A tribal battle over health insurance portability

In 1990, linguist Deborah Tannen made a splash with You Just Don't Understand, a study suggesting that men and women speak fundamentally different languages, informed by different values, and so often talk past each other.

Psychologist Jonathan Haidt has demonstrated something similar with liberals and conservatives: they march to different moral drummers and so make very different ethical judgments about what government and community owe to the individual and vice versa. In a 2012 op-ed, Haidt described liberal and conservative value schemes as different tribal affinities defined by different sacred objects -- for liberals, "formerly victimized groups," for conservatives, "God and country." The villains are all symmetric: elite oppression vs. intrusive and redistributive government. More on Haidt's schema below.

I thought of Haidt's contrasting value systems while reading a Washington Post profile of two people who have left jobs because the ACA made health insurance outside the workplace available to them.

The ACA as a framework for (further) conservative healthcare reform

Austin Frakt does AEI's James Capretta the honor of seriously considering* elements of Capretta's attempt (with Douglas Holtz-Eakin) to fill in the long-empty "replace" blank in Republicans' purported "repeal and replace" program for the Affordable Care Act. After spotlighting various lacunae as well as potentially workable elements in Capretta's "decentralized, market-diven alternative to the PPACA," Frakt comes to a core point, implicitly questioning whether conservative healthcare wonks are acting in good faith:

6...Democrats are well aware of the limitations and problems with the Affordable Care Act. Some are so troubling that the administration is considering some interesting proposals that would require Congress to act. Point being, there is leverage for some negotiation on some aspects of the law. And, crucially, some of the things Capretta has proposed fit within the structure of the ACA, such as allowing Medicaid enrollees to buy exchange plans (see Arkansas), capping the employer-sponsored insurance tax subsidy (see the Cadillac tax), or making exchange plans more catastrophic. But that brings me to …

About that conservative soft spot for means-testing

[reposted from 2/22]

Jonathan Cohn had some fun this afternoon with this tweet and article:

‏@CitizenCohn Huge scoop: White House endorses means-testing for Medicare. http://www.newrepublic.com/article/112506/david-brooks-obama-and-medicare …

--  the joke being that Obama's 2013 budget, released a year ago, proposed modest increases in the already-higher premiums that wealthy seniors pay for Medicare Parts B and D.  Legions apparently retweeted Cohn without pausing to note that the "scoop" was a year old and based on information that the White House publicized.

Cohn's post was prompted by David Brooks lambasting Obama for not offering serious entitlement cuts, such as means-testing, in current negotiations to replace the sequester (see Cohn's post for links).  Which highlights a rather odd fact: means-testing Medicare and Social Security has been a Republican talking point throughout the budget wars. They use it either, I imagine, for cover -- see, we're not just about cutting benefits for the poor -- or as a stalking horse for cutting benefits for everyone else. More on that later.

The funny thing about means-testing is that it's functionally equivalent (if arguably less efficient in some cases) to raising taxes on the wealthy, which is anathema to the GOP.  Another funny thing: people don't realize the extent to which benefits for the elderly are already means-tested -- or, if I'm using that term imprecisely, more expensive for the wealthy (and in one case, available only to the poor).  A few facts, then, about our core elderly benefits:

Breaking: U.S. senior benefits means-tested

Jonathan Cohn had some fun this afternoon with this tweet and article:

‏@CitizenCohn Huge scoop: White House endorses means-testing for Medicare. http://www.newrepublic.com/article/112506/david-brooks-obama-and-medicare …

--  the joke being that Obama's 2013 budget, released a year ago, proposed modest increases in the already-higher premiums that wealthy seniors pay for Medicare Parts B and D.  Legions apparently retweeted Cohn without pausing to note that the "scoop" was a year old and based on information that the White House publicized.

Cohn's post was prompted by David Brooks lambasting Obama for not offering serious entitlement cuts, such as means-testing, in current negotiations to replace the sequester (see Cohn's post for links).  Which highlights a rather odd fact: means-testing Medicare and Social Security has been a Republican talking point throughout the budget wars. They use it either, I imagine, for cover -- see, we're not just about cutting benefits for the poor -- or as a stalking horse for cutting benefits for everyone else. More on that later.

