Author Archive for frank-pasquale
The Limits of Competition and the Rebirth of the Public Option
posted by Frank Pasquale
It’s now official—even Senate leaders are attaching a public option (albeit one with an opt-out) to their proposed health reform bill. Dan Balz of the WaPo asks “What brought the public option back to life?” While Balz focuses on the chess game of Washington politics to explain the public option’s resurgence, I detect deliberative democracy at work.
As Congressional committees have begun to specify exactly how “competition” among insurers would lower costs, they’ve realized that we need to do a lot more than increase regulatory scrutiny and add insurers to the mix. Rather, just as Medicare took care of elderly persons unlikely ever to be profitably covered by private insurers, a new option is needed to address the needs of impoverished or sick citizens unlikely ever to pay profitable premiums to Aetna, Cigna, and their ilk.
Why wasn’t this apparent earlier? I think that closer scrutiny for a proposal to repeal the “antitrust exemption” for insurers has led to more serious consideration of what competition can and cannot do in the health care industry. As antitrust expert Tim Greaney explains, “the Supreme Court has narrowly interpreted McCarran-Ferguson requirement that only the ‘business of insurance’ is exempt; hence insurers’ actions vis a vis providers are not exempt.” Lack of antitrust enforcement—and the market competition it’s supposed to bring—can’t fully explain insurers’ failures here. Some commentators believe that application of antitrust laws to physicians and hospitals in the mid-1970s may even have spurred the development of a “medical-industrial complex” capable of displacing professional norms with profit-driven practices.
Mere promotion of competition, without more, also creates other dangers. Enforcing antitrust laws aggressively against insurers, while failing to balance that effort with similar scrutiny of providers, could lead to even higher health care costs. Do we really expect piecemeal antitrust enforcement, played out in fragmented and uncoordinated courts, to manage such balance? It is often the case that both providers and insurers are concentrated, powerful, and earning supracompetitive profits (whatever “supracompetitive” means in a realm so thoroughly marbled with regulation, subsidy, and barriers to entry).
Insurers are competing in many markets—they’re just frequently doing so in ways that are socially unproductive. As I have noted before, there are effective competitive strategies for insurers that reduce social welfare overall. Given that the average insured stays in a plan for less than three years, the marketplace rewards insurers who put hurdles in front of expensive preventive care, or scramble to drop those with extensive medical needs. It also exacerbates the coverage crisis that necessitates health reform in the first place.
Genuine health reform will provide incentives for insurers to do things that actually improve individual and public health—programs such as transparent physician rating, preventive and chronic care programs, and intensive data analysis to promote evidence-based medicine. Like the V.A., a public option can be ordered to do such things. Moreover, it can be required to cover the costly or unprofitable individuals that private insurers won’t touch. The government might “require” private health insurers to do the same, but I would not count on overwhelmed regulators to enforce such laws adequately.
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October 26, 2009 at 8:22 pm
Posted in: Health Law
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Principles for the Health Reform Homestretch
posted by Frank Pasquale
House and Senate leaders will soon have to reconcile several different versions of health reform bills. The bills are complex, but some simple principles should guide the process of integrating them into a final product. As the press reports on a whirlwind of proposed laws, we need to ask of any particular proposal: Does it . . .
1) Increase productive competition in health care? Everyone talks about “increasing competition” among insurers and providers, but there are many ways to compete. Hospitals and doctors can game the reimbursement system. Insurers may not directly discriminate against the sick, but can find other ways to keep high-risk patients out of their plans, as even the most market-oriented health policy experts realize:
[T]o avoid patients with costly, complicated medical conditions, health plans could include in their networks relatively few doctors who specialize in treating those conditions, said Mark V. Pauly, professor of health-care management at the University of Pennsylvania’s Wharton School.
Both the Netherlands and Switzerland have already experienced problems in this area, even though the Netherlands has implemented risk-adjustment methods (which attempt to deter such “cherrypicking” and “lemondropping”) far more serious than anything proposed in current bills in the US. As Karen Pollitz has repeatedly argued, we’re going to need a much greater investment in insurance regulation to make any reform bill work.
2) Make it easier for uninsured or underinsured individuals to buy coverage? Many of the proposals for allocating and awarding subsidies for coverage sound exceedingly complex. We’re hearing about serious limitations on access to exchanges, subexchanges, burdensome “free rider” provisions, etc. Any particular provision may sound good in the abstract, but taken as a whole they could become an obstacle course that makes obtaining insurance coverage a miserable and exasperating experience for those supposedly aided by reform. During the second Bush administration, hundreds of thousands of children eligible for subsidized health insurance were not enrolled because states failed to make enrollment convenient enough for time- and cash-strapped parents. As Liebman and Zeckhauser remind us, “we must design systems for mere mortals, not the people who inhabit the models of traditional economists.” What seems easy to one of DC’s privileged elite can be very hard for an overworked mom or minimum wage-earning service worker.
