Category: reason

On Monday, after the Congressional Budget Office (CBO) released its score of the American Health Care Act (AHCA), which would partially repeal Obamacare and replace it with a new system of insurance subsidies, Speaker of the House Paul Ryan said that the CBO report “confirms that the American Health Care Act will lower premiums” and tweeted a graphic indicating that the bill would lower premiums by 10 percent.

The problem with Ryan’s claim is that it doesn’t tell the whole story. Instead, it relies on downplaying or overlooking key aspects of the CBO’s premium estimates. Indeed, the CBO provides reason to believe that the most immediate and significant effect of the AHCA will be to raise insurance premiums.

When Ryan says that the CBO report confirms that the House bill will lower premiums, he’s not talking about what would happen right away. He’s referring to the budget office’s projections for what happens after 2020. Starting in the next decade, the agency says that increased premiums would be offset by several factors, and by 2026 would result in individual premiums that are, on average, 10 percent lower than under the current law trajectory.

So Ryan’s argument is that CBO’s estimates confirm that the AHCA would lower premiums in the long run. But even that doesn’t tell the whole story, and there are a number of caveats and qualifications needed to understand the CBO’s numbers.

The first is that the 10 percent lower figure is a relative estimate, judged against the current law baseline extended out into the future. CBO is saying that premiums would be 10 percent lower than they would otherwise be a decade from now, with a decade’s worth of price hikes built in—which is not at all the same as 10 percent lower than premiums are today.

The second is that a big part of why premiums would be lower is that the federal government would be picking up part of the tab. One of the reasons why CBO predicts that premiums would fall for consumers is that it expects that states would use a $100 billion pot of new federal funding called the Patient and State Stability Fund to help cover extremely high cost enrollees, basically removing them from the rest of the insurance pool. The effect, as Cato Institute Health Policy Director Michael Cannon wrote this week, would be to “hide a portion of the full premium by shifting it to taxpayers.” It’s effectively a second layer of subsidies in addition to the refundable tax credit the AHCA would already provide to people buying coverage on the individual market.

Another thing to remember is that the 10 percent relative decrease is an average. It’s not an across the board reduction. And the benefit would go almost entirely to younger and healthier people—while older people would actually be charged quite a bit more.

To understand why, recall that Obamacare includes what’s known as an age rating provision, which limits insurers from charging an older person more than three times what a younger person is charged. The result is to compress rates, meaning that younger and healthier people pay more and older and sicker people pay less. The Republican plan would keep the age rating rule in place but expand it to allow insurers to charge older people up to five times what they charge young adults. So younger people would pay less, and older people would pay more. According to CBO, “premiums in the nongroup market would be 20 percent to 25 percent lower for a 21-year-old and 8 percent to 10 percent lower for a 40-year-old—but 20 percent to 25 percent higher for a 64-year-old.” The point is that the 10 percent overall decrease wouldn’t be a decrease for everyone.

So when Paul Ryan says that the CBO confirms that the AHCA would lower premiums, what he’s actually referring to is the CBO’s projection that the law would lower premiums for younger people, in part by funding a new federal backstop for the insurance market, on a relative basis, a decade from now.

Just as important is what Ryan doesn’t say, which is that in the meantime, the CBO report projects that premiums would rise as a result of the AHCA.

In 2018 and 2019, premiums in the individual market would be 15 to 20 percent higher than under the current trajectory. Most of the increase would come as a result of the law’s elimination of the penalties associated with the individual mandate. Without those penalties in place, the CBO expects that younger and healthier people will decline to purchase insurance, leaving a smaller, sicker insurance pool—and making premiums more expensive. The CBO, in other words, is projecting a significant premium increase in the years before the reductions kick in.

All of the CBO’s estimates should, of course, be regarded with some skepticism. The budget office has a history of missing the mark on projections related to health care legislation. But the short-term premium hikes the CBO expects should be regarded as more likely than the longer-term decreases, because projections tend to become less accurate and reliable the further they extend out into the future.

In any case, if Ryan is going to declare that CBO’s projections confirm the merits of the legislation he’s trying to pass, then it’s worth understanding what the CBO is really saying about the AHCA’s likely effect on health insurance premiums, which is that premiums would go up for several years before falling, maybe, for some people.

