David R. Henderson  

Vladimir Kogan Replies on Sabotage

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Vladimir Kogan, one of the co-authors of the study I recently criticized on Republicans "sabotaging" the implantation of Obamacare, wrote me on November 27. I replied to him on November 29 and he replied to my reply the same day. Given that the issues he raised are of more-general interest, I asked his consent to my posting our whole discussion on EconLog. I told him that I would post my answer to his latest. Vladimir consented on condition that I make clear that he is speaking on his own behalf and not necessarily that of his co-author, Thomas J. Wood. So done.

Vladimir's comments are in the boxes. Mine are not.

Dear Prof. Henderson,

Thank you for highlighting our new working paper in your recent EconLog post and bringing additional attention to our work!

I don't want to quibble with you about specific details, but I did notice that you seemed to overlook our broader point, which we return to in the conclusion: If the policy decisions made by Republicans that we describe did indeed lead to (or at least contribute to) higher premiums, but if voters ended up punishing Democrats for the outcomes of these decisions, this raises some serious normative concerns about the perverse electoral incentives for policy sabotage built into American democracy. I think this is our most important, broadest point that transcends this particular issue and doesn't have any partisan valence (Democratic sabotage of Republican policy in the future could produce similar perverse consequences).

Thank you again,

Vlad Kogan

November 29

Dear Professor Kogan,

You're welcome.

I would not have written the piece if I had thought that I was "quibbling." Your language was highly misleading. Do you disagree?

I didn't overlook your broader point: that was simply not the point of my post. I do pick on language when I think language matters, as I think it does in this case.

Indeed, your broader point might be correct. Take a look at the comments below my post and note that, in response to one of the commenters, I said that if I were the referee of the piece and I found your data and methodology sound, I would recommend publishing but only on condition that you make the language more accurate.

I do have one question, though, that's even broader than the one you addressed. Given that voters are rationally ignorant, do you think it's a good idea to give government great power over their health insurance and many other parts of their lives?

Best,

David

Dear Prof. Henderson,

Thank you for the response!

I think our current language is a fair summary of the accounts of the relevant policy choices provided by the various secondary sources we cite (e.g., footnotes 6-8). I take it your primary disagreement is about effect vs. intent. While it may be possible to rationalize Republican positions on these various implementation questions as reflecting sincere philosophical or ideological positions (although this is much harder to do on the question of regulating the navigators), with lower enrollments and/or higher premiums being mere byproducts, I think our language would still be fair as long as Republican policymakers knew at the time that these policies would result in lower enrollments and/or higher premiums, regardless of whether these were the primary motivations. If Republicans knew that these policies would reduce enrollment and/or increase premiums and chose to pursue them anyway, why is it unfair for us to describe their actions as "undermining" or "sabotaging" the law by increasing premiums or reducing enrollments?

The question you ask as a good one, and I don't think it's one for which I have a good answer. Clearly, the political process is distorted through a variety of mechanisms (including voter ignorance) that result in policies that fall well short of maximizing social welfare. On the other hand, we also know that consumers don't make decisions about their own health care in an entirely rational way (e.g., here is an example), so there is [sic] clearly opportunities for welfare-improving policy "nudges." Whether the policies we have serve this function or not is beyond my area of expertise to answer, although I would guess that there is probably considerable heterogeneity between policies in terms of their welfare impacts.

Vlad


No, my primary disagreement, indeed my only disagreement, has nothing to do with effect vs. intent, interesting as that issue is. My disagreement, as I stated in the original post, is about your and your co-author's use of the word "sabotage." Whatever many of the Republicans politicians' intent--and I'm quite willing to believe that many of them did not want to see the law increase enrollment--if the law gives them the power to decide, for example, whether to increase the number of people on Medicaid, then they are not sabotaging by choosing to exercise that option. It's certainly true that that frustrated the desires of President Obama and many of the Democratic supporters of the law. But frustrating desires is not the same as sabotage.

Consider this. There are many required benefits under Obamacare that many people don't value and would be willing to pay approximately zero for. I, for example, would be willing to pay less than one dollar for coverage for drug and alcohol addiction. Those required coverages, when imposed on people who value them so little, make the premium higher than otherwise. We both agree--see your next paragraph below--that higher premiums, all else equal, make enrollment lower than otherwise. But by your and Thomas J. Wood's usage, if Obama had insisted on enforcing that part of the law and thus making enrollment lower than otherwise, Obama would have been sabotaging Obamacare. But that makes no sense. It's important to distinguish between sabotaging a law and making sure that the law is enforced, even if doing so causes less coverage.

Also, as some of the commenters pointed out, here and here, President Obama broke the law with his illegal subsidies. You didn't address that in the study. Whatever else we might agree or disagree about with regard to your paper, isn't it clearcut that when someone violates the very law he himself pushed for and signed into law, he is sabotaging the law?

On the bigger issue I raised that you replied to about trusting the political process, I have written a lot about this in criticizing Thaler and especially Sunstein, but I will carefully read the study you cite and post on it in a later post. I am currently at a conference and have little to read tht study carefully.

Best,

David


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COMMENTS (2 to date)

I'm an analyst for a small healthcare insurance company and can assure you that many things cause rate increases. Historically, healthcare premium have risen at about twice the CPI for decades. The main cause is very limited supply due to massive regulation and almost unlimited demand due to massive subsidies of old people.

Insurance companies kept premiums low with Obamacare by dramatically increasing deductibles and copays. They did that because they knew the ignorant media would fixate on premiums and not the other. But they can't increase deductibles and copays further so they have no choice but to increase premiums.

The addition of benefits have caused costs to rise, but the main cause was the removal of exiting conditions criteria. And companies can adjust risk only for gender and slightly for age, but young people massively subsidize older people with healthcare insurance.

David Friedman writes:

I think the central issue in your disagreement is the meaning of "sabotage." The U.S. airforce did a lot of damage to German factories during the war, but we don't call that sabotage. The designers of the U.S. torpedoes that consistently missed their targets by running too low did significant damage to the war effort, but we don't call that sabotage either.

As those examples suggest, for an act to be sabotage is must be deliberately done in order to damage something, hence the torpedo mistake doesn't count, and it must be done covertly, typically by someone like a factory employee who is supposed to be making the factory work better, not worse, hence wartime bombing doesn't count.

The Republicans may have been deliberately trying to make Obamacare work worse, but since they had opposed it from the beginning and continued with attempts to repeal it, changes that made it work worse do not count as sabotage.

That, at least, would be my interpretation of your argument.

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