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October 4, 2009 at 8:17 pm
Posted in: Behavioral Law and Economics, Health Law
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Google Books and the Limits of Courts
posted by Frank Pasquale
The Google Books litigation has inspired a lot of commentary on the web. As an early October fairness hearing approaches, a consensus appears to be building: the proposed settlement is too important and complex for a court to approve in its current form. Agent Lynn Chu has complained that “No one elected the[] ‘class representatives’ to represent America’s tens of thousands of authors and publishers to convey their digital rights to Google.” Pamela Samuelson, by all accounts one of the leading academics in American intellectual property law, has this to say:
The Google Book Search settlement will be, if approved, the most significant book industry development in the modern era [emphasis added]. . . . The Authors Guild has about 8000 members. OCLC has estimated that there are 22 million authors of books published in the U.S. since 1923 (the year before which books can be presumed to be in the public domain). Jan Constantine, a lawyer for the Authors Guild, is optimistic that authors and publishers of out-of-print books will sign up with the Registry, but there are many reasons to question this.
For one thing, the proposed settlement agreement implicitly estimates that only about 750,000 copyright owners will sign up with the Registry, at least in the near term. Second, many books are “orphans,” that is, books whose rights holders cannot be located by a reasonably diligent search. Third, many easily findable rights holders, particularly academic authors, would much rather make their works available on an open access basis than to sign up with the Registry. Fourth, signing up with the Registry will not be a simple matter, since the Registry won’t just take your word for it that you are the rights holder. You are going to have to prove your ownership claim.
The non-representativeness of the class is one ground on which it is possible to object to the proposed Book Search settlement. Other reasons to object or express concerns will be explored in subsequent articles. Objections must be filed with the court by September 4, 2009.
A suitable platform for hosting public discussions of the deal only launched a few weeks ago, thanks to the diligent efforts of James Grimmelmann (who is also organizing an academic conference on the issue in October). The proposed settlement raises a number of issues, which may only be addressed by extensive regulation of the project — or a public alternative dedicated to serving those marginalized by the current proposal.
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August 11, 2009 at 9:39 am
Posted in: Antitrust, Economic Analysis of Law, Google & Search Engines, Intellectual Property, Law and Inequality, Privacy, Uncategorized
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Politicized Prognostication at the Congressional Budget Office
posted by Frank Pasquale
Back in 2007, wise wonks were already warning that the Congressional Budget Office could torpedo health reform. The CBO dealt Clintoncare a heavy blow by saddling it with huge cost projections — and failing to take into account the savings the program would realize for individual citizens and the private sector. Current CBO director Doug Elmendorf has been riding a wave of notoriety as an objective “referee” in an increasingly bitter reform battle. But as his office’s one-sided estimates enervate reform, it’s beginning to risk its reputation for impartiality. Consider the following observations about CBO’s work:
Bruce Vladeck: “The CBO’s track record in predicting the effects of health legislation is abysmal. Over the last two decades, the CBO has routinely overestimated the costs of expanded government health care benefits and underestimated the savings from program changes designed to reduce expenditures. Most recently, it overestimated the five-year cost of Medicare Part D — the prescription drug benefit — by more than 35%. Even more dramatically, the CBO’s estimates of the Medicare savings from the Balanced Budget Act of 1997 underestimated the impact, on average, by a full 100%. That’s right: In the BBA’s first three years, Medicare spending fell fully twice as fast as the CBO had projected.”
Timothy Stoltzfus Jost: “[A] moment’s reflection would lead one to realize that the CBO’s guess that [a reform proposal] would save [only] $2 billion is about as worthless as an estimate that a loaf of bread will cost $5.65 in 2019, or a gallon of gasoline $4.73. Indeed, the CBO admits as much, stating that it actually believed the proposal would save nothing, but “there is also a chance that substantial savings might be realized.” . . .[T]he media needs to stop reporting CBO reports as though they reflect the real costs of reform.”
Maggie Mahar: “When I read Elmendorf’s testimony suggesting that the [House] bill wouldn’t bend the trajectory of federal health spending, I couldn’t help but wonder: Did he understand how the proposals in the 1,018 page bill dove-tailed with the excellent recommendations that the Medicare Payment Advisory Commission (MedPac) has made in recent years? Has Elmendorf read the lengthy MedPac reports?”
