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No to Broccoli Mandate, Yes to Health Insurance Mandate?

Ryan Young — Wed, 28 Mar 2012 15:11:43 +0000

The results of a Reason-Rupe poll that was released on Monday are more interesting than the pollsters may have intended. Two of the questions they asked rely on the same basic principle: whether or not the government should be able to force you to purchase a certain product. The answers were wildly different.

In one question, the mandatory product was broccoli. Eighty-seven percent of respondents said this would be unconstitutional. Eight percent said it would be constitutional, and five percent didn’t know.

In the other question, the mandatory product was health insurance. Sixty-two percent said this would be unconstitutional. Thirty percent said it would be constitutional, and eight percent didn’t know.

That’s a 25-percent difference in how many people thought the different product mandates were unconstitutional, even though the principle at hand — the power to mandate — is exactly the same. Weird, huh?

There are many ways to interpret this. One is that a lot of the respondents have better things to do with their lives than study public policy, so they simply aren’t aware of the basic principle at hand. Most people prefer to spend their time on their careers, kids, hobbies, you name it. Economists call this rational ignorance. People aren’t stupid about politics because they’re stupid, they’re stupid about politics because they’re smart. People know how to prioritize their time.

Two other factors are what psychologists call priming, and the ugly reality of political partisanship. The health insurance mandate is at the heart of a headline-dominating Supreme Court case, while the broccoli mandate languishes in obscurity. Insurance is on the brain, and a certain delicious vegetable is not. Or in psychology lingo, health insurance is primed. Broccoli isn’t. That should explain some of the difference.

But it doesn’t explain the direction of the difference. Even people who are rationally ignorant have probably heard about the health insurance mandate debate on the TV or the Internet. It’s everywhere, so most people have formed some opinion on it. Ninety-two percent have, to put a number on it. But opinion-forming takes time and effort. It’s a lot easier to just take the same position as one’s preferred political party.

That would explain why the 25-point swing favors the health insurance mandate being constitutional, instead of moving more against it. The Red Team opposes it, so its partisans mostly remain against it. The Blue Team favors it, so most of their partisans will change their broccoli mandate-no vote to health insurance mandate-yes. For partisans on both sides, this mental shortcut sure beats thinking about it.

But the GOP — thankfully — commands far less than 62 percent of the vote. Only 28 percent of the Reason-Rupe poll respondents self-identified as Republicans. That leaves independents, who made up 37 percent of respondents, to make up most of the gap. They’re a fairly polyglot bunch. Some are libertarians, some are centrists. Others are so far to the right or the left that they outflank their natural party, and reject it. In other words, independents occupy almost every point of the liberal-illiberal spectrum. But by and large, they seem to be skeptical of the health insurance mandate.

Public opinion has precisely nothing to do with whether a policy is a good idea or not; anyone who thinks otherwise would do well to read Shirley Jackson’s short story “The Lottery.” But since I think that government should not have the power to mandate that people buy certain products — think of the lobbying and rent-seeking by companies that stand to benefit! — it is heartening that the majority of Americans think the same way as I do about broccoli. And, to a lesser extent, health insurance.

More importantly, we’ll soon find out how the Supreme Court polls on the broccoli mandate issue. Er, health insurance mandate. Same principle.

Ryan Young

Wed, 2012-03-28

Citation Source:

The Daily Caller

http://dailycaller.com/2012/03/28/no-to-broccoli-mandate-yes-to-health-insurance-mandate/?print=1

Ma Bell's Long Legacy of Unsustainable Pensions Is Alive and Well

Ivan Osorio — Wed, 28 Mar 2012 15:06:21 +0000

“Communism,” comedian Lenny Bruce once quipped, “is like one big phone company.” This dated joke refers to the monolithic phone company known as “Ma Bell,” which enjoyed a government-granted monopoly over America’s communications sector until being broken up in 1984. But while Ma Bell is long dead, its legacy of unsustainable pensions remains alive and well.

Now, one of Ma Bell’s successors, AT&T, is seeking to renegotiate its pension plan with the Communications Workers of America (CWA), the union representing a large segment of its workforce.

Why now? Because the Pension Benefit Guaranty Corporation (PBGC), a federal agency tasked with insuring private pension plans, has long encouraged large companies to delay needed changes to their retirement plans in order to bring labor costs under control.

For decades, AT&T has offered its unionized employees defined benefit pensions, which guarantee a fixed payout to retirees. As a result, payout obligations invariably grow—even when a pension plan’s funding declines.

Why would any company agree to such a scheme? For years, it was the least costly option. Before today’s competitive and vibrant communications market, Ma Bell and unions thrived in an environment of regulated monopoly. When CWA first signed contracts with AT&T’s predecessor over 60 years ago, it was the phone company. For Ma Bell, acceding to union demands was less costly than enduring crippling strikes. Higher labor costs could simply be passed on to consumers, who lacked the ability to go elsewhere.

Ma Bell is long gone, and so are most oligopolies with high barriers to entry. Many of the large firms that have unloaded their pensions onto the PGBC—airlines, steelmakers, and automakers—once operated in an environment of little competition. During organized labor’s apogee, in the years following World War II, U.S. automakers and steelmakers dominated the market, as Europe and Japan worked to rebuild their industrial infrastructure. The Big Three Detroit automakers all had near-identical agreements with the United Auto Workers. And strict federal regulations determined airline routes and fares into the 1970s.

