Roberts’ Rule?
Brad Joondeph has an excellent article on the legal challenges to the ACA (pdf) in Publius: The Journal of Federalism.
Perhaps the most interesting tidbit is that Joondeph thinks the Supreme Court’s decision may hinge not on Justice Kennedy’s vote but on Chief Justice Roberts’. Roberts joined Justice Breyer’s majority opinion in U.S. v. Comstock (May 2010), which advanced a strong view of the Necessary and Proper Clause according to which government action will be upheld so long as it is “rationally related to the implementation of a constitutionally enumerated power.”
In the parlance of constitutional law, a requirement of rational relation—known as a “rational basis test”—ordinarily means the Court will be deferential to the government, giving Congress the benefit of the doubt. In the ACA litigation context, such a strong rendering of the Necessary and Proper Clause would be highly favorable to the Administration’s defense, because it would only need to show that the individual mandate was rationally related to the regulation of insurance markets, an undisputedly valid exercise of the Commerce power.
Justices Kennedy and Alito also concurred in the result of Comstock, but they each wrote separate opinions to qualify their views and distance themselves from the majority opinion. Justice Kennedy’s concurrence specifically called out the majority for its use of the rational basis language, which he notes is imported from Due Process doctrine and not native to the Necessary and Proper context. My read on Kennedy at this point is that he has been carving out the space he’d need to justify striking down the individual mandate, whether he intends to actually do so or not.
The fact that Chief Roberts signed on to Breyer’s opinion but did not feel compelled to qualify his views—at a time when he would likely have been cognizant of the implications for the ACA litigation, as Joondeph notes—may mean that Roberts, not Kennedy, is the “median justice” in this case.
That’s an interesting bit of informed speculation, given that the CW is that it will come down to a 5-4 decision with Justice Kennedy deciding the winner.
Via Joondeph’s aca litigation blog.
Paradox Glossed
I’ve always been a little unsure about the policy ramifications of regional variations in medical care. The Dartmouth Atlas project’s findings—famously noted in Atul Gawande’s New Yorker piece comparing health outcomes and utilization in McAllen and El Paso, Texas—suggest an inverse relationship between the amount of care provided and the quality of health outcomes resulting from that care.
In other words, higher levels of care are associated with lower levels of health. That’s a pretty counterintuitive relationship, begging to be fleshed out with detail. Of course the key to the mystery is that some high-utilization areas are going way overboard on costly tests and procedures that are unnecessary and sometimes harmful.
And so you might think, “Aha! This is an overutilization problem. Doctors in these areas are ordering too many procedures, so we need to lower reimbursements to get them to cut back.” But doctors elsewhere with basically the same reimbursement rates, the same incentives, aren’t going similarly overboard. And we don’t expect that their outcomes would improve if they provided less care. And it’s not automatic that reducing the number of tests and procedures in McAllen would cut out only or mostly the harmful ones.
Anyway, via Austin Frakt, this graph from the Congressional Budget Office provides a helpful way to conceptualize the relationship between utilization and outcomes. It shows how an inverse relationship might appear in a comparison of two regions but not within a single region.
Austin explains:
Suppose we reduced reimbursements so that region 2 had the same utilization level as region 1. That would shift region 2 to the empty circle in the figure. However, at that point, region 2′s outcomes are even worse than they were to begin with. In other words, cutting reimbursements does reduce utilization, but it does so in a way that is harmful to outcomes.
The challenge is to reform policy to reduce spending while not harming outcomes (and, hopefully, improving them). A naive interpretation of geographic variations does not suggest the right reform. Simply spending less is not the right approach.
Let Us Now Praise Incompletely Theorized Cost Control
One of the vexing things about the health reform “debate” leading up to the Affordable Care Act was that, despite considerable success in co-opting potentially adverse interest groups, efforts to bridge the divide with the partisan political opposition were a total failure.
After observing that there still isn’t a lot of constructive engagement on the issues, Don Taylor reaffirms his belief that we need bipartisan compromise on the framework of reform to move ahead to the tough issues of cost control. Certainly reform would be easier if undertaken cooperatively, but I question the need for a grand compromise.
As I see it, there are basically three ways to get major reforms done: (1) one side could win on coverage and keep winning, getting cost reform done unilaterally; (2) the two sides could reach a negotiated bipartisan agreement on coverage and cost; or (3) one side could win on coverage, and cost reform could move ahead despite the losing side’s misgivings about the coverage framework.
