Should We Buy More Government?
I'm looking over an August 2002 budget document (PDF) from the Minnesota Department of Finance to get an idea of what the state budget has been like over the years. From 1982 through the 2002, spending growth in the general fund has risen, on average, 6.4 percent per year. Some of that is due to inflation--though inflation has been under 4 percent per year since at least 1993, and the rest, through an increasing population (roughly 1.2 percent per year). Add an inflation rate of 3.5 percent, and we have a "natural" increase of 4.7 percent a year. The leftover of 1.7 percent per year, is the result of deliberate policy choices.

Now, it's true enough, personal incomes have grown during that time (5.6 percent per year since 1992), meaning people can "afford" more government. But it's not enough to say that personal incomes have grown--even if they have kept pace with government spending increases.

Why? Because the percentage of one's income going to any given product or service ought to go DOWN as income goes up. If, as a teenager, you had a car and had to make car payments, those payments were a substantial part of your income. If you are now established in a career, payments on a comparable car would be less of a drain on your income.

But say that you went from a 10 year old Chevy as a teenager to a brand-spankin-new SUV today. Then, perhaps, the burden of the car part of your budget would be the same, because you've upgraded what you have bought. Was that upgrade necessary? Maybe it wasn't; maybe it was. Who am I to say?

We have a similar situation with state government spending--Minnesotans have gotten wealthier, but instead of replacing that Chevy with another of its kind, we've gone out after Lincoln Navigators and Hummers. "Mission creep" is fine when a person freely spends of his own money. But in this case, what is the public good (and thus meriting tax money) has been upsold as well, beyond what is good. (permalink)

Health Care Spending: Why is More Bad?
I've been reading various articles about the rising cost of health insurance--double-digit increases in premiums, and so forth.

Now, there is much that is wrong with our health care system: it involves too many third parties, health insurance as we know it isn't really health insurance, out-of-control judgments send malpractice insurance rates sky-high, and so forth.

But contrary to what you may read, increased spending on health care is not necessarily a problem. Health care is, after all, a good thing. And when you have more money, you spend more of it on good things. American houses cost a lot more than they used to--but they also have more space and more features, in keeping with appetites for more and better. And one's health is even more important than housing, so if medical science knows how to increase the level of comfort during our lives, and we have the wherewithal to purchase that increased well-being, what's the problem?

Yes, there are many changes that should be made, and much spending on health care is wasted. But the overall level of spending on health is not a problem. It's the sign that we continue to have a wealthy society.

Labels: Health care

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Strike? Yer Out!
Minnesota state government workers are set to strike over health care benefits; 80 percent of voters of one union and 66 percent of voters of another have authorized a strike.

As a former government worker (at the federal level) and a taxpayer, I have little sympathy for the would-be strikers. Employees will still be getting step increases.

Union leaders complain that rising health care costs will offset the expected raises. Well, welcome to the real world, folks.

The state's employment boss says that every extra $1 million in compensation (either salary or benefits) beyond what is already budgeted would require 17 layoffs. That's over $58,000 compensation per position--pretty decent, especially with so many people out of work as it is.

Currently, employees pay $0 a year for single coverage (the national average is $508) and $708 a year (the national average is $2,412). They've gotten quite a deal so far. If they don't like the future, well, there's always the private sector. (permalink)

Take Me Out to the Ball Game
The Chicago Cubs have long wanted to increase the number of games they play at night. But they need the permission of the Chicago city council to do so.

Now that the Cubs are in the playoffs, tickets to Wrigley field are a hot item, going on the street for $300 to $1,500 each.

Guess who's going to be getting playoff tickets at the $35 face value? You guessed it. Members of the Chicago city council.

Understandably, some Cubs fans are upset.

(Note: I'm not a Cubs fan, or even much of a baseball fan.) (permalink)

Chicago-Milwaukee Rail?
Milwaukee-area officials have agreed to spend $91.5 million in federal funds to study ways to extend Metra service from Kenosha to Milwaukee. (For information on Chicagoland's passenger rail system, click here.) Mass transit usually doesn't live up to its promise. Population density in America is seldom high enough to justify its cost. For a review of mass transit in general, see The Public Purpose.

Labels: Transportation

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Uninsurance Rises in Michigan
According to the Center for Urban Studies, at Wayne State University, the number of Michiganders without health insurance rose 1.3 percent in 2002, or 110,000.