Today, defined benefit pensions rarely exist outside of government agencies. In the private sector, they have managed to survive in some large unionized industries—for now. This is in part the byproduct of unions’ aggressive efforts to preserve generous pensions. Another key factor is the PBGC, which has allowed some large firms to delay restructuring their employee retirement plans by allowing them to offload their pensions onto it.

The PBGC is funded through premiums paid by insured companies. But these premiums are set by Congress, in a highly politicized process, with insured companies lobbying to keep premiums low.

Unions also have an incentive to lobby for lower premiums. The more cash their employers have, the more money they can spend on current pay and benefits, while making defined benefit pensions more attractive for employers. For unions, the latter is crucial, since a stable and secure retirement is a major selling point to attract members.

Artificially low premiums inevitably lead to deficits. Indeed, the PBGC’s current deficit stands at $26 billion. Raising premiums is long overdue. But how high should they go? A 2005 Congressional Budget Office report concluded that, “raising rates so that … the present value of expected future losses would equal the present value of premium income would require both the fixed and variable portions of the annual premium to be increased by a factor of 6.5.”

Together, the PBGC backstop and dirt-cheap premiums are a recipe for moral hazard that can only lead to trouble, while discouraging employers from making needed changes. So can defined benefit pensions thrive in a competitive market? Their history suggests that their prospects aren’t promising, but we’ll only know if and when they are allowed to function without a huge insurance subsidy.

Ivan Osorio

Tue, 2012-03-27

Citation Source:

Forbes

http://www.forbes.com/sites/realspin/2012/03/27/ma-bells-long-legacy-of-unsustainable-pensions-is-alive-and-well/

HHS Deems Rate Hikes Excessive in Nine States

Hans Bader — Thu, 12 Apr 2012 19:48:18 +0000

From Michael P. Tremoglie's article on Legal Newsline:

But the issue of the government telling insurers how much premiums should be is a controversial one. Hans Bader is with the Competitive Enterprise Institute, a non-profit public policy organization dedicated to advocating a free market. He was critical of Sebelius' comments.

"Average profit margins in the health insurance industry are just too low for price caps to provide any meaningful relief to consumers," he said. "Instead, price ceilings - or pressure not to raise insurance rates to cover rising healthcare costs - will likely lead to fewer insurers in the insurance market, fewer choices for consumers, and more people unable to obtain private insurance."

Other insurers are getting out of the market already, Bader said. He noted that Principal Financial, which insures about 840,000 through its employer-based health insurance plans, said it would stop selling health insurance.

Hans Bader

Fri, 2012-03-23

Citation Source:

Legal Newsline

http://www.legalnewsline.com/news/235596-hhs-deems-rate-hikes-excessive-in-nine-states

ABIR Lobbies Deficit “Super Committee”

Michelle Minton — Tue, 01 Nov 2011 16:20:31 +0000

Michelle Minton

Sat, 2011-10-29

Citation Source:

Bernews

http://bernews.com/2011/10/abir-lobbies-deficit-super-committee/

Coalition Including Insurance Groups Push for End to NFIP Subsidies

Michelle Minton — Tue, 01 Nov 2011 16:18:52 +0000

Michelle Minton

Fri, 2011-10-28

Citation Source:

Property Casualty 360

http://www.propertycasualty360.com/2011/10/28/coalition-including-insurance-groups-push-for-end?t=regulation-legislation

House Extends National Flood Insurance Program

Michelle Minton — Wed, 05 Oct 2011 21:36:06 +0000

Michelle Minton

Tue, 2011-10-04

Citation Source:

HousingWire

http://www.housingwire.com/2011/10/04/house-extends-national-flood-insurance-program

Bill Extending National Flood Insurance Program to Nov. 18 Approved

Michelle Minton — Wed, 05 Oct 2011 21:37:22 +0000

Michelle Minton

Tue, 2011-10-04

Citation Source:

Insurance & Financial Advisor

http://ifawebnews.com/2011/10/04/bill-extending-national-flood-insurance-program-to-nov-18-approved/

SmarterSafer.org Statement Urges Congress to Stop Passing Temporary Extensions of Flood Insurance

Michelle Minton — Wed, 05 Oct 2011 21:38:33 +0000

Michelle Minton

Tue, 2011-10-04

Citation Source:

Live Insurance News

http://www.liveinsurancenews.com/smartersafer-org-statement-urges-congress-to-stop-passing-temporary-extensions-of/855659/

In Wake of Quake, Californians Would Benefit Most From ‘Affordability Act’

Michelle Minton — Thu, 15 Sep 2011 20:35:19 +0000

Michelle Minton

Thu, 2011-09-15

Citation Source:

The Washington Times

http://www.washingtontimes.com/news/2011/sep/14/in-wake-of-quake-californians-would-benefit-most-f/

Do We Really Need a National Weather Service?

Iain Murray — Wed, 31 Aug 2011 20:45:40 +0000

Image:

Experts:

Iain Murray

Date:

Mon, 2011-08-29

OnDemandUrl:

http://ceiondemand.org/2011/08/31/do-we-really-need-a-national-weather-service/