Standard of living and measuring welfare effects

A few posts caught my eye today by bloggers discussing different, but related topics. All of them suggest that the most measurable outcomes are not necessarily the metrics of policy success or failure we should focus on.

Francisco Toro, at his new blog the Campaign for Boring Development, comments on how microfinance may not raise the incomes of participants, but it does have the potential to increase standards of living.

Matt Yglesias, at Slate, slams the media for misinterpreting (willfully?) the CBO report that says the equivalent of more than 2 million full time (equivalent) jobs will disappear as a result of the ACA. The Plum Line says it’s not a “job-killer,” but people might choose to work fewer hours because now they can afford healthcare. Is that really so bad?


Thank goodness for lawyer friends

I posed a question earlier today about the Medicaid (not Medicare as I wrote earlier) portion of the Supreme Court decision on the Affordable Care Act that came down this morning. My question, essentially, was how is the decision to compel states to cover certain groups under Medicaid by threatening complete loss of funding different than when the drinking age was raised in the US to 21 by threatening to take away state highway funding? In addition, by holding that part of the law unconstitutional, how is the Supreme Court not denying Congress the ability to change legislation? It seems to me very confusing that the Supreme Court could come along and say you actually cannot change the law. I mean, it’s Congress, right? They make laws, they change laws, they get rid of laws?

I either didn’t express my question very well or no one wanted to answer me, but luckily, I talked to my go-to-lawyer friend tonight who actually read the brief and explained the decision to me. I still don’t totally buy that the reasoning in the brief, but at least I got an explanation.

In short (and correct me if I’m totally mashing your words on this), is that federal highway funding constituted a very small portion of a state’s overall finances. So denying federal highway funding would have constituted a very small burden for any given state. In contrast, because Medicaid represents a much larger proportion of a state’s budget, 20% (or so?) and because the vast majority of that is federally funded, requiring the state to cover more people (and increase its own outlay) amounts to coercion because a state wouldn’t be able to cover those people without federal funds.

The answer to the second part of my question, which I think makes even less sense, is that Congress still has the ability to make laws and distribute funds, but this law represented a radical departure from the formerly existing law, not merely an amendment, which places an undue burden on the states who don’t want to expand access.

Thank goodness for lawyer friends.

Clearly, not a lawyer

I have to admit that I don’t entirely understand the Supreme Court ruling today. Lots of people are concentrating on Roberts joining the “liberals”, which is semantically frustrating, but that’s not what I’m confused about.

This part about the expansion of Medicare is what I find perplexing, and perhaps someone can explain. If Congress is allowed to expand Medicare, but not allowed to coerce states into accepting the expansion by threatening to take away their funds, doesn’t that mean that Congress doesn’t have the power to amend legislation to meet the current need? What is it about Medicare that says states were guaranteed access to a certain flavor of coverage in perpetuity? Surely I’m missing something. Didn’t we do essentially the same thing with raising the drinking age?

It’s been a crazy week for the Supreme Court, for sure. I like the Maddow Blog’s breakdown. Short, simple, sweet. Though there’s tons more about it all over the place, including fellow economists Don Taylor of Duke (written here, on TV earlier link) and Harold Pollack of U Chicago at TNR.

Update: The Incidental Economist starts to get at my question, but not really. As does SCOTUSblog. Maybe I’m asking the wrong thing…

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