It is more or less inevitable that power will alternate between the two parties in at least one of the three elected bodies of government, so path (1) is extremely unlikely, essentially impossible. I think path (2) is possible but only when the stars are perfectly aligned. That is, only in the rare times when a significant legislative achievement would not be credited to the president in a way that seemed likely to boost the electoral prospects of the president’s party. That leaves path (3).
If you’ve thought this through before, you’ll probably recognize path (3). It’s where we are now, after passage of the ACA. And it’s where we’ll stay, absent judicial intervention. A certain amount of throat-clearing is de rigeur here—the ACA doesn’t go far enough on cost control, is just the first step, and all that—but given that we don’t actually know yet how to tame cost growth, it’s hard to imagine a more promising approach that is anywhere near as realistic about the politics of reform. And that goes for both interest-group politics and partisan legislative politics.
In the last analysis, as Taylor says, cost control will mean reducing patients’ care or reducing providers’ incomes or both. But the theory of the ACA is that, with ingenuity and concerted effort, we can ease into reform, making smart adjustments as we go, mitigating adverse effects. Igor Volsky sketches the ACA’s early-stage efforts at cost-control:
[The ACA] eliminates overpayments to private insurers and slowly phases-in payment adjustments that encourage providers to deliver care more efficiently. The law also gives [CMS] greater discretion to experiment with alternative payment systems — so that providers are compensated for delivering care more efficiently, rather than just ordering more tests — and establishes an innovation center for payment reform.
The genius of the ACA’s strategy on costs is, or was, that it does not determine in advance which sectors will bear the greater burdens of reform, and thus it does not, or did not, immediately or disproportionately threaten major stakeholders in the healthcare system. It’s an incompletely theorized agreement of sorts.
The ACA can credibly promise cost containment that is politically tenable even in the absence of bipartisan support because it combines incompletely theorized notions of cost-effective care with a mechanism, the Independent Payment Advisory Board (IPAB), designed to circumvent routine political obstruction in Congress and to turn Congressional status quo bias into a structural force for reform.
Those Must Be Some Very Fine Stitches Indeed
Via Medical Billing And Coding. (And h/t TIE.)
The Limits of Cash
In a post titled “In Defense of Cash,” Karl Smith winds up identifying an interesting problem with the idea of replacing social programs with cash programs:
Cash rocks. Or to be more specific liquidity rocks. Both individually and socially. Its great for all your occasions, cancer and liquidity traps.
Its also great for decentralized exploration of creative ways to satisfy preferences.
The problem is that its bad for showing tribal allegiance. One can show up to a friends house for dinner with a bottle of wine as gift but not $40 in cash. I let everyone know that would gladly take the cash, but my wife says “this is why no one wants to have dinner with you.”
There is a similar problem replacing Medicare with cash.
Presumably the thought here is that even if we could replace Medicare with a well-designed cash program that could credibly promise adequate benefits and not cause cataclysmic disruptions in the delivery of care, there would still be the added problem of the signaling effects of such a policy change. In other words, this is the idea that law has an expressive function in society—that people want the law to be what we stand for when we’re at our best.
I don’t really buy it, but it’s an interesting idea.
Anyway, back on Earth, there are plenty of substantive reasons to worry that Medicash/Cashcare would just make things worse for our troubled healthcare system. Ultimately, the problem is that people aren’t naturally very good risk managers and, as Ezra Klein suggests, when it comes to seniors’ health we’re dealing with more of a “when” kind of risk than an “if” kind of risk. Which means that the public will likely end up paying for pretty much the same stuff we pay for now; we just won’t have as much cash in the treasury to pay for it all.
One Sentence to End the Mandate Controversy
Tax day is probably as good a time as any to remind folks that the constitutional controversy over the individual mandate could be resolved by amending the ACA with a single sentence. Something like this:
Section 1501 of this Act is enacted under the power of Congress to lay and collect taxes to provide for the general welfare of the United States, and under the power to lay and collect taxes on incomes, pursuant to Article I, Section 8 and Amendment XVI of the Constitution of the United States.
This is admittedly (a) not going to happen and (b) a problematic sequencing of Congressional action and Congressional expression of intent. But (b) doesn’t really matter; it should be sufficient to create a judicial presumption that the mandate was enacted under the taxing power.
As for (a), the lesson should be clear. If indeed the lawsuits were motivated by concern for fidelity to the Constitution, rather than by less high-minded interests, Congressional Republicans could put this scourge behind us by the end of the week.
