 It's a privilege to have the opportunity to introduce our guest, Professor Richard Epstein. But first, let me just say that on behalf of the McLean Center of Clinical Medical Ethics, I welcome you to today's lecture in our series of ethical issues in health care reform. Today's talk is the fourth talk this quarter. I hope you can join us next week when Dr. Karen Kim, Professor of Medicine here at the University of Chicago, will talk about immigrants. And the ACA access is not enough. Now I have the privilege of introducing today's speaker, Richard Epstein. Richard Epstein is currently the Lawrence A. Tish Professor of Law at New York University. He's an adjunct scholar at the Cato Institute, a Peter and Kirsten Bedford Senior Fellow at Stanford University's Hoover Institution, as well as the James Parker Hall Distinguished Service Professor of Law Emeritus, as well as a senior lecturer at the University of Chicago Law School, a policy advisor for the Heartland Institute, and a faculty member at the McLean Center for Clinical Medical Ethics. Richard, if I could compete with you, I would have done that in one breath, but I couldn't. From 1991 to 2010, Professor Epstein was the director of the John M. Olin Program in Law and Economics here at the University of Chicago. He graduated summa cum laude from Columbia, received a B.A. in law from Oxford in 1966, graduated cum laude from Yale Law School with an LLB in 1968, and from the University of Ghent with an LLB in 2003. Professor Epstein is known for his influential work on a wide range of constitutional, economic, and historical subjects for which he has received numerous awards, including the Bradley Prize in 2011. The Bradley Foundation noted that Professor Epstein's research, teaching, and writing have brought clarity to the law and have helped to advance freedom. Today, Professor Epstein will speak on the implementation of healthcare exchanges under the ACA. Please join me in giving a warm welcome to Richard. But it's a very great pleasure to be here. I've just been told two minutes ago that I'm supposed to speak for 50 minutes, and I'm not so sure that I will make it. I may go long or I may go short. If I go long, stop me. If I go short, by all means, ask some kind of question. Well, it is an extremely difficult question to figure out how it is that we decide on the way in which the Obamacare healthcare exchanges are going to be implemented. The first and perhaps most significant problem is that all of the data that is necessary to make any kind of evaluation seems to be lodged in many disparate and uncoordinated hands, and there is nobody inside the government or in the private industry which seems to have a huge amount of willingness in order to explain exactly what the state of play is, both with those people who are no longer covered by their previous plans which are deemed to be substandard under the Obamacare legislation, and also because we don't quite know the number of people who signed up under the exchanges for individuals, how many are actually going to pay and going to be registered. We also know that there's some very uncertain in deferments both with respect to the employer side of the mandate with respect to large firms for one year and with respect to small firms for two years, so that what's happened is this is a system is just in play. The other feature just to sort of describe why it is that we don't know everything is we also don't know what the law is. Now, what do I mean by that? Well, there are many provisions which have been drafted into the particular statute, and many of them are actually covered by the word channel, but when you see the way in which the thing has been implemented at the executory level by the administration and HHS and elsewhere, what happens is many of these provisions start to get waived either on a block basis or on an individual basis. The process started with the MedMidi plans back in 2010 and 2011 when it became very clear that many unions and many firms had announced that if you require us to give all the benefits that are going to be in these particular plans, we will just have to cancel the entire situation. The exchanges were not open to take them up at that time and the administration made a judgment that they were going to give individualized suspensions with respect to various of the substantive requirements in order to allow those plans to continue in operation. This form of government by waiver is very erratic because you have to apply separately. There's no guarantee of uniformity. There is indeed some evidence that the union plans got more solicitous consideration than did business plans. Blue states did better than red states on these kinds of things. The data is against the mercury so we don't know whether we're dealing with truth fully established or with allegations to be strongly and devoutly believed but that creates a kind of an uncertainty against the backlog. But it turns out giving waivers is a little bit like eating M&Ms, the moment you start having one, you're gonna have a next, you're gonna have a third, you're going to have a fourth. So when somebody asked me to make a prediction about how the programs are going to be implemented in the future or indeed how they've been implemented thus far, until you know exactly what the pattern of past and future waivers is going to be, it becomes extremely difficult and extremely problematic to sort of make some kind of a comprehensive overview as to whether or not the plan is going to be successful or is not going to be successful in the way in which this thing operates. Let me give you, for example, one element which is likely to cause a huge amount of confusion and uncertainty in the future. One of the major structural mistakes, I'm gonna use that term with some degree of confidence of the Obamacast situation, was that it is thought that the only way in which you could expend more resources for patient care was to reduce the amount of resources that were permissible to spend with respect to administrative expenses. A term which is left undefined in the statute and is subject to regulations which are a mile high and a mile deep. Well, it turns out that once you start doing that, the companies which have thought that their efficient solution must have more administrative expenses to control, say, for example, fraud or to police the way in which treatments will go, they were told, no, you have to devote it to plea treatment. This could make these plans very unstable and one of the things that the administration can do and I suspect will do is if the shoe starts to bite too tightly with respect to these administrative expenses, they will simply waive the requirement and allow you to spend a bit more money on administration than you thought was possible under the statute. Moment you start making all of these changes, you'll note that they all go in one direction. They don't make the program more coercive, they tend to make it less coercive. They tend to move it back even slightly towards a more market free choice kind of orientation relative to a strong government oversight interpretation. That extra room may well give it just enough chance for the program to succeed in terms of the way in which it's going. As somebody who was sort of ambivalent about the program to put it mildly, in fact, wish that had never been enacted, I feel like Marx was when he started to talk about the critique of the Got The Program back in the 1870s and the famous debate that he had is what you really want to do about capitalism, he said, is let the whole thing run itself into the ground so it explodes and there'll be a few casualties along the way but so be it. And you could say the same thing about Obama can't be really tough on the executive power to give waivers and make sure that the thing implodes unless they get congressional assistance. On the other hand, a lot of people will die in the course of this particular exercise and I'm not real keen on that. So then what you do is you talk about the gradualist approach, which says what we do, everything we can within the framework to keep the thing alive and if it turns out that we have to pay the price of having to go on in perpetuity, so be it. It should be clear to you that I don't like either of these alternatives but the moment you put a program like this into place what you have to do is to sort of understand the institutional dynamics. It is relatively easy to block a program from going into place before it starts but the moment this thing is in place it turns out that the reliance interests that take place up and down across the entire system of health care are going to be long, deep and profound and all of the costs which are reliance in nature that is figuring out how to program your computers to satisfy the requirements associated with the ACA and so forth. Many of these costs are not salvageable if it turns out that you reverse the fundamental decision to go inside the program. So it's no longer a decision of saying look, we think this is a mistake, let's not do anything at all or go in another direction. It's now a question, having gone in this direction and put so much cash on the table on this particular side, are we so confident that getting rid of the entire program is such a moral necessity that we're willing