Imagine you wake early one morning with severe sinus congestion and a throbbing headache. You wobble down to the local Walgreens for some medicinal relief, only to be denied your Sudafed by the pharmacist for lack of a doctor’s prescription. What do you do? Lug your bloated, throbbing head to the next county where prescriptions are not required? Or schedule a doctor’s appointment for next week? That is hardly timely relief. What will St. Charles County residents do?

The St. Charles County Council voted on July 25 to require a doctor’s prescription when purchasing cold and allergy medications that contain pseudophedrine. Unfortunately, the ordinance imprudently inserts doctors into meth makers’ raw material supply chains. It is difficult to imagine, much less believe, that this ordinance will effectively diminish meth production in Missouri. With a sufficient profit motive, meth makers will seek out alternative arrangements for the procurement of pseudophedrine, perhaps by recruiting doctors as critical prescription suppliers.

In essence, the ordinance will turn otherwise law-abiding doctors into accessories to crime, unwittingly or not. Some will no doubt embrace the temptation to write fraudulent prescriptions, thereby corrupting the practice of medicine.

But this is only the tip of the iceberg. With the resulting increase in the demand for prescriptions, the ordinance further taxes an already over-burdened medical reimbursement insurance system. In an era when concerns for healthcare costs predominate, why should St. Charles County compound the problem by dumping a multitude of cold and allergy sufferers onto the bloated calendars of busy doctors?

And what about consumers? Certainly, the monetary and inconvenience costs of traveling to — and paying for — doctor’s visits and the time exhausted circumventing the ordinance by purchasing medications in non-regulated jurisdictions are substantial. The St. Charles County Council has voted, in effect, to shift meth-related law enforcement costs onto the backs of innocent cold and allergy sufferers.

This cost shift acts much like a tax on the purchase and consumption of cold and allergy medications. As with a tax, the “effective” price for these medications rises for consumers. Similar to a tax, the result is a deadweight loss as consumers ultimately consume less than the optimal amount of medications.

Seriously, is the real purpose of the “prescription mandate” to engineer a local law enforcement database to better monitor the activities of private citizens? If so, shouldn’t someone conduct a detailed cost-benefit analysis comparing the expected benefits with the known costs? After all, pharmacists are already required to request and to enter personal information into a database tracking consumers of pseudophedrine-based medications.

And what can be done to alleviate the competitive disadvantages and inherent inequities dogging those pharmacies who happen to be located wholly within a prescription mandate jurisdiction? They will certainly lose business to competitors fortunate enough to be situated in non-mandate counties and municipalities. Although a statewide mandate would address this latter concern, it nevertheless would still give rise to the corruption of medicine and tax-imposed deadweight losses, as discussed above.

The war against meth is not a free task. The costs associated must ultimately be borne by taxpayers. The issue is whether the selected means for conducting that war are wise and efficient, implying that all costs and benefits have been carefully weighed and compared.

The Show-Me Institute has been one of the leaders in urging Missouri’s attorney general, Chris Koster, to join the lawsuit against the health care reform bill, so we are pleased to note that he finally took action this morning. Better late than never. But regrettably, the amicus brief that Koster filed in the multistate lawsuit only goes halfway.

Although Koster says that the individual mandate is unconstitutional, he also says that it’s severable from the rest of the law. In other words, Koster believes that the federal health care law can remain in place even though the individual insurance mandate can be struck down.

Judge George Vinson went further in his ruling. He ruled that Congress does not have the power to force people to buy something that they don’t want, and therefore the entire law must be declared void.

I understand that many people object to the regulation because of the individual mandate. However, there are additional reasons to oppose this law in Missouri. With or without the individual mandate, the PPACA will raise the cost of health care in Missouri by increasing mandates to cover specific conditions and expanding the eligibility requirements for Medicaid. This component of policy will burden state budgets and threaten state sovereignty. In order to come up with the cash, Missouri will have to raise taxes, cut services, or both.

