Interstate Commerce and Chicken Eggs

A federal judge has dismissed a lawsuit challenging a California law that requires all eggs sold in the Golden State to come from hens housed in roomier cages.

State Attorneys General from Missouri, Iowa, Nebraska, Kentucky, Oklahoma, and Alabama had sued to block implementation of the law on the grounds that it unconstitutionally interfered with interstate commerce under the Commerce Clause.

They said farmers would have to spend hundreds of millions of dollars overhauling farms to ensure they would have access to the California market….

US District Judge Kimberly Mueller of the Eastern District of California disagreed.

The only citizens who may have to spend $120 million to comply with California’s legislation are the egg farmers who intend to participate in California’s egg market[.]

Intend to participate. Not required to participate. That raises a question in my pea brain: which will cost those farmers more, modifying their enclosures or not selling their eggs in California?

Obamacare and Health Care

As Dr Scott Atlas, of Stanford University’s Hoover Institution, in a recent The Wall Street Journal op-ed noted,

  • Private company medical innovation R&D spending in the US the last three years averaged 2.1%, down from an average of 6% over the previous fifteen
  • Malaysia, Thailand, Singapore, South Korea, India, and the EU had greater R&D spending growth in the same period
  • The PRC had a growth rate of 22%

Certainly, those other polities, the EU excepted, were starting from a much smaller base, and so their growth rates will tend to be exaggerated. Certainly, too, our own historically weak economy is exacerbating the situation.

All that notwithstanding, though, this is a trend that is allowed to continue at the peril of our leadership in things medical. Obamacare, with its removal of the insurance aspect of health plans, actively hurts this. What plan can pay for the latest and best drugs or devices, and so drive innovation—or even those drugs or devices that are merely near the cutting edge, or that are middle tier—when those plans aren’t allowed to recoup their costs, except at generalized taxpayer expense?

There’s one aspect, though, that is a direct assault on medical innovation, and that’s Obamacare’s medical-device excise tax. This is a tax the takes 2.3% off the top—that is, before expenses and profit—of all medical device sales. This includes devices from heart pace makers to dialysis units to bandages sold in bulk to hospitals.

2.3% is no big deal?

  • Johnson & Johnson’s medical device and diagnostic sales were down 1.5% in the US, versus up 1.8% internationally, in the first half of 2014
  • General Electric reported that the US healthcare sales shrank by 2% in the second quarter, versus up 2% in Europe
  • Medtronic’s US sales for the 2014 fiscal year were up 1.7%, versus 5.9% internationally
  • Baxter reported US sales of medical products were down 15% for the quarter ended June 2014, versus up 8% globally
  • Fresenius’ US sales of dialysis products were down 1.2% in the first half of 2014, versus up 0.6% internationally

And (via the first link above)

Boston Scientific, Stryker, and Cook Medical have announced job cuts and plans to open new centers for R&D, manufacturing, and clinical trials overseas.

And so on.

Many attempts have been made to repeal this pernicious tax, the latest this past summer. The Democrat-controlled Senate refused to consider it. Again.

In Which another Federal Judge Gets it Right

Recall Halbig v Sebelius, the case wherein plaintiffs objected to subsidies being paid to Obamacare plan purchasers when the those plans were bought through ObamaMart, the Federally run health plan exchange, instead of through State-run health plan exchanges. The text of the Obamacare law allows the latter and bars the former. The DC Circuit agreed with plaintiffs and struck down the subsidies. (The current status of that ruling is that it’s been stayed pending review of Halbig by the DC Circuit sitting en banc.)

US District Judge Ronald White, of the Eastern District of Oklahoma, has ruled on a similar case that came up in his district, a part of the 10th Circuit. I won’t go into the specifics of Pruitt v Burwell, White’s case; the cases are very similar, and the point I want to make here is slightly different, anyway. I will note that plaintiff Pruitt is Oklahoma Attorney General Scott Pruitt, and defendant Burwell is Sylvia Mathews Burwell, HHS Secretary (sitting in for Kathleen Sebelius under an arcane Federal rule that allows such things). I will note further that Treasury Secretary Jacob Lew also was a defendant in this case, and leave things there.