to largely jettison all of the expenditures that take place. The opponents I think of Obamacare well understand this which is why the repeal campaign basically began the day that the thing was enacted because I think everybody on both sides of the political spectrum understands if you're talking about how you implement these kinds of exchanges that the longer you go down this particular path it turns out the more difficult it is to sort of reverse in any fundamental sense the direction in which you can take the program in which you're involved. And you can now start to see the political rhetoric taking place in exactly that fashion. You get the president of the United States getting upstairs in front of the world and saying, you know, this particular debate is over. The whole thing is now clearly here to stay and the only thing that I'm willing to consider are gradual suggestions to the program. I'm not willing to consider that as if I ever were any kind of a fundamental repeal. That in turn then leaves people on the other side to start to be more anxious about it. And one of the questions that we really have to ask is if you try to go forward with this program even with these various kinds of waivers just how good or how bad is it going to turn out to be? And let me see if I can give you some sense of how it is I think you want to look at this particular problem. Earlier last week I think it was a very distinguished economist from the Harvard University a man named David Cutler came by and he gave a presentation to the economics department which gave what I thought to be an all too sunny evaluation of the way in which first the Massachusetts program and more importantly the Obama program is now going into effect. And what happens is if you look at the whole thing as an aggregate there are certain features of it which have widespread public support and popularity which are bundled together with those features of it most notably the exchanges which have been much more subject to various kinds of difficulties. So if you look at the kinds of things which generally have in varying degrees some popular support probably the most famous and the most popular innovation of the Obama can statue is the simple proposition which says that parents are allowed to keep their not so minor children up to the age of 26 on their policies. And this of course has huge resonance in an age in which economic prospects for kids right out of college turns out to term grim. Many of these children are living at home to put them into the individual market which has hugely skewed in crazy rates because of the community rating cross subsidy. This is an absolute disaster. You can't repeal in many cases the community rating system so if you leave them on the parents policy essentially it's win-win. Now do we chalk this up as a victory for Obama can? I think the answer to that question should be no. There is nothing about this particular provision which cannot be enacted wholly separate from and independent of everything else that you want to do. And indeed it's not even clear that you have to do this by way of an enactment. One of the things that you can generally say is that the kids have been on the policy and you've got some history about it. All the standard insurance problems that you have with adverse selection and moral hazard are not going to take place because these are people who are continuing coverages. They're not new people who are signing up for the kinds of coverages that would otherwise be. And so my prediction is for relatively modest premium tweaks all the private sector films would just see this as a new source of business with a very attractive kind of customer base and they'd be willing to take it. So if in fact you want to chalk this up as a benefit for Obama can it's kind of a little bit of double counting. What you're doing is you're saying when you make legislative a particular proposal which has a broad degree of market acceptance we should treat it as though the market would never move in response to that. And that I think is a probably a mistake. Another area in which people start to constantly worry about this has to do with the situation with respect to pre-existing conditions. Now I think the most important thing to remember is there's a 1996 statute called HIPAA which is sitting out there which had many of the same kinds of provisions in it with respect to the ability to turn people down with respect to pre-existing condition. And of course the Obamacast statute does something in exactly the same way but it does that I have to say in an absolutely ham-handed and completely indefensible manner that is it makes the world law worse rather than better. And let me just give you what the technical sort of situation is. If in fact what you do is you have a situation in which people can sign up no questions asked at any time for any particular set of medical benefits what will happen is you will get the complete inversion of the standard insurance model of behavior. The standard model of insurance runs as follows. The insured knows a great deal about his or her particular condition and if allowed to sign up freely will choose to stay out when the probability of getting a recovery in excess of premium is low and will join up when it turns out that this excess of premium is going to be hot. In order to stop this, the standard rules have always required or have always required that individuals be prepared to subject themselves to various kinds of quest tests and examinations by the insurance companies who are writing the policy. And this means if you're insuring a ship the insurance company can come out and see that the hole in fact is water tight and see worthy and all the rest of that stuff. And it also means that they can impose conditions with respect to coverage so that if you don't have a radio you will lose your coverage with respect to the ongoing behavior. And the whole point of all of these conditions is to minimize the probability of accident by requiring the client or the insured to take various kinds of precautions and then insure over the remainder of the risk. And there is no question that billions upon billions of dollars in the insurance industry depend upon a knowledge or a model of asymmetrical information where you treat as the weaker party, the insurance company, not the individual. And obviously when you're doing this it's because of the asymmetry of the information it doesn't have to do with the expected value or wealth of the two companies to the trade and the way in which you protect individual clients against exploitation by a larger and more powerful firm is to make the simple judgment that there are lots of competitive firms out there and so they will bid the price down to marginal cost and you'll get yourself an efficient competitive equilibrium. And this is not fantasy. Virtually every commercial market that you see works in exactly this fashion and the moment you start seeing very funny restrictions on the types of coverage that you can issue or the rates that you can charge these markets tend to implode fairly dramatically sometimes actually to the point of extinction. The Obamacare model is exactly the opposite. What it does is it assumes that these companies all have predatory power or exploitative advantages of some sort. So what they do is they allow you to keep all your information private when it goes into the firm. Once you do this you face the real problem of this death spiral which is a serious adverse selection issue and the way in which you originally were going to stop this was through the introduction of the individual and the employer mandate which are those people who wanna opt out of the system are gonna have to pay some fixed come into the pot so as to combat the adverse selection situation. For those of you who followed the constitutional debate, there was a huge, huge debate as to whether or not this mandate was constitutional on the grounds that never has Congress required people to pay money in order to stay out of certain kinds of activities and that argument actually sort of won in a split decision but the taxation penalty argument went the other way so the mandate was sustained barely on a theory which had lost in all the lower courts but which turned out to be triumphant with Justice Roberts in the Supreme Court. But of course this was all perciflosh, it's a joke because the moment it became clear that the mandate situation was going to be adversely impacted by the very erratic way in which the whole exchanges were going to be implemented on a Friday afternoon when nobody was paying any attention, it was essentially a way for any individual who said it's an inconvenience to pay the money and I think you can say pretty much everybody will be in that particular camp so the individual mandate is no longer. Now what should they have done? But rather than creating this heroic situation which allows you to sign up and sign off, there are a couple of things you could have done. One of them is of course is you could have modest waiting periods which will mean that you can't get in the day before you need the operation and so if you break a leg for example and you wanna sign up the next day can't do it under these circumstances. If you know you can sign up the day of the accident