Atlas Nods: The Libertarian Case for a Basic Income

December 18, 2017

Proposals for a universal basic income are generating interest across the globe, with pilot experiments underway or in the works in California, Canada, Finland, Italy, Kenya, and Uganda. Surprisingly, many of the most outspoken supporters of a universal basic income have been self-described libertarians — even though libertarians are generally considered to be antagonistic toward redistribution and a universal basic income is, at its core, a program of income redistribution. What explains such strong libertarian support for a policy that seems so contrary to libertarian ideals?

This Article seeks to answer that question. We first show that a basic safety net is not only consistent with, but likely required by, several strands of libertarian thought. We then explain why libertarians committed to limited redistribution and limited government might support a system of unconditional cash transfers paid periodically. Delivering benefits in cash, rather than in-kind, furthers autonomy by recognizing that all citizens — even poor ones — are the best judges of their needs. Decoupling such transfers from a work requirement acknowledges that the state lacks the ability to distinguish between work-capable and work-incapable individuals. Providing payments periodically, rather than through a once-in-a-lifetime lump sum grant, ensures that all individuals can receive a minimum level of support over lifespans of variable lengths, while also allowing individuals to adjust payment flows through financial market transactions.

Although our main objective is to assess the fit between libertarian theory and a universal basic income, we also address various design choices inherent in any basic income scheme: who should receive it?; how large should it be?; which programs might it replace?; and should it phase out as market income rises? Lastly, we consider the relationship between a basic income and the political economy of redistribution. We find that the case for a basic income as a libertarian “second-best” is surprisingly shaky: libertarians who oppose all redistribution but grudgingly accept a basic income as the least-worst form of redistribution should reconsider both aspects of their position. We conclude by drawing out lessons from our analysis for non-libertarians, regardless of whether they are supportive or skeptical of basic income arguments.

via Atlas Nods: The Libertarian Case for a Basic Income by Miranda Fleischer, Daniel Hemel :: SSRN

Medicaid Access & State Flexibility: Negotiating Federalism

December 18, 2017

Medicaid is a persistent target of federalism-based accusations that the federal government is infringing states’ sovereignty in the area of health care. Such claims have been used to advance policy proposals to radically reduce Medicaid funding and roll back entitlements, in the name of protecting state power and increasing state flexibility. Such claims have also played a prominent role in legal disputes over Medicaid administration as states push for the elimination or curtailment of private rights enforcement of federal spending conditions. The stakes are high in both instances. And for both, we need to move past simplistic and outdated accounts of federalism that treat federal power as an inherent threat to state authority and states as passive recipients of burdensome federal mandates imposed from on high. This view is inconsistent with the modern reality of the federal-state relationship in Medicaid as one that is often negotiated, dynamic, and in which states are powerful, if not equal, partners.

This more modern federalism account has two implications. In the legal arena, it provides useful context for understanding the Supreme Court’s recent decisions around preemption–based enforcement of federal spending conditions. The decisions arose out of challenges to state Medicaid rate setting, an area of Medicaid administration in which we see negotiated or dynamic federalism constantly at work. The Court’s rate-setting decisions reflect a nuanced approach to determining the availability of equitable relief from state violations of spending conditions – one that exhibits a deep respect for state flexibility consistent with federal program goals, while also affirming the importance of private enforcement of certain Medicaid protections. A modern understanding of the federal-state relationship in Medicaid shows why this balanced approach – as opposed to the wholesale rejection of rights enforcement advanced by the states – is more faithful to the legislative balance struck in the Medicaid statute. In the policy arena, this modern insight supports preserving this balance. The negotiated federalism model undermines claims that a dramatic rollback of Medicaid entitlements and block granting funds are necessary or even effective for achieving greater state flexibility. Indeed, such proposals would create de facto constraints on state power that would reduce flexibility in areas of state discretion, while threatening essential access guarantees that for decades have been understood to be non-negotiable.

via Medicaid Access & State Flexibility: Negotiating Federalism by Brietta Clark :: SSRN

How Protected Classes in Medicare Part D Influence Drug Spending and Utilization: Evidence from the Synthetic Control Method

December 14, 2017

When the Medicare Part D prescription drug benefit was implemented in 2006, six drug classes were designated “protected classes.” Because responsibility for obtaining favorable drug prices depends on private insurers’ abilities to negotiate with pharmaceutical manufacturers using the threat of formulary exclusion, the protected class designation could undermine the insurers’ ability to control spending and utilization of drugs in these six classes. I estimate the effect of the protected class policy on total drug spending and utilization for Medicare beneficiaries. Following Abadie et al. (2010), I employ the synthetic control method on 2001-2011 data from the Medical Expenditure Panel Survey (MEPS). I find that protected status led to a significant increase of approximately $1.02 billion per class per year in overall spending for drugs in protected classes. Results for drug utilization were also positive but not significant. These results are important for informing the recent and ongoing deliberation by the Medicare program over whether to remove several classes from protection.

