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The Lighthouse


The Lighthouse is the weekly email newsletter of the Independent Institute.
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Volume 19, Issue 30: July 25, 2017

  1. Five Questions for Keeping Healthcare Reform Real
  2. Paul Krugman and Other Progressive Shape-Shifters
  3. Illinois to Worsen Its Unfunded Liabilities Mess
  4. San Francisco, Oakland to Ban Flavored Tobacco
  5. Independent Updates


1) Five Questions for Keeping Healthcare Reform Real

Republicans in Congress are playing the blame game, trying to deflect responsibility for their failure to fulfill their promises on healthcare reform. The GOP would do well by looking in the collective mirror. The fundamental reason it hasn’t repealed and replaced Obamacare is that Republicans of all stripes have failed to convince the public that their favored reforms would help real people with real problems. In his latest column at Forbes, Independent Institute Senior Fellow John C. Goodman offers the five questions the GOP must address to keep it real.

The five questions involve scenarios of people having to change their insurance coverage; each one is of the form, “Who should pay the cost if...?” In characteristic fashion, Goodman offers principled guidelines. First, who should pay the cost of coverage when someone loses their employer-sponsored plan and must enter the individual market? (If she’s a high-cost enrollee, Goodman believes that the group market should pay the extra cost, via a small premium tax on all group plans.) Second, who should pay for coverage when someone in the individual market is forced to switch to a new non-group plan—one with better provider networks, for example—due to worsening health? (Goodman argues that the first plan should cover the cost, not the second plan or the enrollee.)

Third, who should pay when an employer cancels coverage for a retired former employee who previously had post-retirement coverage through the employer? (Goodman argues that the employer should pay the cost.) Fourth, who should pay when a family faces healthcare costs that they lack the means to pay—the so-called Jimmy Kimmel test? (For rare instances when medical costs are astronomical, Goodman argues that safety-net coverage is appropriate.) Fifth, who should pay when an uninsured person gets sick and tries to enter the individual market? (Goodman argues that if an enrollee was willfully uninsured, he or she should pay.) The answers to these questions may be less important than the questions themselves. If the GOP’s would-be health reformers fail to deal with them, they will never build the necessary public support for reform. Their failures will continue to impose costs on the public and could dramatically affect the outcome of the 2018 mid-term elections.

Why Republicans Can’t Pass a Health Care Bill, by John C. Goodman (Forbes, 7/19/17)

Priceless: Curing the Healthcare Crisis, by John C. Goodman

A Better Choice: Healthcare Solutions for America, by John C. Goodman

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2) Paul Krugman and Other Progressive Shape-Shifters

Political debate is a blood sport with fewer rules than a mixed-martial-arts competition. Independent Institute Research Fellow Robert P. Murphy, author of Choice: Cooperation, Enterprise, and Human Action, has seen enough ideological fights to notice the frequency of one dirty tactic in particular: a debater shifting the debate topic to something else, or in Murphy’s parlance, moving the goalposts. In a series of recent posts for The Beacon (Part 1, Part 2, Part 3), he reports how progressives have employed this tactic in debates over the 2013 budget sequester, climate policy, and the Oregon Medicaid experiment.

Progressives are by no means the exclusive users of the move-the-goalposts tactic, Murphy notes. “I’m sure I do this myself too,” he writes. But some people on some issues seem particularly prone to doing it. Take Paul Krugman, for instance. The Nobel laureate economist/New York Times columnist couldn’t keep his story straight regarding whether or not he favored the 2013 budget sequester, or whether it was some kind of measure validity test for so-called market monetarism. “Back in April 2013, when he thought he would win the argument, Krugman was happy to say the U.S. economy was providing a good test of his claim that budget cutting wasn’t going to be offset by the Fed,” Murphy writes. “Then when the test he himself put forward blew up in his face, Krugman acted as if the market monetarists were the ones who had invented such a silly criterion—of course there are all sorts of other complicating factors, making it impossible to glean much from a single episode like the U.S. experience in 2013.”