The Detroit Free Press article covering the story quotes an official with the Center, who blames the rise on a decline in unionized manufacturing jobs. Perhaps. But the story is incomplete. Is the 1.3 percent rise more or less than the change in previous years? I don't know. Why did manufacturing jobs decline in number? Perhaps it has something to with the very heavy presence of unions in southeast Michigan. Auto manufacturing has been increasingly turning to open shops--in the south, and in other countries--for decades now.

Longing for a mythical past of union-and-company provided security is a losing game. It's time for public policy to adjust, and provide ways for people to have affordable insurance (not overly expensive prepaid medical care) on their own or in voluntary organizations, rather than through an employment system that is fading in relative importance.

Labels: Health care

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Telemarketers May Win
Telemarketers are accused of being aggressive and pushy, but Shawn Macomber thinks that Congress was too pushy for its own good lately. In his brief article, the American Spectator intern points out that many states (37, in fact) had their own "do not call" acts in place--laws that were working reasonably well. But a national law has raised the ire of the noisemakers, who have challenged the law in federal court, and have thus far won, twice. The latest victory was especially troublesome, as it affirms a constitutional right to pester people over the phone--a right that was in the shadows until recently. In other words, the legal standing of telemarketers is more firm than ever before. (permalink)

Administrivia: Archives Updated
Check out the archives listing; it's now current. I know that search engines are useful, but I wish more blogs would provide an annotated index. (permalink)

WGN-AM Program Host Joins Blogroll
You may notice a new entry in the blogroll today: Milt's files. That would be for Milt Rosenberg, evening (9-11 pm, CT) host for WGN-AM. His program, Extention 720 program is a showcase for what talk radio can be, but seldom is: smart, wide-ranging, and challenging without throwing bombs or ranting and raving. Tune your dial to 720 AM, or have a listen by the net. (permalink)

Government Takes Business from One, Gives to Another
I didn't see this, but I've been told that "60 Minutes" did a profile of eminent domain abuse last night. Read a transcript here. If you're unfamiliar with eminent domain, be prepared: it can be appalling.

Here's a small sample:

Jim Saleet worked in the pharmaceutical industry, paid off his house and then retired. Now, he and his wife plan to spend the rest of their days there, and pass their house on to their children.

But Lakewood's mayor, Madeleine Cain, has other plans. She wants to tear down the Saleets' home, plus 55 homes around it, along with four apartment buildings and more than a dozen businesses.

Why? So that private developers can build high-priced condos, and a high-end shopping mall, and thus raise Lakewood's property tax base.

Eminent domain, which should be used sparingly, is designed for developing such things as roads and courthouses. Instead, it's being used to take property from one private party to give to another private party, who is often lavished with tax credits in the process.

The Institute for Justice is, by the way, a great champion of property owners who face this kind of abuse of government power.

(Interesting note: as I put this post through Blogger's spell-check, it suggested "lawsuits" for "Lakewood's".) (permalink)

Canadian Policy embarrasses U.S. on Drug Price Controls?
The editorial board of the Des Moines Register says that Americans who get cheaper prices for drugs by purchasing from the land up north are "Sponging Off Canada." Sounds like a spoof of reality to me. David Hogberg has the news. (permalink)

Do You Know How Much Your Health Insurance Premiums Are?
The Kaiser Family foundation has a new edition of their annual report on employer-sponsored health benefits. Here's a link (PDF) to the summary.

The survey finds that the average premium per employee for single coverage is $3,383 per year; for family coverage, it is $9,068. For single coverage, employees pay $508 a year (15 percent of the total), with employers paying $2,875 (85 percent). For family coverage, employees pay $2,412 a year (27 percent of the cost), with employers paying $6,656 (73 percent).

But since insurance premiums are but one form of compensation, one can argue that the total "employer" and "employee" contributions are as good as cash when discussing worker pay. In my book, $9,000 a year is a lot to pay for insurance; it's enough, in fact, to make me wonder if the money is being wisely spent.

By contrast, I took a trip over to ehealthinsurance.com and plugged in some numbers for a hypothetical family: husband (age 42), wife (40), daughter (15) and son (12), living in Chicago.