Tellingly, other Republicans seem to have taken a rather different message from CBO’s report.

Asked about the bill yesterday, Texas Senator Ted Cruz worried that the “most troubling aspect” was the CBO’s projection of higher health insurance premiums. “This is not the mandate that we were elected to fulfill,” he said, according to the Dallas Morning News. “The test of success will be a year from now, two years from now, three years from now: Is health care more affordable?” Under the House Republican plan, the CBO states quite clearly that it won’t be.

Named the 2016 North American Company of the Year by the San Francisco-based Global Cleantech Group just seven weeks ago, Pennsylvania battery maker Aquion Energy filed for Chapter 11 bankruptcy last week. The company makes a novel sodium-ion battery. Aquion joins the long list of failed cleantech companies that were backed by government grants and loans.

Most notoriously solar-cell manufacturer Solyndra went belly up in 2011 after receiving more than $500 million in federal loan guarantees from the U.S. Department of Energy. Back in 2010, I visited the vast Ener1 lithium-ion battery factory outside of Indianapolis. As I reported, the Department of Energy had awarded a $118.5 million matching grant to Ener1 to build the plant. In addition, Ener1 was given a state incentive package of $21.3 million and a Hancock County package valued at $48.6 million. In January, 2011 then-Vice President Joe Biden visited the Ener1 plant where he declared: “It’s not the government doing this. It’s the free-enterprise system. We’re providing seed money, one-time deposit, man, so we can spur additional investment.” A year after his visit Ener1 declared bankruptcy and later emerged a privately owned company. Similaly DOE-backed Beacon Power and A123 Systems also went bankrupt.

The Pittsburgh Post-Gazette reports that Aquion Energy had received a $5.2 million grant from the U.S. Department of Energy, plus $8.6 million in grants and another $8 million in loans from Pennsylvania’s Department of Community and Economic Development (DCED). In return, Aquion promised the state it would create 341 new jobs on top of the 70 people it already employed. The company has evidently now laid off 80 percent of its 150 employees. The DCED is vowing to get the money it handed out to Aquion back. “Revenue recovered by DCED from companies that fail to live up to previous commitments will be reinvested to further promote economic growth in the Commonwealth,” declared DCED communications director David Misner. (Here’s an idea: How about just returning it to Pennsylvania’s taxpayers?)

Government “investment” in novel battery manufacturers has so far failed. The outcome of the biggest investment of all is now pending: Tesla’s Gigafactory outside of Reno, Nevada. In order to persuade Tesla to build the factory in Nevada, the state government has given the company a package of tax breaks worth $1.3 billion including tax credits worth $195 million which Tesla could sell for cash. Naturally, Tesla CEO Elon Musk defends his company’s reliance on government largesse. Perhaps the Tesla battery plant gamble will pay off, but the precedents are not promising. One other plea: All states should agree to level the competitive playing field by collectively refusing to hand out tax breaks to rent-seeking companies.

Because kids should be inside with their videogames, not outside on skates, South Middleton Township, Pennsylvania, has told a family it must tear down its backyard skating rink.

Of course, the rationale given is safety, not, Get those kids back inside where there’s plenty of screens, sofas, and junk food. The Beam family was told that their temporary rink—same as the one they built last year with zero complaints—is a drainage violation.

Fox News reports that the Beams received a letter stating:

“A drainage easement is located on your property,” the letter noted. “By placing objects and fences that block the water, such as the skating rink constructed on your property, the amount of storage available is reduced, and the basin will not function as designed.”

And yet the family has lived at that location for 14 years, and only two or three times—always in the summer—has any “substantial water” accumulated, the dad, Terry Beam, told the authorities.

Tough turtlenecks, pops. The authorities want the rink down, and his appeal did not melt their hearts.

Nor did this little interview on ABC 27, where one of the Beam boys, Aron, admitted that he loves playing hockey, but without the rink he’ll just play on XBox all day.

His dad added that when the boys are inside, they are always “driving us crazy, fighting with each other.”

But fighting with each other outside is… hockey.

So here’s to another couple of kids sitting on the couch, swilling hot chocolate. The outdoors, after all, is no place for children.