Koster’s decision to file an amicus brief may be partly due to the Show-Me Intitute’s prodding. Encouraging him to join the lawsuit is a topic that we’ve tracked closely. Show-Me Institute staff have released an open letter, an editorial, an “urgent call for action” via email, and several blog posts on the subject.

The judge in the multstate lawsuit struck down the individual mandate component of the federal health care regulation.

Twenty-six states were party to the lawsuit, but Missouri was not among them. Even though Missourians signaled their overwhelming opposition to the health care regulation by passing Proposition C, Missouri’s attorney general, Chris Koster, didn’t jump on board.

This ruling is good news for Missourians. If the Supreme Court upholds this ruling, Congress will not be able to force people to buy something that they don’t want.

Hopefully, this foreshadows success for Missouri Lt. Gov. Peter Kinder’s own lawsuit challenging the health care reform law. So far, two federal judges have upheld the law, but two have ruled that it is unconstitutional (a lawsuit in Virginia, and now this multistate lawsuit in Florida).

We have followed the Florida lawsuit very closely at the Show-Me Institute, and we will continue to track it as it progresses through the courts.

The full text of the Florida ruling is available online.

I highlighted previously how the federal government is arbitrarily exempting favored groups from the health care regulation. To date, the U.S. Department of Health and Human Services has granted waivers to 800 unions and companies.

These special exemptions encourage corruption and lobbying. This system rewards parties that make large campaign contributions in exchange for special favors. It also encourages private businesses to hire teams of lobbyists to ensure that new laws and regulations don’t put them out of business.

The Washington Times Water Cooler blog asks:

If the new health care act is so great why are companies applying for the HHS exemption waivers to avoid the mandate? And more importantly, if companies should be so excited about the health care law, why is HHS granting waivers to “90-plus” who apply for them?

My thoughts exactly. I also wonder: Won’t this push even more of the costs of the health care regulation onto the groups and individuals that aren’t issued waivers?

Missouri Attorney General Chris Koster has not yet signed onto the multistate lawsuit challenging the federal health care law. At least he is beginning to talk about the issue, however. From an article by Brian Hook at the Missouri Watchdog:

Acknowledging the will of the state legislature, a vote by the people, and his fiduciary duty, Missouri Attorney General Chris Koster inched closer to challenging the constitutionality of the federal health care law.

“We haven’t finally formulated what the plans are,” said Koster, following a question by Missouri Watchdog about his plans regarding the health care law during a press conference Tuesday in St. Louis.

Twenty-six states have already joined. Why hasn’t Missouri yet? What’s the delay?

In the annals of progressive thought, there was a fleeting moment when Ted Kennedy, Ralph Nader, and other left-wing icons sang the praises of unfettered free-market capitalism. This happened with the passage of the 1978 Airline Deregulation Act during Jimmy Carter’s presidency.

The recent passing of Alfred E. Kahn is a reminder of that remarkable moment — when leaders on both sides of the political and ideological spectrum agreed to deregulate the U.S. airline industry. In 1977, incoming President Carter appointed the flamboyant and outspoken Kahn as chairman of the Civil Aeronautics Board, the agency responsible for setting airline routes, schedules and fares. Kahn set out on a mission of writing himself and his agency out of a job — opening the industry to real competition for the first time. Kahn gave airlines the freedom to enter (and exit) domestic markets and to price as they pleased. He also allowed new low-cost, low-fare airlines to challenge the incumbents.
Continue reading "Needed: An Alfred Kahn for Health Care Reform" »

Not only have a majority of Missouri voters signaled that they’re against the health care law, lawmakers in Jeff City have, too. The Missouri Senate recently filed a resolution, SR 27, encouraging Attorney General Chris Koster to join the multistate lawsuit in Florida that challenges the federal health care regulation. This resolution is similar to the one passed recently by the Missouri House, HR 39. Practically the only person who hasn’t demonstrated interest in joining the lawsuit is Koster.

This is an issue that we have been tracking very closely at the Show-Me Institute.