The plan with the highest annual premium: a BlueCross plan with $20 office visits, $0 deductibles, and no coinsurance. Premium? $15,075.

Too rich? How about a PPO that comes up midway through the list of plans offered through this website. It's got a $0 deductible, but a coinsurance of 20 percent, and the price for an office visit goes up to $30. Premium: $9,144 per year.

Wow. Ok, let's try something else. Go cheaper. Another BlueCross plan. Of course, you have to put up a substantial deductible--$5,000 per year, though the coinsurance remains at 20 percent. You pay all for all office visits up to the deductible, then 20 percent after that. Premium: $3,684 per year.

That's roughly 55 percent of what an employer pays for insurance each year, and 40 percent of employer/employee payments, or a savings of 60 percent, or $5,384.

Now, do you think it's possible to come ahead with this plan, or something like it? Certainly. But it requires changing your thinking about the role of health insurance.

In reality, most most health policies mix insurance--seeking protection from the unpredictable--with an expensive, pre-paid purchase arrangement.

As is the case with auto insurance, you can get a less expensive health insurance policy if you accept a higher deductible--that is, rely on it for catastrophic events (for autos: a crash; for health: major unexpected surgery) and not for routine ones (for autos: oil changes and new tires; for health: bouts of the flu).

Will a catastrophic-only health insurance policy make sense? Won't a $5,000 deductible be just too much for most people to deal with? Before saying yes, consider the following.

Most people won't incur massive medical expenses each year, so say that the employer and employee team up for this lower-cost plan. Take half of the cost savings, or $2,692 (5,384 divided by 2), and put it in an employee raise (since the money being spent was on compensation, already). Take the other half and put it in a tax-free account (a medical savings account) and let that grow tax free. That's an incentive to be a wise healthcare consumer. As a bonus, within two years, there will be enough money stored up to pay off the deductible if it maxes out--something that won't happen every year, or even every two years.

An even better approach, of course, is to get the employer out of the equation, and take the cash. We don't have "car maintenance organizations," and depend on employers to provide auto insurance; why should people depend on them for something even more valuable?

Labels: Health care

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Flint Senator Calls for Charter Schools
Charter schools aren't the ultimate solution to what ails public education, but as a step away from the government-run-geographic-monopoly model, they do introduce some measure of school choice.

Democratic politicians, by and large, have been leading the charge against enhanced school choice (charters, tuition tax credits, vouchers), which is why it's always encouraging to see one or two break with the solidarity of status-quo teacher unions.

In Michigan, a controversy has been brewing over a philanthropist plan to build 15 charter schools in Detroit. Sen. Robert Emerson, a member of the Michigan senate from Flint (the city otherwise known as "the industrial sinkhole of Michigan") has said of the man who wants to build the schools: "Tell him we'd love to have some in Flint."

Labels: Charter schools, Education, School choice

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A Few Sports Frivolities
First, the Detroit Tigers are proudly Number 2--that is, they possess only the second-worst team single-season record for a team since 1900. "Could be worse," but only barely. As a native of Michigan who went to a few games at the old Tiger Stadium, I'm glad to see that it didn't happen. Still, the Mackinac Center had some fun publishing a piece describing a subsidies-to-victory ratio.

By comparing the cost of various tax subsidies with the number of victories a team has, Michael LaFaive found a way to describe how it cost taxpayers for each victory. Naturally, the more often a team loses, the more each victory costs. In recent years, the number was slightly over $103,000 per win (2000 SF Giants) to $4.3 million per win (1999 Seattle Mariners).

Second, as if to demonstrate the foolishness of sending good taxpayer money after bad (sports teams of any sort), the Chicago Bears have their home opener tonight at a just-renovated stadium. Soldier Field cost $365 million to fix up. As if to chide the taxpayers for their fiscal folly, the Bears have started the year in which they have an expensive new play palace with ... an 0-2 record. Tonight, they will play a team (Green Bay Packers) that has won 14 of the last 16 contests between the two clubs, suggesting that the team will be 0-3, and the very first contest in the taxpayer-funded renovation will end in a loss for the home team. But even a victory would be expensive.

Finally, summer is officially over, and I can't wait for Winter. Now that I live close enough to some ski hills, the season is noteworthy for something other than short, cold days and long, colder nights. I bought a new pair of skis the other day, and eagerly anticipate making some tracks.

