Coyote Blog

I don't have time to excerpt but, as I predicted, the media is finally catching up to the enormous shift (mainly in the retail and service sector) to part-time work.    I had a long article on this at Forbes last week.

The source for the underlying chart is the Department of Labor blog, with my annotations added.

Postscript:  In most cases legislation is anticipated to pass well in advance and one could argue the effects of it show up even before the signing date.  But in this case whether the PPACA would pass was a nail-biter to the last moment.

Frequent readers will know that last year, I declared that the end of full-time employment in the American service industry (due to Obamacare) would be the biggest economic story of 2013.  The mainstream media either has not yet noticed or cannot be bothered with a story that does not put Obama in the best possible light, but the story is starting to get out none-the-less.

Expect a lot more of this.  The service industry generally does not operate 8 hours a day, 5 days a week anyway, so its labor needs do not match traditional full-time shifts.  Those of us who run service companies already have to piece together multiple employees and shifts to cover our operating hours.  In this environment, there is no reason one can't stitch together employees making 29 hours a week (that don't have to be given expensive health care policies) nearly as easily as one can stitch together 40 hours a week employees.   In fact, it can be easier -- a store that needs to cover 10AM to 9PM can cover with two 5.5 hour a day employees.   If they work 5 days a week, that is 27.5 hours a week, safely part-time.  Three people working such hours with staggered days off can cover the store's hours for 7 days.

Based on the numbers above, a store might prefer to only have <30 hour shifts, but may provide full-time 40 hours work because good employees expect it and other employers are offering it.  But if everyone in the service business stops offering full-time work, there will be no reason not to go to such a plan, and thousands of dollars per employee to do so.

From the file of things that are absolutely obvious to business owners, and a total shocker to the pundit and policy class:

In its latest monthly report on economic conditions across the country, the Federal Reserve points to Obamacare as one reason the unemployment rate has remained near or above 8 percent under the current administration.

That’s what Sally Pipes, president of the Pacific Research Institute, writes in an op-ed piece for Forbes magazine.

The Fed’s so-called “beige book” noted that employers across the country have “cited the unknown effects of the Affordable Care Act as reasons for planned layoffs and reluctance to hire more staff,” Pipes says, adding that as more businesses learn about Obamacare, “the more they’re coming to realize that affordable care” is the last thing it will provide.

Here is my attempt to illustrate the same thing in one chart (net monthly job creation, which Kevin Drum helpfully posts each month):

I will revise this chart later - this is actually public and private totals.  When you look at private only, the April 2010 peak goes away (that was temporary census hiring) and the chart has an even more stark inflection right there in March 2010 when Obamacare was passed.

Proponents of Obamacare and other aggressive government health care interventions often argue that government health insurance will be less expensive than private health insurance.  Ignoring the whole history of government provided services (which you have to do to accept this argument), it is entertaining to press them on what costs will go away.

First, they will argue "profits."  Health insurers "obviously" make a lot of profit, so doing away with that will amount to a lot of savings.  Several years ago, when Obama was actively demagoguing** the health insurance business, the profit margins of health insurers were all around 3-4% or less.  Which means in exchange for eliminating all private profit incentives towards efficiency and productivity, we get a 3% one time cost reduction.  Not very promising.

After profits, Obamacare supporters will point to administrative costs.  Their philosophy that private insurance administrative costs drive health inflation is built into Obamacare, which places a cap on non-care related costs as a percentage of premiums.  I would argue a lot of this cost is claims management and fraud detection that government programs like Medicare don't have, to their detriment, but let's leave that aside.  I think most Obamacare opponents are convinced that there are billions in marketing costs that could be eliminated.  This has always been their bete noir in pharmaceuticals, that drug companies spend too much marketing.

I have said for years that to a large extent, what outsiders call "marketing" in health insurance is actually customer service and information, in particular agents who go out to companies and help people understand and make their insurance choices.

Well, it turns out that when the shoe is on the other foot, Obamacare supporters suddenly are A-OK with massive health insurance marketing costs, even when what is being marketed is essentially a monopoly:

[California] will also spend $250 million on a two-year marketing campaign [for its health insurance exchange]. By comparison California Senator Barbara Boxer spent $28 million on her 2010 statewide reelection campaign while her challenger spent another $22 million.

The most recent installment of the $910 million in federal money was a $674 million grant. The exchange's executive director noted that was less than the $706 million he had asked for. "The feds reduced the 2014 potential payment for outreach and enrollment by about $30 million," he said. "But we think we have enough resources on hand to do the biggest outreach that I have ever seen." ...

The California Exchange officials also say they need 20,000 part time enrollers to get everybody signed up––paying them $58 for each application. Having that many people out in the market creates quality control issues particularly when these people will be handling personal information like address, birth date, and social security number. California Blue Shield, by comparison has 5,000 employees serving 3.5 million members.

New York is off to a similar start. New York has received two grants totaling $340 million again just to set up an enrollment and eligibility process.

** Don't be fooled by the demagoguery.  This is standard Obama practice.  In exchange for eating sh*t from Obama in public, private companies get all kinds of crony favors in private.  Remember, health insurers got the US government to mandate that everyone in the country buy their products, and got the Feds to establish trillions in subsidies to help people do so.  This may be the greatest crony giveaway of all time, and to cover for it, like a magician distracting your eye from the sleight of hand, Obama made it appear in public as if he were health insurers' greatest enemy, rather than their sugar daddy.