Similarly, Murphy notes how climate alarmists claim to support “peer-reviewed” climate science—until their views are shown to be contradicted by the authority that they claimed for support: the UN Intergovernmental Panel on Climate Change. Ditto with regard to liberal pundit Ezra Klein’s support-turned-criticism of the Oregon Medicaid Experiment study. Please, everyone, keep your debate remarks on topic and announce loudly and clearly when you’ve changed your mind. That said, let’s get ready to rumble!

Three Times Interventionists Moved the Goalposts, Part 1, by Robert Murphy (The Beacon, 7/12/17)

Three Times Interventionists Moved the Goalposts, Part 2, by Robert Murphy (The Beacon, 7/13/17)

Three Times Interventionists Moved the Goalposts, Part 3, by Robert Murphy (The Beacon, 7/14/17)

Choice: Cooperation, Enterprise, and Human Action

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3) Illinois to Worsen Its Unfunded Liabilities Mess

Illinois is on the hook for $130 billion in pension payments to state employees, but rather than begin adding the necessary funds to its several underfunded retirement plans, the state legislature has passed a budget that merely delays the day of reckoning. A spokesman for the Illinois Teachers’ Retirement System notes that the legislature has done little more than kick the can down the road.

The new Illinois budget will, however, accomplish one thing that’s fiscally good, at least from the state’s perspective: it will keep Moody’s from downgrading the state’s credit rating to junk-bond territory, explains Independent Institute Research Fellow Craig Eyermann in a new post at MyGovCost News & Blog.

States that make good on their general-obligation bonds while postponing the needed funding of their legally binding retirement plans are just like people neck deep in credit card debt, who try to keep paying off one balance by transferring it to another card. Such consumers will ultimately face a day of reckoning. So too will states who neglect their unfunded liabilities. As for Illinois, Eyermann writes, “as soon as they run out of cash to cover the lavish, state-guaranteed pension benefits payments to retired state government workers, the slow-motion chain reaction that will lead to junk status for the state’s credit rating will get underway.” Those eager for a life raft for their state’s public-pension tsunami are advised to consult Independent Institute Senior Fellow Lawrence J. McQuillan’s eye-opening book, California Dreaming: Lessons on How to Resolve America’s Public Pension Crisis.

Illinois Kicks the Can Down the Road, by Craig Eyermann (MyGovCost News & Blog, 7/24/17)

California Dreaming: Lessons on How to Resolve America’s Public Pension Crisis, by Lawrence J. McQuillan

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4) San Francisco, Oakland to Ban Flavored Tobacco

Fifty years after the Summer of Love, it’s become legal to smoke pot in San Francisco, but starting next April the selling of flavored tobacco products will land you in legal hot water. In June, the city’s Board of Supervisors voted unanimously to ban the products, claiming that they disproportionately harm young people and people of color. Last week, officials in neighboring Oakland also moved to ban flavored tobacco.

Writing in the Orange County Register, Independent Institute Senior Fellow William F. Shughart II and Strata Policy Analyst Josh T. Smith argue that such bans are wrong on both economic and moral grounds. They’re uneconomic because prohibition causes people to spend extra resources to get around the ban (such as through buying the contraband from jurisdictions where it’s legal), and they’re immoral because they treat consumers as second-class citizens, violating their basic right to choose. Also, law-abiding retailers stand to lose business to sellers from other jurisdictions, smugglers, and less scrupulous local retailers.

Prohibitionists need only to look across the bay to Berkeley, where a recently enacted tax on sugary drinks has lowered revenues for local retailers but increased the revenue of sellers from neighboring cities. “Bans historically have failed to improve the lives of those they are meant to protect,” Shughart and Smith write. “One can hope that the flavored tobacco ban will be different, but history and economic theory make that outcome unlikely.”

The Ban on Flavored Tobacco: San Francisco’s Nannies Are at It Again, by William F. Shughart II and Josh T. Smith (Orange Counter Register, 7/6/17)

Taxing Choice: The Predatory Politics of Fiscal Discrimination, edited by William F. Shughart II

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5) Independent Updates

The Beacon: New Blog Posts

MyGovCost: New Blog Posts Featured Video
News Alert

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  • MyGovCost.org
  • FDAReview.org
  • OnPower.org
  • elindependent.org