Tag Archives: markets

12 Million Don’t Use The Health Insurance They Have

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The lede lays out the background.

ObamaCare really is a gift that keeps on giving—for insurers. The law forces Americans to buy pricey plans with benefits they don’t need. And now the Paragon Institute reports that taxpayers are subsidizing insurance for nearly 12 million people who never use their coverage.

As the WSJ puts it, here’s the wild part:

More than a third of all enrollees generated no medical claims last year, according to Paragon’s analysis. That includes 40% of those in plans that are fully subsidized. Between 2021 and 2024, the number of enrollees who didn’t use their health coverage more than tripled to 11.7 million from 3.5 million.

There are a couple of reasons for this. One is that being forced to buy something that isn’t needed or wanted bit. The other is that “purchasers,” after paying those enormously high premiums, or having the government pay those premiums with OPM, still would have to pay out of their own pockets for any health care throughout the year because of the enormously high deductibles those ObamaCare plans hide behind.

Forgive us for being old-fashioned, but why should taxpayers subsidize insurance for healthy people who don’t need or use it?

Indeed.

Yes and No

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Just one example on the matter of drug approvals.

A case in point is Replimune’s melanoma treatment, which the FDA rejected last month. About a third of patients who hadn’t responded to prior immunotherapy showed a strong response to Replimune’s in a clinical trial.
Tumors shrank in nearly all patients, and responses proved durable over three years. Serious side effects were rare. Oncologists who treated patients in the trial hailed the results.

These are responses in absolute terms. The drug was safe, and it worked.

The FDA blocked its release into the market though:

[T]he FDA said the trial was “not considered to be an adequate and well-controlled clinical investigation that provides substantial evidence of effectiveness.”
Its quibble is that the trial lacked a control group.

This is a demand for a relative outcome—whether the drug worked better or worse, and whether it was safer or less so, than the status quo. The status quo is what a control group presents.

The answer, though, is not to stop “quibbling” about control groups when assessing drug trial efficacy. Instead, it’s necessary for the FDA to get out of the business of requiring, as a condition of approval, that a drug work. FDA’s role should hold out only for assessing a drug’s safety. The market, formed by patients and their doctors, will do a perfectly fine job of assessing the drug’s effectiveness, with no more exceptions than are extant in any other market. That Replimune’s drug was shown to work in absolute terms is a happy additional outcome and should not represent even this much of an acceptance criterion.

This is where FDA Commissioner and medical doctor Marty Makary can—and should—make the changes to the FDA’s approval processes. A doctor’s primary injunction is “first, do no harm.” So it should be with the FDA. A doctor continues, with his patient, actively to treat the medical problem. The FDA, on the other hand, should stop at the do no harm part. Let the practicing doctors and their patients do the rest.

Juicing 401(k)s

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President Donald Trump (R) is loosening the restrictions on what 401(k)s are allowed to contain in their investment options. His EO has directed the Labor Department, which oversees the rules governing business’ 401(k) offerings, to consider additional, non-traditional investment vehicles, things like private equity, real estate, and digital assets such as bitcoin.

Hal Scott and John Gulliver, Committee on Capital Markets Regulation President and Executive Director, respectively, argue in favor of this move on the grounds that

investment opportunities in public markets are shrinking. In 1996 there were roughly 8,000 public companies, but that number has since declined by half. Why? Because public companies are subject to increasingly burdensome disclosure obligations, compliance costs, and litigation risk, while private companies aren’t.

They’re right in the sense that overregulation by an ever more intrusive government keeps tying increasing numbers of hobbles onto our investment opportunities, and they need to be rolled back. They’re right, also, in that Trump’s EO moves to sidestep some of those regulations; although workarounds always are suboptimal. Better to eliminate the hobbles.

I say they’re right, though, on an additional ground: more opportunities for and flexibilities in investment are intrinsically good and should occupy a central place in a free market economy.

However.

These added opportunities bring with them added, and harder to measure or even to estimate, risks inherent in those opportunities, especially for retail investors. These things also are not as liquid as the more traditional 401(k) investment vehicles, and that carries its own added risk. Then, too, some of those vehicles carry added tax complexities. See Master Limited Partnerships and Real Estate Investment Trusts, for instance.

None of that is an argument for not getting into these investment vehicles, nor is any of it an argument for a nanny state to “look out for us little guys” by telling us we can’t use them. It is an argument for added caution and more careful vetting—especially by us unwashed retailers—of those opportunities before jumping onto them with both feet and our elbows, too.

Is The Left Nothing but a Bunch of Karens?

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Recall the hue and cry being raised over a good looking woman making an ad for blue jeans. It’s an emphatically one-sided hue and cry, though.

A clear majority of US voters who said they had seen the ad…according to a Napolitan News Survey. 70% said it was a typical ad, while 23% said it promoted white supremacy, and 7% were unsure.

Nobody in the middle or to the right of the middle thought anything of the ad other than it was an ad for jeans. That leaves the Left.

Lose the Claptrap

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Bank management teams are trekking to Conservative States in an effort to get back in the good graces of State governments whose governors and legislatures disdain woke and otherwise bigoted, illegal, and discriminatory policies like redlining whole industries such as gun manufacturing and fossil-fuel extraction. These bank management teams are trying to convince the States that they’ve left off those policies and now only lend, or not, for financial, legal, and reputational reasons.

Therein lies these bank managers’ disingenuousness and cynicism. Refusing to do business over “reputational reasons” is just a weasel-worded excuse for discriminating against industries and individual companies about which someone might object. Or even about which a whole political party might object. In either of those cases, “reputational risk” would be wholly manufactured rather than something intrinsically extant in the market.

The only lending criteria for a bank, or any other financial institution lending money, should be the borrower’s likelihood of repaying and the legality of the borrower’s activity. Bank management teams must exclude the chimerical “reputational risk” and do so in a publicly provable manner. Petty political considerations must never be allowed into what is at bottom a purely market and finance question. Banks that do not achieve this should join the growing list of banks already barred from doing business with State governments over their bigoted, illegal, and discriminatory policies.