Megan McArdle has a column I am going to excerpt at great length (sorry Ms. McArdle).  This is great article on a topic I have tried to explain many times here

After all, the insurance company has to make money.  That has to mean that the expected value of the claims they pay out is lower than the expected value of the premiums their customers pay in.  In some sense, then, the expected value of your insurance premium is negative.

But insurance does make everyone better off, because it covers very large costs that most people would have trouble paying.  Even most really good savers would have a hard time replacing the value of their house, or paying off a $250,000 judgement for an auto accident.  The expected value of those incidencts is very, very negative--more than just the value of the cash, you have to factor in the horror of being homeless or bankrupt.  When you factor in the homelessness, the bankruptcy, and so forth, the slighly negative expected financial value is more than outweighed by the positive value of being protected against personal catastrophe.  Not to mention the peace of mind one gets from not having to worry about homelessness, etc.

This is the magic of risk pooling.  But notice that it's the catastrophe which makes insurance a good deal.  You wouldn't get much value from buying "grocery insurance".  At best, you'd be paying an extra administrative fee to route your routine expenses through an insurer, rather than paying them directly.  At worst, you'll end up with bills skyrocketing as all sorts of perverse incentives appear.  After all, if the insurer is paying all your grocery claims, why not load up on filet mignon instead of ground turkey?

But insurers try very hard never to sell insurance for less than the cost of your expected claims.  If you expect to buy $10,000 worth of groceries next year, it will not charge you less than that for a "grocery policy".  And if we all drive up the costs of grocery insurance by consuming more, the insurer can do one of two things: raise everyone's "insurance premiums" to cover a filet mignon budget, or create a list of "approved groceries" that it will cover, and start hassling anyone who tries to file an excessively expensive claim.

Sound familiar?

This is why you should always have liability insurance, but should think twice about collision damage coverage.  It's why high deductibles are a good idea--for small expenses, it's better to self insure.  And it's why "catastrophic" health plans, which only cover the sort of extremely expensive events that most people would have difficulty financing, are a much better deal than the soup-to-nuts plans that most people get through their employers.  Those plans are expensive, both because they're paying for a higher percentage of your expenses, and because they drive up utilization--which means that they drive up next year's premiums even more.  Imagine what your car insurance would cost if it covered gasoline, routine maintenance, and those little air freshener trees you hang from the rearview mirror.  Then stop asking why health insurance costs so much.

But Kathleen Sebelius, the Secretary of HHS, thinks that catastrophic insurance isn't really insurance at all.

At a White House briefing Tuesday, Health and Human Services Secretary Kathleen Sebelius said some of what passes for health insurance today is so skimpy it can't be compared to the comprehensive coverage available under the law. "Some of these folks have very high catastrophic plans that don't pay for anything unless you get hit by a bus," she said. "They're really mortgage protection, not health insurance."

She said this in response to a report from the American Society of Actuaries arguing that premiums are going to rise by 32% when Obamacare kicks in, as coverage gets more generous and more sick people join the insurance market.  Sebelius' response is apparently that catastrophic insurance isn't really insurance at all--which is exactly backwards. Catastrophic coverage is "true insurance".  Coverage of routine, predictable services is not insurance at all; it's a spectacularly inefficient prepayment plan.

The last two lines are why I knew from the very beginning that the promise I would get to keep my health insurance was a lie.  Because I have true insurance, rather than a pre-payment plan for incidental health-related expenses, and the folks who wrote Obamacare think of insurance as pre-paid medical care (in fact, I believe they think of private insurance as a Trojan Horse for all-inclusive single payer government health care).

Most of the Left wants to measure access to health care by the percentage of people who have health insurance, implying that those without insurance have no access to care.  But in fact the uninsured in the US have access to better health care than most other people in the world.

And it will soon become apparent that the converse is not true either - even with insurance, in a top-down rules-driven government-controlled health care system, one may not have access to health care.    For example, one of my employees was complaining that she was having trouble with workers comp getting care for her injury.  This is a follow-up email I received today from my insurance agent (redacted only for privacy issues):

I talked to [valued employee of my company, call her Jane] this morning regarding her lack of attention from [our workers comp insurer].

I then followed up immediately with [representative of workers comp insurer] working on her account, in Sacramento, CA.

It seems the problem is her injury occurred in CA and she's now in MO.  The doctors in MO don't want to see her due to the paperwork and issues required under the CA laws. 

Jane advises she gets relief from going to a chiropractor.  I told her to keep going and I would get [insurance company] to approve those visits, which [workers comp insurer rep] said she would.

So, it comes down to [our insurance company] trying to find an Orthopedic Doctor who will take her and comply with the CA requirements, which the Drs. don't like.

There is no issues on coverage, it's a political issue.

Already, Medicare and Medicaid patients have trouble finding doctors to treat them.  Enjoy the cozy feeling of being "insured" via Obamacare.  Let's hope that when you are sick, there is a doctor who will see you.

CNS News reported, and no one in the Obama Administration seems to be denying, that the IRS is assuming the cheapest conforming health insurance policy for a family of four under Obamacare will cost $20,000 per year

The IRS's assumption that the cheapest plan for a family will cost $20,000 per year is found in examples the IRS gives to help people understand how to calculate the penalty they will need to pay the government if they do not buy a mandated health plan.

The examples point to families of four and families of five, both of which the IRS expects in its assumptions to pay a minimum of $20,000 per year for a bronze plan.

