CATO Institute

Health Care Lie #492*: A Government Takeover of 16% of the Economy

*I’ve stopped counting, so that number is made up.

[digg-reddit-me]We’ve all heard this claim – that Obama’s health care reform – specifically the public option – is really a stealth attempt to socialize America and have the government take over a significant portion of our economy.

This claim isn’t true. However, unlike the fearmongering that is the invocation of “death panels,” there is a bit more substance to this accusation. But like so much of this debate, it has little to do with the bills currently under consideration which have rather weak public options. What this claim is based on are the hopes of progressives that the public option could prove to the country how great and effective government health care is and thus lead to a single-payer, Medicare For All type system.

According to Mark Schmitt of The American Prospect, the public option was latched onto by progressives early on as a potential “stealth” tool to gradually move America into a Medicare-for-all type system – as they assumed that given the choice, most citizens would prefer government-run health care. As Ezra Klein summarized Schmitt’s piece:

The reason the idea managed to catch the liberal establishment’s imagination was that it was sold as a way of achieving single-payer, or something close to it, within the current constraints of the political system.

Those on the right wing saw the fervor that accompanied discussions of the public option and soon identified it as a potential target. But the public option wasn’t designed to work as a stealth tool. Its main designer and earliest promoter, Jacob Hacker saw his policy “as an alternative to single payer” and “as a competitive alternative to private insurance” – in other words, as a way to maintain some of the advantages of the system a large number of Americans currently have while offering a different model of competition to keep insurance companies honest. The initial design of the public option – which remains intact today – would create a self-sustaining, non-profit agency that competes with private plans on a Health Insurance Exchange. Perhaps the best explanation of why this would work comes from Michael F. Cannon of the Cato Institute who – while trying to attack the possibility of a public option – made this observation:

Any payment system creates perverse incentives…which is why we need competition between different payment systems to temper the excesses of each. So if Kaiser Permanente is skimping on care, which is the perverse incentive its payment system creates, there are fee-for-service insurers on a level playing field that can lure patients away from Kaiser. That tempers the rate at which Kaiser succumbs to those perverse incentives…

This understanding of how markets work – and how a competing payment system could improve health care for all – is exactly the reason so many people were in favor of a choice between a public option and private ones before the current fear-mongering campaign.

Hacker’s policy is what President Obama has decided he wants in a public option, as he explained Time‘s Karen Tumulty:

It shouldn’t be something that’s simply a taxpayer-subsidized system that wasn’t accountable, but rather had to be self-sustaining through premiums and that had to compete with private insurers.

Tumulty later described Obama’s position on the public option:

Obama has never presented the public option as anything other than a means to an end — one that he would be perfectly willing to achieve through other avenues if necessary. His goal is twofold: to provide a low-cost alternative to the private system that already exists and to assure competition in a health-care market where it is generally lacking.

Further demonstrating that the goal of Obama’s health care reform is not to stealthily push America into a Medicare For All program, he has signalled he would be willing to accept a co-op in place of the public option. However, while Republicans had promoted the idea of co-ops as an alternative to the public option, they now are quickly moving away from this position. Ezra Klein explains:

This is a dynamic we saw in 1994. A compromise is offered, and after great anguish and infighting, Democrats grudgingly move toward it. Then the compromise is yanked away. The famous example of this is Bob Dole voting against two bills that had the name “Dole” in the title.

Someone here is acting in bad faith and has a secret agenda. It doesn’t seem to be the Democrats.

Conclusion: The public option could become a stealth path to single-payer. Just like Medicare could. Or Medicaid. Or S-Chip. Or any other legislation that has ever dealt with the serious problems in our market for health insurance. But what we’re seeing now isn’t a stealth option – as much as both progressives and right wingers may want to pretend it is. If our nation is moving towards a single-payer Medicare-for-all-system, this legislation isn’t what will get us there. That fight will come later.

And for what it’s worth: the public option isn’t the most important part of health care reform. The Health Insurance Exchange (on which the co-op or public option would sit along with private companies) is more important – as are the various reforms of the health insurance industry.

(Some other resources on the public option are this Slate magazine piece from 2006 and this report by Jacob Hacker on the advantages of allowing the public to choose a public option.)

[Image not subject to copyright.]

How the War on Drugs Is Making America Less Safe From Terrorism

[digg-reddit-me]The War on Drugs is undermining America’s War on Terror by:

creating an adversarial relationship with a large portion of the country;
calling into question the legitimacy of the rule of law and law enforcement;
competing for law enforcement resources; and
revealing the measures we take to track money being laundered and to stop smuggling.

The threat of terrorism is real, if often exaggerated for political purposes; and the consequences of a low probability, high impact attack could be catastrophic. If terrorism is our most immediate national security threat, then we must rearrange our priorities and end the failing Drug War.

The prosecution of Tommy Chong (half of the perpetually baked comedy duo Cheech and Chong) illustrates some of these points.

The state of Pennsylvania prohibits the shipping of drug paraphernalia – such as bongs – into it’s state. In 2003, a man from Beaver Falls, PA began calling a store in California run by the family of Tommy Chong asking them to ship him a large order of bongs and assorted other glassware. A manager at the store claimed that man called at least 20 times – and each time a representative of the store told him they could not ship to his state, citing the Pennsylvania law. This very determined man traveled to California to order the items – but he was not determined enough to stay around until his order was packed up. He returned to Pennsylvania. The store still refused to ship him the items – but after a few weeks, they gave in to his repeated demands.

