The Heritage Insider: Medicaid sign-ups do not equal success, IRS still wants to silence conservatives, government isn't your neighbor, and more
Updated daily, InsiderOnline (insideronline.org) is a compilation of publication abstracts, how-to essays, events, news, and analysis from around the conservative movement. The current edition of The INSIDER quarterly magazine is also on the site.
January 11, 2014
Latest Studies: 39 new items, including a National Center for Policy Analysis report on how eliminating corporate taxes would help the economy, and a Manhattan Institute report on how to reform public pensions
Notes on the Week: Medicaid sign-ups are not a success story, IRS still wants to silence conservatives, government isn’t your neighbor, and more
To Do: Find out how much economic freedom we still have
Budget & Taxation
• The Devil is in the Details: Base Updating and the Cost of New Farm Bill Programs – American Enterprise Institute
• The Multiplying Risks of Public Employee Pensions to State and Local Government Budgets – American Enterprise Institute
• Massachusetts Tax Revenue Forecasts for FY 2014 and FY 2015 – Beacon Hill Institute
• What Should Be the Return On Public-Sector Investment? – Cato Institute
• 10 Programs to Eliminate in the January 2014 Spending Bill—and Save $10.2 Billion – The Heritage Foundation
• Public Pension Reform: Benefit Design as the Key to Sustainability – Manhattan Institute
• A Survey of Sales Tax Exemptions in the States: Understanding Sales Taxes and Sales Tax Exemptions – Mercatus Center
• Ending Farm Subsidies: Unplowed Common Ground – Mercatus Center
• Simulating the Elimination of the U.S. Corporate Income Tax – National Center for Policy Analysis
• The Effect of Cigarette Tax Rates on Illicit Trade: Lessons Learned in Canada – Reason Foundation
• Summary of Latest Federal Income Tax Data – Tax Foundation
Crime, Justice & the Law
• “The Best of Disinfectants”: Using Publicity to Fight Overcriminalization – The Heritage Foundation
• The Challenge of Comparing Public and Private Correctional Costs – Reason Foundation
Economic Growth
• A Fresh Look at the Indian Business Climate: Findings from a Survey of Indian Entrepreneurs – American Enterprise Institute
• Can Policy Boost Growth – American Enterprise Institute
• A Balanced Approach to Patent Reform: Addressing the Patent-Troll Problem Without Stifling Innovation – The Heritage Foundation
Education
• Higher Education’s Internet Revolution – American Enterprise Institute
Elections, Transparency, & Accountability
• PPACA’s Corrupting Lawlessness – Cato Institute
• Improving Transparency and Accountability in Economic Development – Texas Public Policy Foundation
Foreign Policy/International Affairs
• A Good Half-Century and a Bad One: What Will the Next 50 Years Be Like? – American Enterprise Institute
• The United States Needs to Expand Security Cooperation with Honduras – The Heritage Foundation
Health Care
• Is IPAB a Paper Tiger? – Cato Institute
• Compelling Evidence Makes the Case for a Market-Driven Health Care System – The Heritage Foundation
• Innovations in Indigent Care: Strengthening the Safety Net in Texas – Texas Public Policy Foundation
Information Technology
• Getting Away from GOSPLAN – Cato Institute
International Trade/Finance
• Stay Off the Fast Track: Why Trade Promotion Authority Is Wrong for the Trans-Pacific Partnership – Cato Institute
• Trade Adjustment Assistance: Let the Ineffective and Wasteful Job-Training Program Expire – The Heritage Foundation
Monetary Policy/Financial Regulation
• Taking the Risk Out of Systemic Risk Measurement I – American Enterprise Institute
• A Simpler Approach to Financial Reform – Cato Institute
• The Case for Cost-Benefit Analysis of Financial Regulations – Cato Institute
National Security
• Sochi: Security and Counterterrorism at the 2014 Winter Olympics – The Heritage Foundation
Natural Resources, Energy, Environment, & Science
• Too Much (Questionable) Information? – Cato Institute
• The Green Campaign against Triclosan Is Dangerous and Regressive – Competitive Enterprise Institute
• EPA and the Corps Ignoring Sound Science on Critical Clean Water Act Regulations – The Heritage Foundation
Regulation & Deregulation
• The 10 Worst Regulations of 2013 – The Heritage Foundation
