2012 - %3, June

What Really Happens If the Supreme Court Strikes Down the Mandate?

| Fri Jun. 22, 2012 6:00 AM EDT

As everybody waits with bated breath for the Supreme Court to release its ruling on Obamacare (maybe Monday!), the fashionable parlor game among the chattering classes is to figure out what the impact of different kinds of rulings would be. So let's play! But most of the alternatives are uninteresting. If the court upholds the law, then everything goes forward as planned. If they strike down the entire law, then everything stops. The only interesting question is: What if they strike down the individual mandate but uphold the rest of the law?

We can game this out, but first you have to understand just who would be most upset by a ruling like this. The answer is: insurance companies. You see, the Affordable Care Act (ACA) requires insurance companies to accept anyone who applies for coverage and to charge everyone (with some specific exceptions) roughly the same rate. This works fine if insurance companies get a random selection of customers. They can easily figure out the average cost of care for this random group and then charge everyone that average, plus a little extra so they make some money. Nice and neat.

But without a mandate, they're unlikely to get a random selection of customers. Instead, healthy folks will probably stay out of the market and buy coverage only when they come down with some kind of serious illness. This is a disaster for insurers. They aren't getting regular premium payments from these customers, but they still have to pay for their million-dollar proton beam therapy when they get prostate cancer. Too much of this kind of behavior and they'll be out of business. That's why this dynamic is called a "death spiral."

So what happens if the mandate is overturned? Here's one possible scenario, along with my guesses about the likelihood of each step:

  1. Congress deadlocks on any kind of solution (p=100%).
  2. In 2014 the law goes into effect as scheduled (p=100%).
  3. The death spiral starts as the healthiest segment of the uninsured decides to stay uninsured (p=99%).
  4. However, thanks to the expansion of Medicaid and the subsidies for private insurance, the death spiral happens very slowly. The number of people who buy insurance at the last minute is relatively small (p=90%).
  5. Insurance companies raise premiums across the board to make up for this (p=100%).
  6. Because this happens slowly, the premium increases are small enough and justifiable enough that the Department of Health and Human Services mostly approves them (p=80%).
  7. For all practical purposes, insurance companies replace emergency rooms as the funder of last resort for the uninsured (p=70%).
  8. The death spiral turns out to have an end point. Premiums go up for a while until a new equilibrium is found, and then they stabilize. (Though of course health care costs in general will probably continue to go up. But this is separate from premium increases caused by the death spiral.)

This is a very rosy scenario. The usual objection is that No. 4 is wrong and, in fact, the death spiral happens more quickly—say, within four or five years. In this case, insurance companies will genuinely be in dire straits and will begin to put so much pressure on Congress that even conservatives realize they have to do something. By the time this happens, ACA will be so entrenched that repealing it just isn't in the cards, which means that either Congress passes a constitutionally approved version of the mandate (for example, by making it a tax credit) or else nationalizes health care even further.

Overall, this is the most optimistic possible set of outcomes. In both cases, ACA is basically safe, either because the law's other provisions dampen the effect of the death spiral or because Congress is forced to take action in order to save the insurance industry.

Do I believe this? Actually, yes. Despite the fact that I think overturning the mandate would be a constitutional disaster, I'm not convinced it would inevitably be a health care disaster. It would unquestionably create a fair amount of unnecessary uncertainty, but in the end, things would probably work out okay as long as Democrats have the spine to continue defending the basic law. Time will tell about that.

UPDATE: In #7, I changed "provider of last resort" to "funder of last resort." Obviously insurance companies don't actually provide health services, they just pay for them.

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Corn on MSNBC: Romney's Super PAC Ski Trip

Thu Jun. 21, 2012 10:22 PM EDT

David Corn sat down with Politico's Joe Williams and X-L Alliance's Liliana Gil on MSNBC's "Martin Bashir" to hash out Mitt Romney's speech to Latino leaders today. Is there anything Mitt can say—or any amount he can spend—that can limit the President's advantage on immigration?