Critics argue that joining the lawsuit will be a waste of time and money for Missouri. This argument is not factually true; Missouri will incur few costs by joining. If Koster decided to join the lawsuit, the only cost for the taxpayers of Missouri would be the time it takes for somebody in the attorney general’s office to write the letter, along with the price of a postage stamp — if that.

Although states are free to help offset the costs of the lawsuit, it is completely voluntary. Furthermore, the maximum amount that they may contribute is $5,000. According to the 2010 U.S. Census, there are 5,988,927 individuals living in Missouri. If they were to split this sum equally, each person would pay less than nine hundredths of one cent to fund Missouri’s contribution to the lawsuit. That’s 9 cents for every 100 residents. Decrying the cost of the lawsuit is a smokescreen argument.

Koster would be wise to free-ride on the Florida lawsuit. Missourians have nothing to lose by joining the lawsuit, but they have much to gain, such as freedom in their health care decisions.

Here is a fantastic video made by the students of Young Americans for Liberty at the University of Virginia (full disclosure: in my spare time, I am the Missouri State Chair for YAL) showing how we can make more people happy by keeping the ability to make choices at more local levels:

The idea has almost innumerable applications, but the most relevant example for Missourians today is the federal health care reform bill. Missourians overwhelmingly rejected the portion of the law requiring all Americans to purchase health insurance when they voted for Proposition C in August. However, barring repeal (effectively impossible) or a court injunction (more likely, especially if more attorneys general, like Missouri’s Chris Koster, join the pending lawsuit on the matter), we will all be forced to participate in a program that most of us dislike.

If decisions about health care policy were left up to the states, we could have a multitude of systems, which would better reflect the wishes of individual voters and generate more information about which policies work best. Some politicians in Vermont, including the new governor, have floated the idea of creating a single-payer health care system for the state. I think that’s a terrible policy because it removes competition from the system, and along with it any incentive to perform better-quality work for less money, but it is certainly within Vermont’s rights under the Constitution to try it. If the program succeeds, great. If it fails, we can all learn a valuable lesson and it will be far easier to change a state law than federal law.

Of course, the best system would be no system at all: Allow all individuals to decide what kind of health care plan they want. (We could design a health insurance voucher program for those without the means to pay for it on their own. This would allow them to choose among a number of options instead of being forced into a government program.) Government rules are one-size-fits-all by nature, but each person has different needs and wants. We are happiest when we can pursue those goals as we see fit.

Yesterday, with a vote of 115-46, the Missouri House passed a resolution encouraging Missouri to join the multistate lawsuit in Frorida. This lawsuit challenges the federal health care law and encourages Congress to repeal it.

Encouraging Attorney General Chris Koster to join the lawsuit is a topic that we’ve been tracking closely at the Show-Me Institute. Executive Director Brenda Talent released an open letter to the attorney general on Thursday. I discussed the topic in an editorial that published in the Springfield News-Leader, on the Mike Ferguson show on the Eagle 93.9 FM in Columbia, and in some posts on the blog. The Show-Me Institute also released an “urgent call for action” via email last week.

With the passage of Proposition C, Missouri voters were the first to oppose this attempt by the federal government to take control over health care, and they deserve to have an attorney general that listens to them. The precedent that Missourians set by approving Proposition C could be continued if Koster joins the lawsuit. The fact that the Missouri House has passed a resolution is another signal that Missourians oppose the health care law.

Other states have recently jumped on board, including Wisconsin, Ohio, Wyoming, and Kansas. There’s no compelling reason why Missouri should not be on the list.

Watch out. According to the latest report from the Associated Press (AP), despite recent attempts by states to limit the availability of pseudoephedrine, a key ingredient in both meth production and cold medicine, meth production is up. The AP reached this conclusion after its review of federal data showing that “meth incidents” are on the rise.