The Constitution/Civil Liberties
• New Mexico Photography Business Seeks Supreme Court Review – The Heritage Foundation
Transportation/Infrastructure
• Transit Utilization and Traffic Congestion: Is There a Connection? – Reason Foundation
• Gasoline Taxes and User Fees Pay for Only Half of State & Local Road Spending – Tax Foundation
Welfare
• 50 Years In, War on Poverty Needs New Strategy – American Enterprise Institute
The IRS proposal would restrict the free speech rights of such groups by arbitrarily deeming political a wide variety of activities in the newly-created category of “Candidate-Related Political Activity,” which includes voter registration drives, candidate debates, voter guides, voting records and key votes. They would restrict any criticism of an incumbent federal, state, or local politician within 30 days of a primary or 60 days of a general election and effectively require groups to remove any reference to politicians from their websites during these windows. They even distort the definition of “candidate” to include appointees, so groups weighing in on executive or judicial nominations would be restricted.
These draconian rules will effectively muzzle 501(c)4 groups in the run-up to November’s mid-term elections while unfairly exempting 501(c)5 labor unions that support liberal candidates and causes.
The rules proceed from the assumption that political engagement and discussion of health care, government spending, and other public policy issues and the merits of nominees who implement them cannot logically be part and parcel of a social welfare mission. This is not what the law requires and it is inconsistent with longstanding historical practice and understanding.
While Section 501(c)(3) of the tax code specifically bars those organizations from engaging in political activity, no such statutory prohibition exists in Section 501(c)(4). For half a century the IRS has defined “social welfare” in our democratic society to include activities such as nonpartisan get-out-the-vote drives, voter registration, and voter education on issues of public concern.
The 501(c)(4) category has always been the home of groups that advocate public policy and hold politicians accountable for the policies they pursue at every level of government. The IRS is disregarding these facts and severely limiting rights of association and speech, especially for smaller grassroots groups that cannot easily afford high-priced lawyers to navigate complex new rules. [Posted at Independent Women’s Voice, January 9]
Reminder, you can send comments on the Internal Revenue Service proposal directly to the IRS until February 27:
Send submissions to: CC:PA:LPD:PR (REG-134417-13), Room 5205, Internal Revenue Service, P.O. Box 7604, Ben Franklin Station, Washington, DC 20044. Submissions may be hand-delivered Monday through Friday between the hours of 8 a.m. and 4 p.m. to CC:PA:LPD:PR (REG-134417-13), Courier's Desk, Internal Revenue Service, 1111 Constitution Avenue NW., Washington, DC, or sent electronically via the Federal eRulemaking Portal at http://www.regulations.gov (IRS REG-134417-13).
The important questions in politics, as Milton Friedman taught us, begin with “Who”: Who pays? Who benefits? And especially: Who chooses? Leftism wants to make those questions go away. Hence, middle-class entitlements: What person can complain about high taxes when he also gets a check from the government?
Earlier this year, President Obama urged people to reject voices that “incessantly warn of government as nothing more than some separate, sinister entity” because they suggest “that our brave and creative and unique experiment in self-rule is somehow just a sham with which we can’t be trusted.”
Even earlier, Rep. Barney Frank: “Government is simply the name we give to the things we do together.” The government is us, and that means it’s you, too!
Except that it isn’t. The people didn’t harass conservative nonprofits. The Internal Revenue Service did. The people didn’t shut World War II veterans out of the National Parks. The National Park Service did. The people didn’t force the owners of Hobby Lobby to choose between their faith and staying in business. The Department of Health and Human Services did.