When respected experts like Maggie Mahar are wondering if Elmendorf has understood key literature in the area, something’s gone wrong at CBO. The media’s uncritical acceptance of his figures can only last as long as it fails to report the true complexity and uncertainty involved in both substantive reform and the do-nothing option that CBO’s handiwork is unintentionally advancing.
July 28, 2009 at 7:19 pm
Posted in: Health Law, Philosophy of Social Science, Politics
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Hudson County’s Culture of Corruption
posted by Frank Pasquale
My colleague Paula Franzese has been criticizing New Jersey’s culture of political corruption for some time. Last week’s FBI sweep came as no surprise to those who’d been following her work to reform the system. For about four years I lived in the epicenter of the current scandal, Hudson County, and I thought this blog post from Helene Stapinski captured the political atmosphere there well:
Hudson County, where many of the arrests in New Jersey were made, has a small town feel and mentality. Everybody knows everybody. Lots of people are related to each other. It’s an isolated place, in many ways, so that the politicians who live there really don’t feel connected to the larger world. They feel they operate in a sort of vacuum, where no one will really notice what they do.
But because of Hudson County’s proximity to New York, it’s always been a hot spot, first for industry and now for development, so the potential for making the big bucks exists. There’s the money, without the sophistication. In places like New York City, bribes are made every day as well, but people know how to cover their tracks. Couple the small town ignorance and arrogance of “I can do what I want. Nobody’s watching” with the big town cash possibilities, and you have one of the most politically corrupt places on earth. Welcome to Hudson County.
July 27, 2009 at 6:18 pm
Posted in: Uncategorized
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Meth: The Double Shift Drug
posted by Frank Pasquale
I recently listened to a chilling podcast on a book about methamphetamine use in a small town of 6,000 in Iowa. The town of Oelwein had lost over 2000 jobs since the early 1980s. Timothy Egan’s editorial gives an excellent account of the economic backdrop for rural meth abuse:
Journalist Nick Reding . . . spent nearly four years charting meth’s course in Oelwein, Iowa . . . There, the people who grow our food are agribusiness oligarchs, and the people who run our factories have cut their workers’ wages by two-thirds, dissolved the unions and shipped in illegals to work for a paycheck that would barely pay for dog food.
Meth is a symptom of this collapse, not a cause. . . . Reding says it is “the only example of a widely consumed illegal narcotic that might be called vocational, as opposed to recreational.” . . . [I]t’s a preferred stimulant for people working two jobs in low-wage purgatory.
Many have called for cognition-enhancing drugs to increase productivity in high status professions. We hear less about drug use to make low-wage, low-autonomy work bearable. But it’s surely something we’ll see more market demand for, as movies like Sleep Dealer suggest. According to Reding, the pharma industry also pushed hard against DEA proposals that would have made it harder to make meth.
Correlating the failure of US industrial policy with the need for increased policing due to meth abuse also helps vindicate Bernard Harcourt’s theory of “neoliberal penality,” as expressed by a blogger here:
The idea behind neoliberal penality is that as the norm against government intervention in the economy has increased, governmental energies have been channeled instead to an ever-increasing carceral sphere. Neoliberalism argues that the market is naturally ordered, and that government intrusion constitutes a distortion that generally should be avoided. By contrast, the penal arena is seen as an appropriate venue for government to flex its muscles. Consequently, the social forces which might press against increased penality are weakened, as crime and punishment are precisely the areas in which government is seen as having the greatest claim to authoritative legitimacy.
When work disappears, many of the natural impediments to addictions go with it. We should not be surprised if failure to invest in jobs programs leads to ever more spending on prisons, surveillance, and rehab. Thankfully, books like Reding’s are helping us “connect the dots among America’s agribusinesses, drug companies and global trade and problems like unhealthy diets, the destruction of small farms and farming communities.”
Image Credit: skittlbrau, Don’t Meth Around (street art).
July 21, 2009 at 12:31 pm
Posted in: Uncategorized
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Unilateral Disarmament
posted by Frank Pasquale
David Fontana and Micah Schwartzman complain in TNR that President Obama has failed to appoint young judges to federal appeals courts:
The president has so far nominated five judges to federal circuit courts. On average, these nominees are 55 years old, more than a decade older than Sotomayor was when she was nominated to the Second Circuit. (She was 43.) For years, Republicans have been nominating sharp young conservatives to the lower federal courts. Now, rather than looking for young legal talent of its own, a Democratic administration seems to be favoring older nominees. In our view, this is a major mistake.