Conceding that it might “unfashionable,” Attorney General Jeff Sessions reiterated his belief today that expanding access to recreational marijuana is a disaster for Americans.

“I am astonished to hear people suggest that we can solve our heroin crisis by legalizing marijuana – so people can trade one life-wrecking dependency for another that’s only slightly less awful,” Sessions said in a speech to law enforcement in Richmond, Virginia. “Our nation needs to say clearly once again that using drugs will destroy your life.”

That line about marijuana? It came just seconds after this one: “Every three weeks, we are losing as many American lives to drug overdoses as we lost in the 9/11 attacks.”

In a question-and-answer session following the speech, Sessions seemed to dial back his rhetoric, telling reporters that the Obama-era Cole memo, which de-prioritized federal enforcement of marijuana laws in states where the drug is legal for recreational and medical use, is “valid.”

“We’re not able to go into a state and pick up the work that the police and sheriffs have been doing for decades,” he said.

Sessions also talked up the impact of Project Exile, a program developed during the 1990s by U.S. Attorneys in Richmond to bring federal gun charges against Richmond-area drug offenders.

“This Department of Justice will encourage more efforts like Project Exile in cities across America – coordinated strategies that bring together all levels of law enforcement to reduce gun crime and make our cities safer.”

Criminal justice researchers are divided over Exile’s effectiveness, particularly in Richmond, which has since abandoned the project. Data analysis and reporting by 538 suggests that the Project Exile model, which boils down to bringing federal gun charges–and their lengthy mandatory minimums–in cases that would otherwise be prosecuted by local law enforcement, is a suboptimal way to reduce gun crime.

“In the [Rochester] program’s 18 years, judges have handed out 633 sentences for a total of 3,411 years in federal prison. But the city had 24 gun murders last year — giving it a rate more than four times New York City’s. And community relations with police, as in many cities, are strained. The enthusiasm for Exile appears to be based more in rhetoric than in evidence, which leaves some people asking whether it’s worth the human costs.”

The state of New York wants to tell you what’s appropriate to post online and what should be removed. The concept behind the European Union’s “right to be forgotten” has crossed the Atlantic, and two state lawmakers in New York want to attempt to institute it here.

The “right to be forgotten” in the European Union originated from a court ruling demanding Google and search engines remove links to a story that embarrassed a Spanish man because it detailed a previous home repossession. The story was not factually inaccurate. He insisted it was no longer relevant and that it embarrassed him, and the court agreed he had the right to have the information censored from search engines.

Since 2014, search engines like Google have received hundreds of thousands of requests to have links to news reports removed and not because there’s anything factually incorrect about them, but because the people within them are embarrassed by having the information public.

Now, in New York, Assemblyman David Weprin and State Sen. Tony Avella (both Democrats) are attempting to implement such a law in the United States.

The bill (readable here) appears remarkably far-reaching. It would allow people to demand that identifying information and articles about them to be removed from search engines or publishers if the content is “inaccurate,” “irrelevant,” inadequate,” or “excessive.” And yes, there are potentially fines involved ($250 dollars a day plus attorney’s fees) for those who don’t comply. Here’s how the legislation defines the rather vague justifications for removal:

[C]ontent, which after a significant lapse in time from its first publication, is no longer material to current public debate or discourse, especially when considered in the light of the financial, reputational and/or demonstrable other harm that the information, article or other content is causing to the requester’s professional, financial, reputational or other interest, with the exception of content related to convicted felonies, legal matters relating to violence, or a matter that is of significant current public interest, and as to which the requester’s role in regard to the matter is central and substantial.