“The annual national average bronze plan premium for a family of 5 (2 adults, 3 children) is $20,000,” the regulation says.

Bronze will be the lowest tier health-insurance plan available under Obamacare--after Silver, Gold, and Platinum.

Kevin Drum shot back, saying that Conservatives were essentially out of touch for thinking that health insurance currently, or could ever conceivably, cost much less

So is this unusual? Not really. The average cost of healthcare coverage for a family is currently about $16,000,and by 2015 (the base year for the IRS examples) that will probably be around $18,000 or so. And that's for employer-sponsored plans. Individual plans are generally steeper, so $20,000 isn't a bad guess. It might be a little high, but not by much. And the family in question will, of course, be eligible for generous subsidies that bring this cost down substantially, thanks to the Affordable Care Act. They won't actually pay $20,000 per year.

(We'll ignore that last part as typical Progressive double think -- as long as the government is paying, the costs don't count.  It's like being free!)

I can't believe that Drum has actually shopped for health insurance of late.  The link he relies on for his data is for employer plans only, and Drum makes the unproven assumption that these are somehow less costly than individual plans people have to actually shop for. This is false.  Employer plan averages include a lot of gold-plated policies in the mix driven by noncompetitive union contracts and executives wanting gold-plated plans for themselves at the expense of shareholders.   I would argue that Drum is comparing "platinum" plans today to "bronze" plans under Obamacare, and it should be disturbing that even with this bit of judo, bronze Obamacare plans come out 20%+ more expensive than gold-plated current corporate plans.

But there is an even easier way to solve this, one Drum (who is nominally a "journalist") could solve with a few phone calls or clicks on Internet sites:  we can get some quotes.  Being a blogger with a real job, I do not have time to do this, but fortunately I don't have to because I just did this a few months ago for my family.  Here are a few quotes for a family of four with two 50+ old adults in pretty good health and two teenage kids from Blue Cross - Blue Shield of Arizona:

BlueOptimum- Plus $5000 deductible - $615.45 per mo., 7,385.40 per year>

BluePortfolio-Plus $3000 deductible - $703.80 per mo., 8,445.60 per year  (HSA eligeable)

BluePorfolio-Plus $5500 deductible - $499.75 per mo., 5,997.00 per year  (HSA eligeable)

Note first that these high deductible and HSA policies are ILLEGAL under Obamacare, in large part because they are actual insurance and Progressives don't mean "insurance" when they say "health insurance", they mean fully pre-paid all-encompassing medical care.  I consider the purpose of insurance to be to protect from catastrophes that you can't afford (e.g. your house burns down).  In the case of medical care, I thought about from my financial position, and determined what the largest financial setback I could bear in a year if someone really had a medical problem.  So I set my deductible at that number, and made sure I bought a policy that paid everything else above that reliably, without any low lifetime or maximum payment numbers.

The Blue Optimum above is a fairly standard co-pay plan that covers most doctor visits and drugs with only a copay.  The Blue Portfolio are HSA plans that are pure insurance.  I pay everything (except certain preventative care costs) up to the deductible, and they pay everything else above that.  In this case, note that the deductible is per person but there is a total family/policy deductible of twice that.  In other words, with the second policy, even if everyone in my family gets cancer in the same year, we aren't out of pocket more than $6,000.  So, for this middle policy, in typical years we spend $8,445.60 plus, say, another $1000 on miscellaneous stuff for a total health cost of $9,445.60.  Or half the Obamacare "bronze" or cheapest possible plan.  In the worst possible year, if two family members get very sick in the same year (not a hugely likely event) we are out $14,445.60 per year.  This is the worst case.  Still 28% lower than the cheapest Obamacare option.

In this plan, I am allowed under the HSA provision to bank about $5,000 a year in a pre-tax account.  I can use this money to pay medical bills up to the deductible, or save it.  If money is left over some day, it becomes a retirement account and I can use the money for retirement.  So I have the financial incentive to shop around for best prices, because the residual in the HSA is mine to spend on .... whatever.   I have told the stories a number of times here about my medical shopping experience.  X-rays that were charged to insurance companies for $250 suddenly cost $45 when I said I was paying cash.  My wife got a 70% cost reduction the other day on orthodic shoes when she offered to pay cash rather than put her insurance in play.  So, not only will Obamacare raise the prices of my insurance substantially, it will also raise medical costs in general by stripping away the last incentives for anyone to price-shop for health care.

When I read my Bastiat, I am always reminded how humans tend to insist on adopting the same myths and fallacies about the economy.  The myths he busts in the 19th century can be seen on the pages of our newspapers every day of the 21st century.   But one unique idea we have spawned since Bastiat is this bizarre notion that somehow it is wrong to pay for ones own medical expenses out of pocket.  It took forever to convince even my very smart HBS-educated wife that it was a much better deal to go to a high-deductible health plan.  Since we did so, we have saved a ton of money, and by the way done our small bit to keep prices down for the rest of you by actually shopping for things like x-rays (you can thank me later).  I don't know why this fallacy is so entrenched and hard to change, but we have built the entire edifice of Obamacare on top of it.

Someone from the National Council of Mayors or Cities or some such group called me wanting to meet.  I asked him what he wanted.  Blah blah blah.  I asked him after a bunch of doublespeak about learning about how my great business operates what he really wanted.  He said he wanted to share with me Federal and State and City programs to help my business.  The conversation then went approximately this way:

Me:  I don't want any of that stuff.  I don't want other people to be forced to pay for my business

Caller:  So you are a Republican?