I think Fontana and Schwartzman are right that older appointees are a mistake for the Democratic party, even though they are probably better for the nation as a whole. (I favor more seasoned judges, particularly as life spans lengthen.)
This is one of many examples where Democrats are trapped in a difficult dilemma by Bush administration practices. If they appoint older judges, they let the circuit courts’ current rightward skew persist longer. But if they retaliate with relative youngsters, we lose the experience and insight that only age can bring to the courts. Same goes for executive appointments: many transparently political appointees of the Bush era have “burrowed in” to permanent positions at agencies, and balance probably requires similar strategies close to the end of the Obama administration — even if long-serving bureaucrats could do a better job in such positions.
Similar dynamics affect government transparency policies. For example, the Brennan Center recently “gave the Obama administration an F for its use of State Secrets” and has criticized it for continuing several Bush era policies of opacity. Here, again, a change would probably be for the better — but we all know that if a terrorist attack occurred, Dick Cheney’s acolytes would be on TV the next day declaring that Obama’s openness helped cause the carnage.
The health reform debate provides a final example. Bush’s plan for Medicare Part D was essentially an unfunded benefit. Rather than take on the tough task of real cost containment, he and the Republican Congress delegated it to fragmented private insurers with little power to make it happen. Conservatives now complain about a dodgy cost curve in Obama’s plans, but denounce virtually every proposed effort for cost containment as “socialized medicine.” Obama’s political fortunes probably rise if he follows the Bush path, but the country will be better off if he and Congress embrace fiscal responsibility.
In light of these examples, I think Fontana and Schwartzman have shed light on a larger phenomenon of the dangers of unilateral disarmament in an increasingly partisan age. If rules of cooperation like the filibuster exist at any less a status than constitutional norm, perhaps the Dems should think deeply about the proper deployment of the “constitutional option” pioneered by those on the other side of the aisle.
July 20, 2009 at 8:37 pm
Posted in: Politics, Privacy, Supreme Court
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From Antitrust to Anti-Systemic Risk
posted by Frank Pasquale
The “optimal size and complexity of developing countries’ financial systems” has been hotly debated in the economics community. Writing for the Harvard Business Review & Boston Globe, Duncan Watts focuses on our own dilemmas in a provocative account of complex systems:
[G]lobally interconnected and integrated financial networks just may be too complex to prevent crises like the current one from reoccurring. . . . A 2006 report co-sponsored by the Federal Reserve Bank of New York and the National Academy of Sciences concluded that even defining systemic risk was beyond the scope of any existing economic theory. Actually managing such a thing would be harder still, if only because the number of contingencies that a systemic risk model must anticipate grows exponentially with the connectivity of the system.
So if the complexity of our financial systems exceeds that of even the most sophisticated risk models, how can government regulators hope to manage the problem? There is no simple solution, but one approach is close to what the government already does when it decides that some institutions are “too big to fail,” and therefore must be saved – a strategy that, as we have seen recently, can cost hundreds of billions of taxpayer dollars. . . .
An alternate approach is to deal with the problem before crises emerge. On a routine basis, regulators could review the largest and most connected firms in each industry, and ask themselves essentially the same question that crisis situations already force them to answer: “Would the sudden failure of this company generate intolerable knock-on effects for the wider economy?” If the answer is “yes,” the firm could be required to downsize, or shed business lines in an orderly manner until regulators are satisfied that it no longer poses a serious systemic risk. Correspondingly, proposed mergers and acquisitions could be reviewed for their potential to create an entity that could not then be permitted to fail.
Of course, our system has been headed in precisely the opposite direction, largely thanks to the “best and brightest” now at Treasury and the Fed. As Simon Johnson puts it, we “pay too much deference to the expertise and presumed wisdom of a sector that screwed up massively.”
July 20, 2009 at 8:57 am
Posted in: Antitrust, Corporate Finance, Economic Analysis of Law
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Rating Agencies: Privilege Without Responsibility
posted by Frank Pasquale
First Amendment fundamentalist Floyd Abrams is back on the attack, now in the service of the credit rating agency S&P. He says that their ratings are essentially the same as an editorial — a position I looked at with some skepticism here. Editorials fail to receive the regulatory subsidy routinely channeled to raters, via acts like the Secondary Mortgage Market Enhancement Act of 1984 and the Investment Company Act of 1940, and agencies like the National Credit Union Administration (all of which mandate the use of raters’ products). Abrams appears to want to let the raters get all the benefits of such government subvention, without the liability or extensive regulation it should naturally lead to.