And the people don’t mail benefit checks to those in need. The government does. You don’t get credit for charity by paying your taxes; you get to not go to jail. As Kim Holmes explains, more and more government has become a substitute for individuals’ connections to their communities. The results are a smaller bank of social trust, higher stakes when government makes choices, and courser politics.
Solutions? First, get out and talk to your neighbors. William Mattox and Glen Morgan write separately about think tanks taking their messages to the people. Second, tell people their happiness is for them, not the government, to choose. Iain Murray details what’s wrong with the happiness agenda, while Bruce Thornton urges us to understand politics as a contest over who—individuals or government—does the choosing. Third, stop the government from further centralizing things—like education. Jennifer A. Marshall and Lindsey Burke detail Common Core’s race to the middle.
Those Medicaid numbers are probably wrong, and definitely nothing to celebrate anyway. Late last week, Josh Marshall at the liberal Talking Points Memo blog claimed that 10 million people now have health care coverage because of ObamaCare. [TalkingPointsMemo, January 3] He gets that figure by adding together enrollees in the federal and state health insurance exchanges (2.1 million is the latest figure from the Department of Health and Human Services), the number of young adults under 26 now covered by their parents’ plans because of ObamaCare’s provision requiring insurance companies to offer that benefit (3.1 million, also according to HHS), the number of Medicaid sign-ups since the exchanges opened (4.3 million, according the tabulation by the website ACASignups.net), and the number of people who bought ACA-compliant policies from private insurers instead of through the exchanges (500,000, an estimate from Josh Marshall himself based apparently on his desire to reach an estimate of 10 million total newly covered people).
Various analysts have picked apart those numbers, most notably the Medicaid sign-ups. Medicaid serves 60 million people, and so there are always a lot of people signing up for Medicaid. And there are a lot of people who drop off of Medicaid, too, because their income and employment situations change. How much of the 4.3 million sign-ups is from normal churn and how much is it from people signing up because they are newly eligible because of ObamaCare’s Medicaid expansion?
Sean Trende has inferred an estimate by comparing the changes in sign-ups in states that expanded Medicaid to changes in sign-ups that did not expand Medicaid. He estimates that ObamaCare’s expanded Medicaid is responsible for only 190,000 sign-ups, though he cautions that is an extremely rough estimate. [RealClearPolitics, January 7]
It’s important to make sure that cheerleaders for the program are not trafficking in bad numbers. However, there is a much simpler way of knowing that 10 million is a bad number: Marshall is adding together things that shouldn’t be added together: Being covered by Medicaid is a very different experience than having private insurance. In short, it’s much worse. In some situations, it appears to be even worse than having no insurance.
The Heritage Foundation’s Kevin Dayaratna reviewed studies comparing the experience of being on Medicaid with the experience of having private insurance and no insurance. He found considerable evidence that Medicaid is a very bad deal for the low-income people the program tries to help. He notes, for example:
[A] 2010 study in the Journal of Hospital Medicine found similar results for non-cancer-related illness. In this study, the authors examine the relationship between insurance status and health outcomes for myocardial infarction, stroke, and pneumonia patients.
The authors statistically analyzed a nationally representative hospital database and noticed, even after adjusting for factors such as age, gender, income, other illnesses, and severity, higher in-hospital mortality rates for Medicaid patients than for privately insured patients. Additionally, even after adjusting for these factors, the study found that Medicaid patients hospitalized for strokes and pneumonia also ran up higher costs than the privately insured, as well as the uninsured. [Internal citations omitted.]