Meth incidents, I should note, are a count of the number of times that meth labs, dumpsites, or even meth production equipment is seized. The statistic is not, as I once naïvely thought, a count of meth lab explosions, or even labs themselves. The AP’s analysis does not delve into which types of “incidents” are on the rise, just that the total is up. Additionally, an uptick in meth lab incidents could just be an effect of law enforcement cracking down on meth production more effectively. So, already, we should approach the AP analysis with skepticism.

A few years ago, a number of states, including Missouri, limited the purchase of pseudoephedrine, restricted where it could be sold, and began to track those who purchased the drug. The AP says that those restrictions have created a black market trade in pseudoephedrine, the cold medicine.

From the AP:

An Associated Press review of federal data shows that the lure of such easy money has drawn thousands of new people into the methamphetamine underworld over the last few years.

“It’s almost like a sub-criminal culture,” said Gary Boggs, an agent at the Drug Enforcement Administration. “You’ll see them with a GPS unit set up in a van with a list of every single pharmacy or retail outlet. They’ll spend the entire week going store to store and buy to the limit.”

Well, don’t count me among the shocked. After all, it’s pretty common knowledge that regulation and restriction can create all sorts of black markets of perfectly banal commodities, such as “food, cookware, haircuts, clothing, machinery repair, house building—almost everything people use in their everyday lives.” In this case, government restriction has made something that had previously been easy to acquire that much more difficult, thus increasing the price of pseudoephedrine on the black market to far above the, say, Walgreens price.

Recent government regulation of pseudoephedrine appears to have led to a brief decline in meth production after the regulations were put in place, followed by a bounce back as meth producers found other ways to acquire drug ingredients. In the past year there were, as the AP breathlessly tells it, “10,064 meth incidents, a 62 percent rise over the previous two years.”

Yikes, I guess. This means that there are 0.00003278 meth incidents for every person in the U.S. If that’s too many decimal places for you, perhaps a better way of looking at it would be to say that there is one meth lab incident for every 30,505 people. Per year. And that can be as minor as the seizure of “chemicals and glassware.” I personally am more concerned with car fatalities (which are, by definition, fatal and occur three times more frequently than meth lab incidents).

Say you, or perhaps Gov. Jay Nixon, are still concerned by this uptick in meth statistics. Let’s set aside that we don’t know what type of “incident” is on the rise; whether this is attributable to an increase in use or to better law enforcement; whether the previous low points in the statistics were attributable to declining drug production, or just a shift from one type of drug production to another; and the extraordinarily probable explanation that drug producers will figure out how to adapt (as they have already done) to additional government regulation of pseudoephedrine.

Let’s say that the governor, or even AP reporters, suggest instead that pseudoephedrine be put behind a prescription wall. Only those who have a prescription from a doctor would be allowed to purchase cold medicine. Would that solve the problem? And would that step be worth it?

Okay, yes, those were rhetorical questions. For the first question: Of course not. If meth producers are paying individuals to buy up pseudoephedrine until they hit government-imposed purchased limits, it certainly seems likely that those producers would pay individuals to take the additional step of getting prescriptions to buy up pseudoephedrine. I suppose such a policy would help at least one group of people: Those who could get a perscription and then sell pseudoephedrine to meth producers. I bet that they could get a better price.

The second question is one that I’ve already answered on this blog, and has the same answer as the first: Of course not! There are so few “meth incidents” that to reduce them even by half hardly seems worth the cost to everyone else of either having to go to the doctor’s office when they have a cold, or forgoing treatment.

Again, I’d like to remind legislators, governors, and reporters that health care costs are a huge issue that seems insurmountable at the moment. Regulations like these are bound to increase those costs: Either individuals will have to pay for a doctor’s time in order to obtain a prescription for cold relief, or, if that person has a low co-pay, this regulation will raise health insurance providers’ costs, which will most certainly result in health insurance premium costs rising.

I hope that politicians and reporters will find some other, less intrusive issue to sensationalize for personal gain.

(H/T for post title suggestion to John Payne.)