On the Media has a great interview with Abrams, who vigorously defends the agencies’ actions:
[Interviewer] BROOKE GLADSTONE: Okay, so first of all, explain to me why this is more like an editorial. To me it seems more like a clothing inspector, the people who leave the little number inside the clothing you buy. They leave their number so that if the zipper was put in backwards, for instance, they could theoretically take responsibility. Why are the ratings companies different from that?
FLOYD ABRAMS: Well, because the rating agencies use their models, use their heads, use their common sense, have ratings committees. They sit down and they come out with their best judgment as to what is likely to happen in the future about repayment of debt. And that is not subject to mathematical yes/no answers. It’s not the same as saying, my zipper is no good or a couch is no good. It’s not being an inspector. It’s not.
BROOKE GLADSTONE: Fair enough. Let’s move away from that analogy and let’s go to one that attorney David Grais, who we just spoke to, came up with, that in many cases rating agencies want their ratings to be protected as opinion, like, say, a restaurant critic’s. But more often, he notes, they’re like critics who go into the kitchen, make the food and then come out and write about it. They help create these deals. And they have a financial stake in their own ratings ‘cause they’re paid by the very companies they rate, a seemingly obvious conflict of interest.
FLOYD ABRAMS: Rating agencies have analytic standards. They apply those standards. And, yes, they discuss with the entities that they’re rating why they’re doing what they’re doing. And if the entity asks them, well, you know, how come you’re giving us a triple BBB instead of a double AA, they tell them why. And if the entity wants to do things to get a higher rating, they can do them.
And it is not inappropriate, in my view, so long as they take good steps to deal with the potential for conflict of interest. It is not inappropriate that they get paid by the entities they rate. I mean, it is not conceptually that distinguishable from, you know, a large entity which puts big ads in – what, a motorcycle magazine and then they write about the motorcycles. Do they have to be careful? Yeah.
BROOKE GLADSTONE: The fact of the matter here is that the ratings agencies, in this case, were so widely off the mark, ultimately, that it doesn’t seem to have been just a series of mistakes of judgment.
I really look forward to seeing how Abrams would deal with facts like these if similar revelations emerge about his own client:
[In the package of loans it was to rate,] Moody’s learned that [over 38 percent of the borrowers] did not provide written verification of their incomes. . . . On the plus side, Moody’s noted, 94 percent of those borrowers with adjustable-rate loans said their mortgages were for primary residences. “That was a comfort feeling,” [one analyst] said. Historically, people have been slow to abandon their primary homes. When you get into a crunch, she added, “You’ll give up your ski chalet first.”
Borrowers have no chance of repaying via income and assets? Assume a ski chalet! (Much like the classic economic approach of assuming a can opener.) As the Summary Report of Issues Identified in the Commission Staff’s Examinations of Select Credit Rating Agencies (by the Office of Compliance Inspections and Examinations of the SEC) noted in July 2008, none of the rating agencies had specific procedures for collateralized debt obligations–even though 17 CFR 240.17g-2 required them to make certain internal documents public, including procedures and methodologies they use to determine credit ratings.
Sadly, I think that, given the current state of the law, Abrams’s First Amendment arguments will do well in front of many courts. But as David Segal states in the NYT article, “The First Amendment is no defense against fraud, and that is what is alleged by many of the plaintiffs.” Segal notes that, “Against them, Mr. Abrams will argue that S.& P. was every bit as blindsided as nearly everyone else in the private sector and in the regulatory sphere.”
Here are a few quotes that appear to be from S&P:
1. Internal Email: “rating agencies continue to create [an] even bigger monster – the CDO [collateralized debt obligation] market. Let’s hope we are all wealthy and retired by the time this house of cards falters.”
2. Instant Message: “It could be structured by cows and we would rate it.”
These people don’t sound blindsided to me. Rather, they, like the three ratings agency CEOs who together earned $80 million themselves over the past 6 years, sound like people who knew exactly what they were doing: getting while the getting was good. If Abrams succeeds, he’ll be making that particular Wall Street strategy all the more foundational for America’s brave financial innovators.
But would a loss for S&P change anything? I really don’t know. What I do believe is that the US discourse on rating agencies would probably benefit from some input by scholars like John Quiggin, who argue that “Among the many challenges in reconstructing a sustainable system of global finance, the replacement of ratings issued by for-profit agencies with an alternative system, in which AAA ratings actually mean something, is among the most important.” Quiggin notes that the rating agencies are biased in many important ways:
[T]hey have a long-standing ideological bias against the public sector. This is reflected in the fact that state and local governments, which rarely default on their debt, are assessed far more stringently than corporate issuers. In the last year, thousands of private-sector securities issued with AAA ratings have been downgraded to junk, and many have subsequently gone into default.