The funny thing about means-testing is that it's functionally equivalent (if arguably less efficient in some cases) to raising taxes on the wealthy, which is anathema to the GOP.  Another funny thing: people don't realize the extent to which benefits for the elderly are already means-tested -- or, if I'm using that term imprecisely, more expensive for the wealthy (and in one case, available only to the poor).  A few facts, then, about our core elderly benefits:

Morning in, ah, Medicare?

Well, it's a sunny pre-holiday Friday morning, and I am cheered by Ezekiel Emanuel in today's Times heralding the bending of the healthcare cost curve, as it now seems over the past ten years. On the cost control front, perhaps the ACA will look in retrospect something like the surge in Iraq, giving a jolt of indeterminate magnitude to a st of processes already in motion.

In any case, perhaps superficially, I am riffling through my mind the hopeful signs that have emerged on the healthcare front in recent weeks. If I want to go head over heels in caffeinated optimism, I might imagine that Atul Gawande's vision of a kind of venture capital process of reform stimulated by the ACA -- dozens of simultaneous experiments, a handful of which will yield dramatic results -- may actually occur over the next ten-odd years.

Hopeful signs include the fact that, for all the GOP's caterwauling about "bureaucrat-controlled" and "government-controlled" healthcare, beneath the radar some Republicans are looking at cost control measures that are indeed government-imposed, and likely to be effective.  For example, as I noted recently, two long-term "doc fix" bills are currently circulating in Congress, one bipartisan (but mainly Democrat), one Republican. While the GOP bill accords far more input to healthcare providers, both purport to either end or radically curtail fee-for-service payments.

A second sign of some nonideological thinking on the Republican side emanates from a bipartisan initiative, the Partnership for the Future of Medicare, co-chaired by former CBO head Douglas Holtz-Eakin and Ken Thorpe, a professor at Emory. The pair this week distilled a  PFM report in a post on the Health Affairs blog. I think of Holtz-Eakin, former economic adviser to the McCain campaign, as an intensely partisan critic of Obamanomics and the ACA, an impression gleaned mainly from quotes in news articles.  I was therefore somewhat surprised to learn that he is preaching the futility of simple cuts to benefit formulas, and calling for more systemic reform that does not simply rely on the Competition Fairy:

The adminstration's last bullet against economic stagnation?

Back in 2008, as the mortgage crisis metastasized,  FDIC chair Sheila Bair, a Bush appointee, was for it.  John McCain,  under tutelage of his economic advisor, former CBO director Douglas Holtz-Eakin, was for it (twice, in two forms). In early 2009, leading Senate Republicans were for it. Today, former Reagan Council of Economic Advisers Chair Martin Feldstein is for it. And we learn it today's FT that Glenn Hubbard, George W. Bush's Council of Economic Advisers chair, is also for it.

"It" is large-scale mortgage relief for underwater homeowners. Bair, McCain-Holtz-Eakin, and Feldstein called for principal writedowns. Hubbard wants interest rates reduced to today's low levels:

Factcheck.org carries water for McCain

In a display of false even-handedness, a new Factcheck.org article, "Out of Context on Health Care," falsely accuses a new Obama ad of distorting McCain's healthcare proposals.

The ad in question seizes on a proposal in a just-published article under McCain's byline to "[open] up the health insurance market to more vigorous nationwide competition, as we have done in banking." Factcheck complains that the ad

claims that McCain said he would "reduce oversight of the health insurance industry ... just 'as we have done over the last decade in banking.' " But the ad takes the comments out of context, failing to explain what exactly McCain meant by the comparison to banking. He was talking specifically about allowing the sale and purchase of health insurance plans across state lines.

In fact, Factcheck makes its own unwarranted inferences as to "what exactly McCain meant"--not to mention what gutting state insurance mandates might mean. Here's the McCain passage in question:

I would also allow individuals to choose to purchase health insurance across state lines, when they can find more affordable and attractive products elsewhere that they prefer. Opening up the health insurance market to more vigorous nationwide competition, as we have done over the last decade in banking, would provide more choices of innovative products less burdened by the worst excesses of state-based regulation.

What phase of bank deregulation was McCain referring to? Factcheck cites competing interpretations from the two campaigns cited in The Wall Street Journal, then delivers a completely unwarranted judgment. Here's the WSJ:

Douglas Holtz-Eakin, Sen. McCain's chief economic adviser, said the banking regulations referenced in that magazine article were common-sense provisions approved in 1995 that allowed people to bank across state lines. Obama adviser Jason Furman said Sen. McCain appeared to be referencing 2004 rules that pre-empted state banking regulations and that, he argues, helped bring on the current financial meltdown.

