Correcting Alito, Part 2

Yesterday, I analyzed Justice Samuel Alito's math on costs and benefits for the currently-uninsured under the mandate. Alito continued to return to these costs and benefits in more than one question, so it seems the comparison is important to his thinking on the case. These errors in thinking were not the only shortcomings Alito demonstrated during the arguments.

On page 32, line 3 of the transcript, Alito says:

If you took the group of people who are subject to the mandate and you calculated the amount of services this whole group would consume and figured out the cost of an insurance policy to cover the services that group would consume, the cost of that policy would be much, much less than the kind of policy that these people are now going to be required to purchase under the Affordable Care Act.

Here he is again discussing the $854/$5,800 comparison analyzed yesterday. But he also demonstrates a critical misunderstanding of who will be affected by the mandate. The mandate includes many minimum coverage requirements, including $0-copay preventive care and no annual or lifetime limits to benefits. As a result of the mandate, a huge class of people who currently have low-quality insurance will trade up to a better plan that meets these minimum requirements. 78% of people who have a medical bankruptcy have health insurance, and these people will be affected by the mandate. But Alito appears unaware that these people exist, thinking it is only the uninsured affected by the mandate and ignoring the underinsured.

Alito also draws a comparison between between burial insurance and health insurance. Most of us will get sick, and all of us will die, so if you can mandate health insurance, why can't you mandate burial insurance. This is a comparison which demonstrates ignorance of the differences between the markets. A burial costs what it's going to cost, and you know it's a cost you'll pay once and then be done with. There is no significant cost-dumping by people who aren't able to afford burial onto those who can afford it. But in health care, you don't know what your costs will be; I could consume $500 in services this year, or I could consume $500,000. If I don't have insurance and don't have $500,000, I could wind up sticking the system with hundreds of thousands of dollars in costs, shifting these costs to my fellow citizens.

Alito can't seem to grasp these distinctions. He demonstrates a fundamental lack of knowledge about health insurance and the mandate. Hopefully he will educate himself before the Court renders its judgment in June.

More generally, Alito's lack of knowledge demonstrates a huge problem in the concept of the Supreme Court as currently constituted. The Court has all these standards by which it attempts to analyze this or that aspect of a law before them, and as demonstrated by Alito, they wind up not having the knowledge necessary to render effective judgment. It's not that Alito is dumb, but it's not possible for a Justice to be an expert on everything he's asked by our system to judge.

Rather than trying to analyze every aspect of the cases they review, which is impossible to do well, the Judiciary needs to have more deference to the democratically-accountable branches of government. Justices are experts on the law, not on economics, finance, or anything else. Our system should not cause an unequipped judge to decide based on faulty understanding whether tens of millions of people will get insurance or not.

Correcting Alito

I've been over the transcript of Tuesday's oral arguments a few times now, and I keep coming back to a section where Samuel Alito appears to demonstrate a woeful lack of knowledge about the insurance industry and the individual mandate on which he sits in judgment. Most of the questions he asked of the government's lawyer involved the cost of insurance versus the benefit they will receive in return for that cost, so it's clear that this issue is central to his thinking about the case.

Alito begins, on page 8 line 23 of the transcript, while discussing :

You can correct me on these numbers if they're wrong...

Don't worry, I will.

...but it appears to me that the CBO has estimated that the average premium for a single insurance policy in the non-group market would be $5,800 in 2016... The Respondents (that is, the 26 states suing to eliminate Obamacare) estimate that a young, healthy individual targeted by the mandate on average consumes $854 in health services each year. So the mandate is forcing these people to provide a huge subsidy...

What a simplistic "analysis"! He simply takes these two dollar amounts and appears to conclude that the mandate would force the currently-uninsured to pay $5,000 into the system and get nothing in return. He fails to consider a number of factors, which causes one to doubt his ability to properly render judgment on the matter.

For starters, let's look at where the numbers come from. The $854 number is based on Appendix 22a of an amicus curiae brief (.pdf, page 67), which is based on an analysis of numbers from 2008. The $5,800 from the CBO analysis (.pdf, page 7) is a projection for 2016. Assuming a 5% rate of health care cost inflation, which I take from another CBO analysis (.pdf, page 5), that same care that in 2008 costs $854 would cost $1,262. So Alito should have definitely at least cited that number instead of $854, to compare apples to apples.

But underestimating the cost by more than 30% is far from the most significant error Alito makes. The 50% increase on one side of Alito's ledger assumes that the insured and uninsured people will consume identical amounts of health care. Having insurance will allow the citizen to have better access to care. These insured services will increase the value received for their $5,800.

By being able to more easily see a doctor, they will be generally healthier, allowing them to miss fewer work days, adding even more to the good side of the ledger, not to mention the more intrinsic value of not being sick as much. Paying for more preventive medicine now, the patient won't have to spend as much money later by having better control of their blood pressure, cholesterol, etc. By establishing a market where people of all ages pay the same rate, current young people also gain the benefit of having lower rates when they are older.

what is clear is that Alito's understanding of the facts of the case and the market involved is overly simplistic. He ignores multiple factors which affect the costs and benefits for those affected by the mandate. Since these costs and benefits were the main focus of his questions, one would have hoped he'd have put more thought into it.