By contrast, defaults on government debt have remained rare. One effect of the differential ratings practices of the agencies is that government borrowers have been forced to seek insurance from bond insurance companies such as AMBAC that are, in reality, less sound than the governments they are insuring.
Unfortunately, the 2006 Credit Rating Agency Reform Act specifically prohibited the SEC from regulating the “substance of the credit rating or the procedures and methodologies” used to calculate it. Reform measures proposed by the Obama administration have barely addressed the CRA’s. At the very least the government ought to be able to use FAIR v. Rumsfeld to insist on more responsible behavior (as Jennifer Chandler has argued, in another context, here). CRA’s should take the bitterness of regulation with the sweetness of regulatory subsidies.
I believe that as long as the US government provides a de facto regulatory subsidy to CRA’s, it should require them to factor into at least some of their ratings the full social value of the rated entity—not simply its likelihood to default. Ratings are often a self-fulfilling prophecy, and the state should harness their value to promote projects that improve the health, safety, security, and well-being of citizens. At the very least, the government should set up a “public option” in credit rating (akin to the proposed public option in health insurance) that is more transparent and accountable than extant credit raters. If the finance sector is going to grow as dependent on government help as the health care sector has, it should learn to accept the same web of standards and regulation that guarantee some minimal accountability for providers who accept government funds. Looking at the AHRQ and comparative effectiveness research could be a good place to start.
July 19, 2009 at 11:55 am
Posted in: Corporate Finance, First Amendment
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Is the House’s Proposed Health Surcharge Progressive Enough?
posted by Frank Pasquale
The usual suspects are alarmed by the House Health Reform Bill’s proposed surcharge on high income earners. As the NYT explains with some examples, “Starting in 2011, a family making $500,000 would have to pay $1,500 in additional income tax to help subsidize coverage for the uninsured. A family making $1 million would have to pay $9,000.” The surcharge rises with income, and over time, to hit 5.4% (by 2013) for households earning over $1 million annually. Households making between $280,000 and $500,000 per year would only face a 2% surcharge by 2013.
Beneath all the sturm und drang about soaking the rich, the press should focus on three underlying realities. First, income and wealth vastly increased at the top of the distribution over the past thirty years — in part because of corporate cost savings that included denial of health coverage to millions of workers. Second, inequality itself exacerbates the health care crisis, by fueling the allocation of medical care according to profit potential, not need. Third, inequality causes health problems, because societies grow “more dysfunctional, violent, sick and sad if the gap between social classes grows too wide.” The surcharge on the rich is not some random resentment inflicted by Frenchified Madame DeFarges on America’s John Galts. The surcharge will itself help address some of the problems health reform is designed to solve. I’ll unpack these thoughts in a series of posts this week.
Nevertheless, the surcharge is not progressive enough, and this should be the main message of liberals commenting on the House bill.
July 16, 2009 at 6:32 am
Posted in: Health Law, Tax
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Washington Post Fire Sale
posted by Frank Pasquale
As newspapers falter, we often hear about how terrible it would be if public funding supported them. Imagine the conflicts of interest! Well, we’re now getting an inside look at the “stealth marketing” media may need to engage in in order to survive:
Mike Allen at Politico.com [has] reported that Post publisher Katharine Weymouth has decided to solicit payoffs of between $25,000 and $250,000 from Washington lobbyists, in return for one or more private dinners in her home, where lucky diners will receive a chance for “your organization’s CEO” to interact with “Health-care reporting and editorial staff members of The Washington Post” and “key Obama administration and congressional leaders. . . .”
Though the Post’s leadership quickly backed away from the plan, we can only imagine what kinds of fire sales a few more years of economic hardship will bring:
Looks like Dan Froomkin got out just in time!
July 2, 2009 at 2:30 pm
Posted in: First Amendment, Media Law
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Google Book Search Scrutiny
posted by Frank Pasquale
Writing in Slate, Mark Gimein knocks down a number of straw man arguments against the Google Book search deal. I look forward to seeing how he grapples with more serious concerns, like those raised by James Grimmelmann. I’ve also been impressed by Christopher Suarez’s working paper on the need for antitrust scrutiny of the proposed deal . Suarez proposes a number of sensible settlement modifications that I hope the court will take seriously. It doesn’t have much time to get this right, as the following conference announcement shows:
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July 1, 2009 at 4:29 pm
Posted in: Antitrust, Economic Analysis of Law, Google & Search Engines, Intellectual Property
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Copyright Law as Book Ban
posted by Frank Pasquale
A judge in New York today ruled that Fredrik Colting cannot publish his book, 60 Years Later: Coming Through the Rye, in the US, in part because it “contains a 76-year-old version of Holden Caulfield, the protagonist of ‘The Catcher in the Rye.’” The judge noted:
Both narratives are told from the first-person point of view of a sarcastic, often uncouth protagonist who relies heavily on slang, euphemisms and colloquialisms, makes constant digression and asides, refers to readers in the second person, constantly assures the reader that he is being honest and that he is giving them the truth
Michael Madison has rounded up legal perspectives. It sets up an interesting tension between the opinions in Stallone v. Anderson and the Wind Done Gone case.