 

Later, they discussed the legalities of a GOP retreat to the uber-elite ski country of Deer Valley, Utah—a trip that will feature Mitt Romney, GOP leaders, and Super PAC all-stars. Apparently skiing and shmoozing do not qualify as "coordination."

 

David Corn is Mother Jones' Washington bureau chief. For more of his stories, click here. He's also on Twitter.

The Washington Post Says Mitt Romney Outsourced Jobs....Or Maybe Not

| Thu Jun. 21, 2012 9:40 PM EDT

Glenn Kessler of the Washington Post dings the Obama campaign today for claiming that Bain Capital "shipped jobs to China and Mexico" while Mitt Romney was CEO:

Upon hearing this ad was under consideration for a tough rating, the Obama campaign supplied reams of additional SEC documents regarding Romney’s ownership in Bain after he left for the Olympics, most of which we had examined previously when we first looked at this question. The campaign also supplied SEC documents showing that two of these companies, Modus and SMTC, as well as one called Stream International (a predecessor of Modus), earned money in part by helping other companies subcontract work overseas. Some of this business predated Romney’s departure from Bain, but thus far it seems a slim case for this particular ad.

Twelve hours later, Tom Hamburger of the Washington Post filed a story suggesting the case isn't so slim at all:

A Washington Post examination of securities filings shows the extent of Bain’s investment in firms that specialized in helping other companies move or expand operations overseas.

....Bain’s foray into outsourcing began in 1993 when the private equity firm took a stake in Corporate Software Inc., or CSI....Two years after Bain invested in the firm, CSI merged with another enterprise to form a new company called Stream International Inc. Stream immediately became active in the growing field of overseas calls centers....By 1997, Stream was running three tech-support call centers in Europe and was part of a call center joint venture in Japan, an SEC filing shows.

....The corporate merger that created Stream also gave birth to another, related business known as Modus Media Inc., which specialized in helping companies outsource their manufacturing....According to a news release issued by Modus Media in 1997, its expansion of outsourcing services took place in close consultation with Bain.

....Another Bain investment was electronics manufacturer SMTC Corp....The company said that communications and networking companies “are dramatically increasing the amount of manufacturing they are outsourcing and we believe our technological capabilities and global manufacturing platform are well suited to capitalize on this opportunity.”

So who's right, the Washington Post or the Washington Post? I excerpt, you decide.

Does George Zimmerman's Story Add Up?

| Thu Jun. 21, 2012 6:59 PM EDT

Does George Zimmerman's account of what happened on the night he shot and killed Trayvon Martin add up? That question, and whether or not he acted legally in self-defense, will be adjudicated in a Florida court. Aside from Zimmerman landing back in jail for allegedly lying during his bond hearing, the story on the Martin killing has been relatively quiet in recent weeks. But now, on the court's orders, Zimmerman's legal team has been forced to release additional documentary evidence, including a written statement from Zimmerman and a police video (above) in which he reenacts the deadly altercation for investigators the day after it went down.

It isn't hard to see why Zimmerman's attorneys were reluctant to make the material public. It raises more questions and reveals apparent discrepancies in his story.

In a four-page written statement to police on February 26, the night of the shooting (see the document below), Zimmerman says Martin "circled his vehicle" and then disappeared into the darkness as Zimmerman spoke to a police dispatcher on his cell phone. When the dispatcher asked him for his location, Zimmerman wrote in the statement, "I could not remember the name of the street so I got out of my car to look for a street sign."

His stated reason for exiting his vehicle may not be implausible, but it's certainly odd: After all, Zimmerman had lived in the Retreat at Twin Lakes, a small gated community, for years. And he was a leader of its Neighborhood Watch program; prior to the night he killed Martin, he'd called the police no less than 46 times since 2004 to report alleged incidents in the neigborhood. This is a guy who now doesn't recognize which street he's on in his neighborhood?

