Trump’s Business Approach

Here’s a surprise:  Congress is mired in disputes about the new legislation that is supposed to “repeal and replace” the Affordable Care Act (or at least claims to do something to deal with the ongoing problems with President Obama’s signature legislation).  There was supposed to be a vote on the legislation on the floor of the House of Representatives yesterday, but the tally got postponed over concerns that the legislation might fail.

President Trump has been involved in the wrangling, and last night he weighed in with what the Washington Post described as an “ultimatum.”  According to the Post, Trump told the Republicans in the House to either pass the legislation on Friday, or reject it, in which case Trump will move on to other items on his agenda.  Trump apparently will leave it up to the Republicans in the House to figure out whether they can agree or not.

It’s an interesting approach, and I suspect that it comes from Trump’s years of working in the business world.  Corporations typically don’t engage in open-ended negotiations, allowing events to marinate and slowly come together — which often seems to be how Congress works (if you believe that Congress works at all).  Instead, because there’s a time value to money and limits to corporate resources that can be expended on potential deals that don’t materialize, corporations set establish priorities, set deadlines, and push.  Once a deadline gets set, it becomes another means of applying pressure to the parties to reach an agreement, and if the deal doesn’t get done by the deadline, typically that takes the transaction off the table, the corporation moves on, and there is no going back.

Trump’s approach to this legislative test is, obviously, also informed by political considerations; he wants to set a deadline so members of Congress are actually forced to do something concrete, and we don’t have the lingering story of “what’s going to happen to Obamacare” attracting all of the media attention and detracting from the other things he’s trying to accomplish.  It’s a gamble, because if the legislation Trump is backing doesn’t pass, he could be painted as a failure in the early months of his Administration, making it less likely that he’ll be able to obtain passage of other parts of his agenda, like tax reform.  We already knew that Trump is a gambler, of course — his whole campaign was a bizarre, otherworldly gamble that paid off.  Now he’s bringing some of that high-stakes, business world approach to the legislative political realm.

We shouldn’t be surprised, by now, that Trump is going to continue to gamble and continue to do things in confounding ways.  Today we’ll get another lesson in whether his approach can actually work in Washington, D.C., even on a short term basis.

Questioning The Architecture Of The “Obamacare” Websites

The Affordable Care Act health care exchange websites continue to be plagued with problems, beyond the first-day “glitches.”  The Obama Administration says it’s due to heavy traffic.  Now Reuters has published an interesting article suggesting an alternative explanation.

Reuters interviewed IT experts who question the very architecture of the federal health care exchange website.  They believe that the website simply requires computers to load too much software and information, overwhelming the system.  One expert found that clicking “‘apply’ on HealthCare.gov causes 92 separate files, plug-ins and other mammoth swarms of data to stream between the user’s computer and the servers powering the government website,” including 56 JavaScript files and plug-ins that allow data to be uploaded.

As one expert explained it, the massive volume of data moving between computers and servers resembles a computer hacker attack on a website — except this attack is self-inflicted, as part of the website’s basic design.  If the experts are right, the website designers made a very fundamental, almost amateurish blunder.

The bottom line from these experts is that the solution is not simply adding more servers, but reconfiguring the system.  That possibility would involve more expense, and delay, and frustrations for people who are just trying to comply with their legal obligation to obtain insurance.

Learning From “Obamacare”

Some people are ardent proponents of the Patient Protection and Affordable Care Act — known to many as “Obamacare” — and others are equally ardent opponents.  People on both sides of the issue feel passionately about whether the concept and purpose of the statute is good or bad, and it’s hard for a moderate to find common ground.

I think there is one thing, however, that fair-minded people on both sides of the issue might grudgingly accept:  the implementation of the statute hasn’t gone as its advocates forecast.  There have been delays in promulgating regulations, and developing systems to audit and enforce the different provisions of the law.  There have been unexpected consequences, as employers have considered the economic impact of different potential approaches to compliance with the law — a process that has resulted, for example, in some employers deciding to focus more on part-time workers.  The allegiances of former supporters of the bill, such as labor unions, have in some cases shifted as regulations are promulgated and the potential impact of the statute has become clearer.