I would love it if Republican's narrowly branded themselves as folks who don't take money by force from others.  I would call myself one.  But unfortunately Republicans and Chamber of Commerce type CEO's who nominally call themselves Republicans wallow all the time in such corporate cronyism.

Further, Republicans spend a lot of time on social crusades that drive me crazy.  The other day at a party, I was talking to a number of entrepreneurs who all should have found a natural home in the Republican party given their economic views.  But they were all Democrats, most of them for the simple reason that they did not want to be associated with Republican social crusades.  I talked to a guy for hours who despised Obamacare but voted for Obama twice because he did not want to be associated, for example, with Republican's anti-gay position (e.g. Rick Perry).

Of course, this is a double edged sword.  There are likely many Republican voters who are fiscally liberal but vote Republican for its commitment to opposing gay marriage and abortion and the like.

PS-  The call actually went on for a while.  He asked me what he could help me with.  What is my number one problem?  I told him, honestly, we have put everything else on hold, all our growth plans have been frozen, until we figure out how to minimize the costs of the PPACA on us.   This was not something he seemed to want to discuss.

Given recent legislative and judicial decisions, there are vanishingly few electronic records that the government cannot rape at will.  Increasingly, government agencies can access electronic data without even bothering with silly stuff like warrants or judicial review.  

The Drug Enforcement Administration is trying to access private prescription records of patients in Oregon without a warrant, despite a state law forbidding it from doing so. The ACLU and its Oregon affiliate are challenging this practice in a new  that raises the question of whether the Fourth Amendment allows federal law enforcement agents to obtain confidential prescription records without a judge’s prior approval. It should not.

In 2009, the Oregon legislature created the Oregon Prescription Drug Monitoring Program (PDMP), which tracks prescriptions for certain drugs dispensed by Oregon pharmacies, including all of the medications listed above. The program was intended to help physicians prevent drug overdoses by their patients and more easily recognize signs of drug abuse. Because the medical information revealed by these prescription records is highly sensitive, the legislature created robust privacy and security protections for the PDMP, including a requirement that law enforcement must obtain a warrant before requesting records for use in an investigation. But despite those protections, the DEA has been requesting prescription records from the PDMP using administrative subpoenas which, unlike warrants, do not involve demonstrating probable cause to a neutral judge.

While the government needs a search warrant to access paper medical records, it apparently feels it can look at electronic records without a warrant,.  Which explains one reason why the Administration is so excited about the new medical records requirements in Obamacare.   You didn't think HIPAA applied to the government, did you?  And if you wondered why Obamacare requires doctors to ask medically-unrelated questions (e.g. on gun ownership), now you know.

The fiscal settlement passed last night did absolutely nothing to improve the deficit or the financial sanity of government.  Its only purpose, as far as I can tell, was to let Democrats count coup on rich people as a reward for winning the last election.  It's like telling your kids that on their birthday, you will take them to do absolutely anything they like, and Democrats chose to display their disdain for rich people as their one act of celebration.    A few other observations:

• I had expected that they would gen up a bunch of fake savings and accounting tricks to pretend there were spending cuts in proportion to tax increases, but apparently they did not feel the need to bother.  Essentially only trivial spending cuts were included.
• At what point can we officially declare that the reduction in doctor reimbursement rates that supposedly paid for much of Obamacare is a great lie and will never happen?  Congress once again extended the "doc fix" another year, eliminating the single largest source of savings that was to fund Obamacare.  Congress has been playing this same game  -- using elimination of the doc fix to supposedly fund programs and then quietly renewing the doc fix later -- for over a decade
• The restoration of the FICA tax is probably a good thing.  Though I think the reality is something else, people still think of these as premiums that pay for future benefits, so in the spirit of good pricing, the premiums should reflect the true costs.  And FICA premiums have always been set about at the right level (it is only the fact that past Congresses spent all the money supposedly banked for future generations that Social Security has a financial problem).  In fact, we should raise Medicare premiums as well.
• Apparently, though I have not seen the list, this last minute deal was chock full of corporate cronyism, with a raft of special interst tax preferences thrown into the mix.

And so ends, I suppose, the 12-year saga of the Bush tax cuts, with tax cuts for the rich revoked and the rest made permanent.   The establishment media decided early on that it was going to run with the story line that these cuts were "for the rich."  The irony, that will never get any play, is that now, at the end, it is all too clear that this was far from the case.  Reversing the tax cuts to the rich only reversed a small percentage of the original tax cuts.  In fact, if the Bush tax cuts had been mainly for the rich, then the Democrats would not have even bothered addressing the fiscal cliff.

This is a highly instructive story about Wal-Mart dropping health coverage for part-time workers (hat tip to a reader -- I always forget to ask if they are OK having their name used).  The writer is amazed at unintended consequences that were so hard to envision that complete non-experts like me predicted them days after the law's passage.