Also eyebrow-raising is Zimmerman's recollection of the violence that took place after he exited his vehicle. In the written statement, Zimmerman describes reaching for his cell phone to dial 911 as Martin accosts him, comes at him, and punches him in the face. "I fell backwards onto my back," Zimmerman wrote. "The suspect got on top of me."

But in his reenactment at the scene, filmed the day after the shooting by police investigators, Zimmerman describes moving forward after Martin punches him in the face, not falling onto his back. "I think I stumbled," he tells investigators, gesturing forward with his right hand from the spot where he says Martin punched him. "I fell down, he pushed me down, somehow he got on top of me."

An investigator then asks, "On the grass or on the cement?" 

Zimmerman points and walks forward about six paces, the camera following him, as he responds: "It was more over towards here. I think I was trying to push him away from me, and then he got on top of me somewhere around here, and that's when I started screaming for help."

Zimmerman has a right to his day in court. It's important to keep that in mind. But as more information from the investigation emerges, it doesn't seem to be doing much for his case in the court of public opinion.

 

Maybe It's Time to Shut Down the Commerce Department

| Thu Jun. 21, 2012 4:54 PM EDT

Kevin Williamson reacts to the news that John Bryson has resigned as Secretary of Commerce:

The existence of the Commerce Department, a.k.a. the Department of Corporate Welfare, suggests that Washington has little institutional confidence in free markets and believes that markets must be guided by the sorts of geniuses who end up working in the Commerce Department.

Possible reactions:

A. Agitate for better personnel at the Commerce Department.

B. Abolish the Commerce Department.

I’m voting for B.

This is our lucky day! It turns out that back in January President Obama asked Congress for the authority to do just that, so all we have to do is put together a bipartisan consensus of National Review pundits and Mother Jones pundits and we should be all set.

Of course, there are some details to work out here, just like there always are when people suggest getting rid of cabinet departments. The Commerce Department, for example, includes the Census Bureau. Can't get rid of that. BEA produces some pretty useful statistics. NOAA does good work on that whole hurricane prediction thing. NIST is handy to have around so we know what time it is and how long an inch is supposed to be. Patents and trademarks really need to be kept going. And someone has to negotiate trade agreements.

Anyway, it turns out Obama wants to keep all that stuff and just put it into a new agency with a different name, which means that even his optimistic estimate is that deep-sixing Commerce would only save $3 billion per year. Nothing wrong with that, but it's not exactly earth-shaking stuff. Williamson might want the ax to swing a little harder, but I'm not sure how much harder it can really swing.

In any case, this is a good example of the problem with people — usually people running for president — using the elimination of cabinet departments as conservative applause lines. It sounds good, but it's like taking potshots at the visible parts of icebergs. What you really want to do is look below the waterline and ask which agencies all those presidential wannabes are planning to get rid of. After all, just shuffling them around into other departments doesn't save much money.

Romney to Latinos: Pay No Attention to That Man From the GOP Primary

| Thu Jun. 21, 2012 2:42 PM EDT

During the Republican Primary, Mitt Romney had a very clear position on immigration: All unauthorized immigrants need to leave. 

Heading into the general election, Romney's position on immigration now sounds more like a relationship status on Facebook: It's complicated.

In his speech before the National Association of Latino Elected and Appointed Officials Thursday, Romney dodged most of the direct questions about what he'd do on immigration policy while attempting to strike a moderate tone at odds with his primary rhetoric about making undocumented immigrants lives so miserable that they "self-deport." Having spent months appealing to the anti-immigrant base of the GOP to out-conservative Rick Perry and New Gingrich on the issue, Romney has now shifted to a strategy of strategic obfuscation. In a speech touted by his campaign as a "long-term strategy" on immigration reform, Romney completely avoided the two big questions: How will Romney deal with the 11 million undocumented immigrants already in the US, and what will he do about the DREAM Act-eligible immigrants Obama spared from deportation last week? Romney offered nothing resembling a straight answer to either of these questions.