This would put the courts in the position of having the authority to declare what is or isn’t relevant for the public to know. Reason asked First Amendment attorney Ken White of Brown, White & Osborn (and also of Popehat fame) for his analysis of the bill. He did not hold back in an emailed statement:

This bill is a constitutional and policy disaster that shows no sign that the drafters made any attempt whatsoever to conform to the requirements of the constitution. It purports to punish both speakers and search engines for publishing—or indexing—truthful information protected by the First Amendment. There’s no First Amendment exception for speech deemed “irrelevant” or “inadequate” or “excessive,” and the rules for punishing “inaccurate” speech are already well-established and not followed by this bill. The bill is hopelessly vague, requiring speakers to guess at what some fact-finder will decide is “irrelevant” or “no longer material to current public debate,” or how a fact-finder will balance (in defiance of the First Amendment) the harm of the speech and its relevance. The exceptions are haphazard and poorly defined, and the role of the New York Secretary of State in administering the law is unclear. This would be a bonanza for anyone who wanted to harass reporters, bloggers, search engines, and web sites to take down negative information, and would incentivize such harassment and inflict massive legal costs on anyone who wanted to stand up to a vexatious litigant.

Also of relevance: The law extends the statute of limitations for defamation complains for online content in a way that pretty much all but removes them. The clock for the statute of limitations for defamation claims wouldn’t start ticking until the defamatory statement has been removed from the internet, meaning that publishers could be sued for content posted years ago. White noted that this change “encourages and incentivizes legal harassment.”

But not all First Amendment attorneys are opposed to the idea of the “right to be forgotten.” CNN contributor Marc Randazza (who just recently won a case defending a doctor’s right to critique a type of Alzheimer’s treatment) has written in support of bringing the concept to the United States. He told Reason that he still supports a right to be forgotten and thought the New York bill actually didn’t go far enough to allow citizens’ to have information about themselves deleted from social media over time. But he also didn’t believe this New York law would survive a legal challenge. The European Union does not have the same type of free speech First Amendment protections that exist in America.

“Even if it gets signed, it is pre-empted by federal law and will be struck down the first time someone tries to use it,” Randazza responded in an e-mail. “How is a New York state law going to be enforced against a Silicon Valley company? Good luck with that.”

Additional analysis from Eugene Volokh at The Washington Post here. And the New York Post details a recent revenge porn case being used to justify these kinds of legal efforts.

“The U.S. [health care system] is what you get when you let government run rampant,” says Michael F. Cannon, who’s the Cato Institute’s director of health policy studies. “The government controls half of our health care spending directly and the other half indirectly.” He elaborated:

The government tightly controls who can practice medicine, what education they must have, what tasks they can perform, where they can practice medicine, who can open a medical facility, who can purchase expensive medical equipment, where we can purchase our medical insurance, what our insurance covers, the prices we pay for insurance, how we obtain health care in retirement, what treatments doctors can describe, what manufacturers can say about those treatments and their products, the organization structure of health care providers, how health providers get paid, how much they get paid, how much we spend on health care, [and] how we help the poor obtain health care.

Would Americans be better off if the government pulled back and let markets function? That was the topic of a debate held Monday night at the Soho Forum, a monthly Oxford-style debate series that “features topics of special interest to libertarians” and “aims to enhance social and professional ties within the New York City libertarian community.” (An archive of past Soho Forum events.)

Cannon’s debating partner was The Huffington Post‘s Jonathan Cohn, author of the 2007 book, Sick: The Untold Story of America’s Health Care Crisis—and the People Who Pay the Price.

Cohn and Cannon debated the following resolution: “A market system for medical care would save more people from suffering inadequate care than any other system.” At the beginning of the event, attendees voted “yes,” “no,” or “undecided.” After Cannon and Cohn had their say, the audience voted again.

Cohn won the debate, convincing two percent of “yes” votes and 16 percent of the undecideds to switch to his side. The results are here.

Listen to the debate on SoundCloud below. Better yet, subscribe to the Reason podcast at iTunes.

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The pursuit of happiness, it seems, does not extend to the pursuit of work.

At least that’s been the longstanding view of the U.S. judicial system. Judges have been hesitant to identify a due process right to pursuing a lawful occupation, but the recognition of such a right could go a long way towards curbing occupational licensing and other government-created restrictions on who can do what work.

David Bernstein, a professor at the Antonin Scalia Law School at George Mason University, believes economic freedom can win favor with conservative and (perhaps surprisingly) even more so with liberal judges.