• The writer is amazed that Wal-Mart would support Obamacare and then try to evade its provisions.  This is how the corporate state works.  Wal-Mart was an enthusiastic supporter of Obamacare NOT because it believed the law made any sense, and not because it had any intention of complying with its spirit, but because it knew that its size, political clout, and infrastructure would allow it to duck the new costs of Obamacare more easily than its competition.
• We see unintended consequences run wild.  Wal-Mart was guilted into providing some health care coverage of part time workers because of tear-jerker news stories about these folks having no other alternative.  But under Obamacare, they do have an alternative (Uncle Sam) so the pressure on Wal-Mart to provide the care to avoid bad PR is removed.
• I am amazed that we seem to naturally assume that providing health care is an employer's obligation.  This is just bizarre, and applies to none of our other needs.  Employers pay us money, we spend it according to our preferences to fulfill our needs and caprices  (a great phrase I stole from Agatha Christie via Hercule Poirot).   “Walmart is effectively shifting the costs of paying for its employees onto the federal government with this new plan".  I would have said that Wal-Mart is shifting the choice of how to spend their total compensation back on the employee.
• The cat is almost out of the bag on the story I have promised to be the biggest economic story of 2013:  "Several employers in recent months, including Darden Restaurants, owner of Olive Garden and Red Lobster, and a New York-area Applebee’s franchise owner, said they are considering cutting employee hours to push more workers below the 30-hour threshold."  These guys are just being coy in public if they are saying "considering."  I know insiders in the restaurant industry and they have been working on definite plans to part-time their entire work force for well over a year.   By mid-2013, the service worker who works more than 30 hours a week will be a dinosaur
• Some time in the past, we really screwed up the whole concept of health care "insurance."  One person complains in the article:  “The packages Walmart is providing for low-income people aren’t offering very much coverage except for catastrophes."  Gee, I could have sworn this is exactly what insurance is supposed to be.  Her statement is like saying "my home insurance isn't offering much coverage except in the case of major damage to my house."
• Every extra dollar Wal-Mart pays for its employee's health care costs is another dollar added to the shopping bill of the lower income people who shop there.

In Obamacare, it was mandated that health insurance companies spend 85% of premiums on care (vs. marketing, profits, and overhead) or else they owe their customers a refund.  So if the same standard was applied to unions, how much of their dues would they have to refund?

For example, according to the most recent federal filings, the Michigan Education Association — the state’s largest labor union — received $122 million and spent $134 million in 2012. They averaged about $800 from each of their 152,000 members.

According to union documents, "representational activities" (money spent on bargaining contracts for members) made up only 11 percent of total spending for the union. Meanwhile, spending on “general overhead” (union administration and employee benefits) comprised of 61 percent of the total spending.

The union appears to have spent nearly the entirety, or $119 million of their $122 million in dues, just supporting their leadership  (and various politicians) in grand style.  They actually had to borrow $12 million to do their job of representing their members.

By Obama's standard of good management (core activity costs = 85% of total customer dues paid) then the union should have taken only $17.4 million from their members, and owe them a $104.6 million refund.

Sorry, but it is not the fiscal cliff.   It is the complete shift in the US labor model, at least in the service sector, due to Obamacare.

Here is what I am doing for the rest of the year -- working with every manager in my company so that as of January 1, 2013, none of our employees are working more than 28 hours a week.   I think most readers know the reason -- we have got to get our company under 50 full time employees or else I am facing a bill from Obamacare in 2014 that will be several times larger than my annual profit.  I love my workers.  They make me a success.  But most of my competitors are small businesses that are exempt from the Obamacare hammer.  To compete, I must make sure my company is exempt as well.  This means that our 400+ full time employees will have to be less than 50 in 2013, so that when the Feds look at me at the start of 2014, I am exempt.  We will have more employees working fewer hours, with more training costs, but the Obamacare bill looks like about $800,000 a year for us, at least, and I am pretty sure the cost of more training will be less than that.

This will be unpopular but tolerable to most of my employees.  The vast majority of them are retired and our company is merely an excuse to stay busy, work outdoors, and get a little extra money.

But this is going to be an ENORMOUS change in the rest of the service sector.  I have talked to a lot of owners of restaurants and restaurant chains, and the 40-hour work week is a thing of the past in that business.  One of my employees said that in Hawaii, it was all the hotel employees could talk about.   Many chains are working on mutli-team systems where two teams of people working part-time replace the former group of full-time employees.  2013 is going to see a lot of people (who are not paid very well to begin with) getting their hours and pay cut by 25%.  At the same time that they are required, likely for the first time since many are relatively young, to purchase health insurance.

It will be interesting to see what solutions emerge.  My bet is that it will become standard for people in the service sector to work two different jobs for 20-25 hours each with two different companies.  This will be a pain for them, but allow them to keep their income up.  The hard part may be coordinating shifts between companies.  For example, a company that divides their shifts into mon-tue-wed vs. thu-fri-sat cannot share employees with one who divides their shifts between morning and afternoon.  If given time, I would guess that just as the mon-fri workweek emerged as a standard, companies may adopt standard ways of dividing up the work weeks for part-timers, making it easier for schedules to mesh.

Republicans before the election worked to convince Libertarians that a vote for Gary Johnson (or any other third party) was a wasted vote -- that Libertarians needed to be voting against Obama and therefore for Republicans.  Some libertarians have argued that the only way to change the Republican Party is from within.  Libertarians need to join the party and then work to make the party less statist.

I thought this was a crock at the time and think so even more now.  Here is the key thought:  Republicans are not going to change their platform and their candidates and their positions to woo voters they are already getting.  After the election, no one in the Republican leadership was talking about what a mistake it was to run a big government Republican like Romney -- the ex-governor of Massachusetts for God sakes -- who authored the predecessor to Obamacare.  No one was wondering about Gary Johnson as a 2016 candidate.