As far as I know, there were no taxpayer subsidies involved in the development of my favorite ski areas. Though in this day when government planners get involved in nearly everything, I could be wrong. (permalink)

Speed Limits to Rise on Illinois Tollway?
Officials at the Illinois State Toll Highway Authority are thinking about raising the 55-mph speed limit, at least in some areas. A spokesman says "We're looking at doing anything we can do to improve customer service."

Well, good for them. While metro Chicago highways have their stop-and-go times, often cars travel in excess of the stated speed limit. The motorist who sticks with 55 is more likely than not going to be a traffic hazard.

With the limited enforcement of the current speed limit, it makes sense to bring the stated limit more into conformity with the speed at which most people actually drive. The 85 percentile rule, I think it's called. People are in general smart enough to know what's an appropriate speed, and artificially low speed limits only furthers a cynical view of law.

Labels: Transportation

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Swim, Jim, Swim
Not exactly a policy story, but since I've lived in a Great Lakes state for my entire life, it's still interesting. A 40 year old Michigan man is 10 stages through a planned 16-stage trip to swim the length of Lake Michigan. He launched the 340-mile trip after withdrawing from an attempt to swim across a portion of Lake Superior. He tries to swim for 20 miles at a time, though on occasion that means a 42-hour swim.

A representative of the Coast Guard, which has tracked his path, said "He's raising money for Big Brothers and Big Sisters, so he's got a good cause, but he could pick a better time of the season to do it." (permalink)

Do it for the Teachers
Negotiations to bring 15 more charter schools to Michigan have hit an impasse. Meanwhile, 3,000 people protested the proposal outside the capitol. The Detroit Free Press said of the crowed "many of them teachers," but I suspect the percentage was close to 100 percent, and if not teachers, then their allies in other unions or the education establishment.

Labels: Charter schools, Education

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Don't Call Me, I'll Ignore You
A few thoughts:

1. Congress is acting now because it is a very easy way for each member to
gain political points. "See, I am helping you spend time with your family
and not answering phone calls from unscrupulous companies."

2. Phone calls pitching fraudulent transactions are already subject to anti-
fraud laws, regardless of whether there is a do not call list.

3. As much as we would like to not receive this calls, there is no
constitutional right to expect this to happen, anymore than there is a
constitutional right for me to not be offended by seeing the Detroit Tigers
slide into the history books as the worst-ever team in baseball while the
Yankees move towards another World Series championship.

4. Though there is no constitutional right to not be pestered by phone calls,
Congress may enact a law or authorize a regulation prohibiting it from
happening. However, that law or regulation must be enacted only through
specified procedures. In a country operating under the rule of law (more or
less--less than I would like, more than pessi-conservatives would admit),
process and procedure ARE important, and cannot be short-circuited just
because the end result is popular. A judge has ruled that the process of
bringing the national do not call list into being was wrong. The solution?
Congresses passes a law and gets the process right.

5. Despite what I just said, it is an open question of whether or not a do
not call registry violates a true, enumerated right in the constitution--to
free speech. Even businesses have a right to free speech under the
constitution. An individual's right to free speech can in fact limited in
some very specific cases ("shouting fire in a crowded theater").
Businesses' right to free speech is limited as well (in case of fraudulent
claims, for example.) Whether or not limits apply to a do not call registry
would still have to be tested in court. If I had to flip a coin, I would
say they will win.

6. A friend of mine has suggested that what is at stake is his property right to control what happens to the telephone. It's an interesting argument, and I'm sympathetic to most proposals to rely on property rights. A companion argument to this would be that freedom of speech does not establish a requirement to listen.

7. By the way, here's a great column on the topic from Dave Barry. (permalink)

Government as Competitor to Private Business
Some things, the government should do, and do well--such as organize and provide national defense. On the other hand, they get into trouble by trying to do too much--such as things performed by the private sector. Not only does this unnecessarily enlarge the size of government, it provides unfair competition.

The Texas Public Policy Foundation recently issued a report (PDF) describing how governments in Texas have gone afar from their core functions by entering into commercial ventures. Some cities are in the Internet business, for example. Municipally-owned electricity is a $3 billion industry. In all, 3 percent of the state's gross product is performed by government agencies. (permalink)

Multi-state Tuition Agreements
One unusual feature of higher education finance in Minnesota--or at least a feature I have not seen elsewhere--is a reciprocal agreement it has with other states. Residents of Minnesota, Wisconsin, and some other states (one or both of the Dakotas, plus Manitoba) can attend state universities outside of their own state, at the same tuition as residents of those states.