you may back up a little bit longer and the other thing that you could do is you say yes you have the right to pick up when you want to sign up but if you sign up you gotta stay for a year or something of the sort and give cancellation penalties for those people who wanna get out of the system a bit earlier on in order to reduce this type of situation and that is not what the situation is with respect to the ACA and again one of the questions is now that we've gotten rid of the mandate by executive action are we going to start to switch in some way, shape, or form some of the rules that are associated with the way in which the pre-existing conditions issue is going to be administered by the state and that it sources a very difficult issue. In practice I think most of the people who looked at HIPAA have had a huge surprise. On the one hand they thought that the pre-existing condition issue would be really big and generally speaking it has not proved to be that big it's a 2% issue with respect to healthcare often you can handle it by contracts between insurers so as to make for a movement to the risk back and forth between insurance companies I'll take your sick client if you pay enough money so that I can basically cover the pre-existing condition you can do those kinds of deals and handle it. The real problem with respect to HIPAA turns out to be on its privacy side the kinds of extravagant regulations as to what information you could share and how you could use it and whom you could use it with this is roughly speaking a $25 billion a year enterprise now every doctor in every single interaction has to worry about HIPAA authorizations Norman Bradburn who was active in this told one day at one of these workshops hey he said you know the typical medical record gets accessed 25 times in the course of a sort of a given billing cycle or a given year and every one of those access has to be HIPAA compliant with respect to the system you can use various kinds of programs to ease it you can have frequently asked questions that you can answer but the whole thing turns out to be pretty much of a nightmare largely redundant and probably foolish and yet there's nothing whatsoever about the ACA which even takes this issue on because one of the major features that the president and the Democratic Party did is we don't want to take on anything that's controversial we just want to make sure that we can get enough people to cobble together a coalition which will allow us to get this thing through and if you want to fight HIPAA you're going to get all the privacy groups upsetting against you and it could sink the entire ship so who knows which way you want to count that the third feature turns out to be the Medicaid expansion and this one most people have no idea what the litigation is about or in fact why it was such a grotesque plan in the first place look it is perfectly settled under American constitutional law that Congress can put into place any form of Medicaid program that it wants and it will be free of any constitutional challenges by curmudgeons like myself who actually think that forced transfers between individuals raise serious constitutional issue if you wanted to do that you could simply say well we're going to lower the ages that you need we're going to expand the conditions that are eligible we're going to expand the benefits that we give under the programs and you do it federally and you do it uniformly and you would never have had a constitutional case but what these guys did was to say look we are going to give you a carrot and a stick the carrot is that if in fact you adopt an expanded version of the Medicaid program we will give you lots of extra money but we won't give you a hundred cents on the dollar and it will start to disappear as you reach you know 2018, 2019, 2020 and so forth and by the way if you don't do it you lose all your Medicaid money from all your pre-existing programs so you're out 50 billion dollars if you're the state of California or some such number and the attack was on that particular form of doing business with carrots and sticks it turned out that this was a bluff and many of the states decided that they would call the bluff and refuse to take the money and the issue is whether or not the government could then yank all the dollars out from them I actually wrote a brief saying that they could not do this it would be regarded as coercive and to the amazement of most people we won this one seven to two not five to four now this is crazy to attribute any expansion in Medicaid enrollment to the Obamacare statue the correct role was they should have never gone down this quixotic role to begin with they should have simply expanded the program within its traditional contours adding or subtracting people as they saw fit making state block grants or not as they saw fit without inviting this constitutional struggle in the form that they did it so if we now say that there are two or three million additional people who have come on by virtue of Obamacare it's not a credit to the particular statute in question it's just simply a sign of a ham-handed way in which this program was done because now we no longer have any semblance of national uniformity some states are out, other states are in and there's just no reason whatsoever to do business in this kind of a cock-eyed fashion so if that's an increased enrollment it's not attributable to anything the bill does what the bill is distinctive about is title one which worries about the creation of the individual and the employer-manding that's the one thing that we have to worry about that's what's distinctive with respect to the bill now let me sort of give you a kind of a general accounting about how some of these things work so I think you can see some of the difficulties that are associated with this particular operation the first thing you have to do is to remember that there are a very large number of uninsured individuals out there prior to the passage of this particular statute but the second thing that you have to remember is that this is not some random fact of nature but rather is a consistent and necessary consequence of policies adopted at the state and the federal level over the previous 30 years and what I mean by that is if you were to go back to about 1980 or so and ask yourself the percentage of Americans in the workforce who were in fact covered by various kinds of employer-based plans you would discover that the appropriate answer to that particular question was about 60% of the population in the working force by the time you got the 2010 60% has become 50% if you're talking about a workforce roughly speaking of 150 million people it means that 10% is 15 million of these people who are uninsured in fact were uninsured at a later time because of earlier policies well what is it that one did well what one did in effect is to say look everybody knows that the way in which we expand the coverage that is given under medical care is to condition the ability of an employer to write insurance on its ability or willingness to include certain things inside the overall packaging question and that could be neonatal care it could be psychiatric benefits it could be various kinds of medicines and procedures and so forth somebody like myself who's a market-oriented lawyer and economist when you start looking at these things this is the conclusion that you reach starting from the ex-ante perspective at the time that the policy is sound if in fact these things were worth including in terms of the cost that they imposed on the patients and the benefits that they gave to them somebody would do it voluntarily how do I know that well I've looked at a number of these policies and I've never seen a policy which was written as follows this policy requires you to pay $10,000 a year this policy gives you no benefits whatsoever it's quite clear they're giving you some package of benefits for some cost and there's absolutely no incentive on the part of an insurance company to force down the throats of individuals coverages that they don't like this proposition is true in a competitive market which the health market is in it is also true in a monopolistic market the monopolist will raise prices that exclude other individuals but he has no incentive whatsoever to make his own life miserable by including in a series of policies a set of terms that nobody wants to have and so the moment you start to understand that the question of what terms you have to regulate cannot be decided as an indirect effort to rectify what you think to be a wrong or inferior market structure it has to be based on the argument that you know better than the companies and better than their customers and better than the customers, employers representation exactly what they want that is what our friend Friedrich Hayek he may not be a friend to everybody in this room but he is to me called the fatal conceit and what he meant by that term quite simply is the idea that somebody standing apart and separate from a particular case knows more about the economic benefits and costs of different kinds of contractual arrangements is a form of foolishness people have enough trouble figuring out what their own preferences are they have enough trouble trying to evaluate their own uncertainty the thought