As Bernstein writes in a paper recently published by the Yale Law Journal Forum, there have been just two Supreme Court cases since the New Deal that expressly dealt with this question of whether an individual’s right to pursue an occupation is covered by the Due Process Clause of the Fourteenth Amendment. Neither of those two decisions—Williamson v. Lee Optical (1955) and Ferguson v. Skrupa (1963)—should be seen as definitively closing down the possibility of judicial review of occupational licensing laws, or other legislative efforts to restrict employment, Bernstein argues.

In the decades since those rulings, though, the Supreme Court has embraced arguments about substantive due process to uphold so-called “unenumerated rights”—that is, rights not explicitly written into the U.S. Constitution or the Bill of Rights—like the right to an abortion and the right to same-sex marriage.

But the court hasn’t thrown the doors wide open. In a 1997 case (Washington V. Glucksburg) where the Supreme Court unanimously rejected a due process argument for the right to commit suicide, Chief Justice William Rehnquist, writing for the majority, outlined when and how the Supreme Court could recognize such unenumerated rights. In order to be recognized as fundamental, Rehnquist wrote, those rights must be “deeply rooted in the Nation’s history and tradition.”

“The right to pursue an occupation free from arbitrary government action is certainly deeply rooted in American history,” argues Bernstein.

In some ways, this is a throwback to an older interpretation of due process rights. The Supreme Court did recognize the right to earn a living in pre-New Deal cases. Meyer v. Nebraska, for example, refers to “the right…to engage in any of the common occupations of life.” It’s not that the right no longer exists, but that it’s now subject to something called rational basis deference, which means it mostly loses in court because judges give legal deference to almost any justification offered by government for restricting occupational freedom.

The U.S. Supreme Court won’t get a chance to address that issue this year, but some state courts are warming up to the idea that the Fourteenth Amendment’s due process protections can extend to the right to pursue an occupation.

The Texas Supreme Court has gone the farthest so far, with a 2015 ruling in Patel V. Texas Department of Licensing and Regulation that invalidated a state law requiring practitioners of eyebrow threading to obtain a cosmetology license—an expensive and time-consuming process that includes limited, if any, instruction in the actual skills of eyebrow threading. The ruling is significant because the court set a new, higher standard for the government to meet before imposing rules that limit individuals’ economic freedom.

Bernstein spoke with Reason about how courts might recognize a right to pursue work. The conversation has been lightly edited for length and clarity:

Reason: I think most people would be somewhat surprised to learn that there’s no clear-cut constitutional right—not even one that’s implied or interpreted by the courts—to having an occupation, even though that seems fairly central to the whole “life, liberty, and the pursuit of happiness” thing. What have the courts said about the right to pursue an occupation as a due process issue?

Bernstein: Since the late 1930s, the Supreme Court has held that economic regulations of any sort, including occupational restrictions, pass constitutional muster so long as the court could think of a rational basis, defined expansively, for the regulation. So there is a right to pursue an occupation, it’s just that it will almost never be enforced under the federal constitution because the test the court applies is so deferential to the legislature.

Reason: Occupational licensing laws are something we usually think about as an issue for legislatures. But you argue that courts could play a role here. What would that look like?

Bernstein: At the very least, courts should invalidate occupational restrictions that are justified only by the desire to restrict competition. So far, five federal appellate courts have ruled on that issue, and two of them have held that even gross protectionism to benefit incumbent members of a profession is a valid “rational basis” for an occupational restriction, while three have held it is not.

I would prefer if courts would go a bit further, and require the government to show that it truly had a rational, public-spirited basis for the law it enacted, rather than just requiring that someone at some point in the litigation be able to make up a basis post-hoc.

Reason: You write a lot in this paper about how both liberal and conservative justices have been unwilling to take on the right to an occupation as a due process issue because of fears of “resurrecting Lochner.” What should the average person know about the Lochner case, and why are Supreme Court justices on both “sides” scared of it?

Bernstein: Lochner v. New York was a 1905 Supreme Court case that held that New York State could not limit bakers to sixty hours of labor per week because that violated both the bakery workers’ and the bakery owners’ implicit right to liberty of contract under the Fourteenth Amendment’s Due Process Clause. The case is less important for its specific holding than for its symbolic importance, that it represents everything that was wrong with the Supreme Court’s jurisprudence before the New Deal.