It sounds weird, but it seems to be an innovative way to avoid empire building in the upper Midwest, even allowing (at the margin) for some economies of scale: not every state needs to have a graduate program in music therapy, for example.

The legislative auditor has a new report, though, that reveals an oddity of the arrangement. Minnesota residents have several branches of the University of Minnesota to choose from. Those who attend the Twin Cities campus (by far the largest) pay a surcharge, on top of resident in-state tuition. Wisconsin residents who attend that campus do not. So, if you live in Minnesota and your children want to attend "the U" (as the Twin Cities campus is called), here's the cheaper way of doing it: move to Wisconsin (where taxes are cheaper anyway), and send them as non-residents. (permalink)

More on Medicaid
Stateline.org has a short story on the latest Kaiser Foundation study on Medicaid, released last week. What stands out in this story is the attempt to squeeze money out of providers and current recipients, rather than be more careful about how gets into the program in the first place. This is exactly what you would expect from public choice theory--bring more and more people into the program (to create more voters who depend on or favor expansion of the program), and focus less on actually improving the service provided to people already there. By the way, 49 states have reduced payments to doctors and hospitals, but only 18 have changed the income standards for who qualifies--standards that sometimes let people with incomes of up to 2 or 3 times the federal poverty level to enter a public program in some way.

Labels: Medicaid

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Schools for the Students ... Or for Teachers?
Michigan politicians are negotiating the expansion of the state's charter law, a move that would allow another 15 charter schools in Detroit. The teachers union responds by ... organizing a protest that draws so many teachers out of the classroom that the school system sends students home.

Labels: Charter schools, Education

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Victimless Non-Crimes
Sometimes, the virtual world needs more virtue.

Police in Michigan received a tip that a man had agreed, through an Internet chat, to meet a 13 year-old girl for a sexual encounter. The man's employer--a high school--and local media heard about it, too. They received the man's picture, home and e-mail addresses and telephone number, from a concerned citizen.

The girl never existed. She was made up, a creation of a sting. Police pose as prostitutes all the time, and they have also started to pose as minors in online forums, trolling for pedophiles. But in this case, it wasn't the police who did the trolling. It was a private citizen in Wisconsin, an online--and unnamed--vigilante.

According to the Detroit Free Press, the would-be virtual pedophile's attorney says that his "conversation was 'all make believe' that 'happens online a million times a day in these chat rooms.'"

While the vigilante's tactics can be questioned--there is, after all, plenty of opportunity for defamation--you've got to wonder why any right-thinking person would even play at being a pedophile. (permalink)

Next Time You Hear "Teachers are Underpaid," Remember This
Some Chicago Public School teachers will receive a raise of $13,000, to be spread over five years.

Actually, that understates the raise, since the number of school days will be cut from 180 to 174. (permalink)

Some Things Do Change, After All
I'm not much of a baseball fan, but I did notice this line from the fron page of the Chicago-area Daily Herald: "It's Sept. 24. Do you know where your Cubs are? They're in first place. All by themselves."

Cubs in first place? In late September? Next up: "Pigs can fly; prototype unveiled." (permalink)

Wisconsin Politician: Cut My Pay
According to the Milwaukee Journal-Sentinel, "The Washington County Board chairman's pay would be slashed $17,820 next year, a 50% reduction, as part of a budget-cutting resolution that the Executive Committee adopted Tuesday." Other officials may--this proposal has only been passed by a committee, not the full board--be cut by a smaller amount, 9 percent.

Chairman Ken Miller volunteered for the cut Tuesday, and members agreed to cut his pay--but they were not eager to cut their own pay by 50 percent, a proposal that one of them called "an insult." Another member, according to the paper, "said the board in effect had cut its salary by not approving a raise since 1999."

Sounds like Washington DC accounting: the lack of an increase is a cut. Reminds me of the teacher who said that he wasn't getting a pay cut because the pay scale hadn't moved--though he was getting a step increase based on the schedule. Hey, if it's more money in your paycheck, it's a raise. And if your paycheck remains the same, it isn't a cut. Yes, I understand the effects of inflation.

