I have been researching issues of dysfunctional government and over-regulation for the next book, which won’t be done for months. But now is a good time to discuss some of the results that bear on the new administration’s agenda.
Trump rode a popular wave of anger at being lied to and cheated by the DC pols and bureaucrats who have been in the pockets of special interests — oligopolic corporations, unions, and regulated industries — for several decades now. The fog of disinformation funded by government PR and interlocking media conglomerates obscured how regular people were being shafted to fund ever-increasing costs for medical care, education, housing, and cable TV, special interests that had captured their regulators to increase profits at the expense of middle-class families. Proximate causes of voter anger: the lies of Obamacare and the intentional subversion of the law and welfare systems to support a large population of illegal immigrants intended to tip the electoral balance against citizens who were born in the US or entered legally. The government cheerleaders denigrated blue-collar and less degreed workers, while promising and failing to deliver good jobs. “College for everyone” policies meant college degrees came to be required for all good jobs, and meanwhile failed public schools graduated students unprepared for even low-level college work, then stuck the dropouts with nondischargeable student loan debts. College tuitions rose far faster than inflation while an elite class of academics and administrators took home fat paychecks and enjoyed job security and benefits unavailable to most taxpayers — meanwhile abusing nontenured adjuncts to do the actual teaching for poverty-level pay. Lives have been destroyed by the promises of the social engineers, and the people finally stopped buying the propaganda.
Trump is not beholden to the usual billionaire donors and subsidy-seeking industries. His administration is the first opportunity in decades to seriously overhaul the regulatory structure that has crippled US competitiveness. Real structural reform could unleash a wave of growth and new jobs and lower costs of housing, allowing people to move to where the jobs are and start rebuilding families and lives that have stagnated since 2008’s Great Recession began.
I’m going to propose an agenda of radical reform that not only would create a business boom, but a freedom dividend. The elitists have tried micromanaging normal people by regulating the most trivial details of daily life (for example, incandescent bulb and plastic shopping bag bans) and opposing all new housing, pipelines, and industrial development. They should be told to mind their own business.
Radical reform agendas affecting multiple sectors have a problem getting accepted. One can try to build a coalition to get people to accept the parts they don’t like for the sake of others they do, but you run the risk of notifying the entrenched interests that you’re threatening their monopoly profits. Those special interests will join together to fund propaganda to frighten the population into halting the reforms. This was Arnold Schwarzenegger’s downfall in California; he took on the entrenched power of public employee unions — nurses, prison guards, and civil servants — who funded a massive PR campaign against his reforms and halted them at the ballot box. Schwarzenegger gave up, convinced the interests he had challenged were too powerful to curb. So perhaps the reform agenda should be secret — picking off the interests one by one with as little fanfare as possible, so the people wake up one day to discover they are richer and more free than before. Announcing that you intend to fire millions of paper-pushers so they can go to work in real jobs that actually add value might possibly be a bad idea… even those paper-pushers might be better off in the long run working in more dynamic industries, but it is hard to convince someone to voluntarily undergo wrenching change for some long-term good.
So slow and steady change, with due regard for transitional measures to smooth the way. But smash the system, gently, and let people choose freely how to live and create. The status quo is no longer sustainable, and change rolled out before the inevitable collapse of the debt-based economy will perhaps forestall the worst scenarios.
One of the downfalls of the Democratic-Progressive machine was the failure of the Rube Goldberg ACA / Obamacare health insurance scheme they believed would cement their electoral dominance by creating more dependent citizens. Passed in a hurry when they were about to lose their lock on the Senate, the law was a Frankenstein monster of parts assembled by special interest groups and progressive policy wonks, famously cheered on by MIT Prof. Jonathan Gruber, who admitted the proponents had intentionally obscured its true nature: to greatly raise the cost of insurance for healthy middle-class families so that poorer, sicker people could get subsidies without revealing the huge hidden tax increase involved. Repeated lies were used to pass it, including Politifact’s Lie of the Year for 2013, Obama’s “If you like your health care plan, you can keep it,” plus the promise of $2500 per family yearly savings.
But the current death spiral of the ACA individual insurance market is far worse than the planned hidden tax and subsidy scheme. Through its poorly-designed rules of payment for coverage, the scheme allowed and encouraged gaming — clever consumers discovered they could sign up and pay for one month, then get lots of expensive healthcare services for three months before being cut off for nonpayment. And the loopholes allowing enrollment outside normal time windows were so easy to bypass that many people dropped coverage, returning to pay only when they had a major medical expense upcoming. Because of the high prices — which were barely affordable even with subsidies, and many times the cost of similar pre-ACA policies for those who were not subsidized — many or most of those eligible chose not to buy in, leaving the sickest and poorest to drive up average medical spending for the risk pool.