via How Protected Classes in Medicare Part D Influence Drug Spending and Utilization: Evidence from the Synthetic Control Method by Courtney Yarbrough :: SSRN

The Effects of Student Loans on the Provision and Demand for Higher Education

December 9, 2017

We characterize the outcomes of the tertiary education market in a context where borrowing constraints bind, there is a two-tier college system operating under monopolistic competition in which colleges differ by the quality offered and returns to education depend on the quality of the school attended. College quality, tuition prices, acceptance cut-offs and education demand are all determined in a general equilibrium model and depend on the borrowing constraints faced by households. Our main finding shows that subsidized student loan policies can lead to a widening gap in the quality of services provided by higher education institutions. This happens because the demand for elite institutions unambiguously increases when individuals can borrow. This does not happen in non-elite institutions, since relaxing borrowing constraints makes some individuals move from non-elite to elite institutions. The higher increase in demand for elite institutions allows them to increase prices and investment per student. As investment and average student ability are complementary inputs in the quality production function, elite universities also increase their acceptance cut-offs. In this new equilibrium, the differentiation of the product offered by colleges increases, where elite universities provide higher quality to high-ability students and non-elite universities offer lower quality to less-able students. We illustrate the main results through a numerical exercise applied to Colombia, which implemented massive student loan policies during the last decade and experienced an increase in the gap of quality of education provided by elite and non-elite universities. We show that the increase in the quality gap can be a by-product of the subsidized loan policies. Such results show that, when analyzed in a general equilibrium setting, subsidized loan policies can have regressive effects on the income distribution.

via The Effects of Student Loans on the Provision and Demand for Higher Education by Rodrigo Azuero, David Zarruk Valencia :: SSRN

Editor’s note: this paper focuses on undergraduate student loans but arguably the same logic/dynamic/perverse consequences may apply to medical student loans.

Deadly Dust: Occupational Health and Safety as a Driving Force in Workers’ Compensation Law and the Development of Tort Doctrine and Practice

December 9, 2017

Many observers, looking back at the early twentieth century’s creation by states of the workers compensation laws have seen a grand bargain. In this view tort remedies were compromised for the certainty of more modest scheduled statutory benefits. This study argues that the tort laws were a major victory for labor. Workers gained the right to medical treatment, temporary total disability benefits, and permanent disability benefits. The medical benefits and temporary disability were prompt and reliable for all work related accidental injuries. The loss of the tort remedy against the employer was of little significance since compensation via tort was highly uncertain. Further the right to sue third parties in tort was preserved – and enabled to some degree by the workers compensation benefits received.

But occupational diseases were excluded until pressure by labor and pro labor interests achieved reforms. Much of the driving force was the recognition of pneumoconiosis – particularly silicosis. The granite cutters of Vermont spurred studies which demonstrate the limits of the germ theory of disease and identified the deadly granite dust as the cause of lung disease. Many states broadened their definitions of occupational disease.

Asbestos related disease – particularly the form of pneumoconiosis known as asbestosis advanced the science of pulmonary disease. The landmark studies by Irving Selikoff of morbidity and mortality of insulation workers created a body of evidence that supported the massive wave of third party asbestos litigation. The asbestos epidemic litigation advanced the doctrines of strict product liability law, drove courts to advance management of “mass torts” via multi-district litigation, and increased the competence of courts to deal with epidemiological and other forms of scientific evidence of disease causation.

via Deadly Dust: Occupational Health and Safety as a Driving Force in Workers’ Compensation Law and the Development of Tort Doctrine and Practice by George Conk :: SSRN

Caring for Those in Custody Identifying High-Priority Needs to Reduce Mortality in Correctional Facilities

December 8, 2017

Maintaining inmate health and safety is a significant challenge. Correctional facilities are often overcrowded, understaffed, and underfunded. Many inmates suffer from chronic medical conditions, mental health disorders, infectious diseases, and substance dependence in numbers that are often disproportionate in comparison to the general population. Further, the incarceration experience itself can be detrimental to overall health and safety in a variety of ways.

While some level of in-custody deaths are inevitable — for example, the passing of elderly inmates from old age — certain types of mortality are highly preventable with the proper interventions. This effort convened a panel of prison and jail administrators, researchers, and health care professionals to consider the challenges related to inmate mortality in correctional facilities and opportunities for improved outcomes. Through structured brainstorming and prioritization of the results, the panel identified a series of needs that, if addressed, could significantly reduce inmate mortality rates.

via Caring for Those in Custody: Identifying High-Priority Needs to Reduce Mortality in Correctional Facilities | RAND

Kids Get Health Coverage While Taxpayers Get the Shaft

December 8, 2017

Notice from the chart that in 1997 some 67 percent of children had private health coverage.  Roughly 21 percent had public coverage (Medicaid only, since CHIP was still in process), and about 13 percent were uninsured.

Over the next 20 years, boosted by CHIP, the percentage of children with public health coverage grew to 42.6 percent while those with private coverage dropped to 54 percent.  The percentage of uninsured declined to 5 percent.

via Kids Get Health Coverage While Taxpayers Get the Shaft