Today, the Springfield News-Leader ran my recent editorial in which I argue that Attorney General Chris Koster should join the multistate lawsuit challenging the federal takeover of health care. I have enjoyed reading the comments there, because many are quite colorful. I would like to address the following comment specifically, because it depends on assumptions that are false:

I hope the SNL editors research and footnote the types of benefits offered to the Show-Me Institute’s employees, if any, and that Harbin discloses her participation, if any, in them. My guess is that she would refuse to disclose which benefits she receives, much like the GOP Congress refused to do this week.

The commenter guessed incorrectly. Even though I don’t consider it to be relevant to my argument, nor do I consider it to be the responsibility of the Springfield News-Leader to investigate it before running an editorial, I’m happy to clarify the health care benefits that I enjoy. This is no secret — it’s something that I mentioned yesterday when I was talking about health care policy on the Mike Ferguson show on the Eagle 93.9 FM in Columbia. It’s a characteristic of my generation — we tend to be very willing to disclose details of our finances.

I have a health savings account (HSA) and a health insurance policy with a $5,000 deductible. My monthly premium, which I pay out of pocket, is around $100, which is manageable. I work at the Show-Me Institute because I am committed to the ideas of liberty and individual responsibility — certainly not because I receive a lucrative benefits package, because I don’t. If I simply wanted a fat paycheck, I would get a job in the private sector or become a school superintendent.

Insurance policies are not one-size-fits-all, particularly in health care. Although high deductible insurance plans and HSAs work very well for healthy 20-somethings like John Payne and me, I’ll readily admit that it is not something that works best for everybody. However, a plan that works best for everybody doesn’t exist. A so-called Cadillac insurance plan with a low deductible, for instance, would be a poor fit for me at this time in my life. This is precisely why health care should remain in the free market — it preserves consumer choice and ensures that individuals can select the policies that fit their needs. We can see that when the government increases the number of mandates, the cost of coverage rises.

Show-Me Institute staff and scholars have highlighted the advantages of HSAs previously. As one particular benefit, my policy is portable (i.e., it’s not tied to my employer). Therefore, if I were to leave the Show-Me Institute, my health care coverage would be unaffected. From my perspective as a young person, an additional benefit of an HSA is that it serves as a tax-sheltered savings account. Unlike flexible savings accounts, which expire every Dec. 31, the money that I put into my HSA rolls over each year. Furthermore, if I don’t spend the money in my account by age 65, I can withdraw it without penalty like I would with a traditional IRA.

The bottom line is that it is important to preserve choice in health care. Overall welfare would decrease if families and individuals weren’t free to choose the policies that best fit their particular lifestyles and budget constraints.

Typically, when I discuss how government picks winners and losers in the marketplace, it’s in the context of targeted tax credits in Missouri. The practice of picking and choosing is disadvantageous for overall welfare because it increases the cost of doing business for non-favored groups. This places them at an artificial competitive disadvantage and makes it difficult to compete against groups that enjoy the government’s favor.

According to an editorial in the Wall Street Journal, the government is picking winners and losers
by exempting some companies from regulation, and not others. From the editorial:

One of these effects [of the health care law] is the spectacle of employers going hat-in-hand to the Department of Health and Human Services (HHS) for waivers from some of the law’s more onerous provisions. [...]

It’s not hard to connect the dots. The Obama administration is using waivers to reward friends. On the flip side, business executives will be discouraged from contributing to the president’s opponents or from taking any other steps that might upset the White House or its political appointees at HHS.

Providing special exemptions to some is a tacit admission that the cost of providing health care under the new regulations is prohibitively high. From the perspective of overall welfare, it would be better if the the federal government enacted a policy that favored no groups over others.

Contributors to Show-Me Daily have previously discussed the negative consequences of the Patient Protection and Affordable Care Act. In particular, the measure will will ultimately limit health care coverage because it eliminates limited-benefit health insurance plans known as “mini-meds.” Additionally, it will likely increase unemployment, particularly among those with low incomes, because it increases the cost of labor to an employer.