What the GOP did do is panic at the shellacking they got among Hispanic voters.  The ink was not even dry on the ballots before Republican leadership was considering abandoning their anti-immigrant stance in order to win more Hispanic voters.  I am not sure that will get them Hispanic voters, but whether they are right or not, that is the conversation they were having.  They were asking, "How do we attract voters WE DID NOT GET" -- not, "how do we attract voters we are already getting".

The turn of the century Progressive Party (William Jennings Bryant, free silver, etc) never won a Presidential election but both the Republicans and Democrats co-opted many of their platform positions because they sought to attract voters they were losing to the Progressives.

I don't see how Libertarians can look at a party that has fielded John McCain (author of speech restrictions) and Mitt Romeny (author of the proto-Obamacare) as any sort of long-term home.  Heck, the Republicans more seriously considered Rick Santorum and Donald Trump than Gary Johnson or Ron Paul.  I respect what Mr. Paul has done in bringing libertarian issues to the debate, but as long as he keeps reliably delivering his voters to whatever lame statist candidate the party fields, the GOP is never going to seriously address libertarian concerns.

An interesting set of data I read the other day:

In 2011, the Arizona Health Care Cost Containment System, Arizona's Medicaid program, paid for 53 percent of the state's 84,979 births, while private insurance paid for 42 percent, according to state statistics. The remainder were paid for by individuals....

Sen. Sylvia Allen, R-Snowflake, estimated that including pre- and postnatal care, it costs Arizona about $7,500 per birth for a delivery with no complications. Using those estimates, the 2011 deliveries would have cost Arizona taxpayers nearly $338 million....

In 2010, 58 percent [of Arizonans] had private insurance and 18 percent were on Medicaid.

So, 18% of Arizonans are having 53% of all births.  Another way to put this is that the 18% of people who get this procedure from the government for free account for half the demand, despite the fact that these folks are the ones who, if rational, should be the least likely to have a lot of births because they presumably have the most difficulty affording an extra mouth to feed.

God forbid I start sounding like some crotchity Conservative, but I continue to be amazed that pregnancy is treated as an "emergency procedure."  It strikes me that unlike, say, cancer, individuals can choose to avoid this condition fairly easily if they can't afford it.  I certainly know my wife and I put FAR more deliberation into having children than we did any other decision in our lives.  There is a terrible tension here - no one wants to turn away an expectant mother and endanger her child, but freely giving away an expensive procedure without any sort of restrictions nearly begs for a baby boom.  Those who try to argue that Obamacare won't increase health care expenses (in other words, arguing that demand curves don't upward) only have to look at these numbers.

PS-  Apparently, our state legislature is appalled by these numbers.  This is the same legislature that has proposed about a zillion abortion restrictions over the last year.  It will be interesting to see if fiscal issues change anyone's thinking on the abortion issue now that there is suddenly a $7500+ incentive to allow an abortion.

Update -- Thinking about this, I think the 18%/53% comparison is directionally correct but the difference is exaggerated due to Medicare.  I doubt Medicare delivers many babies, but a large part of the AZ population is on Medicare.  If the numbers were reset to show the percentage of Arizonans of child-rearing age on Medicaid, the number would be north of 18% but likely well below 53%.

My son is in Freshman econ 101, and so I have been posting him some supply and demand curve examples.  Here is one for health care.  The question at hand:  Does government regulation including Obamacare increase access to health care?  Certainly it increases access to health care insurance, but does it increase access to actual doctors?   We will look at three major interventions.

The first and oldest is the imposition of strong, time-consuming, and costly professional licensing requirements for doctors.  At this point we are not arguing whether this is a good or bad thing, just portraying its inevitable effects on the supply and demand for doctors.

I don't think this requires much discussion. For any given price for doctor services, the quantity of doctor hours available is certainly going to increase as the barriers to entry to the profession are raised.

The second intervention is actually a set of interventions, the range of interventions that have encouraged single-payer low-deductible health insurance and have provided subsidies for this insurance.  These interventions include historic tax preferences for employer-paid employee health insurance, Medicare, Medicaid, the subsidies in Obamacare as well as the rules in Obamacare that discourage high-deductible policies and require that everyone buy insurance rather than pay as they go.  The result is a shift in the demand curve to the right, along with a shift to a more vertical demand curve (meaning people are more price-insensitive, since a third-party is paying).

The result is a substantial rise in prices, as we have seen over the last 30 years as health care prices have risen far faster than inflation

As the government pays more and more of the health care bills, this price rise leads to unsustainably high spending levels, so the government institutes price controls.  Medicare has price controls (the famous "doc fix" is related to these) and Obamacare promises many more.  This leads to huge doctor shortages, queues, waiting lists, etc.  Exactly what we see in other state-run health care systems,  The graph below posits a price cap that forces prices back to the free market rate.

So, is this better access to health care?

I know that Obamacare proponents claim that top-down government operation is going to reap all kinds of savings, thus shifting the supply curve to the right.  Since this has pretty much never happened in the whole history of government operations, I discount the claim.  When pressed for specifics, the ideas typically boil down to price or demand controls.  Price controls we discussed.  Demand controls are of the sort like "you can't get a transplant if you are over 70" or "we won't approve cancer treatments that only promise a year more life."

Most of these do not affect the chart above, since it is for doctor services and most of these cost control ideas are usually doctor intensive - more doctor time to have fewer tests, operations, drugs.  But even if we expanded the viewpoint to be for all health care, it is yet to be demonstrated that the American public will even accept these restrictions.  The very first one out of the box, a proposal to have fewer mamographies for women under a certain age, was abandoned in a firestorm of opposition from women's groups.  In all likelihood, there will be some mish-mash of demand restrictions, determined less by science and by who (users and providers) have the best lobbying organizations.