White ruled for the plaintiff, which means he also held that the subsidies paid to Obamacare plan purchasers who bought them through ObamaMart are illegal.

Here’s where things get interesting.

In his conclusion, White wrote [citations omitted, emphasis mine]

Other judges in similar litigation have cast the plaintiffs’ argument in apocalyptic language. The first sentence of Judge Edwards’ dissent in Halbig is as follows: “This case is about Appellants’ not-so-veiled attempt to gut the Patient Protection and Affordable Care Act (‘ACA’).” Concurring in King, Judge Davis states that “[appellants’ approach would effectively destroy the statute….” Further, “[w]hat [appellants] may not do is rely on our help to deny to millions of Americans desperately-needed health insurance….”

And

Of course, a proper legal decision is not a matter of the court “helping” one side or the other. A lawsuit challenging a federal regulation is a commonplace occurrence in this country, not an affront to judicial dignity. A higher-profile case results in greater scrutiny of the decision, which is understandable and appropriate. “[H]igh as those stakes are, the principle of legislative supremacy that guides us is higher still…. This limited role serves democratic interests by ensuring that policy is made by elected, politically accountable representatives, not by appointed life-tenured judges.”

And

This is a case of statutory interpretation. “The text is what it is, no matter which side benefits.” Such a case (even if affirmed on the inevitable appeal) does not “gut” or “destroy” anything. On the contrary, the court is upholding the Act as written. Congress is free to amend the ACA to provide for tax credits in both state and federal exchanges, if that is the legislative will. … “But in the last analysis, these always-fascinating policy discussions are beside the point. The role of this Court is to apply the statute as it is written – even if we think some other approach might ‘accor[d] with good policy.’“

Finally, quoting from a ruling by his own 10th Circuit appellate court,

In reviewing statutes, courts do not assume the language is imprecise…. Rather, we assume that in drafting legislation, Congress says what it means.

And that’s the deal. A law says what Congress—the People’s directly elected representatives—says it says. A judge, or any appellate court at any level of our judicial hierarchy, can only apply that law to the case before him. Most especially, he cannot rewrite the law or “creatively interpret” it into something more agreeable to his personal philosophy.

Oh, and just to saucer and blow the thing, White formally ruled pretty clearly:

The court holds that the IRS Rule [allowing those subsidies] is arbitrary, capricious, an abuse of discretion or otherwise not in accordance with law, pursuant to 5 USC §706(2)(A), in excess of statutory jurisdiction, authority, or limitations, or short of statutory right, pursuant to 5 USC §706(2)(C), or otherwise is an invalid implementation of the ACA….

Judge White’s ruling can be seen here.

 

h/t Jonathan Keim of the National Review Online

An Instructive Graph

This one is from the Census Bureau’s Income and Poverty in the United States: 2013. The headline of the report is that American household median income stagnated for the second straight year and remains, in real terms, 8% lower than it was in the last year before the Panic of 2008. The graph below reflects that.2013MedianHouseholdIncome

What interests me about this graph, though, is not the end result snapshot, but the slopes of the graph’s separate lines, the changing levels of median incomes, as we come out of recessions and panics over the last 50 years.

Notice: coming out of nearly every one those dislocations, either immediately after it was over or shortly after, the slopes are up. Median household income recovered quickly for all groups indicated. To be sure, there were some significant lags in this—blacks often, Hispanics coming out of the 1990 mini-recession, for instance. However, even coming out of the 2000 dot-com bust, incomes “merely” stagnated overall (although with that one, incomes didn’t fall very much, either).

But coming out of the Panic, this administration’s policies have set a new record for holding back a recovery—incomes have not stagnated (would that we’d done that well); they’ve been pushed down.