None of this is particularly surprising, but it does teach a valuable lesson.  The American economy is extraordinarily complex, and whenever Congress promises to take an action that “fixes” a problem, we should all show a healthy skepticism.  Health care is a significant and complicated part of the economy, but it’s not appreciably different than, say, the mortgage loan sector.  People are, perhaps, more aware of the issues with the Affordable Care Act because it has been the continuing subject of withering public attention and because, in certain respects, its implementation is having an impact on everyday Americans — but I think it’s quite plausible that the financial institutions regulation that Congress enacted recently, or for that matter the Patriot Act passed in the wake of 9/11, are having similar issues and producing similarly unanticipated effects.

This has nothing to do with the party affiliation of the sponsors of legislation, or even the competence of the administrators trying to draft appropriate regulations.  It’s just reality.  The American economy is intertwined and interdependent and interconnected that broad-based regulations are going to have a ripple effect that could go far beyond whatever the politicians promise.  All of us, Democrat and Republican, should remember that the next time Congress makes confident predictions about the effect of a significant statute.

Up To The Supremes

The U.S. Supreme Court has decided to accept one of the appeals addressing President Obama’s health care statute, and thereby has set the stage for one of the most anticipated legal rulings in years.

In its order accepting the case, the Supreme Court identified four issues for the parties to brief and set aside five-and-a-half hours for oral argument.  Five and a half hours!  It’s an extraordinary amount of time, but why not?  The issues presented are titanic and unprecedented and could have far-reaching consequences.  Can the federal government require everyone to buy insurance?  If not, should the entire statute fall?  Should the Supreme Court even decide those issues on their merits, or should it wait for the law to be fully implemented?

Many people will focus on the political impact of any Supreme Court ruling on the health care statute, but I think the legal issues are of the most interest.  In many ways, the statute tests the outer limits of Congress’ power under our Constitution — if in fact there are any limits left.  The Supreme Court may well decide that issue come June.

The “Health Care Reform” Law Hits The High Court

It is looking increasingly likely that Supreme Court will hear an appeal of the ever-controversial “health care reform” law, and soon.

Both sides to a lawsuit — the Department of Justice in favor of the law, and 26 states and the National Federation of Independent Businesses in opposition — have asked the Court to accept an appeal and decide whether the law should be upheld or struck down as unconstitutional.  The Supreme Court has the discretion to decline the appeal, but the fact that the appellate court declared the law unconstitutional, and the fact that both sides to the case are seeking review, should increase the chances the high court will hear the case.

Stripped of its partisan baggage, the appeal poses a fascinating legal issue:  how far does Congress’ power to regulate interstate commerce extend?  In prior cases, the Court has articulated an expansive view of that power.  However, opponents of the new law argue that this case is different because Congress — through the “individual mandate” provision that requires all citizens to buy health insurance — is for the first time assuming the power to compel unwilling citizens to engage in commerce.  Proponents of the law respond that, when it comes to health care, every living American is already affecting commerce, because those who don’t have insurance and then need health care are imposing economic burdens on the rest of us.  A Supreme Court decision on this issue would go a long way toward defining, once and for all, the full extent of Congress’ power to regulate the daily lives of Americans.

If the Supreme Court takes the appeal, it would be likely to rule in the summer of 2012 — just before a presidential election where the wisdom of the “health care reform” law is likely to be a very hot topic.  And the decision will come against the backdrop of a recent report that shows a sharp increase in health care costs, which undoubtedly will cause Republican candidates to blame the unpopular new law and redouble their attacks on it.

Who Is This Guy? (The Health Care Side)

The third part of the approach President Obama outlined in his fiscal policy speech on April 13 addressed health care costs.  He first contrasted his approach with his characterization of the Republican plan.  He said Republicans intended to reduce health care costs in the federal budget by “asking seniors and poor families” to pay the health care costs, whereas his approach would “lower[] the government’s health care bills by reducing the cost of health care itself.”