For liberals, it became a symbol for the notion that courts should allow Congress and state legislatures to engage in economic regulation and experimentation, even if it interferes with what traditionally were considered important economic rights. For conservatives, Lochner demonstrates that courts should be extremely hesitant to enforce any unenumerated rights under the Due Process Clause. Both of these perspectives rely on the notion that Lochner was a uniquely poorly-reasoned case with a uniquely bad practical outcome. In my writings, I’ve tried to demonstrate that Lochner’s flaws have been greatly exaggerated.

Reason: You write that judicial support for the right to pursue an occupation has come historically from the right, but it might find more fertile ground with liberal/progressive justices in the near future. Why is that?

Bernstein: Historically, before the New Deal, the right to pursue an occupation was protected under the Fourteenth Amendment’s Due Process Clause. Conservative judges have largely disavowed protecting any rights not specifically mentioned in the Constitution under that clause, for fear of legitimizing a series of liberal “activist” opinions under that clause.

Most notably, conservative don’t want to lend any credence to Roe v. Wade, which found a very robust right to abortion under the Due Process Clause, sufficient to overcome the laws of all fifty states and give the U.S. what at the time was the most liberal abortion regime in the world.

Liberals, meanwhile, typically think courts should stay out of controversies over economic regulation. But the right to pursue an occupation could easily be recharacterized as a non-economic right. As one legal scholar has noted, “the choice of occupations reflects and affects “personal capacities, values, style of life, social status, and general life prospects in innumerable ways,” and is a vital form of self-expression.” The right to pursue an occupation can therefore be reconceptualized by progressives as a personal autonomy right rather than as an economic right.

Reason: We now have a new nominee to fill the vacancy on the Supreme Court. What should we know about Judge Gorsuch’s views on this subject? Since he figures to leave the court about where it was, ideologically, when Scalia was on the bench, is that a good thing or a bad thing for the approach you’re advocating here?

Bernstein: To my knowledge, Judge Gorsuch has not opined on this issue, beyond general standard conservative rhetoric about how public interest groups should look to achieve their goals in the legislature, not the courts.

Younger conservative jurists tend to be less hostile than the older generation to judicial engagement on economic issues, so Gorsuch’s youth–he was born about thirty years after Scalia–is at least a mildly good sign.

What do gun and travel bans have in common?

A. Barton Hinkle writes:

This is just a wild guess, but the folks at the National Rifle Association and the folks at the Council on American-Islamic Relations probably don’t sit around thinking about ways they can collaborate for the good of their mutual interests. Maybe they should.

Last week law-enforcement officials charged almost two dozen Virginians who allegedly took part in a gun-running ring. The accused bought boatloads of firearms in Virginia and sold them in New York City for exorbitant sums. The tough gun-control laws in New York have made gun-running very profitable, and the repeal of Virginia’s one-gun-a-month law four years ago has made it very easy.

Naturally, this has inspired gun-control advocates to suggest the law should be reinstated. The General Assembly passed the law largely to dry up the “iron pipeline” between Virginia and New York, and while it was in effect it seemed to work as intended, at least in the early years. With the law repealed, gun-runners seem to have gotten back into business, and one was recorded making light of Virginia’s ostensibly lax gun laws: “There’s no limit to how many guns I can go buy from the store,” Antwan Walker said. “In Virginia, our laws are so little, I can give guns away.”

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FreedomFest, the world’s largest annual gathering of libertarian and free-market thinkers, activists, and policymakers takes place in Las Vegas between July 19 to July 22 at Bally’s Paris resort.

William Shatner will talk about space exploration and the cultural staying power of Star Trek. Newscasting legend John Stossel, who will soon be making videos for Reason TV, will also be there and this year’s conference will also include a celebration of the life and ideas of Steve Forbes, longtime FreedomFest “co-ambassador.”

Special “Reason Day” sessions on Saturday, July 21 will deliver cutting-edge views on “Free Minds and Free Markets.”

To add to the excitement, FreedomFest impresario Mark Skousen has teamed up with Newsmax magazine to produce a list of “the 50 Most Influential Libertarians” in each of eight different categories such as business and finance, entertainment and the news, freedom-movement organizations, media, politics, and academia.

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