Similar findings have been reached by studies looking at the experiences of adults with different kinds of cancer, pneumonia, and diabetes; children with asthma; and boys with urology problems. [“Studies Show: Medicaid Patients Have Worse Access and Outcomes than the Privately Insured,” by Kevin Dayaratna, The Heritage Foundation, November 9, 2013]
What’s the problem? As Paul Howard has explained:
Despite the program’s enormous cost, Medicaid reimbursements are so low in many states that providers often refuse to treat Medicaid patients altogether. The result is that the program’s beneficiaries have rich medical coverage in theory, but very limited health-care access in fact. Indeed, a recent Health Affairs study found that more than 30% of physicians (both primary-care doctors and specialists) would not accept new Medicaid patients. While Obamacare will raise primary-care provider reimbursement rates for Medicaid patients to the same levels as those for Medicare patients, the increase is only temporary, scheduled to last just two years. (The reimbursement rate for specialists will not increase at all.) States will either be on the hook for these costs after the federal funding expires or will have to cut reimbursement rates—creating further headaches for state lawmakers. Meanwhile, Medicaid’s incentives encourage providers to focus on high-cost institutional care (for which they can receive more money) rather than on disease prevention and management for high-risk populations. The result is that there is little relationship between Medicaid’s open-ended spending and improvement in beneficiaries’ health outcomes. [National Affairs, Spring 2013]
In short, expanding Medicaid is no success story, even if that’s what the program intended. [See also: How Medicaid Fails the Poor, by Avik Roy, Encounter Books, (November 2013).]
We predict ObamaCare will continue to get its name in the newspaper. Healthcare.gov now seems improved to the point where people can actually sign up. And the administration is reporting that sign-ups are now in the millions. So everything’s good with the law, right? Grace-Marie Turner makes “Ten ObamaCare Predictions for 2014.” [National Review, January 6] Her list identifies the issues that people need to remember as they hear reports about sign-up levels and other measures of the law’s success. For example, there is a difference between signing up and actually paying for a plan. How many sign-ups will eventually pay? And how many sign-ups will continue to pay once they’ve started? What is the health status of the enrollees? If too many are sick and not enough are healthy, then rates will have to be adjusted upwards next year. How many new enrollees had insurance they liked, but lost it because of ObamaCare’s new market rules? How many of the newly insured are just Medicaid sign-ups? Some studies show that for certain conditions, those without insurance actually do better than those on Medicaid. Clearly, “newly insured” denotes many different circumstances, not all of them actually success stories.
Further, how will the constant revising of the rules in response to political pressures affect insurance companies’ willingness to participate in the program next year? And the insurance market rules change again in 2015. How many more private companies will respond by cancelling the insurance they had provided their employees?
Print up Turner’s predictions, post them on your bulletin board, and see how many come true this year. We will.
A conspiracy against ObamaCare: National Federation of Independent Business v. Sebelius (the lawsuit that challenged Obamacare’s individual mandate) was one the most important Supreme Court cases of the past 50 years. It was a special case for another reason, too: The arguments that made their way to the Court were developed publicly on the Internet, in particular on legal blogs such as The Volokh Conspiracy. Even though the Court upheld ObamaCare, most of the constitutional arguments made against the law received five votes at the Supreme Court. As Randy Barnett explains, the saving construction that Chief Justice John Roberts crafted (redefining the mandate as a tax) was the second-worst outcome possible for the Left. The result of that ruling is that the Commerce Clause does validate any and all attempts by government to regulate individual choices. That’s kind of important, in the grand scheme of things.
Barnett and his fellow Volokh conspirators came to The Heritage Foundation on Tuesday to discuss their new book A Conspiracy Against ObamaCare: The Volokh Conspiracy and the Health Care Case, which traces the blog’s role in shaping the constitutional debate leading up to the case. As Barnett points out, that piece of the history is important to know. Courts are mainstream institutions. If a constitutional argument is seen as outside the mainstream of public opinion, the courts are very unlikely to accept it. In the case of the ObamaCare lawsuit, the legal blogs developed an argument that was at first derided by most legal academics and made it into a mainstream view. ObamaCare is now facing several other significant constitutional challenges; how the courts rule will depend in part on whether those arguments become accepted by the mainstream of public opinion.
Health care spending growth started declining a decade before ObamaCare became law. The Obama administration wants people to believe that recent slower growth in health care costs is an accomplishment of ObamaCare. But the slowing of health care costs is part of a decade-long trend. As you can see from the chart below, produced by Investor’s Business Daily, the trend even preceded the economic slowdown that started in 2008-2009.