As a result, the trumpeted increase in coverage was entirely due to expanded Medicaid, which is free and worth every penny. The Oregon study which showed that Medicaid coverage did nothing to increase health or decrease death rates for newly-covered people was ignored, and the claims that new Medicaid coverage would save thousands of lives every year and decrease ER usage among the poor turned out to be false — ER usage rose as poor people continued to prefer no-appointments, no-payment access to ERs over Medicaid clinics with long waits for appointments. Meanwhile, the 20 million people who had paid for their own insurance before the ACA have been soaked, and there are now only 10 million people enrolled in the new individual ACA plans. So while proponents continually claim success in that more people are “insured,” the deteriorating quality of the coverage and the reduced participation by the young and healthy who were supposed to pay the bills mean that it is becoming both a financial and a healthcare disaster.
What happens when a significant number of voters have supposed facts drummed into them by political leaders, but discover they were all lies, and many middle-class voters are being soaked for insurance that covers less and costs much more, reduces choice in providers, and limits travel because they can’t get coverage outside their area of residence? They begin to doubt the word of the “experts” of the government propaganda machine on every other subject, and they yearn for honesty.
Passed to satisfy all major special interest groups, the ACA appeared likely to increase profits for health insurance and drug companies, which is why they supported it. It has not worked out that way, with the companies generally losing $billions on individual health insurance plans. Progressives are now calling for a public option which would somehow undercut the pricing of private insurance companies, many of which are nonprofits, while doing the same work the government way — we can see how well that might work by how patients are treated by the VA.
But the failure of the ACA has created a climate for real reform because the old mostly-functional system is now smashed to pieces and there is less to lose from drastic change. The ACA, ruled constitutional by the Supreme Court, established that the Federal government could regulate and interfere with the healthcare markets of every state. Under the expanded Commerce Clause powers now established as precedent, nothing stops Congress from seizing direct control of medical professional licensing. The balkanized 50-state regulation of care is part of the inefficiency of the system — it should go. In practice there is no evidence that doctors licensed by one state become hazards to care in a different state, and the complex schemes that restrict supply and raise costs for medical certifications need to be streamlined and unified. Irish doctors who go through a four-year program are just as good as doctors trained in the US’s standard eight-year program, which costs hundreds of thousands of dollars more. Services which can be provided by technicians in cheap clinics like those popping up in drugstores nationwide should be expanded; for example, checking for suspicious skin growths to screen for cancer can now be done by AI-based optical scanners at very low cost. Standard tests and treatments for colds, flu, STDs, skin fungus, and impacted earwax don’t require a doctor’s knowledge. State laws requiring doctor supervision of even routine care do little to improve care but a lot to restrict availability and raise prices.
Medicaid is both expensive to taxpayers and provides delayed and substandard care. An expanded system of clinics for the poor is a much better way of spending public money on low-income patients. Hospital ERs need to be free of the requirement to treat non-emergency patients, and free to pass them off to public clinics who can more cost-effectively treat the less urgent problems they bring in.
Requiring prescriptions for drugs raises costs and reduces availability for everyone, even wealthy people — having to see your doctor several times a year to renew routine prescriptions for birth control, blood pressure, cholesterol, and other common medications adds to costs with minimal benefits. Doctors have to waste time jumping through insurance company hoops intentionally imposed to reduce drug costs, and vast amounts of time and money are spent needlessly.
There are some medications which need to be controlled to prevent overuse. Antibiotics, for example, gradually lose their effectiveness as organisms build up resistance, and so having some authority limit their use to cases of real need is cost-effective. But most standard medicines should be free for sale over the counter — only antibiotics and highly addictive drugs need to be controlled. This would cut out layers of cost and reduce prices and the cost in time and trouble to patients and doctors. OTC birth control costs the system much, much less than Obamacare’s “free” birth control pills.
Many newly-approved treatments are startlingly expensive. One reason for this is a hidebound FDA, which requires massive double-blind controlled studies for approval. For each drug that is approved, many more fail, so the billions spent have to come from somewhere, and that means very high list prices for patented treatments. The focus on approvals can make or break billion-dollar companies, and so the FDA deciders are subject to influence-peddling campaigns and barely-hidden bribery, making their decisions less transparent and more political than is decent. Meanwhile, foreign countries control prices and reap the benefits of new treatments while not footing much of the development cost. It’s only because the US government enforces this setup that the market works this way; removing bans on imports and equalizing world prices for medications would force the pharmacy companies to price more rationally and fight the price-controlling developed countries that are free-riding on US research costs.
So setting up a commission to investigate modernizing FDA approvals, freeing up provision of most medical services and licensing, and allowing US sales of any drug approved by reputable agencies abroad would be a good start. Drug companies will fight this since it means they have to find another way to charge the costs of research more broadly to the rest of the developed world while selling at marginal cost to poorer patients wherever located, but the current situation is not sustainable — just as the US no longer dominates the world economy and can no longer afford to pay the lion’s share of defense costs for its allies, medical research and drug approval costs have to be more widely shared. And the paternalistic control of what adult citizens choose to eat, drink, smoke, and take as drugs needs to end. It is vastly wasteful and costly to freedom.