Salinger has alienated many potential fans with the lawsuit. Apparently his young protagonist is also not exactly a darling of the youth set anymore:
Teachers say young readers just don’t like Holden as much as they used to. What once seemed like courageous truth-telling now strikes many of them as “weird,” “whiny” and “immature.” . . . Barbara Feinberg, an expert on children’s literature who has observed numerous class discussions of “Catcher,” pointed to a story about a Holden-loving loser in the Onion headlined “Search for Self Called Off After 38 Years.”
“Holden is somewhat a victim of the current trend in applying ever more mechanistic approaches to understanding human behavior,” Ms. Feinberg wrote in an e-mail message. “Compared to the early 1950s, there is not as much room for the adolescent search, for intuition, for empathy, for the mystery of the unconscious and the deliverance made possible through talking to another person.” Ms. Feinberg recalled one 15-year-old boy from Long Island who told her: “Oh, we all hated Holden in my class. We just wanted to tell him, ‘Shut up and take your Prozac.’ ”
And don’t forget the Adderall and Ritalin! Seriously, though, Mr. Salinger might want to take a chill pill and let others imagine futures for the characters he’s created.
July 1, 2009 at 3:42 pm
Posted in: Intellectual Property
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Perils of a “Lightly Regulated” Insurance Market
posted by Frank Pasquale
I’ve addressed the “ostrich economics” of Gregory Mankiw on this blog before. Mankiw’s “Pitfalls of a Public Option” is yet another contribution to the genre. Mankiw argues that no public option in insurance is necessary, since “We don’t need government-run grocery stores or government-run gas stations to ensure that Americans can buy food and fuel at reasonable prices.” Paul Krugman’s response:
Economists have known for 45 years — ever since Kenneth Arrow’s seminal paper — that the standard competitive market model just doesn’t work for health care: adverse selection and moral hazard are so central to the enterprise that nobody, nobody expects free-market principles to be enough. To act all wide-eyed and innocent about these problems at this late date is either remarkably ignorant or simply disingenuous.
Krugman actually understates just how unconventional the economics of health care can be. Given these divergences from standard market models, Brad Delong may well be right to say that even Friedrich Hayek could approve the idea of a public plan: it’s a way “to use the market as an institutional discovery mechanism.”
Of course, most modern-day Hayekists are more likely to take Mankiw’s view than Delong’s; namely, that “private insurers, lightly regulated to ensure that the market works well, would offer Americans the best health care at the best prices.” We have a sense of how concentrated the private insurance industry and providers are. What exactly does “light regulation” look like in that context?
July 1, 2009 at 6:59 am
Posted in: Health Law
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Introducing Guest Blogger Kevin Johnson
posted by Frank Pasquale
It is my great pleasure to introduce Dean Kevin R. Johnson, who will be guest blogging with us this July. Johnson is Dean of the School of Law, and Mabie-Apallas Professor of Public Interest Law and Chicana/o Studies at the University of California, Davis and is a leading immigration, civil rights, and critical race theory scholar. His book, How Did You Get to Be Mexican? A White/Brown Man’s Search for Identity (1999), was nominated for the 2000 Robert F. Kennedy Book Award. Dean Johnson has also published Complex Litigation: Cases and Materials on Litigating for Social Change (Carolina Academic Press, forthcoming 2009) (with Catherine A. Rogers & John Valery White); Opening the Floodgates: Why America Needs to Rethink Its Borders and Immigration Laws (2007); The “Huddled Masses” Myth Immigration and Civil Rights (2004); Race, Civil Rights, and American Law: A Multiracial Approach (2002); and Mixed Race America and the Law: A Reader (2002), as well as numerous articles on immigration, civil rights, and racial identity.
A graduate of Harvard Law School, where he served as an editor of the Harvard Law Review, Dean Johnson earned his undergraduate degree in economics from UC Berkeley. He is the recipient of many honors and awards, including the Clyde Ferguson Award of the Minority Groups Section of the Association of American Law Schools (2004), Latino Professor of the Year by the Hispanic National Bar Association (2006), and 2008 National Association for Chicana and Chicano Studies Scholar of the Year. In 2003, Johnson was elected to the American Law Institute. He currently serves as president of the board of directors of Legal Services of Northern California and serves on the board of the Mexican-American Legal Defense and Educational Fund. He is co-editor of the ImmigrationProf blog.