My longer series of three Forbes articles on this and other economic issues with Obamacare begin here:  Part 1 Information, Part 2 Incentives, Part 3 Rent-Seeking

Update:  Pondering on this, it may be that professional licensing also makes the supply curve steeper.  It depends on how doctors think about sunk cost.

Apparently, he things "moocher" is unfair.  So I will remind you what he wrote a while back:

...for the first time that I can remember, this means that I have a personal stake in the election. It's not just that I find one side's policies more congenial in the abstract, but that one policy in particular could have a substantial impact on my life.

You see, I've never really intended to keep blogging until I'm 65. I might, of course. Blogging is a pretty nice job. But I'd really like to have a choice, and without Obamacare I probably won't. That's because I'm normal: I'm in my mid-50s, I have high blood pressure and high cholesterol, a family history of heart trouble, and a variety of other smallish ailments. Nothing serious, but serious enough that it's unlikely any insurance company would ever take me on. So if I decided to quit blogging when I turned 60, I'd be out of luck. I couldn't afford to be entirely without health insurance (the 4x multiplier that hospitals charge the uninsured would doom me all by itself), and no one would sell me an individual policy. I could try navigating the high-risk pool labyrinth, but that's a crapshoot. Maybe it would work, maybe it wouldn't.

But if Obamacare stays on the books, I have all the flexibility in the world. If I want to keep working, I keep working. If I don't, I head off to the exchange and buy a policy that suits me. No muss, no fuss.

Attempting to remind him of these comments, I commented today:

I'm confused here.  A few weeks ago, didn't you say you support Obamacare because it let you retire early?  You said you could not afford to quit working early without Obamacare, because you would need your work and income to pay for, what to you, is a vital good.   Obamacare allows you to quit working earlier, presumably because other people, rather than you, will pay for at least a part of your health care with their labor.

I understand no one likes the word "moocher."  But you came on these pages really proudly announcing that Obamacare allowed you to retire early while others labored to support your needs.  What word would you suggest as an alternative, then, to describe this behavior?

(Yeah, I can predict the response.  It's not the subsidy you want, just the community rating.  Well, high premiums for 55-year-olds with pre-existing conditions are not some evil conspiracy, they reflect true cost to serve.  Having a government mandate that you pay the premiums of a healthy 25-year-old when you are 60 and sick is still a subsidy, paid for with someone else's labor.  As a minimum, 25-year-old minimum wage workers just entering the work force pay more when they are healthy so you can lead a life of indolence).

Arizona has always had a pretty intelligent rule that driving schools that have been certified by the state can actually give kids their written and driving tests.    They get a certificate they take to the DMV where they then get issued the physical license.   Kids who can't afford the school can certainly go into the DMV to take the tests, but since our DMV is swamped with insane waits, it is nice to have an alternative.

Until now.  Apparently, for reasons that entirely escape me except perhaps to pander to state employees' unions, all kids must now take their tests, written and driving, at the DMV.  So, the DMV's solution to insane waits is to... increase demand on their services.  Awesome.  Sounds eerily similar to Obamacare's solution to ER waits.

Kevin Drum writes:

...for the first time that I can remember, this means that I have a personal stake in the election. It's not just that I find one side's policies more congenial in the abstract, but that one policy in particular could have a substantial impact on my life.

You see, I've never really intended to keep blogging until I'm 65. I might, of course. Blogging is a pretty nice job. But I'd really like to have a choice, and without Obamacare I probably won't. That's because I'm normal: I'm in my mid-50s, I have high blood pressure and high cholesterol, a family history of heart trouble, and a variety of other smallish ailments. Nothing serious, but serious enough that it's unlikely any insurance company would ever take me on. So if I decided to quit blogging when I turned 60, I'd be out of luck. I couldn't afford to be entirely without health insurance (the 4x multiplier that hospitals charge the uninsured would doom me all by itself), and no one would sell me an individual policy. I could try navigating the high-risk pool labyrinth, but that's a crapshoot. Maybe it would work, maybe it wouldn't.

But if Obamacare stays on the books, I have all the flexibility in the world. If I want to keep working, I keep working. If I don't, I head off to the exchange and buy a policy that suits me. No muss, no fuss.

So yes, this election matters, and it matters in a very personal way. It does to me, anyway. It's not just about gridlock as far as the eye can see.

I usually have a pretty thick skin for this type of stuff, but this got to me.  I wrote:

Great.  Those of us who are comfortable actually, you know, working to support ourselves look forward to subsidizing your future indolence.
Sorry, I am not usually that much of a snarky jerk, but really, that is what you are celebrating.  You are not celebrating some medical or scientific breakthrough that allows you to stay healthy at a lower cost.  You are celebrating a system to force other people to pay for your body's maintenance.  All so you don't have to support yourself for over a quarter of your life.

If you were to say that, "wow the health dice really rolled against me and I need help," few would begrudge you the help.  But this notion of an indolent retirement is radically new.  It is a product of our century's and our country's great wealth.  Retirement is a luxury good.  I have no problem with anyone consuming this luxury good out of their savings, but consuming it out of mine, and then crowing about it to my face, is highly irritating.