It's getting late, so I'll finish my critique of Alito's position tomorrow.

Obamacare in deep trouble

Obamacare's individual mandate, the heart of the law which makes the guaranteed issue (can't reject people for pre-existing conditions) and community rating (can't charge sick people more) work, appears on its way to being struck down. Scalia, Alito and Thomas are clearly against it, while Ginsburg, Kagan, Sotomayor and Breyer definitely for it. That leaves Roberts and Kennedy as the deciders. If either one voted in favor of the law, it would stand, but both expressed significant reservations about the constitutionality of the mandate during oral arguments yesterday. CNN's legal analyst and former Harvard Law Review editor Jeffrey Toobin said this morning he believes the individual mandate is "doomed".

Both Roberts and Kennedy seem to think that the individual mandate is an unprecedented expansion of government power. This is unfathomable to me, given the realities of Social Security and Medicare. It's settled that, if the government wants, it can take your money and set up massive federally-run systems with it. It can throw you in jail if you refuse to give up this money (payroll taxes). But the court appears on the verge of saying that the government can't require you to spend your money with the provider of your choice. It seems obvious that the mandate is less of a use of government power than Medicare. So why is Kennedy talking about the mandate as if it's a step down a slippery slope?

Roberts asked the government's lawyer if the government could use the precedent potentially set by upholding the mandate to force people to buy cell phones for use in calling 911 in an emergency. The difference here is that there is not a biological certainty that you will eventually need to call 911, as there is a biological certainty that you will need health insurance.

More generally, it's unbelievable that health insurance for 30 million people can be eliminated after only 6 hours of public discussion. Multiple reporters present for the arguments yesterday noted that the government's lawyer coughed at the start of his presentation, and apparently it "threw him off his game". If one guy having a tickle in his throat matters, the system doesn't work. It's too high stress/high stakes of a situation to be a good way to come to the right decision.

We'll see how it goes. Maybe Kennedy or Roberts were just looking for reassurance of what they already think. But I'm definitely not feeling good about things at the moment.

Gonna need to walk this one off

I've been reading today's transcript of the arguments before the Supreme Court regarding the individual mandate. It's been quite a roller coaster, running the gamut from utterly depressing to mildly hopeful. Ultimately, I settled on mildly hopeful. I'm too beat to do a full post, but here's one quick point:

This decision by the Court is overwhelmingly important, no matter where you come down on the issue. Its far-reaching implications will alter the flow of trillions of dollars, affect whether millions of Americans have access to non-emergent health care, and (equally importantly) how I earn my living. Given this importance, why is it that open discussion of the issue is only worth six hours of the justices' time? And even then, only with a few lawyers out of a nation of 300 million who mostly aren't lawyers?

Just askin'.

Health insurance not just any product

Many conservatives argue that Obamacare is unconstitutional because Congress doesn't/shouldn't have the power to regulate inactivity. It's fine to force people to buy car insurance or build factories that pollute less because these are economic actions people have chosen to make, and Congress has a clear role to regulate interstate economic activity. But punishing inaction, as the Obamacare mandate does, is unprecedented, and the law should therefore be thrown out as Congress does not have this power under the Constitution. But given that we are mortals who will eventually get sick and die, we must one day involve ourselves with the health care industry, and Congress has a role in regulating how this involvement is paid for. This has been previously discussed in this space.

Let's talk a bit more about why this distinction is important. We will all eventually get sick and need care. If one decides to not buy insurance, they are really deciding to get their medical care from emergency rooms and to pay for their future medical bills with a combination of savings, borrowing from friends, credit cards and charity. Obamacare says that this combination of decisions, which cause about $43 billion in uncompensated care every year, which is passed on to those of us with insurance, is illegal. The Supreme Court has held in Wickard v Filburn and Gonzalez v Raich that Congress can regulate personal private activity if it causes disruptions in the larger market. In Wickard, it was a farmer who wanted to grow wheat for his own personal use, in violation of 1930's era quotas. In Raich, it was a medical marijuana patient who was growing weed for her own use.

Congress has the right to impose an individual mandate due to the unavoidable involvement of every citizen with the health insurance injury. This is what makes a mandate for health insurance different from a "slippery slope" inspired proposal for a mandate for daily intake of broccoli; biology necessitates involvement with health care, but not broccoli.

Given that choosing to self-insure (through savings/borrowing/credit cards/charity) is just as much economic activity as choosing to buy insurance, I am confident that the Supreme Court will follow precedent and uphold Obamacare.

Obama embraces "Obamacare"

I'm signed up for the e-mail lists for the DNC, Obama for America and other left-leaning organizations. Yesterday, I got an e-mail from "David Axelrod" (which is the name of a bigwig in the Obama campaign) discussing that lefties should be proud to call health reform "Obamacare". I had just posted a similar sentiment the day before. I spent a good 30 seconds thinking that my post had somehow been read by someone at the campaign, and this was an e-mail from the campaign designed to encourage micro-bloggers like myself. I was amazed that the Obama campaign might go through the effort to have a computer program following blogging sites like blogspot.com/blogger.com for posts tagged "Obamacare" and sent a form e-mail in response. Eventually I realized it was a mass e-mail sent to anyone on the e-mail lists of those sites. But for a few seconds yesterday, I had a few seconds of mild delusions of grandeur. I never even considered that Axelrod was actually trolling blogger.com or anything, but I thought that through the miracles of a well-designed social media operation, my humble blog might have been noticed.