But I've got a word for the Washington County board member who laments the lack of a pay raise: get used to it. Some of your constituents haven't had a pay raise in four years, either. And public service--especially for a part time gig--is, well, a service, not a right. (permalink)

Aging Prisoners Costing Taxpayers a Bundle
In 1997, 5.3 percent of Michigan's prisoners were over 50. This year, the percentage has more than doubled, to 11.4 percent.

With an aging prison population, the Michigan Department of Corrections faces the same problems facing Medicare: as people age, they tend to need more medical care, and that demand is compounded with a growing aged population.

According to the Detroit News, "Experts predict that these costs will increase every year until sheer economics dictate early release of old prisoners who have health problems and are a low risk to return to a life of crime."

The Department spend $170 million a year on medical care, and will go up if projections hold. (The department already consumes 20 percent of the state's general budget.) Keeping the public safe through a criminal justice system is a core function of government, so the expense is not necessarily wasted. But since the demand for health care is, in theory, infinite (one cannot be "too healthy"), and the courts will (and have) imposed minimum levels of care for inmates, the state may have to make more aggressive (and wise) use of parole for older prisoners. (permalink)

The Personal Isn't Political
One of the most tiresome (though trivial) aspects of the modern entertainment industry is the tendency of artists to make political statements. (Come to think of it, the fact that we have an entertainment industry shows how prosperous we are. What was an occasional avocation by weary workers looking for a break after a long, hard harvest is now an industry that surrounds us.)

I'm reminded of this tendency of the creative types to use their platform for political statements by the latest pronouncements of the Dixie Chicks. This all-woman trio has decided that it's no longer a country music act. Jonathan Last of the Weekly Standard provides a quick review of how the Chicks have alienated many of their Bush-voting country music fans.

Now that one of the trio says "We don't feel part of the country scene any longer, it can't be our home anymore," Last offers three possible reasons why the group has gone out of its way to offend conservatives (and some others) by insulting President Bush and then people who might vote for Arnold Schwarzenegger: (a) they're sore for not winning any awards at the latest country music self-congratulation ceremony; (b) it's a calculated marketing strategy; (c) they simply don't like their fans.

I have a copy of their breakout CD, "Wide Open Spaces," in my car, and I occasionally play it. I enjoy listening for the banjo and fiddle playing, and occasionally wonder about picking up fiddle playing myself. (My other musical experiences are limited to playing the piano and singing in a college chorus.)

The people who know me well find this an odd choice in music. But my standard reply is that if I bought CDs only of people who shared my politics, I would have a very slim music collection. I'm willing to separate a person's creative performance from his politics. (permalink)

Don't Drink, Drive, and Skip Your Court Date
In Wayne County (Detroit) Michigan, over 7,000 people have been cited for driving under the influence, but have ignored their court dates.

Says the county sheriff, "The real problem is that the traditional game for years in Wayne County has been that if you're a drunk driver and you get arrested, you can post a $100 bond and you're out on the street," apparently, never to deal with the criminal justice system.

The State of Michigan is giving the county $392,400 to pursue scofflaws. Proving that some government officials have a sense of humor, the newly created task force is named the "Last Call" unit.

By the way, the Detroit News has a more substantial take on the development. (permalink)

Zero-Tolerance: Zero Sense
Blogger Mitch Berg tells how his son was suspended from school for carrying three plastic pellets from a tiny gun. " The odd thing is, the assistant principle didn't know what the tiny beads were; she had to be told--by Berg's son--what they were. Berg concludes: "As I walked out the door of the building that had been cleansed of plastic toy ammunition, I tallied up the day's balance sheet: Half a day of work missed; half a day of school missed; and a son who's learned one of life's most important lessons: The Authorities Just Aren't Very Smart. (permalink)

Popular Advocate of Low Taxes Leaves High Tax Minnesota
The power of talk radio can be overstated, but advocates of better-and-smaller government in Minnesota will miss Jason Lewis, of KSTP-AM, who is taking a job in Charlotte, North Carolina. The local St. Paul Pioneer Press calls the "best friend Minnesota Republicans ever had."