that somebody who's sitting far away and who has no direct knowledge to their preference set or to their own adaptive behaviors will do a better job on this is in fact the conceit which nobody ought to have who is the most conceited person in the world on the strength of this particular situation it's none other than the president of the United States because he is prepared to go around as policy after policy gets canceled and to announce that they were all substandard by a standard only he can divine and cannot articulate with respect to anybody else so this particular attitude essentially meant this follows we're gonna throw this thing on and you look at it, what's gonna happen? Well, most of the time you can say with complete confidence that in this particular case the additional benefit which is worth less than the additional cost will not cause people to cancel the policy and in fact one of the delusion of many policy makers is that people will never respond to these incentives because they're always inframodal means they're never the person hanging over the edge of the cliff who's going to fall off when it turns out that the land is pushed back in this way or the water advances in that way but what happens is you're right 90% of the time but 10% of the time you're wrong and so in most cases you take out $100 worth of consumer surplus, nothing happens then there'll be one case where you take out $10 in consumer surplus, you flip over the ratio and the whole policy goes so that what you're doing without even knowing it is playing a very dangerous high stakes game in which you hope to be able to achieve small incremental benefits according to some social standard that you have that I don't share without taking into account that the gradual gains are often met by a precipitous fall at the edge of a cliff when the system in fact goes in another way and what happened is over a period of 30 years if you're losing 15 million people in a workforce it means roughly speaking a half a million people every year are dropping out of this system because some employer found that it was cheaper to give wage adjustments to their workers than to keep the coverages in question so what is the great genius of the Obamacare system? It is to double down on a failed mechanism what we do now is if you look at the thing one of the most conspicuous features with respect to the program is it's set of essential minimum benefits that are required of everybody in these plans there was some question at some time as to whether or not grandfathered plans could be exempt from this sort of thing but it has become perfectly clear by a series of Byzantine rules that this is just not going to happen I'll give you but one strategy and then you could take it or leave it if you want what's the definition of a plan? and most of you say well I'm insured by Blue Cross Blue Shield Plan number 1123 and plan number 1123 is subject to amendments that can be put in periodically subject maybe to review by an insurance commissioner or by the employer or whatever it is and that's your definition of a plan which has gone through many many transformations that's not the statutory definition of a plan but the statutory definition of the plan is the moment you change anyone benefit or coverage provision or cost provision or procedural provision is now a different plan because it has different content so what you thought was a plan that you'd had for 30 years you were sadly misinformed in the same way that Rick Blaine was when he thought there was water in Casablanca because you had not had just one plan you had hundreds of different plans you just weren't aware of it and so once you start using definitions like this what you do is you create a certain amount of deep public untrust because nobody now knows whether the English language in which you praise the plan is the legal language in which it turns out that you describe it and this kind of two talking is in fact one of the most dangerous things that you can engage in and that is regrettably one of the most important features of the Obamacare rollout because when I said to you that nobody actually knows what the state of play is on the ground it is part of the general campaign of obfuscation to keep from everybody exactly the way in which the system starts to work so what happens is if you see that you've lost 15 million people from coverage what you understand is that those who are back may have thicker coverage but that's not the same thing as saying you have higher consumer surplus and so you look at me and say what the world do you mean by that well consumer surplus is one of the most powerful tools in economic and legal analysis and it has a very simple definition it's the value subjectively to you of a particular program over the cost that you have to pay in order to acquire and generally speaking if consumer surplus is reduced it's regarded as a bad even if you don't get rid of the plan but the moment you start saying thicker coverage is better there is no correlation between thicker coverage and the levels of consumer surplus if in fact what happens is the things that you pay for and keep the policy are the things that you don't want rather what happens is the difference between the benefits and the cost of that incremental item is a tax with respect to the operation of the overall program and if that tax gets high enough the whole thing blows up and sure enough when we started to put the individual mandate into effect in the last part of 2013 blowing something up became a term of art nobody knows exactly how many people lost their coverages I've seen estimates somewhere between four million people and 10 million people going out from underneath the system and when they're cut off we know you don't have to sign up to be cut off you're just cut off so in fact if you could get the actual number it would be much larger and then you have to figure out how it is that the group of individuals and that thing are going to fail when they go back into the other plans well this in fact is the source of the great anxiety because now what happens is you put people into the new plans and the question is how is it going to work when they start to sign up well the first thing you have to ask yourself is are they better off with their new plan than they were with their old plan we know they are better off if they take the new plan than they are without the old plan once it's been cut but the fair comparison to the success of the program is whether or not when you force people out of a plan you're forcing them to give up something which is more valuable than the kinds of things that you're now requiring that they take and the critique that one makes of the Obama plan is that what they're doing in effect is they're killing the competition off by regulation and then announcing a triumph when it turns out that the gains that they get from their various programs are greater than zero where the relevant measures whether they're greater than what it was that you had on the other type situation and we simply cannot treat that I think as an appropriate measure of social welfare but it's even more difficult than that because when you start to figure out these plans here is something about old plans which is true which is not true about new plans and I'm using plans as an English word rather than as a statutory term these old plans had been in place and they've been in place through multiple insurance cycles in many cases for years and what happens is you can be pretty confident if people sign up for the 11th year in a plan in which they've had 10 years of experience that the 11th year is generally gonna be at a positive experience like the previous 10 unless there's some exogenous shock like a huge regulation that starts to come in so that what happens with respect to voluntary markets is exactly opposite what the critics say is they turn out if you actually look at them in practice to be remarkably stable in which the turnover rate generally speaking say in a typical insurance market is about 10% and a lot of that is simply what you'd expect people die, people get new children, people change firms, people go to new locations, people retire and so forth but it's an orderly systematic change and you could calculate it. Now what you do is you have a program which has an entire history of zero associated with its operation and if we put aside as I'm certainly going to do for these purposes all the calamitous problems with respect to implementation the question now remains how durable will these plans turn out to be? Well if in fact you get a bunch of newbies coming into one of these programs coupled with a set of benefits which are so exhaustive that it turns out that there's no one who actually knows what they are except by administrative fiat and since the premiums themselves are gonna be only for this year they're gonna have to be recalibrated for last year. The first and most fundamental question you're gonna have to ask is A, is there enough consumer surplus given the huge uncertainty that people are gonna renew these plans assuming that the current conditions stay and two, if it turns out as I think is likely to be the case that there's gonna be some real adverse selection when the people who sign up shake themselves out so we know