That was the excuse a SWAT team needed to raid the store and arrest Tommy Chong. The entire operation was set up by a U. S. Attorney for the Western District of Pennsylvania, Mary Beth Buchanan. The net cost to the taxpayer to put Tommy Chong in jail for 9 months (Chong was convinced to take the fall although he didn’t run the business and had nothing to do with this incident) was $12 million. Tommy Chong, reflecting on the lessons of his experience pointed to “the absurdity of the War on Drugs when we have a much more pressing – and wholly unrelated – war on terrorism to worry about.”

I only disagree with the sage Tommy Chong in that the two wars are wholly unrelated. They are related intimately – and the war against Tommy Chong is making the war against Al Qaeda harder.

The most profound way the War on Drugs is undermining the War on Terror is how it calls into question the legitimacy of the rule of law and of law enforcement. Tommy Chong’s case is not atypical in how disproportionate the resources used to take him down were to his threat to society – from the millions of dollars spent to the SWAT team to the sting operation – you would expect him to be some kind of violent drug lord. Chong’s case is exceptional only due to his celebrity. The number of hours dedicated to fighting the Drug War against American citizens is incalculable. Each arrest for possession, for possession with intent to distribute, or any other of a long list minor offenses involves the time and attention of police officers, as well as judges and attorneys. Yet with all this effort, this War on Drugs has been fruitless. As Ben Wallace-Wells subtitled his summary of the War on Drugs: “After Thirty-Five Years and $500 Billion, Drugs Are as Cheap and Plentiful as Ever.”

Excessive force is often used in the Drug War – and not just against isolated individuals. The libertarian CATO Institute has documented the enormous number of paramilitary raids – mainly involved in the War on Drugs. They cite an estimate of 40,000 paramilitary raids a year – including many which kill innocent bystanders or are raids on the wrong address. In an example from just a few months ago, police raided the home of the mayor of a small suburb outside of Baltimore and shot his dogs in search of marijuana. The mayor and his family were innocent, as were the dogs. One of the mayors neighbors said to him after the police raid: “If the police shot your dogs dead and did this to you, how can I trust them?”

At the same time, the Drug War has alienated a large segment of its population from its law enforcement and national security agencies. At times – especially as in the case of Tommy Chong – it seems to have become a surrogate for a culture war. Largely as a result of the War on Drugs, America has the largest incarceration rate of any nation in the world. Yet most offenders of drug laws are never imprisoned – as it is estimated that nearly 7% of Americans use illegal drugs every month. Among the Americans to cross into enemy lines in the War on Drugs include our last, current, and future presidents. The War on Drugs has created an adversarial relationship between the government and a large portion of Americans.

The failures of the Drug War haven’t yet affected the War on Terror because it has largely been seen as something “different,” something which unites all Americans, which transcends boundaries. Mobsters, drug dealers, smugglers, and even governors of Illinois may be threats to the rule of law and targets of law enforcement, but they, with law enforcement, see terrorists as enemies of civilization. The Sopranos illustrated this with a storyline in which a mobster is asked by the FBI to keep a lookout for suspicious activity – and he is eager to. But the War on Drugs keeps threatening to undermine this essential distinction, as law enforcement uses powers designated to it in order to fight terrorism for other ends.

The War on Drugs also competes with the War on Terror for government resources and attention. This refers not only to the degree to which the FBI, Customs, and local police forces must split their attention between the two Wars – thus shortchanging both, but also to the more formal war in Afghanistan. Our anti-drug policy is driving the poor farmers of Afghanistan to seek the protection of the Taliban according to President Hamid Karzai. At the same time, even as additional resources have been allocated at the federal level to combat terrorism, local police forces must now split their attention – and their efforts in the Drug War often undermine the trust they need to prevent a potential terrorist attack.

More insidious though is how the intersection of the War on Drugs and the incentives of drug trafficking create an infrastructure that can be used for terrorism as a Congressional report from 2004 explained. The enormous profits involved in drug trafficking have incentivized an industry dedicated to undermining our national security infrastructure – it has created experts in smuggling to get contraband through or around Customs and into America; it supports an industry of money laundering and of illegal weapons and false identifications. All of these are useful and often essential to a terrorist operation – and yet none of these could be adequately financed by terrorism alone. The efforts of the War on Drugs reveal weaknesses in our national security to drug dealers and terrorists alike. One of the authors of a study of America’s vulnerability to nuclear terrorism joked the best way to smuggle nuclear material into America would be in a package of cocaine. If America were to focus our national security efforts – including efforts to track suspicious money and to prevent smuggling on terrorist-related targets, less would be known of our capabilities.

The War on Drugs has failed in its objectives. It affects Americans unequally and unfairly. And it is making us less safe. There is an international consensus on the dangers of heroin and cocaine trafficking – and we should continue to combat them. But we stop fighting a “War on Drugs” that is undermining the War on Terror.

We must rationalize the drug laws – by equalizing the penalties across similar classes of drugs and by legalizing those drugs health experts agree are less dangerous and addictive while continuing to make efforts to reduce the demand for and smuggling of the rest. We must end the “War on Drugs” that is targeting a significant percentage of American citizens and helping to destabilize countries around the world. We must stop blurring the lines between our efforts to stop drug trafficking and the War on Terror. The best defense against terrorism is a people who trust law enforcement, respect the rule of law, and are knowledgeable about threats.

The War on Drugs is squandering this resource. Which is why we must end it.

[Picture licensed under Creative Commons courtesy of CmdrGravy.]