One likely reason for the slowdown, as IBD’s editors note, is that businesses have been shifting to consumer-directed plans that give workers incentives to be smarter health care shoppers:
Health savings accounts, for example, have exploded in popularity. These plans combine higher deductibles with lower premiums and tax-free savings accounts for out-of-pocket costs. HSAs now account for more than 20% of the employer market, up from zero in 2005.
A RAND study concluded that expanding the HSA market share to 50% would cut health costs by nearly $60 billion a year.
Wal-Mart offers its employees individual coverage for about $40 a month. And that’s for a plan with a deductible of $2,750, access to a wide network of doctors and hospitals, and at least $250 deposited in a worker’s own health reimbursement account, according to the Washington Examiner.
But rather than learn from the Wal-Marts of the world about what’s working and what isn’t, President Obama decided that Washington politicians and federal bureaucrats know better. And as a result, ObamaCare will severely undercut these positive trends.
That becomes clear when you compare what Wal-Mart workers can buy to the “great products” ObamaCare has to offer.
As a result of ObamaCare’s myriad benefit mandates, rate regulations, taxes and fees, the best a 27-year-old can do in any one of 18 major cities is $122 a month for the skimpiest bronze plan. Even with tax subsidies, a young worker pulling down just $29,000 a year will still pay more than $110 a month for ObamaCare insurance, according to the Kaiser Family Foundation. [Investor’s Business Daily, January 7]
One more reason ObamaCare will cost more than advertised: Emergency room visits will go up. If we could just give people subsidies through ObamaCare, then taxpayers wouldn’t have to pick up the tab for so many expensive emergency room visits. Or something like that was one argument made for ObamaCare. As recently as September, White House spokesman Jay Carney said:
[W]e’re obviously pleased with developments in Ohio and in states across the country where the decision to expand Medicaid has been made, because […] that creates enormous benefits for those states in terms of reducing costs in emergency rooms […] . [As quoted in “Oregon Study Exposes Another ObamaCare Falsehood: Rather Than Reduce Unnecessary ER Use, Medicaid Increases It,” by Michael Cannon, Forbes, January 2]
New research published by Science magazine highlights a problem:
We find that Medicaid coverage significantly increases overall emergency use by 0.41 visits per person, or 40 percent relative to an average of 1.02 visits per person in the control group. We find increases in emergency-department visits across a broad range of types of visits, conditions, and subgroups, including increases in visits for conditions that may be most readily treatable in primary care settings. [“Medicaid Increases Emergency-Department Use: Evidence from Oregon’s Health Insurance Experiment,” by Sarah L. Taubman, et al., Science, January 2]
And right now more people are signing up for Medicaid than for coverage on the ObamaCare exchanges. The figures that have been reported are 4 million sign-ups for Medicaid in October and November, while only 2 million have signed up for coverage through the exchanges. (It’s not clear how may Medicaid sign-ups are people who would have been eligible even without ObamaCare’s expansion of the program.)
Two points from Avik Roy: First, the new ObamaCare entitlements, whatever their other merits, cannot possibly cost less than the taxpayer subsidies to emergency rooms: “Nationally, it’s estimated that we spend about $50 billion a year on uncompensated care for the uninsured. But Obamacare spends $250 billion a year of taxpayer money on covering the uninsured.”
Second, of course Medicaid enrollees use emergency rooms more than the uninsured. The program is designed to achieve that result!
Because Medicaid was nearly free to the program’s enrollees, those enrollees ended up seeking—and receiving—lots of inappropriate care. That led to massive cost overruns that, even today, are bankrupting state governments. But states have had little flexibility to reform Medicaid’s cost-sharing features. The one thing they have been able to do is pay doctors and hospitals less and less to provide the same care.
That trend, in turn, has led many doctors to stop accepting new Medicaid patients. So it’s extremely difficult for Medicaid enrollees to get appointments with primary care physicians. They have to spend weeks on the phone to find someone who will treat them.