Private Insurance Is Public, Too
There are lots of ways to set up a system of health insurance. You can involve the government to varying degrees in regulation and payment, and to the extent that the government takes it upon itself to bear the population’s major health risks, you have a system of public insurance. To the extent you allocate risk through market mechanisms, you have a system of private insurance. But either way, at bottom the concept of insurance is about distributing risk through a population. That’s what gives insurance its social utility, and it’s the reason people buy insurance. And so in an abstract sense, all insurance is public insurance. It is people pooling money through premiums or taxes to cover their collective health risk.
Obviously people have different opinions about what sort of system distributes risk more efficiently and fairly. But our political debates have a tendency to get clouded over by the public vs. private question, which is more often than not a distraction. “Public” and “private” are not good stand-ins for fairness and efficiency (or efficiency and fairness), and here in the U.S. of A. we have mixed and jumbled public and private elements in just about every government insurance program and every health-insurance market there is. Even in the market for employer-sponsored plans where about 160 million Americans have “private” health insurance, Ezra Klein reminds us, government’s role is massive:
Most of the people who have health-care insurance and don’t get it from Medicare, Medicaid or the military/veteran’s systems are getting it from their employer. And the reason they’re getting it from their employer is that health-care benefits — unlike wages — are tax deductible. That ends up being a huge subsidy for people who get health care through their employers. Between 2010 and 2014, the Joint Committee on Taxation estimates that this break will cost the Treasury about $660 billion. It’s the single most expensive tax expenditure in the entire tax code.
The employer exclusion was worth about $100 billion in 2009, when, according to CMS, private insurance premiums were about $800 billion. (And the JCT estimates apparently don’t capture the full value of the exclusion, which also provides a significant break in payroll taxes.) But the problem with the exclusion is not that it injects government into the private market; the problem with the exclusion is that it is unfair and inefficient. It is unfair because, as a blanket exclusion from employees’ income, it delivers a higher value tax benefit to those in higher income brackets; and because it transfers wealth from the uninsured who pay taxes but don’t get an exclusion. Compounding the problem, the exclusion probably incentivizes inefficient and overgenerous coverage, as compensation in health benefits is worth more to employees than the equivalent compensation in taxable wages.
Is Senate Approval Required to Abolish the Senate?
Matt Yglesias answers a reader’s question about whether there is a “legal path to getting rid of or disempowering the Senate that would not require Senate approval“:
It all depends on what you mean by “legal” but the short answer is “no.” The longer answer is just to observe that the existing United States Constitution was adopted by means that were, at the time, illegal. Elites felt that the Articles of Confederation were inadequate to resolving the problems of the country, so elites gathered to write a new constitution that contained a ratification procedure at odds with what’s spelled out in the Articles. Then along they went seeking ratification by various states and when they had the number the said was necessary, they declared victory and pushed ahead, installing victorious General George Washington as the new head of state and head of government.
At some point in the future if there’s some crisis, you could imagine something like that happen[ing] again.
I think this is an interesting and underrated piece of the historical background to the framing of the Constitution, but it’s not the right answer to the question. There is a clear legal, Constitutional path to disempowering the Senate that does not require Senate approval. Article V says only that “no state, without its consent, shall be deprived of its equal suffrage in the Senate.” An amendment to abolish the Senate could be proposed by “application of the legislatures of two thirds of the several states” and then ratified by the states. The question then would be whether all the states must ratify in order that none be deprived of equal suffrage without its consent. It seems to me you could ratify with the normal threshold of three quarters of the states, since zero senators per state is also “equal suffrage.”
I’m pretty sure I agree with Yglesias’s pragmatic take on the historical legal context to the adoption “our unconstitutional Constitution.” There’s no doubt it was in flagrant violation of the terms of the Articles of Confederation. People can talk about this in two ways. One way is to say the written constitution (the Articles) is not the whole constitution, and adoption of the 1787 Constitution was merely unarticlesofconfederational, not unconstitutional. The other way is to say the 1787 Constitution was the product of a revolutionary coup. But those are just two ways of saying the same thing. Personally I avoid talk of an “unwritten constitution” because it sounds too sort of Platonic for my taste, but at the same time I think a constitution is an arrangement of political institutional practices and can’t be perfectly reduced to ink on paper.
The Best Laid Plans Are the Ones That Are Plans
I’m agnostic about whether Rep. Paul Ryan’s budget quasi-plan is ultimately constructive or not. We should absolutely welcome any serious Republican attempts to grapple with the hard problems of health care costs. I’m just not sure if that’s an apt description of what the Ryan quasi-plan does. (It’s not an actual budget plan because it lacks sufficient detail to be a budget plan. For one thing, its revenue side remains a mystery; it is all hat, no rabbit.)