For example, Mitt Romney's web page states that "Illegal immigrants who apply for legal status should not be given any advantage over those who are following the law and waiting their turn. Mitt absolutely opposes any policy that would allow illegal immigrants to 'cut in line.'" In his speech however, Romney said "As president, I will reallocate green cards to those seeking to keep their families under one roof. We will exempt from caps the spouses and minor children of legal permanent residents. And we will eliminate other forms of bureaucratic red tape that keep families from being together."

Like much of Romney's speech, this is just vague enough to give the impression that Romney has moderated on immigration policy without making an actual commitment to any policy changes.  But does his statement about green cards mean that he'd allow the undocumented relatives of legal permanent residents to stay, which would be a dramatic shift from his prior position? It's unclear. 

During the primary, Romney promised to veto the DREAM Act, yet he chose not to reiterate that commitment today. Instead, he said, "Some people have asked if I will let stand the president's executive action. The answer is that I will put in place my own long-term solution that will replace and supersede the president's temporary measure." Calling that an "answer" doesn't make it an answer. Romney's statement completely avoids the question it supposedly addresses. Is Romney committing to some kind of comprehensive immigration reform? What is this "long-term solution"? Will it allow some undocumented immigrants to stay? He doesn't say.

There are some elements of the speech immigration reform activists should like—Romney spoke about making legal immigration easier so as to discourage illegal immigration. That's likely the only permanent solution.

Overall, Romney's speech was a parade of sidesteps and distortions. Romney said Obama "failed to address immigration reform" despite having "huge majorities" that made him "free to pursue any policy he pleased." In fact the Democrats filibuster-proof majority lasted about 14 weeks, and Obama's attempts to address immigration reform meet with unanimous opposition and obstruction from Senate Republicans. Republicans blocked immigration reform and are now blaming Obama for not addressing it. 

Will Romney's immigration speech neutralize Obama's advantage with Latinos concerned about immigration? Anyone's guess, but it probably shouldn't. Romney continues to dodge the most basic, direct questions about his positions on immigration, while asking Latino voters to pay no attention to the candidate he was during the primary. 

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Poll: Americans Don't Want Antibiotics in Their Meat

| Thu Jun. 21, 2012 2:40 PM EDT

For decades, FDA saw its duty to reckon with antibiotic abuse on factory livestock farms like many of us see the dentist: as something to be put off as long as possible. Meanwhile, evidence piled up like manure in a chicken factory that giving animals small, daily antibiotic doses gives rise to antibiotic-resistant pathogens that threaten people.

Finally, earlier this year, the agency proposed new rules that would restrict the meat industry's antibiotic habit. Trouble is, the proposed rules are voluntary and contain a gaping loophole.

But the public may be running out of patience with the FDA's toothless-watchdog approach to regulating the meat industry. A just-released nationwide poll conducted for Consumers Union found that the majority of people are none-too-thrilled with tjhe role of antibiotics in ag. Results:

Chart: Consumers UnionChart: Consumers Union

As someone who writes about this topic a bit, I'm quite heartened by these findings. People are finally starting to care about what the meat industry gets up to in order to profitably churn out cheap burgers, pork chops, and drumsticks.

Consumers also expressed enthusiasm for alternatives to meat raised in a deluge of antibiotics. From the complete report:

More than 60% of respondents stated that they would be willing to pay at least five cents a pound more for meat raised without  antibiotics. Over a third (37%) would pay a  dollar or more extra per pound.

Yet 24 percent of respondents said their supermarkets offered no access to antibiotic-free meat products—and of those, 82 percent said they would buy them if they could.