actually who pays then we can be perfectly confident in these plans that the premiums are going to go systematically upwards whereas when you're dealing with standard plans where you have stable customer basis there is no adverse selection problem because you've priced everybody correctly to begin with and one of the things that people do not seem to understand at all about the way in which you start to use market rates is that market rates tend to move incrementally and have a huge degree of stability whereas regulatory systems have the kind of precipice that I talked about as when you start to air on various kinds of mandated benefits on the assumption that there is no tomorrow that is going to take place so that the system can work as it is. So now what you have to do is to make these things going forward and my prediction is that the rate of retention is going to be extremely hard by those people who have serious adverse conditions and the rate of retention is by those people who don't given the higher premiums is going to start to be load at which time in year two it may well be that you're going to be faced with a genuine catastrophe about the way in which this system is starting to be organized. Now this is just the good news because there's the other part of all of this stuff which is the way in which this thing is often projected is that you have two programs of equal cost in some sense that are competing with one another and you happen to prefer the Obama plan to everything else. But there are a couple of other points here I think that really need to be stressed. One is creating these exchanges and running them and I don't talk about the gaps I'm talking about just doing it right the first time requires that you do more than have a form which allows you to enroll. Anybody who's ever worked with a computer system will tell you as they have told me that making this thing work from the beginning of a cycle to the end of the cycle requires that the back end of the operation be done with as much precision as the front end of this particular operation and we have yet to see the way in which these particular programs are going to cycle over a pay period or over a complex illness or over situations where you have multiple providers who are putting in inconsistent claims or with respect to procedures whose classification may well be in doubt, yada, yada, yada and it's a very long set of list. We have no idea how much that costs but it's in the billions of dollars. So the question you then have to ask is if in fact you thought the two systems were equal in terms of the benefits they provided and I've given you strong reasons to believe that they are not, do you want to spend lots of public monies to get the one system in place while you're spending more additional dollars of public monies in order to shut the other systems down through a system of regulation? And even after you do that, you have to remember that for the most part all of the employer plans were say, we say self-sufficient in the sense that nobody got subsidies above and beyond what I think to be a regrettable subsidy. That is that the monies which go to pay for the individual memberships and employer group plans are in fact not treated as income on the customer side and yet they are deductible as a business sense on the other side so that you got a built-in subsidy. But with the Obamacare it turns out that the subsidies that you get at the bottom of the list are going to be extremely large for many people and there is a built-in industry out there which is designed to tell people how to file their forms so as to maximize the size of it. One of the things of course you say as well you tie this all to annual income. This is one of the great delusions with respect to how these programs work. There are many people who have easy annual weekend. They work for the University of Chicago, they get a paycheck of 52 equal installments and in fact they have a bit of outside income. That probably describes 60 or 70% of the population but there are these nasty people who do seasonal work. There are nasty people who work for multiple employers with the cost to a given period. There's this whole elaborate employment market, independent contract market out there and there are probably 30 or 40 million people in the United States given our very complex economy who do not have conventional lifestyle. Well how do you calculate their particular income is going to be to see whether or not they're going to be eligible for a subsidy of one sort or another. It's almost a nightmarish difficulty to be able to figure it out and a system which essentially says to an individual you've got the better information about what your slippery periodic episodic variable income is going to be, figure out what kind of insurance policy you want and how you want to pay for it will I'm better do than a system which says the government's going to tell you exactly who's eligible, who's not for what subsidy. When you have to make a decision at the beginning of a year of a subsidy purpose is when you don't even know what your employment prospects are going to be in this sort of short-term market as the year goes by. So what you're doing in effect is you're running a program which has greater internal uncertainty. It has in fact greater administrative over-course and it also has huge public subsidies and since it's taking people out of the private plans which actually turn a profit what you discover is that some of the tax revenue that's going to be involved is going to be removed from the system. Now it's not exactly clear exactly how far this will go in terms of its general operation. This is a very difficult thing to start to calculate but one of the things that you always worry about is the moment you have detailed systems of regulation that work within the confines of a particular market you have to worry about what we would call exogenous shifts in the way in which the overall system is going to work. Now what do I mean by that? Well one of the common assumptions that people make about the employment market is that if you start to change the kinds of regulations that are going to put into effect it may change the incidents of the contract and the net take home pay but it's not going to change the overall level of employment and the willingness of people to enter this market or the willingness of firms to hire them. Now there was some evidence when people thought that the employer mandate would be in place that there was a downturn with respect to employment and the argument was given the requirements of this particular system and otherwise positive some employment relationship turned negative because of the implicit tax associated with the Obama situation. And now the employer mandate gets lifted at least temporarily and that effect starts to disappear. But there is no question that as a long-term situation once you decide to regulate these kinds of contracts things that you thought to be exogenous from the system that has the willingness to sign up to work for a job or the willingness to take somebody in or how you're going to hire them all of that stuff is going to change and change very dramatically. How is it going to be changed? Well one of the things that we know about labor markets right now is that they are heavily regulated over a wide variety of dimensions and that what you see is a constant effort on the part of what you used to call employers to make sure that the people who work for them are independent contractors so they're not going to be responsible for a whole variety of expenses that are normally tied into the employment relationship including unemployment insurance just to start and family leave pay and all the rest of it and required benefits to employees. Well you have to figure out what the line is between an employee is an independent contractor and even for ordinary private law purposes this is not an easy thing to do but now that everybody has a strong incentive to see if you can change the kind of relationship you're going to see lots of people getting 29 hour jobs instead of 31 hour jobs because in effect that extra two hours of employment is going to cost you an entry fee into a regulatory system of which you want to be no partner. Now many people can't live on 29 hours of pay a week particularly if wages are stagnating they're going to start to get two jobs. Well if the employers of the two jobs start to coordinate is it really one job divided between two people so that the overall system of regulation for employees applies or does it not? Now most people looking in a room like this say why are you worried about such things you're just a petty foggy nitpicking little lawyer. Well the reason I do it is because if you start with a base of 30 million people say in this particular category and you then discover that these nits only arise how we say in 1% of the cases you all of a sudden have 300,000 cases before some bureaucrat that have to be resolved at a very high cost. What people must understand is you can never get any of these systems to work at the 1% level. 