How to do so?  First, by reducing “wasteful subsidies and erroneous payments,” cutting “spending on prescription drugs by using Medicare’s purchasing power to drive greater efficiency and speed generic brands of medicine onto the market,” and working with governors “to demand more efficiency and accountability from Medicaid.”  Next, the government will “change the way we pay for health care” with “new incentives for doctors and hospitals to prevent injuries and improve results.”  Finally, “we will slow the growth of Medicare costs by strengthening an independent commission of doctors, nurses, medical experts and consumers who will look at all the evidence and recommend the best ways to reduce unnecessary spending while protecting access to the services that seniors need.”  These initiatives, the President said, will save $500 billion over the next 12 years.  And if those savings don’t materialize, “then this approach will give the independent commission the authority to make additional savings by further improving Medicare.”

This part of the speech seems completely inconsistent with a prior part of the same speech.  The President earlier observed:  “So because all this spending is popular with both Republicans and Democrats alike, and because nobody wants to pay higher taxes, politicians are often eager to feed the impression that solving the problem is just a matter of eliminating waste and abuse.  You’ll hear that phrase a lot.  ‘We just need to eliminate waste and abuse.’  The implication is that tackling the deficit issue won’t require tough choices.”

The clear implication of that passage is that promising savings from eliminating “waste, fraud and abuse” is not a serious approach to solving budget problems.  Yet isn’t that all that the President’s health care approach does?  Look again at the President’s proposed approach, and you’ll see plans to eliminate “wasteful subsidies and erroneous payments” (end waste), to demand more “efficiency and accountability from Medicaid” (prevent fraud), and to “improve results” while “reducing unnecessary spending” (avoid abuse).  It’s as if the two parts of the speech were written by two different speechwriters — or as if President Obama thinks that, just because he is the one making the proposal, the tired “waste, fraud and abuse” mantra has actual validity this time.

So, again, I am left to wonder what this President actually believes.  Does he believe that a deficit reduction plan that focuses on eliminating purported “waste, fraud, and abuse” is really no plan at all?  Or, does he truly think there is $500 billion in waste, fraud and abuse to be wrung from our health care spending — and if that is the case, why has that waste, fraud, and abuse been allowed to continue unabated during the first two years of his Presidency?

While we are asking questions, another fair question is whether the President honestly thinks that there is any real value in blue-ribbon commissions, when the political landscape is littered with the reports of prior blue-ribbon commissions that have been happily ignored by those in power.  And if the President does think such commissions are a powerful answer to problems, why does he hold that belief when he has pretty much ignored the recommendations of the Bowles-Simpson budget commission that he himself appointed?

Who Is This Guy?  (The Defense Side)

Who Is This Guy?  (The Spending Side)

Government By Waiver

One of the more troubling aspects of the “health care reform” legislation enacted into law last year has been the ability of companies and unions to get waivers that relieve them from having to comply with certain aspects of the law.  The waivers relate to provisions of the law that prevent plans from using high deductibles or low annual limits to control benefits.  Unfortunately, many plans need such provisions to manage costs; without those provisions, employers and unions would need to jettison their plans as unaffordable.

The Department of Health and Human Services may waive those provisions for certain employer and union plans.  The HHS website explains that, to be eligible for a waiver, the plan must certify “that a waiver is necessary to prevent either a large increase in premiums or a significant decrease in access to coverage” and must inform plan enrollees “that their plan does not meet the requirements of the Affordable Care Act.”  Whether to grant the requested waiver then seems to be entrusted to the discretion of the HHS and its Secretary, Kathleen Sebelius.  To date, 733 company and union plans, covering 2.1 million Americans, have received waivers.

This concept of “government by waiver” is troubling.  I’m skeptical of the claims of some conservatives, who believe that the waivers are being handed out as rewards for prior political support.  I do, however, question a process that allows unelected bureaucrats to grants waivers from a law that is supposed to apply to everyone.  The waiver process is symptomatic of the accumulation of power in the Department of Health and Human Services that seems to be the true hallmark of the “health care reform” legislation. If the law remains in force, Americans will need to get used to the idea that HHS will be making all kinds of decisions that have a direct impact on our health care.