If I were a Republican, or if I had one iota of trust in them, I might write that this is what the election is about.  Since I don't have such trust, I will instead merely highlight Drum's thoughts as a good representation of modern entitled thinking.  For God sakes this guy is not even trying to use my money to escape, say, a coal mine early.  He wants my cash to escape blogging early, perhaps the cushiest job there is (as indicated by the fact that many of us do it for no compensation what-so-ever).

I read a few political blogs from the Left and Right - not many, because I cannot stand the whole team-politics thing, but I feel like I need to hear what they are saying.  Apparently, Conservatives (after the Supreme Court Obamacare decision) are saying that their side is too soft, too amenable to being intimidated by the Left.

Here is my observation from reading a fairly equal helping of political blogs from both sides:  These sort of things are cherished beliefs of both sides.  I don't have the post-holiday energy to hunt up the links, but I can say with confidence that both Left and Right seem to believe, or at least to write that:

• Their own side compromises more than the other side does
• The other side is much more bare knuckles, doing what it takes to win.  Their own side has ethics that always causes them to stop short
• The other side is better at keeping its members from breaking ranks
• The other side is raising more money than their side
• The other side is a vast coordinated conspiracy using a top-down imposed message while their own side is mainly individuals acting independently

My column is up at Forbes.com, and has a few quick thoughts on the decision.  A brief excerpt:

Second, though, I am really confused how financial penalties on states can be read as an effective mandate, and therefore un-Constitutional, but financial penalties on individuals do not constitute an effective mandate (if they did, this very ruling says that such a mandate would be illegal).   Using financial penalties to coerce action is either the equivalent of a mandate or it is not, but the decision seems to take two opposite stances on this question.

So this is how I read the PPACA/Obamacare decision today

• The mandate is not allowed under the commerce clause powers
• However, Congress is allowed to use its taxing power to issue financial threats to coerce individual activity it can't mandate
• However, Congress is not allowed to use financial threats to coerce state government activity that it can't mandate

The Wall Street Journal editorial page had a piece on the "smearing" of small business.  Apparently, in the political battle over Obamacare, the NFIB has become the new target of the left.

I have not seen these attacks on the NFIB, but after the bizarre joint attacks on ALEC, I certainly believe they exist.  The WSJ summarizes these attacks this way:

According to the smear campaign against the National Federation of Independent Business, or NFIB, small businesses are thrilled with the Affordable Care Act and the trade group betrayed the 300,000 companies it represents. Among the dozens of media outlets publishing anti-NFIB op-eds disguised as reporting, Reuters recently asked in a headline, "Who truly speaks for small businesses?" The question mark was superfluous.

The chairmen of the House Progressive Caucus, Democrats Raul Grijalva and Keith Ellison, chimed in with a letter accusing the NFIB of acting against "the best interest of small business owners" and "the popular opinion of the American small business community." They suggest Karl Rove is behind the suit, as he is everything else.

As a member of the NFIB  (I joined several years ago specifically due to their work on health care) I believe the NFIB addresses issues that really concern our company better than any other group I have found.  Certainly they are far better than the Chamber of Commerce, which tends to be a group of large companies more interested in crony handouts than free competition.  Members get polled constantly to see what issues we care about and to see what positions we would like the NFIB to take.

This latter process makes the NFIB among the most virtuous of the organizations to which I have belonged.  Certainly the Sierra Club, way back when I was a member, never polled me on whether I preferred them to focus their efforts, say, on political activism or true conservation efforts.

I am exhausted by journalists and politicians on the Left who have barely even worked in a profit-making venture, much less run one, who speak with great authority on what small business owners should or should not want.  Our company is in the business of making long-term operations bids.  For the last three years, we have had to bid two numbers for our expenses, one with Obamacare and (a much lower one) without.  Never in 25 years of our history has any external factor, government-drive or not, made this much contingent difference to our bids.  So it is simply insulting to be told that it should not make any difference to me, or that its effects will be universally cost-reducing.

Further, it is really, really hard for a small business to parse the impact of Obamacare because it is #$&*#$ hard to figure out just what its provisions are.  McDonalds can afford to hire a team of experts to figure it out, and to start gaming it by using its political clout to seek special exemptions and treatment from the Obama Administration.  We cannot.  The NFIB is the only organization, public or private, in the country that has actually helped us understand the law's requirements.  For several years running, they have sent an expert, at their expense, to our industry gatherings to help educate companies on the law.

There is an argument going around, mainly on the Left, that the Supreme Court cannot overturn the PPACA (aka Obamacare) because it is just too major and significant.  It's sort of OK to overturn minor legislation at the margins, but if Congress does something really big, it deserved the Court's respect and acquiescence.

But it strikes me that the larger and more comprehensive a piece of legislation is, the more likely it is to run afoul of Constitutional restrictions.  And this is the case no matter what theory one holds about the Constitution.

I am not a Constitutional scholar nor a lawyer, but I would describe two schools of thought on the Constitution.  The first is that the Constitution gives the Federal government certain enumerated, defined powers beyond which it may not stray.  The second is that the Constitution gives citizens a number of enumerated, defined rights (e.g.  First Amendment freedom of speech) such that the Federal government can do most anything it wants as long as it does not trample on these defined rights.   (I would argue that the first interpretation was the clear meaning of its authors, and the second interpretation is probably the majority view today of average Americans today).

But under either interpretation, larger, more sweeping legislation is more rather than less likely to cross a boundary that circumscribes Federal power.  Whether such a boundary has been crossed by this legislation is another matter, but the argument that large legislation per se should be exempt from the possibility of being overturned on Constitutional grounds does not hold water.