Whether it is or is not constructive, a budget, or even a plan, it does present an opportunity for debating the role of healthcare-cost control in a constructive budget plan. The trouble is, as Ezra Klein points out, Ryan has kickstarted a different debate. This debate is not so much about reining in healthcare costs as about redistributing them from Medicare to its beneficiaries.
The basic theory of Ryan’s plan is that you can control costs by focusing on the insurance system. Seniors become consumers and their decision-making holds down costs. The Affordable Care Act has a lot of the same insurance-system reforms that Ryan does, but the basic theory of that plan is you control costs through the care delivery system. It’s about knowing what treatments work and what treatments don’t, paying for value rather than quantity, cutting down on unnecessary readmissions and errors, doing more to manage chronic diseases, etc.
It’s only once you can do all that that exchanges really become useful, because then and only then will insurers — be they private or public — really be able to control costs. The reason none of them really do it right now is that none of them can force hospitals and doctors to hold down costs. It’s not like there’d be no competitive advantage in being the cheapest, best insurer in the country. But you can’t find one example of the model Ryan proposes slowing costs to even half what Ryan predicts. That’s why his plan really isn’t a plan — it’s just a way to make the numbers work so he can “balance the budget” without tax increases and make some conservative changes to entitlements.
I’m a big fan of exchanges. I’d use them systemwide if I could, as the Swiss and the Dutch do. But health-care costs are not all about, or even mostly about, insurance. Indeed, so much as I like exchanges, it’s very possible that you need the government putting pressure on the delivery system to control costs. What we tend to see with private insurers is that they just don’t have enough leverage over hospitals or doctors to get major changes done. Medicare does have that leverage, which is why it makes sense to use Medicare as a tool to reform the health-care system, as opposed to just the health-insurance system.
However “aft agley” they may go, the best laid schemes of mice and men are the ones that at least aim to solve the problem that needs solving, rather than simply making it someone else’s problem.
A Veto for 1099 Repeal?
Repeal of the ACA’s quasi-notorious 1099 provision has now passed the House and Senate and is on its way to President Obama. The provision was scored as generating $22 billion in revenue, and so its repeal must pilfer $22 billion from elsewhere in the budget to achieve deficit-neutrality. The repeal bill, H.R. 4, essentially siphons the money from the ACA.
Under the ACA, people making between 133% and 400% of the federal poverty level (FPL) may receive tax-credit subsidies to purchase health insurance in the exchanges. If their income shifts into a higher bracket during the year—say, from 150% FPL to 300% FPL—they have to pay the government back for some portion of those tax credits, but the ACA capped the amount taxpayers (with incomes under 400% FPL) could owe at $400. If the taxpayer’s income ended up over 400% FPL, they’d have to pay back the whole subsidy. That “cliff” was smoothed out by legislation passed during the December lame-duck session, and subsidy paybacks were capped for incomes up to 500% of the poverty line, though on a raised sliding scale up to $3,500. If President Obama signs H.R. 4, subsidy recipients whose incomes rise above 400% FPL will once again have to pay back the entire subsidy, potentially thousands more than the capped amount under current law.
There’s no doubt that the ACA’s 1099 reporting requirements would cause widespread annoyance and some genuine headaches. Businesses would have to issue 1099s to any person or company they paid $600 to, for any goods or services. One thing that isn’t often mentioned though is that there were already rules requiring businesses to issue 1099s above the $600 threshold. But the ACA’s probably-soon-to-be-repealed provision would have required that 1099s also be issued (a) to corporations, not just individuals and partnerships, and (b) for sales of goods, not just for services.
But even as we pat ourselves on the back for rescuing businesses from headaches and paper cuts, we ought to be concerned about the very real difficulties we’re creating for people participating in subsidized exchange plans. Tim Jost explained this a while back:
Excess advance payments can happen easily and will happen often. The income of hourly-wage lower and middle-income Americans often fluctuates from week to week and is difficult to predict. Dependents may leave or return home. Family members may become eligible for Medicaid or CHIP. Taxpayers may be eligible for a premium tax credit in the early months of the year while unemployed but then get a job with coverage and no longer need premium assistance. Or they may lose a job part way through the year and face dramatically reduced income, even though their full year reported income remains high.
All these changes will affect the subsidy calculation. It will be difficult for the exchanges to keep up with changes in family circumstances and for families to know what changes they should report and to whom. It is inevitable that there will be some inconsistency between advance payments based on estimated income for the year and the final credit determined at tax time.
