Tag Archives: markets

Medicaid Cuts?

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Some conservative Republican Senators are looking to cut Federal transfers to the States earmarked for those States’ Medicaid programs.  Others are concerned.

[T]he [conservative Senate Republicans’] Medicaid plan could affect many more people and shift significant costs onto hospitals and states.

One State’s Medicaid program, though, should be paid for exclusively by that State and not subsidized by the other 49 through those Federal transfers. Medicaid is, after all, a state program by design, and Medicaid eligibility is determined by each State.  The Federal transfer subsidies are made the more egregious by the fact that each State determines its own citizens’ eligibility for Medicaid, and that eligibility is income-based—with the maximum income for eligibility in most States being a multiple of the Federal Poverty Guidelines.  This means that in those States, a citizen can be eligible for Medicaid funds even though, by definition, that citizen isn’t in poverty.  Other States ought not be required to subsidize, through Federal Medicaid transfers, such eligibilities.  Not only are the States are defining “low income” much too loosely, other States have to pay into those definitions.

If each of those other 49 were able to keep the monies collected by the Feds for transfer, they’d also have more money—of their own—with which to fund their own Medicaid programs, and each of the States, absent attendant Federal strings, would be freer to structure their individual Medicaid programs according to their own citizens’ needs and demands.  As it is, States wanting to structure their programs must waste time and resources pleading to the Feds “Mother, may I?” and then argue the matter.

Such State-initiated restructuring—subject to central government approval—already is beginning to include things like work requirements, drug testing and time limits on coverage, all of which would free up State resources for the State’s truly poor.  Federal cuts to transfers to State Medicaid need not interfere with this; on the contrary, such cuts would encourage needed restructuring, while moving to insulate each State from other States’ decisions.

Of course, such Federal transfer cut would have complex implications and require serious Federal tax code restructure and reform—the taxes the Feds transfer for Medicaid come from a variety of sources: individual and business income taxes, dividend and cap gains taxes, and on and on.

That just puts a premium on getting started.

Expanding their Empire?

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The SEC—the Securities and Exchange Commission—doesn’t have enough power; it wants to convince more private companies, over which it has no jurisdiction, to go public so it can regulate them, too?

To spur more companies to go public, the new head of the Securities and Exchange Commission has turned to a veteran Silicon Valley lawyer whose career has involved some of the biggest deals in history.

SEC Commissioner Jay Clayton seems to be sincere in this effort, but he won’t be around forever, and his predecessor had different regulatory ideas, and so likely will his successors.

Then there’s this:

“The real question is do small-growth companies have access to capital, and they do,” said Robin Graham, Managing Director and Head of Technology, Media and Communications at Oppenheimer & Co Inc. “It’s just in the private markets.”

There’s a hint there.

The USPS and Price Increases

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The United States Postal Service lost more than $560 million in the previous quarter (!), and it wants a pay raise to pay for it, a rise in the price of stamps by a penny.  Now, a penny might not seem like much, especially against the current price for a first class stamp on a 1oz letter, but it is symptomatic of a much larger problem: the USPS, a protected monopoly in the first class mail niche and so lacking actual competition and associated innovative pressures, is a money-losing (to the tune of two and a quarter billion dollars each year) proposition.

Postmaster General Megan Brennan:

America deserves a financially stable postal service that can continue to play a vital role in our economy and society[.]

Yewbetcha.  And the USPS ain’t it.

The postal service has lost money for 10 years in a row. It says the continuing red ink hurts consumers because it can’t make necessary investments to ensure “prompt, efficient and reliable postal services,” such as by updating delivery trucks and equipment.

Once again, the USPS, with its empirical performance, is making the argument for disbanding it and replacing it with competitive private enterprises in a free market economy.  Sort of like the protected monopoly Ma Bell was replaced, the USPS needs—the American people need—that replacement (who pays a dime a minute for a long distance call anymore?  Who needs to pay half a buck to send a letter?).

Going Soft

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Senate pseudo-Republicans are balking at one good item that was contained the House-passed American Health Care Act: repeal of Obamacare’s trillion dollars’ worth of taxes.  These guys actually don’t see the value of that repeal.  Senator Susan Collins (R, ME) is typical:

I don’t see how you can repeal all of the pay-fors…and still meet the goal of providing health-insurance coverage for people who truly need assistance[.]

Aside from the false premise of needing Federal government “pay-fors” as a default position, rather than a last result, the Lady from Maine and her fellows plainly either don’t understand free market principles, or they have no confidence in free markets.

One path for the Senate could be a repeal of the taxes but a delay in the effective dates.

This is the only legitimate point of discussion on the repeal of these taxes.  The AHCA makes the repeal retroactive to 1 Jan 2017.  It’s the repeal that’s important, not its date of effectivity.  Effective 1 Jan 2018 is fine, so is a date (certain) in 2019, to the extent health coverage providers, businesses, and individual citizens need time to plan and prepare.  The repeal itself, however, must be inarguable.

I’ve decried the House’s Freedom Caucus of No, but the Caucus of Squish in the Senate is going too far in the other direction.  These folks need to do the job they were sent to the Senate to do vis-à-vis Obamacare and our nation’s health provision and health coverage industries.  Failing to repeal the Obamacare taxes in addition to the reductions in other business and personal taxes that have been proposed is unacceptable.  If the Caucus of Squish fails to do this, its members need to be replaced at the next available elections for each of them.

If that costs the Republican Party control of the Senate, well—how will we tell the difference?  The Caucus of Squish is, with its timidity, worse even than the Progressive-Democratic Party.

The Durbin Amendment and Price Fixing

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Senator Dick Durbin (D, IL) added to Dodd-Frank an amendment that mandated the maximum price large banks could charge merchants who process debit-card payments.  The House’s Financial Services Committee, in marking up Chairman Jeb Hensarling’s Financial Choice Act, included repeal of the Durbin Amendment.

Naturally, Durbin has demurred, and he did so, among other place, in a Letter to the Editor of The Wall Street Journal.

It’s no secret that Wall Street hates the swipe-fee law that I authored in 2010. This law finally reined in the debit swipe-fee price-fixing that Visa and MasterCard were doing on behalf of banks. The old rigged system permitted Visa and MasterCard to fix the same fees for all card-issuing banks, and without competition the fees always went up. It was a market failure and merchants and their customers ended up paying for it.

And

The 2010 reform law said that if the nation’s top 1% of biggest banks are going to let Visa and MasterCard price-fix their swipe fees, then the fees must be reasonable and proportional to the cost of conducting the transaction.

Wow.  Price fixing is OK as long as it’s Big Government doing to fixing, says the Progressive-Democrat from Illinois.  No.  There exist, already, laws against such collusion; all that’s necessary, were the banks actually colluding as Durbin claims, is to enforce existing law.  There is neither need nor excuse to expand Government by writing a new law to fix a failure from enforcing existing law.

Market failure?  Again, no.  Not every burble, bubble, or dislocation represents a market failure; indeed, they’re the normal volatility of a thriving free market.  Or they would be with less government interference so we actually had a free market.  Far from a market failure, this failure is another failure of Big Government’s central planning for our market.  It’s time—long past time—to dump the Durbin amendment.

It’s time—long past time—for competition to reenter the credit and debit card free market niche and to let the free market “fix” the prices.  It’s time—long past time—for Big Government to leave the market.