Put yourself in the shoes of that Medicaid enrollee. Why would you bother calling primary care docs all day and all week, if you can go to the emergency room and get the same care for the same price? So that’s what Medicaid patients do. [Forbes, January 2]
We knew him before he became a big deal. This week we’d like to note one of the better Heritage intern graduation speeches we’ve ever heard. It was delivered by Jordan Long, and it was so good, The Foundry decided to publish it.
Jordan happens to have interned for us; and by “us” we mean yours truly, the folks who put together The Insider and do other coalition-building stuff at The Heritage Foundation. We’re not at all surprised that Jordan was selected by his fellow interns to deliver a graduation address. We noticed very early last fall that his work was excellent and it got only better. As you can see from the excerpt below, Jordan has an excellent understanding of how unique America’s experiment in self-government really is:
How can it be that as “young” leaders in our youth-obsessed and increasingly diverse nation, we are so firmly bound to quill and parchment and the ideas of some much maligned old dead white men who didn’t even have Facebook, let alone Twitter?
Perhaps as a history major I am not the best suited to answer such questions. But I will try.
As young people, it is quite natural to be defending and proselytizing on behalf of the freshest and most innovative ideas on man and how he ought be governed in history: that “we hold these truths to be self-evident, that all men are created equal, that they are endowed by their creator with certain unalienable rights, that among these are life, liberty, and the pursuit of happiness, that to secure these rights, governments are instituted among men, deriving their just powers from the consent of the governed.”
These words were penned more than 200 years ago. But that length of time pales in comparison to the thousand-year reigns of much more established theories in the organization of human affairs: despotism, aristocracy, plutocracy, warlordism, tribalism, empire. The animating principle of these regimes has always been the same: the unfettered exercise of power by those who happen to possess it at the time.
The notion of an enlightened philosopher king and his wise counselors, centrally planning an economy and society from an imperial capital for the benefit of his ignorant subjects, is nothing new. The administrative state is nothing new.
In fact, it is deeply ancient. Much more ancient than the seemingly old system of ordered liberty our Founding Fathers gave voice to in Philadelphia in 1776, and the constitutional structure they negotiated in that same city in 1787. [The Foundry, December 31, 2013]
Keep an eye on that guy. He’ll continue doing great things for liberty!
• Discover just how much economic freedom has mattered over the past 20 years. The Heritage Foundation will release the 20th edition of its seminal Index of Economic Freedom (co-published by the Wall Street Journal) at 11 a.m. on January 14. The launch will feature remarks from Sen. Rand Paul (R-Ky.).
• Help make government better by entering the Pioneer Institute’s Better Government Competition. This annual citizens’ idea competition will honor the best ideas for improving the performance of state government. The deadline for entry is April 7. The Pioneer Institute will announce the winners at a June awards dinner.
• Recognize the social entrepreneurs you know. The Manhattan Institute is now accepting nominations for its William E. Simon Prize for Lifetime Achievement in Social Entrepreneurship and its Richard C. Cornuelle Award for Innovation in Social Entrepreneurship. The Simon award recognizes individuals who are groundbreaking social entrepreneurs, while the Cornuelle award recognizes nonprofit organizations that excel at serving the public. If you know either an individual or a group deserving to be honored for their social entrepreneurship, then send their names in. The deadline for both awards is March 3.
• Become a citizen journalist. Watchdog Wire wants citizens to become local government watchdogs, and has a checklist of ways for you to get involved.
• Hear some ideas for New Year’s Resolutions for the liberty movement. A panel discussion hosted by the America’s Future Foundation will discuss what the liberty movement’s 2014 priorities should be. The discussion will begin January 14 at 6:30 p.m. at the Reason Foundation headquarters in Washington, D.C.
Save the date: Join leaders in the conservative movement for The Heritage Foundation’s 2014 Resource Bank Meeting, March 26 – 28, 2014, in New Orleans. Resource Bank is a must-attend conference of today’s top conservative leaders—policy experts, think tank CEO’s, activists, and donors—filled with strategy sessions, networking, coalition building, and policy collaboration.
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