More importantly, he has been a consistent proponent of change in Minnesota, driving home (literally--he has had the evening drive time slot) the message that state residents are already overtaxed. The Charlotte Observer quotes Sarah Janacek, a Minnesota-based political consultant, as saying that "the no-new-taxes [pledge of Governor Tim Pawlenty] was greatly enhanced by Jason yakking about it every night." And amazingly, Pawlenty and the legislature (half Republican, half Democratic) put together a budget that dealt with a $4 billion deficit without a tax increase. To the extent that Jason Lewis was responsible, I am grateful. I didn't listen to him that often--my schedule didn't allow for it--but I am going to miss knowing that his voice was out there. (permalink)

Medicaid Growth Slows in 2002
The Kaiser Commission on Medicaid and the Uninsured has three new reports today about Medicaid spending. A survey of the 50 states reveals more of the same--cutting payments to physicians and other health care providers, and raising copayments or restricting services to beneficiaries.

It's not true that Medicaid spending is actually down; spending has increased from year-to-year for quite some time. What is different is that the rate of increase for 2002 was less than the rate of increase from the previous year--the first time something like that has happened in 7 years. In 2001, the rate of growth was 12.8 percent; in 2002 it was "only" 9.3 percent.

In the last 3 years, states have leaned heavily on providers--all 50 states have frozen or even reduced payments to doctors and other providers. But only 32 to 35 have increased copayment requirements, restricted or reduced who is eligible, or reduced benefits.

The Foundation lays the cause of increased spending on the elderly and people with disabilities (rather than the stereotypical low-income household). It notes that spending increased by $7 billion in FY 2002, while overall state revenues decreased by $62 billion (of course not all that "lost money" would have gone to Medicaid, magnifying the importance of increased spending.)

Cutting provider payments and nickel-and-diming beneficiaries cannot stem the fiscal disaster that will befall states if the current path continues. The National Center for Policy Analysis, meanwhile, offers a number of ways to reform Medicaid that will increased consumer care and decrease costs.

An old (March 2003) story in USA Today offers some more statistics.

• First, 47 million people (or 1 in 6 people--16 percent of the population) receive Medicaid benefits. By any standard, that's a large number.


• Nationally, 20 percent of state budgets are spent on Medicaid--second only to education.


• Since its inception in 1965, the number of people covered by Medicaid has "expanded dramatically."

The story ends with a call by FamiliesUSA for national health care. Until recently, there hasn't been much work on finding consumer-friendly alternatives.

Labels: Medicaid

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Public Policy Term for the Day: Optical Solution
If you google the term "optical solution," you will get over 5,000 hits, most of which have to do with either high tech or eyeglasses. Nothing terribly useful if you, like me, are interested in public policy.

But here's another use of the term: a highly visible government program or initiative that does nothing to achieve a public policy goal; a symbolic act to convince the public that the government is "doing something" about a problem.

I came across this term in the Seattle Weekly. I perused this "alternative" newspaper while on a trip to the Northwest recently, and read an article about how difficult it is for the U.S. government (and Canadian government, for that matter) to patrol the U.S.-Canadian border.

The U.S. government will be adding a number of employees in an attempt to prevent terrorists from entering the country through Canada. Given the large number of miles and small number of agents (roughly 600 agents and 5,200 miles of border), it's nearly impossible to control what's going on. So has the recent emphasis on the northern border, and adding more border agents actually achieved anything? According to Kathleen Walker, an immigration attorney, what the U.S. has gained is the appearance of having control. In other words, she says, it has achieved an optical solution.

Such a useful term. Remember that next time you read of a new program, or law, to deal with a problem, real or imagined. Does the act actually mitigate the problem, or is it only an optical solution? (permalink)

Something's wrong in Wisconsin
With less than 2 percent of the nation's population, Wisconsin leads the country in the number of sexual predators released into neighborhoods. Of all all the perverts released under such laws, one-third have been released in Wisconsin.

Under the law, dubbed Chapter 980, sexual predators are released, but are subject to being placed back into confinement if they violate certain rules. (Think of it as lifetime parole, I guess.)

Before 2000, the convicts were not released until a doctor certified that they were making substantial progress in their "treatment" (whether or not treatment can be effective is a debate for another day). But then state's Department of Health and Family Services waived that requirement.