Consumer Union also sent "secret shoppers" into at least five stores operated by each of the nation's 13 largest grocery chains, to get a snapshot of what consumers have access to. They found the widest variety of antibiotic-free meat products at five chains:  Whole Foods (where all meat offerings come from animals raised without antibiotics), Giant, Hannaford, Shaw's, and Stop & Shop.

At other chains, however, Consumer Union's shoppers found no antibiotic-free products. They are as follows.

Sam’s Club, owned by Wal-Mart (6 stores surveyed); Food Lion, owned by Delhaize (3 stores surveyed);  Save-a-Lot, owned by Supervalu (3 stores surveyed); and Food 4 Less, owned by Kroger (1 store surveyed).

What all of this tells me is that consumers want alternatives to the pharmaceutical-meat complex and the market isn't doing enough to deliver them. It's time for the FDA to step up and act.

Mitt Romney Kinda Sorta Takes a Stand on Immigration

| Thu Jun. 21, 2012 1:21 PM EDT

Surprise! Mitt Romney, who was immigration's most strident foe during the primaries, has suddenly discovered that "we can find common ground here, and we must." Also unsurprisingly, he's still declining to take a firm stand on President Obama's mini-DREAM order:

“Some people have asked if I will let stand the president’s executive action,” he said. “The answer is that I will put in place my own long-term solution that will replace and supersede the president’s temporary measure.”

Okey dokey. More mush from the wimp, I guess.

UPDATE: More detail here from Adam Serwer.

Citizens United vs. Sideboob

| Thu Jun. 21, 2012 1:11 PM EDT
The Cast of NYPD Blue Season Six.

In a narrowly tailored but near-unanimous decision on Wednesday, the Supreme Court ruled that the Federal Communications Commission's regulations regarding "indecency" are unconstitutionally vague. Most of the Justices didn't question whether the FCC had the authority to regulate television content for indecency—instead, they argued the FCC had failed to give the networks "fair notice" that certain content could be considered indecent.

The content in question seems somewhat quaint in the age of the Internet—ABC aired "seven seconds of nude buttocks" accompanied by a few more seconds of sideboob on NYPD Blue in 2003, while Fox aired "isolated utterances of obscene words" by "the singer Cher" and "a person named Nicole Richie" during the Billboard Music Awards in 2002.

Of the eight Justices who ruled on the issue (Sonia Sotomayor recused herself because she was a judge on the Second Circuit when it took the case), only Justice Ruth Bader Ginsburg, in a brief concurrence, questioned whether the FCC's authority was too broad. Ginsburg wrote that the 1978 case upholding the FCC's authority to regulate "indecency" over the airwaves was "untenable" and "bears reconsideration." (The 1978 case involved a hilarious radio monologue from the late comedian George Carlin.)

The court's narrow ruling reflects a very different attitude towards the First Amendment than the one on display in the court's decision in Citizens' United, which opened the spigot for unlimited, unregulated corporate money in elections. As Justice Anthony Kennedy wrote in his Citizens United opinion, "it is our law and tradition that more speech, not less, is the governing rule." That rule appears to apply only to unlimited corporate cash, not sideboob. Which do you think is more threatening to the democratic process?

Philly Fed Says Business Outlook Has Plummeted

| Thu Jun. 21, 2012 12:10 PM EDT

Joe Weisenthal points us to the Philadelphia Fed's monthly Business Outlook Survey, which he terms a "disaster." Here's what the Philly Fed says:

The survey’s indicators for general activity, new orders, shipments, and average work hours were all negative this month, suggesting overall declines in business....Nearly 40 percent of the firms reported declines in activity this month, exceeding the 22 percent that reported increases in activity. Indexes for new orders and shipments also showed notable declines, falling 18 and 20 points, respectively.

Presumably Ben Bernanke and the other Fed governors knew this yesterday, when they met and decided not to do much about the economy. Perhaps they were swayed by the fact that the future outlook remained "positive." Perhaps they don't think there's anything more they can do. I don't know.