5% is probably a better estimate if you're serious about how these things go and when you have a 5% breakdown rate over a multimillion dollar person base what you do is you have an administrative congestion and right now you can see all sorts of people who tell you their kinds of war stories. Well I want a clarification and I call the hotline and the only thing I got was a promised solemn and written an ink that I will call you back later at some time which was not specified and which was not on. So my own situation with respect to this implementation stuff I'm gonna just sum up now is that you cannot through shall we say propaganda campaigns through various kinds of cheerleading through political statements of one sort or another deal with what I regard to be the fundamental structural dangers that are associated with programs of this sort. The mistakes that I'm talking about here are not mistakes which come out because Ms. Kathleen Sebelius did not know how to hire contractors in order to put the websites into place. In fact it's almost paradoxically the opposite. The more efficient the website the greater the long term danger because the more easy it is for those people who are gonna be net winners from the system to now enroll from it and so when you start seeing the numbers go six, seven, eight million people you don't know whether or not these are all going to be carrying positive fees for the companies who have to cover them or negative fees. My instinct is that it is going to shift and shift in the negative direction. So just to give you the last number that I will bore you with on the day people say well you need 40% of the people who are young and invincible to sign up for this coverage. Well the fact that you call these people young and invincible means you don't know anything about insurance. If they are young and they are invincible they will need $0.0 worth of insurance and they won't sign up for anything. What they are is they're young and less prone to medical needs than other people at a ratio which is very heavily dependent on age. It's a continuous distribution. The Obamacare website when it gives you the estimation picks one number in the 50s and one number in the 20s. If they were doing this under a truth and lending regime that applies to private companies they would probably find themselves serving to serious regulatory sanctions maybe even to jail sentences. But remember government always accepts itself from all of these kinds of regulations. And so what you do is you're going to get adverse selection and you're going to get more costs. You're not going to be able to pay everybody. But and I guess I have to say this. When the moment I leave this I'm going to be teaching criminal procedure. And when I teach criminal procedure the question is when the government wants to use your data or do you have a reasonable expectation of privacy? And one of the things you should know about the Obama site is it has the following language on it. Abandon hope all ye who enter here. I mean anybody who submits data unto this particular system in order to get a government benefit now knows that they have no reasonable expectation of privacy with respect to the data that's being enclosed. What does this show you? There is a double standard. If any private company tried to do that they would find themselves in the dock. When the government tries to do that what we do is we plead public necessity. And I think as I end this talk I'm reminded of a line from John Milton and it is necessity is the tyrant's plea. You've got to be very very worried about these kinds of claims. And there is never any kind of quote unquote government necessity with respect to the implementation of routine programs over the last numbers of people. These are not wars, these are not famines, these are not forest fires. This is just bad government administration. So I have a rather negative appraisal of how it is that this program is going to pay out. I only wish that the president has spent more time listening to other people at the University of Chicago before he made his own judgments as to how this thing would prevail. Thank you. Well is there anyone who has a question? Not I'm heading home. Somebody has to have a question. Yes, Koleanski, yes. Why is it that you would be the first person to, I don't even want to answer. In the age of 26 provisions and all that, the Obamacare dad and their mom. And just a personal experience, I know that after my old plan for Obamacare when that rule came in, my underage 26 children of course were included. When I went to see what the options were under Obamacare for these changes. And then I got to the point of planning choices. It turns out that my underage 26 children were separated off by Obamacare into separate categories and we were asked to choose separate plans for the adults and our team and our race and child. And our children who were underage 26 by the over age 18 were not to be included in that family plan. So I did a little bit of research which was very difficult to do when I got sure that the conclusion is exactly here at this point. But it seems that that under 26 provision applies to private plans not obtained through Obamacare. Do you know anything more about that? You know, I haven't gone to this particular website but mysteries never cease with respect to the operation. What we do know is follows and I'll make the more general point which follows from the particular situation. It is very clear that the minimum essential benefits are not covered by any standard insurance premium that anybody can pay if all the other terms of the contract are held constant because they just demand too much to go into these things. So what happens is Obamacare does not regulate a whole variety of things. For example, how many tertiary care centers you have to have where your doctors are gonna be located and so forth. And the economies that take place are on all these collateral arrangements in order to meet this. So what the plans have done is they've guaranteed you protection for the things that you don't want and they forced the company to necessarily remove from you the things that they do want. If this has happened with respect to the 26 period it only reinforces the total danger appropriated with this situation because the law of unintended consequences will take over. And this is I think something which many people have asked me is can this plan survive? Well the answer is I gave you waivers by government now the other thing we have to take into account is adaptations by private plans in an effort to conserve cash in order to stay above water. Will they be able to do it? Well I don't know how good their actuaries are and frankly neither do they because they're all faced with the fact for example that they're going to have to put in process through a regulatory structure rates for 2015, 16 on the basis of information which is collected as of this date when most people have no experience with respect to going on. And if you actually look at the Obamacare formalities associated with this there are four independent stages of review first state then federal first then state again then federal again. There is no way in real time when you're doing with multiple plans that you could get to those four levels. Through there if they force it it will be a calamity and people will know on January 15th what their insurance coverage was on January 1st or what they will do is they will waive some of the administrative review processes and that's just part of the original situation. The thought that somehow or other a plan is which is now signed up a certain number of people has proved that success when every other single relevant indicator is not known is to me just an unbelievable assertion of overconfidence which indicates in the fact that the president and most of the people who support him I don't think understand how these particular programs really work. And when I say this I don't mean to say that I do understand how they all work. What I mean to say is I can figure out some of the difficulties but I'm not gonna start telling these plans how to do their business because again the fatal conceit of an academic is to think that he knows more about everybody else's business than they know about their own. I think what I know is more about general theory than they do but in fact either their behavior conforms to my theory at which point I'm right but if their behavior doesn't conform to my theory then in some sense I'm wrong. But I think the predictions of how people respond under regulation are not confined only to the healthcare market but they cover all sorts of other markets and this constant process of basically putting greater pressure on the unregulated terms in order to comply with the regulated terms is not unique to medical care. It applies equally well with respect to every other industry that you care to mention. Now I know there's a bottle of water somewhere and I can't possibly remember where I found it. If somebody throws one in this direction that'd be fine, otherwise throw, oh don't throw it question from somebody else please. Yes ma'am. So I actually have a couple questions for you. First regarding, you're concerned that people only signing up when they become sick, signing up when it's convenient to them. Would part of that concern be addressed by the fact that there's a limited open enrollment period that you can't enroll at any time during the year? Yes, the answer is yes it will but it's