Obesity remains a serious health problem and it is no secret that many people want to lose weight. Behavioral economists typically argue that “nudges” help individuals with various decisionmaking flaws to live longer, healthier, and better lives. In an article in the new issue of Regulation, Michael L. Marlow discusses how nudging by government differs from nudging by markets, and explains why market nudging is the more promising avenue for helping citizens to lose weight.

Armed with a computer model in 1935, one could probably have written the exact same story on California drought as appears today in the Washington Post some 80 years ago, prompted by the very similar outlier temperatures of 1934 and 2014.

Two long wars, chronic deficits, the financial crisis, the costly drug war, the growth of executive power under Presidents Bush and Obama, and the revelations about NSA abuses, have given rise to a growing libertarian movement in our country – with a greater focus on individual liberty and less government power. David Boaz’s newly released The Libertarian Mind is a comprehensive guide to the history, philosophy, and growth of the libertarian movement, with incisive analyses of today’s most pressing issues and policies.

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Medicare Rx: Let the Sickie-Dumping Begin

When Republicans created the Medicare prescription drug entitlement, I warned that the private drug plans would take steps to avoid sick seniors and enroll only healthy ones. Since the plans receive the same amount per senior, the healthy ones are a cash cow while the sickies are a liability.

It seems that the sickie-dumping has begun.

The Hill reports that one private drug plan, Sierra Health Services’ SierraRx, noticed that a lot of new and very costly enrollees were formerly enrolled in Humana Health Services’ Complete plan. Sierra alleges that Humana urged maybe 4,000 to 7,000 of its sickest enrollees to switch to SierraRx. According to the article:

Humana counters that it merely passed along information to its customers about a competing product that might better suit their needs, and said federal regulators approved its actions….

“Our goal was to make sure these people continued to have access to prescription coverage,” Humana’s director of media and public relations, Dick Brown, said. Humana also asserts that CMS approved the script the company used for these calls.

Brown would not explain, however, whether the company contacted each of the more than 400,000 Complete customers with the same information or if Humana targeted the calls to a subset of these beneficiaries such as those with the highest drug costs, as Sierra implied.

Did they? Didn’t they? Was it intentional? Wasn’t it? Really, who cares. It doesn’t matter if the drug plans deliberately dump the sickies, because Part D will reward such behavior even if it’s unintentional.

That’s why the last chapter has not been written on the cost of Part D. The drug plans can play avoid-the-sickies for a while. But when enough plans lose that game, there won’t be many places for the sickies to go. Their expected utilization will be built into the projected costs of all drug plans, which means that younger workers will have to shell out more to fund the program. It also means that healthy seniors will have to shell out more — but they’ll scream so much that Congress will probably pass even more of the cost on to younger workers, either through tax hikes or price controls on prescription drugs.