In addition, what does it say about this hastily drafted, poorly considered law that more than 700 plans have certified that one of the law’s provisions will either vastly increase costs or cause coverage to be sharply curtailed?  Does anyone doubt that, if all American businesses had been aware of the possibility of obtaining waivers, that 700 number would have been multiplied by a significant factor?  It also is worth noting that the waivers aren’t limited to small, Mom and Pop plans.  To the contrary, some of the plans that have received waivers have hundreds of thousands of participants.  According to the HHS website, the plans that have received waivers include the United Federation of Teachers Welfare Fund (351,000 participants), CIGNA (265,000 participants), Aetna (209,000 participants), and BCS Insurance (115,000 participants).  Given these waivers, how can the proponents of the “health care reform” legislation continue to contend that the legislation will neither increase costs nor reduce coverage?  By granting the waivers, the bureaucrats at HHS are admitting that the exact opposite will occur if the law is enforced as written.

Making A Statement And Fulfilling A Promise

The House of Representatives, now under Republican control, has passed legislation to repeal the “health care reform” legislation passed by the last Congress.  Democrats in the Senate, who control that chamber, are saying that repeal legislation will never come to the floor for a vote — and, of course, President Obama would be expected to veto any repeal legislation that would happen to reach his desk.

So, was the House vote a waste of time?  I don’t think so.  By voting to repeal the “health care reform” legislation, the Republican majority was fulfilling a campaign promise.  We should applaud politicians who do so, not condemn them.  The general public would have a more favorable view of politicians generally if more politicians actually tried to keep their promises.  By acting so promptly, the Republicans are demonstrating that elections have consequences.  And, of course, you never know whether political pressure will build on the Senate to consider some form of repeal legislation.  If Democrats in the Senate consider the legislation to be such a great success, why should they duck a vote on its proposed repeal?

Now that the Republicans in the House have met one of their promises, they need to turn to working on the others.  If I had a vote, I would urge them to focus on deficit reduction and a careful analysis of potential federal spending cuts.

Phony Figures

Today Kathleen Sebelius, the Secretary of the Department of Health and Human Services, released a report that concludes that up to half of all Americans below age 65 — 129 million in all — have some kind of “pre-existing condition” that might otherwise cause them to be denied health insurance coverage.  The report, which was released on the day the House of Representatives began debate on a bill to repeal the “health care reform” legislation, notes that under that legislation those individuals with “pre-existing conditions” cannot otherwise be denied coverage, or be charged significantly higher premiums.

HHS Secretary Kathleen Sebelius

As is the case so often these days, this report seems to be motivated almost entirely by political concerns — in this case, trying to make a case for retaining the “health care reform” legislation.  Consider the study itself.  It concludes that “50 to 129 million (19 to 50 percent of) non-elderly Americans have some type of pre-existing health condition.”  Can’t we expect a bit more precision from our governmental studies than a margin for error of 79 million Americans?  No doubt the political manueverers at HHS realized that the news media would report the higher number — which is exactly what has happened.  The headline on the ABC News website report on the study, for example, is:  “Half of Americans Have Pre-Existing Health Conditions”.

And consider, too, the fact that the report itself notes that “as many as 82 million Americans with employer-based coverage have a pre-existing condition.”  In other words, those conditions — if they exist at all — have not stopped those 82 million Americans from getting and keeping insurance through their employers.  If the insurance companies were really as evil as Secretary Sebelius and the supporters of “health care reform” legislation argue, how could that have happened?  Why didn’t the greedy insurance companies immediately eliminate coverage for those 82 million Americans?  The fact that, according to the government, as many as 82 million Americans are maintaining health insurance notwithstanding their purported “pre-existing conditions” refutes one of the basic arguments for having “health care reform” legislation in the first place.