Dean Johnson has written more than 50 law review articles. Select recent publications include:
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June 30, 2009 at 1:58 pm
Posted in: Administrative Announcements
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The Rationing Scare
posted by Frank Pasquale
The opposition to real health reform boils down to two lines of attack: 1) the government will spend too much money and bankrupt us or 2) the government will spend too little money and ration our care. To the extent I can find people who make the first point while also opposing the many recent tax giveaways to the very wealthy, I’ll try to engage them. The rationing point is more interesting, but needs to compare reform proposals to the status quo–not some big rock candy mountain of free and fabulous care for all.
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June 27, 2009 at 10:08 am
Posted in: Health Law, Uncategorized
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The Unconventional Economics of Health Care
posted by Frank Pasquale
In a response to one of my posts on the public plan, Tyler Cowen noted that it was “hard to translate” my points into “econspeak.” I agree, and I think that’s one reason why we need to pay attention to “alternative economics of health care,” to use the title of Geoffrey M. Hodgson’s excellent article. In a series of posts over the next few days, I will focus on the many ways in which classical economic reasoning fails in the health care context, and what that means for law.
For an accessible opening example, consider Charles Morris’s description of the “bargaining” between doctors and insurers in his book “The Surgeons.” From a chapter entitled Money, here is a fascinating and counterintuitive insight on the interplay between incentives and medical care:
There is a strongly held opinion, particularly among conservative think tanks, that with multiple competitive private payers, the normal interactions between vendors and payers will gradually create a more efficient health care system. I saw no evidence to support that belief.
June 26, 2009 at 7:44 am
Posted in: Uncategorized
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Modern Day McCarthyism
posted by Frank Pasquale
I was recently listening to a program on the rise of “red-baiting” in some Vietnamese-American communities. It’s apparently becoming a common rhetorical strategy:
On April 16, 2009, the Thurston County Court ruled in favor of a Vietnamese man who sued for defamation. This case was the first of its kind in the state of Washington. . . . The court found the five defendants . . . guilty for wrongly accusing the plaintiff . . . of having communist sympathies.
[I]n this case, both the defendants and plaintiffs fought against communism during the Second Indochina War. All those interviewed invoked a word commonly used within the Vietnamese émigré community to describe the act of wrongly accusing someone of communist sympathies: chụp mũ. As this trial brought to light, chụp mũ is a widespread practice among Vietnamese community leaders. However, it is very rare for a person who has been chụp mũ to sue his/her accusers.
This might be an interesting precedent for those accused by shock jocks of being socialist, Marxist, Bolshevik, or in favor of concentration camps.
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June 25, 2009 at 5:41 pm
Posted in: Current Events, Economic Analysis of Law, First Amendment, Law and Inequality
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Announcing: Health Reform Watch Blog
posted by Frank Pasquale
Now that we’ve got a critical mass of posts, I just wanted to announce Health Reform Watch, a project of the Seton Hall’s Center for Health & Pharmaceutical Law & Policy. We’ve been honored with some great contributions, including:
Tim Greaney on competition in the insurance market.
Tim Jost on the prerequisites for a successful co-op compromise.
John Jacobi on public plans and chronic care.
Nathan Cortez on comparative health reform.
June 25, 2009 at 2:03 pm
Posted in: Health Law
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Paging Dr. Gawande: Health Reform Matters.
posted by Frank Pasquale
Atul Gawande’s article “The Cost Conundrum” has become a cause celebre in policy circles. The Obama White House is reading it, leading journal Health Affairs has sponsored a roundtable on it, and pundits across the political spectrum are invoking it.
There are good reasons for all the attention in health reform circles. But there’s a paradox here, too, because Gawande doesn’t believe that changes to health care finance and regulation can deter the wasteful and uncoordinated provider behavior which he sees at the root of the present crisis. I respectfully disagree. Law may not be doing a good job at this now—largely because health care regulators over the past 20 years vastly overestimated the degree to which the market would improve quality and access. But we have a rare window of opportunity to correct for those assumptions. Moreover, without real reform, the profit-obsessed providers who are the villains of Gawande’s piece will systematically outcompete the integrated delivery systems he champions. Gresham’s Law applies in health care, too.
June 24, 2009 at 6:51 am
Posted in: Economic Analysis of Law, Health Law
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