And here's Factcheck:

McCain did not cite specific legislation. But it is clear he was comparing such regulations to his proposal to allow the sale of health insurance across state lines.

Now just what are "such regulations" -- and why assume that "allowing the sale of health insurance across state lines" is some kind of neutral, inherently harmless proposal? As the Journal exchange indicates, the weakening of states' control over banking was a multi-stage process, with a relatively benign phase and a malignant phase.

In the Journal passage above, Holtz-Eakin seems to claim that McCain was alluding to the Riegel-Neal Interstate Banking Act passed by a Democratic Congress in 1994 (not in "the last decade," per the McCain passage"), which removed prohibitions against interstate banking. It's true that Riegel-Neal left consumer protections in place. But the Bush Administration took care of that with the Fair and Accurate Credit Transactions Act of 2003 (FACT), which restricted states from enacting future laws to protect consumers in the credit markets. Then, in 2004,

a previously obscure federal banking regulator -- the little noticed Office of the Comptroller of the Currency (OCC)--eliminated application of all state consumer protection and predatory lending laws, as well as state enforcement authority, over national banks, even when no federal law protected consumers at all...The OCC asserted it had authority to take the field over virtually all matters pertaining to national banks, even when no federal law protected consumers from unfair or predatory financial practices (Edmund Meirzwinski, U.S. Pirg) .

The states fought back against the Federal power grab. In August 2003, 35 attorneys general, supported by 43 state bank commissioners, filed an amicus brief in support of the Connecticut banking commissioner in defense against a Wachovia lawsuit that challenged the state's right to license and supervise Wachovia Mortgage Corporation, a state-chartered mortgage lender. In a release announcing the amicus filing, Iowa Attorney General Tom Miller warned:

The breadth of preemption through regulation that the OCC is pursuing through court decisions is dangerous for both consumers and financial institutions. The check on abusive practices that state law and state law enforcement have provided has created a confidence in our financial system that has allowed that system to thrive.

Alaska Attorney General Gregg Renkes added:

As a matter of law as well as of public policy, the Comptroller of the Currency is on shaky ground. We hope that this court turns the tide of excessively deferential decisions in favor of OCC interpretations of federal law. Otherwise, we fear that a void is being created that could provide a breeding ground for consumer abuses.

Chief among those preempted state checks on abusive practices: curbs on predatory lending.

Why should we assume that McCain, or rather whoever ghosted the article, was referring with clarity and purity of purpose to the unnamed Riegel-Neal? Everything we know about John McCain indicates otherwise -- that a) he didn't mean anything precise, and b) he's "always for less regulation"--in 1994, 1997, 2003, 2004 and today.

McCain is indeed itching to do "the same" to health insurance as the Bush Administration did to banking regulation (hard though it is to believe that our current system could open the door to even more discriminatory pricing, restricted and often illusory coverage, or minefields of coverage exclusions). McCain wants to enable the purchase of insurance across state lines because many state insurance schemes prohibit a wide range of coverage restrictions and provide rating protections that make small group insurance more affordable to older and sicker workers. By giving individuals the "freedom" to buy health insurance in any state, McCain would trigger a regulatory race to the bottom in which health insurers charter in states with the weakest regulation. As it is, almost as many Americans are underinsured as uninsured, stuck in plans with low benefit caps, high co-pays, and a maze of coverage exclusions. If you think that health insurance is melting down now, just wait till John McCain gets through with it.

Factcheck rightly points out that McCain's article "was not 'an article praising Wall Street deregulation,' as the ad says. Wall Street itself is never mentioned..." Foot fault -- the banking industry does not equal Wall Street. On the main point, though, the ad is dead-on. McCain would shred consumer protections in health insurance - what little we have - as thoroughly as the Bush Administration destroyed consumer protection in banking.

McCain's economic bridge to nowhere

The Wall Street Journal's Bob Davis, reporting on an interview with John McCain focused on his economic platform, does a nice job highlighting multiple inconsistencies -- not to say an overall incoherence -- without any explicit diss. Repeatedly, Davis presents McCain's claims against an understated backdrop of inconvenient truths.