Finally, the report shows, I think, that our federal government really doesn’t have much respect for the common sense of Americans.  Does anyone honestly think that if half of all Americans under 65 really had pre-existing conditions that made it impossible for them to get private health insurance we would see the kind of vigorous opposition to the “health care reform” legislation that has continued, unabated, despite the best efforts of the news media and the federal government to quash it?

 

How Will History Judge?

Senate Majority Leader Harry Reid is now describing the current Congress as the “most productive Congress in the history of the country.” He numbers among its accomplishments the “stimulus” legislation, the “health care reform” legislation, repeal of the military’s “Don’t Ask, Don’t Tell” policy, new financial regulations, and the extension of the Bush-era tax cuts.

When you are in the moment, it is difficult to assess what the ultimate judgment of history will be.  I doubt that many Americans would put the current Congress up among the great Congresses of the past, however.  After all, voters just gave the boot to many of the Representatives and Senators who passed the legislation Reid touts, and Congress’ approval rating is a dismal 13 percent — its lowest level in decades.  And those people who are critical of Congress no doubt will point to the things that Congress didn’t do, like passing appropriations bills or making meaningful cuts to the federal budget.

History will make its judgment, as history always does.  In the meantime, there is something unseemly and profoundly unattractive about Senator Reid’s excessive pride.  His hubris exemplifies a significant problem with the current uninspiring crop of legislators:  they are oblivious to how they are being perceived outside the Beltway.

Exploring The Limits Of Constitutional Power

Today a federal district court judge in Virginia ruled that the “individual mandate” provision of the “health care reform” legislation — that is, that portion of the statute that would require people to purchase health insurance or pay a penalty — is unconstitutional.

Judge Henry Hudson concluded that the individual mandate “exceeds the constitutional boundaries of congressional power.”  He found that the commerce clause, which gives Congress the authority to regulate interstate commerce, does not permit Congress to regulate a person’s decision not to purchase a product.  Although there are other court rulings that have upheld the “health care reform” legislation, Judge Hudson’s decision is significant because it reflects an interesting approach to skirting the broad powers afforded Congress through the commerce clause.  In effect, Judge Hudson is saying that if individuals choose not to purchase a good or service they are not engaged in commerce, and therefore they necessarily are beyond Congress’ regulatory power under the commerce clause.

Of course, this issue will be addressed by federal appellate courts and, ultimately, will be decided the Supreme Court.  Until then, it is an issue that Americans of all political stripes may well want to consider.  Supporters of the “health care reform” legislation want that law to be upheld — but do they really want a court ruling that says that Congress can force Americans to buy products or take other actions in furtherance of commerce?  In other instances, federal law requirements are simply attached to a decision and therefore become part of the individual decision-making process.  If I want to work, for example, I have to pay Social Security and have income tax withheld from my wages.  If I don’t want to pay Social Security, I can choose not to work.  With the “individual mandate,” however, there is no choice.  Simply by virtue of being an American, you become obligated to buy health insurance.

When we speak of constitutional doctrine, we have to take the long term view and look past the relative merits of the statute at issue.  If the Supreme Court rules that Congress has the constitutional power to force us to buy health insurance, what’s next?  Smoke alarms?  Government bonds?  Subscriptions to the Congressional Record?  And if we think the corruption and influence of lobbyists is out of control now, what will it be like if corporations and interest groups learn that, through some deft lobbying work, they can achieve passage of legislation that will require us to spend our money for their goods and services?

Your Tax Dollars At Work, Protecting Americans From Unlicensed Neighborhood Lemonade Stands

Does anyone in government stop and think about what they are really doing, anymore?

Here’s the latest story of some ridiculous lack of judgment by a government regulator.  A 7-year-old girl in a suburb of Portland, Oregon sets up a lemonade stand at a neighborhood festival and starts serving lemonade made from bottled water and Kool-Aid mix, at a price of 50 cents a cup.  Some county health inspector with a clipboard comes up and asks the kid to show her temporary restaurant license.  Not surprisingly, the child doesn’t have one — they cost $120, after all — and the health inspector tells the kid that she has to close up shop or face a $500 fine.  The child left in tears.  Of course, the county health inspectors defend the action, saying that they “need to put the public’s health first” and must “protect the public” no matter how small the business or how young the proprietor.

