. And that is not a secondary problem of Obamacare, it is a primary problem.
Interestingly, I found the NYT reader comments on my piece to be fairly supportive, which is not always the case. There’s a good deal of “this happened to me, too,” and not so much raw invective about whatever defects I may have.
I think it is a big mistake to argue Obamacare is on the verge of collapse, or whatever other exaggeration of the day may be at hand. Still, I don’t find the current set-up of the exchanges to be entirely stable, at least not in terms of ongoing popularity, much less consumer sovereignty.
A key question is what happens moving forward. One option, which I had not initially expected, is for the exchanges to narrow and evolve into an expanded version of some of the earlier plans for a segregated high-risk pool. In that case, the argument would morph from “don’t worry, enough people will sign up for the exchanges” into “the welfare effects here are still positive, because fortunately not everyone signs up for the exchanges.” The high risk pool would then at some point require additional subsidies. In the past, I argued that the penalties for not signing up were too low, but under this scenario it may be desirable to lower rather than raise those penalties.
We’ll see. The piece covers other issues as well, do read the whole thing.
Here is Megan on the costs of ACA plans. Here are some interesting calculations from Jed Graham.
Rene Girard has passed away
Here is the Stanford report of his passing, well done, and here are previous MR mentions of Girard. He was one of the world’s great thinkers.
Police steal from you so burglars don’t have to
Police in the East Rock section of New Haven are trying to send a strong message to residents to lock their doors amid several car break-ins and they are doing it an a rather unconventional way.
Starting today, police who notice valuables left in plain view inside unlocked cars will take them to keep them safe from would-be burglars, according to the New Haven Register.
There have been eight car break-ins in one week alone and Lt. Herbert Sharp told the Register that this strategy will prevent burglars from getting expensive items from cars, while forcing residents to make a trip to the police station to pick up belongings.
After taking the valuables, police will either leave a note or call the resident.
There is a noisy video at the link, via Craig Palsson.
Solve for the equilibrium don’t forget to check your email
In early October, the [German] district government informed Sumte’s mayor, Christian Fabel, by email that his village of 102 people just over the border in what was once Communist East Germany would take in 1,000 asylum seekers.
His wife, the mayor said, assured him it must be a hoax.
Here is the NYT article, you will note that Herr Holger Niemann is enthusiastic about the new development; he is the lone neo-Nazi on the local town council. By the way, the town has no stores, they had to install more pumps in the sewer system, and if I understand the article correctly Sumte has no permanent police presence.
At lunch lately we have been arguing how many immigrants can be taken in without seeing political backlash and eventually immigration reduction. We’ll soon be seeing more data.
But how exactly are they cheating?
A man who sold himself a $1,000,000 winning D.C. Lottery ticket is just one of many retailers a WUSA9 investigation found winning the lottery at rates statisticians say border on impossible.
At least three retailers won the lottery around 100 times according to an analysis of D.C. Lottery records obtained under the Freedom of Information Act.
“$10,000, $5,000,” Lounes Issaad said about some of his 27 payouts that averaged $30,000 each. “I don’t have nothing to hide.”
…Our investigation found lottery retailers make up at least three of the top five D.C. Lottery frequent winners – all with about 100 wins or more.
There is more here (the link makes some noise), via Michael Rosenwald.
Does India Need a New Constitution?
Writing in Quartz, Atanu Dey and Rajesh Jain have a very interesting argument that historically slow growth and many of India’s other problems can be traced back to its extractive constitution, which was largely inherited from the British.
For nearly a century, India was under comprehensive colonial British rule. As can be rationally expected, the government that the British imposed on India was not primarily directed towards development, but rather towards extraction. That is only reasonable because wealth extraction is the rationale for colonial rule.
The British, therefore, created the institutional structures, which necessarily includes the government that controlled India through comprehensive government control of the economy. This structure administration and control was left intact when the British decided to leave India, and was taken over by the government of Independent India. Although India attained political independence from the British raj, Indians did not become free of a controlling—and extractive—government.
…The conclusion has to be that India’s problem is structural and systemic, and not idiosyncratic. If the constitution were to change, the ultimate rules of the game would change, the policies (the derived rules) will change, and thus the action on the ground (the play of the game) will change, and therefore the outcome will change.
India needs a new constitution that is consistent with a nation of free individuals living in a complex, modern, large economy. This modern constitution has to be one that guarantees economic freedom to the individual, prohibits the government from making any laws that discriminate among citizens, guarantees freedom of speech and the press, prohibits the government from entering into businesses that are properly the domain of the private sector, and so on. In other words, India needs a constitution that protects the comprehensive freedom of the individual: economic, social and political.
What would be the best form of constitution for India? Westminster or Presidential? First past the post or proportional rule? Single-member or mixed-member districts? Plurality rule or Borda count? Federalism? Certainly. But what kind of federalism enforced in what way? A Supreme court? How appointed? And what would be the most important rights to codify in a bill of rights?