not as good as the next best solution that has been eliminated. That's the problem. Second question regarding concerns about adverse selection in people who end up not paying their premiums. I wonder if that would not also be to some degree addressed by the fact that large numbers of these people are receiving financial assistance. And so the people who are less, excuse me, who are most likely to drop off are probably the people who are receiving less financial aid rather than the people who have less need of comprehensive insurance. Well, I mean that number will only aggravate the adverse selection problem because generally speaking if you had to make a guess you would assume loosely speaking age and other conditions held constant. Income would be a pretty good predictor of the level of coverage that you're gonna need in a particular year. People with less income are generally going to have more complications relative to that income and are gonna need greater levels of precaution. Look, this is a serious problem for anybody who's trying to run a sensible welfare, social welfare type system. How do you deal with it? My own view about this is to go in exactly the opposite direction, which instead of trying to figure out how clever people will regulate this market, it's to pull down the barriers to entry and to allow large retailers to set up various kinds of medical establishments on a walk-in basis where they can post prices in advance and get the attraction of their customers and tell them one of the things that we supply you with is pretty good information as to whether or not you're going to need to go to somebody else for serious treatment or whether we could have it happen here. Everybody I think who's in the medical business knows that one of the major functions of an intern is correct, more is to figure out which specialist you put the collar on in order to get your patients treated. And that's as true with low income patients as it is with professors at the University of Chicago. And one of the things that happened with the Obamacast system is that all efforts to introduce competition and choice was suppressed in order to get a political majority in favor of the status quo. If you guarantee money to various kinds of pharmaceutical companies, they'll stay in even though they may take price restraints because of the guaranteed market. And if you make sure that out of state insurance companies can't compete on even term with the locals, then in effect they will support this system because it's consistent with market fragmentation, cartilization and the like. And there's just a huge amount of the cost of Obamacast is in fact the collateral restraints on trade. These are then matched by taxes like those on medical devices, which are based as an excise tax, that is the percentage of revenues independent of profit. And those have already proved to be real serious disasters leading to a shut down and research movement overseas of these things and so forth. This thing is a lot of moving parts and there's no such thing as a free lunch. And let me give you the more general answer. Everything you say may make sense that there are things you could do to mitigate the loss. And that's what I was talking about. Waivers and adaptation. But the rule is always this. Mitigation never gets you back to the status quo ante. That is if the loss that's imposed by regulation is 100 you could get the finest minds in the world and they could reduce it to 70. Well, do you really want to go from 100 to 70? No, you'd rather go from to zero, have no losses and then try to figure out how you put gains in there. And one of the costs of Obamacast is you cannot innovate now in the way in which you design your coverages because you can never get it through the regulatory system. That's just a long-term cost associated with their operation. And I've never seen any of the defenders of Obamacast do the 360 analysis to indicate how it impacts on collateral markets which is a serious deficiency in their overall analysis. Anybody else on this side? And then somebody in the back, we got two. Hi, I'm wondering how you relate to the Canadian quasi-single-payer system as well as the Vermont proposed plan which is going to be a single-payer system. Well, I mean, look, the question of whether you believe or don't believe in single-payer is one which depends on what your baseline is. If your baseline is a pure competitive market in which firms can get in and out of states without worrying about licensure requirements of one kind or another and an ability to shape their own contracts, I have no question that single-payer is an obsolete, impossibly inefficient system with all the worst monopoly elements associated with it. That's the first one. But if the alternative is Obamacast, right, to single-payer, now it becomes a much more complicated question because you have two very bad systems and you're trying to find out which of them is going to be better. The thing to understand about this is we do not have the option of going to the Canadian system. It's just simply off the tape. The key feature associated with the Canadian system is that they use budget controls at the central level and then they allocate the money to the states and within the budget constraints that are given there, the states then have to allocate to various kinds of programs, capital improvements, maintenance and operation, fees for generalists, specialists and so forth. We have no budget constraints in our system. We have no capitation to states. What we do is we pass an entitlement, figure out what the darn thing is and then decide to raise taxes to cover it and we've done that from the day these programs started. If you go back to Medicare in 1965, you remember there was a very confident position that this thing would be budget-neutral by 1973 in which 50% of the revenues would be paid for by the recipients and 50% out of general funds and they had projections as to how much it would be expanded. They were off by orders of magnitude by the time you got 25 years into it. 25 cents on the dollar paid by recipients and it's paid in a crazy way because everybody pays a level premium regardless of age or risk so huge amounts of internal cross subsidies in there and 75% comes out of general revenues which now includes a 2.9 excess tax, right? Percent excess tax on earned and investment income alike. So, you know, we just can't keep it down and we're just gonna find more ways to try to shovel it. Now, you can kind of control these things and one of the things that the president said was we've managed to level off these Medicare payments. Well, the point is if you do this because you're improving reimbursement system, you don't need to pass Obamacare and mess up the exchange markets for individuals and employers to figure out how to run better payment systems in a program which is already run by the government. So, the fact that there's any connection between the two of them completely escapes. But the other point is we don't know how permanent those are. One of the things that we do understand is that many medical expenditures go down in times of recession to the extent that the people have copays and have less income to satisfy them. If things start to turn around, if the copays start to change, you'll start seeing higher utilization levels. Now, within two days after the president's speech, there was already some rumblings out there in both the private and the public sector that the good experience that you had in 2011 and 2010 would no longer last. Why you would attribute that to Obamacare before it's actually implemented is another reason that we don't have to do. But you can't do that. There is no way you can graph the Canadian system into the American system. And there's something else, of course. The Canadian system has a safety battle. If it turns out that the weights are intolerable there, there's a place called Buffalo, right? And down you come from Toronto and you get medical care somewhere else on a private market. Or where are we supposed to go, Cuba? I mean, actually it would be the Canada and they will set up a payment system. We are doing this right now as we speak. I don't know how many of you follow the FDA and it's rather aggressive campaign to convert medical treatments and procedures by way of surgery into manufacturing oppositions with, for example, stem cell transplant. But the net effect is guys who used to do business in Colorado have now set up shop in the Cayman Islands because they can't run it here unless they go through the entire cycle from one end to the other. Stuff that we've actually talked about in some of our workshops that have been done in this program. So any American plan for single payer will turn out to be as complicated, convoluted, uninformed and ignorant as the current programs that we have. The political public choice dynamics are there. The only cure is if you can remove regulations that you don't need and there are lots of those. By lowering price, you have market guarantees of quality and by lowering price, you can get greater access. And we've always worked on the other model. We require more and more of you and then we throw more and more subsidies in there. And essentially, if you get rid of both the subsidies and the regulations, you'll be