Didn’t anyone at the county health department ever have a lemonade stand?  Doesn’t anyone at the county health department have any common sense?  Is unlicensed lemonade sold by a 7-year-old really such an enormous risk to public health that the full weight of the country government must be brought to bear?

Whether a 7-year-old gets to run a lemonade stand without being harassed and reduced to tears by clipboard-waving bureaucrats doesn’t mean a lot in the grand scheme of things.  This story reveals a greater concern about how government works, however.  One reason why some people, at least, oppose the government making decisions about their health care is precisely because they are worried that those momentous decisions will be made by nameless bureaucrats who don’t have the sense to determine that a 7-year-old’s lemonade stand doesn’t pose a fundamental risk to public health.

The Voters Begin To Speak On “Health Care Reform”

Tuesday’s election in Missouri included a ballot initiative where voters were asked to weigh in on whether a key provision of the “health care reform” legislation — the “individual mandate” that requires people to either get health insurance or pay a penalty — should be invalidated.  More than 71 percent of the Missouri voters voted yes on that issue.

I’m sure supporters of health care reform have lots of rationalizations for the landslide in Missouri — it was a special election, Republicans were more motivated to go to the polls, serious people understand that ballot issues aren’t going to decide the matter and therefore we shouldn’t pay attention to the results, etc. — but I think the Missouri election result has to be viewed as having some significance.

The reality is that, when voters were asked to pull the lever on a key feature of the “health care reform” legislation, they rejected it overwhelmingly.  Commentators can pooh-pooh the results if they wish, but does anyone doubt that if Missouri voters had overwhelmingly approved of the individual mandate that result would have been cited as evidence that popular perception of the legislation was changing?

I don’t know whether an up or down vote on one part of a complex bill can tell us much about how voters will treat members of Congress when they stand for re-election in November.  Most voters aren’t single issue voters; they typically consider an incumbent’s overall record.  Still, if I were a Democrat who had voted in favor of the “health care reform” legislation and its individual mandate centerpiece, the Missouri results would leave me feeling queasy.

Recognizing Taxes As Taxes

The New York Times recently carried an interesting article on the Justice Department’s arguments against claims that the “health care reform” legislation is unconstitutional.  The “linchpin” of the argument is that the individual mandate, which requires people to obtain health insurance or pay a penalty, is constitutional as an exercise of Congress’ broad taxing power.

The Justice Department’s argument is interesting because, while the “health care reform” legislation was being debated, President Obama and many of his congressional allies denied that the individual mandate was a tax.  For example, Congress did not cite its taxing power as a basis for the legislation.  Now that the legislation is being challenged, however, the Administration’s lawyers have recognized the individual mandate for what it is — a tax on individuals and their individual decisions — in order to buttress its prospects for being upheld.

Just another example of how duplicitous the legislative process can be.

The Massachusetts Mess, Coming Soon To A Neighborhood Near You

The Wall Street Journal has published an article with the latest news from Massachusetts — the state whose universal health care program served as the model for the federal program that will soon be taking effect nationwide.  The news, to put it mildly, is not good.  The highlights (or rather lowlights):

*  The Massachusetts plan increased private employer-sponsored plan premiums by an average of 6 percent.

*  Massachusetts has the highest average premiums in the United States.

*  There is rampant and growing abuse of the state’s “individual mandate,” in which people buy insurance only when they are about to incur significant medical expenses and then drop the coverage after the expenses have been covered by insurance.

*  The state imposed price caps on insurance rates that had no actuarial support (but were politically popular), even though underlying state health costs are rising at a rate of 8 percent annually.

I am sure that all working Americans will welcome increased health plan premiums, to go along with the tax increases that will take effect starting in 2011.