All insurance is a bad deal in that it costs more than the services one might expect on average to get in return; the overhead of the insurance company, claims managers, and payment systems has to be built into the price. Thus insurance for small expenses one could easily afford to pay is a bad deal; extended warranties for appliances, phones, and travel insurance are overpriced. Most people who bought their own insurance pre-ACA had catastrophic coverage, which kept premiums down by having high deductibles. But these policies got them access to the insurance company-negotiated prices, which is important because hospital list prices have been set artificially high in response to the Medicare reimbursement system. Bare-bones policies covered the truly unaffordable costs of serious medical treatments, which is the correct use of insurance. Now many people who had catastrophic coverage can’t get it at the formerly reasonable prices since even unsubsidized policies must conform to ACA rules.
So the first relief for ACA problems is to end regulation of policy benefits so individuals can buy what they actually need in coverage. If medical screening is allowed, setting up a national subsidized high-risk pool for poorer people with pre-existing conditions can help solve that problem, or regulations could require anyone with continuous coverage to be accepted, as they did before the ACA in most states — only a few people would find themselves uncovered and needing a subsidized high-risk pool. Most of the damaging gaming of ACA policies comes from those who stop paying in until they have an expensive need, and requiring continuous coverage limits that problem.
Subsidies for lower-income people are problematic in many ways. One is the benefits cliff, which penalizes someone who increases their income many times the increase, punishing efforts to better their lives. Another is the high cost to taxpayers — the costs have been less in total than expected because ACA policies have been much less popular than expected, but higher per covered person. Getting medical costs down overall through deregulation and heightened interstate competition and economies of scale will help, and making any subsidy required be available through income-tax credits eliminates the need for the costly and mostly failed state and national marketplace web sites, easier dreamed of and promised than executed by government contractors. Those have cost $billions but have proven unsustainable even when they work. Let insurance companies sell directly, let any aggregator compete to sell policies, and get the government out of health insurance provision entirely.
The FDA was once focused on policing the marketplace for food and drugs — its predecessor started under the Pure Food and Drug Act of 1906, and the emphasis was on preventing fraud. Focused on dangerously adulterated food and false claims of efficacy for medical treatments, proper manufacturing and labeling were effective at reducing problems, with the Prohibition-like bans on some drugs and detailed regulation of what chemicals a citizen could buy coming later. Most of the damage caused by quacks and adulterated foods and drugs could be prevented by emphasizing consumer information and labeling instead of prohibition — making sure what is sold is what it is labeled as being and preventing unsupported claims of efficacy are really all that is required, and the growth of FDA regulation beyond that is retarding progress and increasing costs to consumers with very little benefit. Patients with their doctor’s guidance ultimately choose what is needed and useful in medical care, and the FDA has forced them to smuggle in lifesaving medications from abroad and set up a system that prices treatments far above affordable costs. No one who is facing a life-threatening illness to should be kept from trying promising treatments the FDA is too slow to approve. And advanced countries like Britain allow pharmacies to sell, for example, codeine (similar to heroin!!) with acetaminophen tablets for the asking — with little additional risk, though they have been criticized for not warning enough against the dangers of overuse of acetaminophen (Tylenol).
And the FDA is legally prevented from halting the advertisement of and wasted money on homeopathic medicines, which do nothing but can harm people by delaying treatment with real medication. They are also barred from halting supplement sales, and liver toxins like valerian root are still sold freely without appropriate warning labels. Consumers are lead to believe authorities have made the world safe for them, and do not investigate and are not sufficiently skeptical of claims made.
The Hoover Institution’s studies of medical reform are in line with what I’m suggesting, though less radical. I’m particularly bored by HSAs and schemes to jigger tax credits when the underlying problem is that costs are just too damn high, but those incremental improvements would be worthwhile.
[next installment: Sekrit Plan for media conglomerates and cable TV companies, now one and the same]
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[Death by HR: How Affirmative Action Cripples Organizations, available now in Kindle and trade paperback.]
The first review is in: by Elmer T. Jones, author of The Employment Game.
Corporate HR Scrambles to Halt Publication of “Death by HR”
Nobody gets a job through HR. The purpose of HR is to protect their parent organization against lawsuits for running afoul of the government’s diversity extortion bureaus. HR kills companies by blanketing industry with onerous gender and race labor compliance rules and forcing companies to hire useless HR staff to process the associated paperwork… a tour de force… carefully explains to CEOs how HR poisons their companies and what steps they may take to marginalize this threat… It is time to turn the tide against this madness, and Death by HR is an important research tool… All CEOs should read this book. If you are a mere worker drone but care about your company, you should forward an anonymous copy to him.
For more reading goodness:
Regulation Strangling Innovation: Planes, Trains, and Hyperloop
Who Killed Prince?: Update – Buprenorphine Implant Approved by FDA
FDA Wants More Lung Cancer
No More Elections or Campaigns: Liquid Democracy
Death by HR Introduction: HR Pushes Damaging Regulations Into the Enterprise
Death by HR: Thiel, Trump, Palantir: Regulation as Partisan Weapon
Update on: Who Killed Prince? Restrictions on Buprenorphine
California Dream Choo-Choo Lives On: Bay Bridge Lessons Ignored
Public Schools in Poor Districts: For Control Not Education
The VA Scandals: Death by Bureaucracy