far better off than having the vain delusion that the one is somehow or other inappropriate or perfect offset to the other, okay? There's a, in the back, yes? Just the two questions, the bigger one I'll give you first and you kind of touched on it when you mentioned Medicare, you know much more about healthcare policy and history than I do. But beyond what you've already told us about Medicare, are there any lessons to be learned historically about the rollout from Medicare? Because now all of us live with it in the medical field, it's a part of the landscape. But when I was in high school, I remember even healthcare stalwarts like the AMA opposed to Medicare. Yeah, no, I mean, that's a great question. Look, the AMA has gone a frontal lobotomy. All the people who used to run it 50 years ago were dead and gone and all the people who've taken it over have a political orientation 180 degrees to the opposite. My father was a physician when Medicare went into operation and yes, we did hear all about the apocalypse that would follow by virtue of the payment system. Interestingly enough, the rollout was relatively simple because it was only a reimbursement system that was made for bills presented with reasonable services, which is not nearly as difficult to put into place. Everybody who did it did not understand what was gonna go wrong with the system. What they assumed wrongly was that the rate of utilization would be independent of the price that you had to pay to gain access to the service. And as it turns out that you get relatively free access, a lot more people gonna come into the system, some of them needing it and some of them not. I don't wanna pretend that it's an old downside, that would be crazy and so forth. Then on the other side, the rates that they said that you pay for Medicare to be matched by those which you get in the private sector, everybody thought the private sector rates were a ruler that could not be changed, but as you pull people out of that system, the demand on the private side is going to be restricted to people of higher means. And in effect, since you know that if you raise your rates on the private side, you could raise them on the Medicare side, what happened is the overall increase in demand meant that you had prior rates in both areas. So instead of having the same level of customers with the same level of rates that you had before, you have more customers charging higher rates or collecting higher rates. So the system starts to implode. In the 1980s, you try to put the DRGs into effect. Anybody who knew Ralph Mueller when he was here wouldn't know what the adage was. Anything that they can do, I can beat in six months. Was essentially what every major hospital did. So the government gets a hundred guys to put together a DRG program and every hospital system in the United States has a thousand people on his staff who are trying to figure out how you dismantle it. And the half life of those reforms is always going to be extremely short. On the private side, one of the things that you have is that in an effort to pose complex discipline on firms, the attack on insurance companies refuseless to allow treatment have generated huge lawsuits and liability and many wasteful expenditures take place. Mark Siegel always said, hey, what about using bone marrow transplants in order to deal with breast cancer? Was that the one more? Well, I know, it didn't work. And of course, it's that $2 billion worth of tries, you know, mandated expenses later, you find out that you can't use these kinds of system. But what happens in the ex-ante state, the judgments of the companies on denial of services on general ineffectiveness don't stand up against consumer pressures. So it's not as though that the private side of this market is unregulated either. It's also subject to huge amounts of pressures of which that's one and the mandates turn out to be another. So if you're really trying to figure out in terms of total discretion, what percentage of the total health care budget, both before and after Obamacan is driven by federal expenditures or federal regulations, state expenditures, the state regulations, you're talking about well in excess of 50% of the way in which the system works. And that's just simply too much of a drag for any engine to carry it through in an efficient fashion. My shorter and somewhat tongue in cheek question is more intramural than that, is that you've told us about your concerns and constructive criticisms of the ACA as it's currently constituted and as it's being rolled out, particularly from the administrative and economic standpoint. Would you, the last job that President Obama had before he ascended to the White House and on the national political scene was, as a law professor, not far from here, do you think he would have been better suited in terms of his decision making and his group's decision making had he gone to the White House from the Booth School of Business here rather than the law school? No, it's not a question of where you go. It's a question of whom you talked to. And I knew him very well. We were social friends. But it's not as though he came to me and says, I know you're a pro-market guy with respect to healthcare. Sit down with me and explain to me what it is that you think we're doing wrong so that when I become a senator we could fit this out. This was never his style. I mean, there's a huge amount of intellectual overconfidence and I'm always amazed that somebody who spends so little time and detailed study of these systems is much more confident about how things are gonna go than folks like myself who have a real difficulty in making predictions. But they're difficulty figuring out which kind of disaster will occur, when it will occur and how it will occur. It's not as though I think that there's a credible position that by the time the dust settles on this thing, given what we know today it's gonna come out better. And I think in general this is a serious issue. Let me just give you the other anecdote. I mean, there's no question that the Heritage Fund sort of announced some kind of exchange program, competitive markets on open exchanges similar to the Obamacare system. But it was quite striking that during the entire process, nobody from the administration spoke to anybody from the Heritage Fund about how it is they wanted to do it. And indeed some of the things that I have written were not of the can we blow this thing up variety but if I'm running this thing, here are the changes that I would make to it in order to sort of make it more stable than it would otherwise be. That is you would call them friendly amendment. So change the minimum benefits, essential benefits list. Do not put on that list anything which is not found in any voluntary plan anywhere on the face of the globe because you know that those things don't make any sense. Get rid of the medical loss ratio stuff on the grounds that firms know how to get the correct marginal adjustments between whatever they call an administrative expense and what you call a medical expense and do it in this particular fashion. And then when you start going down other kinds of situations get rid of some of the multiple levels of review that are taking place with respect to adequacy of premiums allow people to essentially tailor different plans for different markets. Get rid of community rating or at least expand the coverage. You can do four or five things which would basically take a plan which is I think in very serious jeopardy and in effect make it much more viable than it would otherwise be. But you have to be confident that the people who are criticizing you know at least a little bit of a fraction of what you know. And this has not been a debate. I mean it has been somebody who's in charge and essentially their attitude is if we can't persuade you we've got the votes we're gonna run it down. The problem of course is it gets no legitimacy under that circumstances and one of the real convulsions that I have is you get a real change in sentiment in the 2014 election or the 26 presidents and the 2016 presidency. You get real discontinuities and God knows what's going to happen when the Republicans take it. Because I mean just to end on this note because I think the time is just about over I think most of you could figure out that I'm not a Democrat. Very insightful, right? But I'm not a Republican, right? I mean many of the things that are worse features of this bill had bipartisan support with respect to this. I do, I think there are better plans out there. I think the healthy Indiana plan is vastly superior to anything here because what it tried to do is to just give money to people and the essential truth of giving money to people is you give them an allowance which is more than they need and tell them if they don't understand it all they keep the excess because at that point they now have a vested interest in various kinds of economy and that's not what's being done in this particular case. You quote on quote waste a little bit but it's only a transfer of dollars as opposed to this system where for every dollar that you transfer you're probably spending another dollar in dead weight administrative costs. And on that happy note I will take Lee of you in a sea of troubles and go and teach my criminal class.