Just thought it was a potentially-amusing chain of events.

Obamacare is pretty much the entire reason I'm posting. It's by no means perfect, but it's a huge step in the right direction. To be honest, one of my primary goals with this blog is to convince a few people to go vote for Obama so that health reform will survive to be enacted in 2014. Seems only fair that I inform y'all of this fact.

"ObamaCare" ok with me

Usage of the term "ObamaCare" has pretty much been limited to opponents of the Affordable Care Act. I don't really understand why supporters of reform don't use it more. The fate of reform and the fate of Obama are inextricably linked. If Obama loses, most if not all of ObamaCare will vanish. If he wins, the bulk of the reform will kick in as planned in 2014, and it will be next to impossible to get rid of it after that. With millions of voters gaining insurance under the law, taking that coverage away will be extremely difficult politically. Obama and his legacy will sink or swim along with the fate of his signature policy achievement, so he should be proud to have his name attached to it.

While I always care about the outcome of an election, the fate of ObamaCare makes this the most consequential of my lifetime. At its core, reform is an attempt to encourage preventative care. As a primary care pediatrician, I wholeheartedly agree with this goal.

Next week, the constitutionality of the individual mandate will be argued before the Supreme Court, with a decision likely in June. So I'm going to focus more on ObamaCare over the next few posts.

Conservatives lying about ObamaCare costs

Last week, the Congressional Budget Office released a report projecting the costs of ObamaCare over the next 10 years. In 2010, 10 year projections ran from 2010 to 2019, which included 4 years of minimal spending as the exchanges, subsidies and expanded Medicaid which all get up and running in 2014. The new projection runs from 2012 through 2022 (11 years total), with only 2 of those years, 2012/2013, being before the 2014 start date. Not surprisingly, the headline cost of the new projection is significantly higher, given the additional years of actual ObamaCare, as opposed to cheap years before the programs actually start.

The total projected cost in the new analysis (.pdf, Table 2) is $1.76 trillion. In 2010 (.pdf, Table 4), the cost was $940 billion. Here's a graph I made from the CBO numbers that includes every year included in both analyses:

The blue 2010 projection includes those two tiny bars for 2010 and 2011, along with the rest of the decade from 2012-2019. The red 2012 projection includes the same 2012-2019 stretch along with those three big bars for 2020-2022. 91% of the entire cost difference between the two projections is entirely attributable to the different years included in the analyses.

To get a true sense for how the new projection changes the expected costs, let's focus in on the years included in both analyses:

The total costs for these years included in both analyses increased from $933 billion in 2010 to $1.01 trillion in 2012, an increase of $77 billion, or 8.3% of the originally projected cost for these years. Most of this increase is due to more people being poor as a result of the recession and slow recovery and needing government help to afford insurance.

Conservatives have greeted the new report not with reasonable but answerable concerns that the cost has gone up by 8.3%, but to say that "costs have almost doubled". There are multiple writers from multiple organizations making this claim. Even Rep. Tom Price, the #4-ranked GOP house leader, parrots the claim.

This claim is amazingly dishonest. It is comparing apples (2010-2019, 10 years, including 4 with minimal costs) to oranges (2012-2022, 11 years, including only 2 with minimal costs) and asserts that we were somehow misled during the initial passage.

Our system only works if voters are given the information to make decisions on the issues of the day. If one side or the other is willing to make ridiculous assertions like this, the whole thing doesn't work. There are plenty of legitimate criticisms of ObamaCare. The "costs have doubled!" lie isn't one of them.

Biology, not Obama, forces involvement in health care

The individual mandate used to be a conservative idea. As discussed in this piece which appeared in the Wall Street Journal, the mandate was originally pushed by conservative leaders like the Heritage Foundation, Mitt Romney and Newt Gingrich. Richard Nixon supported an employer mandate, an idea to the left of Obama's plan. Even Milton fuckin' Friedman, a very conservative (and, to be fair, a very insightful and influential) economist, advocated for "a requirement that every U.S. family unit have a major medical insurance policy."

Most opposition to the mandate centers around the distinction between regulating economic activity and forcing economic activity. It is one thing, they say, for government to put rules in place regarding activity that you would want to do anyway (e.g., you want to buy a car, and the government can put rules in place about safety, pollution, etc.). But it's another thing, they say, to force you to participate in an activity you wouldn't otherwise choose to be involved in. And you know what? They kinda have a point.

But here's the thing: whether ObamaCare is repealed or not, simple biology mandates that everyone is involved in the health care industry. At some point, we are going to get sick and need medical care. Given that we will all eventually need care, and the costs to the system involved in such care, society has a role, via government, in regulating how that care is paid for.