[* * *]
Fear of potential end-of-year liability could be a substantial deterrent to participation in the advance premium tax credit program. It was estimated that the December amendment increased the likely number of uninsured after 2014 by about 200,000 people, who would rather be uninsured than face substantial repayments. Millions more consumers will face unanticipated financial burdens. This is likely to create a powerful backlash, as Americans who thought they were receiving a tax credit to help them purchase insurance find out it was in fact only a loan, and that they owe the IRS a substantial debt.
That’s serious cause for concern. With plenty of time to deal with the ACA’s 1099 provision (§ 9007) before it takes effect in 2012, I don’t think a veto should be out of the question.
UPDATE 4/8: Fixed an error in my description of the subsidy-payback provisions of the ACA.
UPDATE 4/18: President Obama signed H.R. 4 on April 14. So that’s that.
April Foolery
It seems like celebration of April Fool’s Day was particularly robust on the intertubes this year. Gmail motion was pretty good. The blogosphere was rife with fake paywall announcements (though this one was actually from March 20). But my vote for winner goes to Geoffrey Pullum at Language Log, who really had me going for a while with this account of a curious policy about sentence structure at The New Yorker. Pullum played the setup—beautifully—a few days before, reminding readers of his standing invitation to New Yorker staff to come forward with an explanation of the magazine’s odd fidelity to a certain stylistic convention that produces some very awkward constructions. Here’s an illustration from a 2010 Language Log post, citing a 2003 post (establishing this pedigree was part of the effect, distracting readers—me, at least—from their usual April 1 guardedness):
As Chris Potts noted on Language Log way back in 2003 (“A ban on quotative inversion?“), The New Yorker apparently has a house-style prohibition on (if I may use the technical terms employed in The Cambridge Grammar of the English Language) subject postposing in a parenthetical report frame for directly reported speech, even when the quoted speech is preposed.
They ban “said NP” even when the subject NP is long and complex. In fact they ban it even when the subject contains additional parenthetical interruptions and thus cries out to have a place at the end of the clause. Chris cites this sentence:
“He used to have this great, dignified passion to him,” Christopher Hitchens, who, until his own political change of heart, defended Chomsky, says. (Larissa MacFarquhar, “The devil’s accountant”, The New Yorker, March 31, 2003, p.67, column 2.)
[...] [T]he New Yorker‘s fierce and unyielding house style code will not allow the subject to be postposed, to yield what could have been a perfectly acceptable sentence:
“He used to have this great, dignified passion to him,” says Christopher Hitchens, who, until his own political change of heart, defended Chomsky.
[...] It is irritating to waste even this much time confirming something so obvious: there is no such thing as a fluent native speaker and reader of Standard English who rejects such sentences. Someone at The New Yorker is stone crazy.
“That conjectural stone-crazy editor is the subject of Pullum’s wily April 1st post, At last, the truth from The New Yorker, winner of this year’s award for excellence in April foolery,” Jim Hufford, an admirer of Pullum’s work at Language Log, and himself a blogger who writes, though seldomly and at an admittedly very amateur level, about linguistics, wrote.
Court Intrigue
Eight members of the the nation’s highest court have permanently recused themselves from participating in all future cases, according to insiders at the DoneScotus blog, a group of anonymous current and former clerks at the Court. It seems that the eight Justices signed and submitted official documents making sweeping conflict-of-interest disclosures. The signatures trigger automatic recusals “in all cases pertaining to United States federal or maritime law or the law of nations, and in all cases [involving] any parties save ambassadors or other public ministers” who may invoke the Court’s original jurisdiction under Article III.
No. Talking.
Experts are still gaming out the consequences and trying to piece together the facts. As best we can tell, the eight recused Justices had each signed documents they may have believed to be a birthday card and related liability waivers (with further advance acknowledgements, retroactive stipulations, and binding nondisclosure disclosures) for recused Associate Justice Anthony Kennedy. The documents were in a folder marked “Happy Birthday, Tony,” though it is unclear why Kennedy himself would received the folder or signed its contents. The eight Recused are technically still members of the Court and are not expected to resign or retire. The Constitution grants federal judges life tenure, with no strings attached, at least during “good behavior.”
Thomas’s office has also issued a “Non-Advisory Opinion Notice” that the Court intends to revisit the meaning of the Constitution’s Speech or Debate Clause for the purpose of considering whether the Court’s new “No. Talking.” policy may be imposed in the United States Congress “in times of national emergency incited by partisan opponents of the Thomas Court and its Constitutional control of the independent judiciary.”
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