Among the highlighted lacunae:

Social security reform: "the Arizona senator says he still backs a system of private retirement accounts that President Bush pushed unsuccessfully, and disowned details of a Social Security proposal on his campaign Web site." That is, the website calls for a plan similar to Hillary Clinton's, creating personal investment "supplementing" social security, without touching the structure of the existing program. That's a switch from his 2000 campaign, when McCain called for diverting a portion of social security taxes to fund private accounts, as Bush tried to do in 2005. McCain's chief economic aide, Douglas Holtz-Eakin, chalks up the change to the runup of the deficit in the Bush years.

But, Davis reports, "asked about the apparent change in position in the interview, Sen. McCain said he hadn't made one. 'I'm totally in favor of personal savings accounts," he says. When reminded that his Web site says something different, he says he will change the Web site. (As of Sunday night, he hadn't.) ' As part of Social Security reform, I believe that private savings accounts are a part of it -- along the lines that President Bush proposed."

This repudiation highlights the article's subtext: that McCain claims to be a deficit hawk but avoids any serious attempt to make his numbers add up - that is, to deal with the deficit. Which brings us to self-repudiation #2:

Bush tax cuts and more: As is well known, McCain voted against Bush's massive tax cuts in 2001 and 2003 but now opposes letting them expire. Now he wants to pile on with a cut in the corporate tax rate from 35% to 25% at a cost of $100 billion per year, and elimination of the Alternative Minimum Tax, at a cost unspecified in the Journal article but estimated by the Urban Institute-Brookings Institution Tax Policy Center at least $800 billion over the next decade (Aviva Aron Dine, Center on Budget and Policy Priorities). "In all," Davis reports, "his tax-cutting proposals could cost about $400 billion a year, according to estimates of the impact of different tax cuts by CBO and the McCain campaign. The cost will make it difficult for him to achieve his goal of balancing the budget by the end of his first term."

Offsetting savings? Davis makes it clear that they're pitifully inadequate:

To show he can control spending, Sen. McCain cites his long record as a spending hawk, who battles sweetheart deals between the Pentagon and defense contractors, as well as projects that lawmakers of both parties cram into appropriations bills -- "earmarks," in budget lingo.

Congressional earmarks total $18 billion a year, according to the Taxpayers for Common Sense, a Washington, D.C., research group -- and each has a member of Congress who will ferociously fight to keep that spending going. Mr. Holtz-Eakin, the McCain adviser, says that earmarks actually cost $60 billion a year, counting programs that started in earlier years and get funded year after year.

Another source of spending cuts eyed by the McCain campaign is a White House hit list of underperforming or redundant programs. But again, the numbers are relatively small -- $18 billion annually -- compared to the cost of Sen. McCain's tax plans, and the programs include housing loans, education grants, and water projects popular with Congress.

The accompanying interview highlights the absurdity. Asked by Davis, "are you worried your numbers don't add up?", McCain responds:

If you just look at two spending bills that the president signed into law, there's $35 billion just in those two bills [that could be cut]. I saved the taxpayers over $6 billion on one Air Force tanker deal. I'm not worried about being able to find savings in government.

I love the use of brackets above - $35 billion [that could be cut] -- if the President got every cut he claimed to want in two bills totaling several hundred billions in spending. That's in a budget with a current deficit of over $400 billion. Tack McCain's $400 billion in new tax cuts onto that, and then take a guess at the cost of maintaining over 100,000 troops in Iraq indefinitely.

Slow Stimulus: To get the economy going, Davis emphasizes that McCain "said he might have 'a couple of fireside chats with the American people.'" Beyond that, nothing -- except extending the Bush tax cuts and adding his own:

While other candidates were scrambling in January to put together stimulus plans to boost flagging consumer spending, he proposed long-term tax cuts which could take years to come into law. "In the shorter term, if you somehow told American businesses and families, 'Look, you're not going to experience a tax increase in 2010,' I think that's a pretty good short-term measure," he says.

The Bush tax cuts have already been justified, first by the surplus of 2000, then by the recession of 2001, then by the recovery of 2003-07. Now McCain is tacking on the anticipated recession of 2008. Here we go again: massive tax cuts are the cure for every economic slowdown, and the cause of all economic growth.

Pat Buchanan recently said that McCain running our foreign policy "could make Cheney look like Gandhi." With this deadpan presentation, Bob Davis makes it clear that McCain running the economy could make Bush look like Alexander Hamilton.

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