Not surprisingly, officials have a hard time finding a place to house these offenders; neighbors have a way of objecting and raising a protest. Most other states with release laws have released one, or at most, two offenders. (permalink)

Don't Call Us, We'll ....
The Indianapolis Star takes a look at some Indiana-based telemarketing companies who believe that the new, federal "Do Not Call" registry will in fact help them. "We think this improves telemarketing," said one telemarketing executive. The law will be a boon to some companies, that sell products to other telemarketers to keep them on the right side of the law. Another said that he expects to see fly-by-night telemarketers disappear in a few years.

Just what the world needs. A respectable telemarketing company. By the way, one
telemarketing firm cited in the story has "doubled its sales about every six months." (permalink)

Pre-Paid College Plans Put Taxpayer on the Hook
Michigan was the first state to enact a prepaid college tuition program, under which parents turn money over to the state now for a guarantee of N units of prepaid credits available at a later date for their children.

According to the Detroit News, the Michigan Education Trust--available only to state schools--has been a financial boon to some families. However, taxpayers could be asked to kick in money if tuition rates go out of sight. (Colorado ran into a similar problem, and halted new entrants to its program.)

Aside from putting taxpayers at risk, the MET is troubling because it encourages taxpayers to place their faith in government planners, rather than turning to private investor services. The dependency of the middle class on government services continues, and as often the case, the incentive is education.

The News also notes that three private colleges in the state--including my alma mater--have joined over 200 private colleges across the country in a similar, privately-run program. (permalink)

Flexible Spending Accounts and Non-Prescription Drugs
After an administrative ruling by the IRS, people with flexible spending accounts (FSAs) will soon be able to use the tax free money to buy prescription drugs. The Detroit Free Press offers the comments of several Michigan-based employers on the topic. It also offers a consumer-oriented Q&A and a list of the most commonly-used drugs that may (depending on the plan's provisions) be purchased with FSA dollars.

Since only 20 percent of eligible people (nationwide) participate in these tax-free accounts, participation rates have nowhere to go but up. This is a move in the right direction, in that it makes people more aware of the costs of health are (in this case, medications) and accustomed to being wise consumers of health care dollars. It may also save some overall dollars in health spending; currently, people face an incentive of obtaining more expensive "free" (covered by health insurance) medication than generics, which are often less expensive and just as effective, or nearly so.

On the other hand, FSAs are limited in one important aspect: they still impose a third party--employers--in the provision of health care. The Freep article suggests that consumer receipts will be carefully monitored by employers for fraudulent claims.

Labels: Health care

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Money Down the Rat Hole
Bill Gates gives $50 million to the New York City school system. (Thanks to The Corner for the link.)

One thing that the Gates Foundation has right on schooling is that smaller schools are better than behemoth schools. And smaller schools tend to be .... private schools. How about half of that money going to scholarship programs for kids to take to private schools? (permalink)

Economic Growth, Top-Down
Illinois Governor Rod Blagojevich [How I wish Jim Ryan had won! A much easier-to-spell name] announced an economic development plan.

The St. Louis Post-Dispatch reports that 'While the governor said "Economic growth in Illinois will be driven by the private sector and businesses,' not government, Blagojevich said. 'We can't keep relying on the traditional approach to economic development," it looks like government still has a large role to play in the plan.

The proposal--with no price tag yet attached--calls for industrial policy ("developing clean coal technology, vineyards and Southern Illinois University Carbondale") and depending on federal handouts ("protecting Scott Air Force Base from federal cutbacks") and trying to prop up a public works white elephant ("development of MidAmerica Airport.")

Now, if the governor wants some other ideas--without a budget for his proposal, it's hard to say that it is finished--he could hop over to the website of the Illinois Policy Institute, which, among other things, has called for using the already-enacted federal bailout money for business tax relief. (permalink)

Texas Legislators May Smother Popular Fiscal Watchdog
Since 1991, e-Texas, a program run out of the comptroller's office, has recommended more than $16 billion in savings. As an entity separate from the legislature, it has been free to take on political pork such as the Texas Food and Fibers Commission, and offer innovative proposals for changing the way state government works.

Critics in the legislature, though, say that there is an inherent conflict of interest: the comptroller is responsible for estimating revenue. So, the argument goes, the comptroller may underestimate revenues, thus overstating deficits--and creating more opportunities for the office to become the fiscal saviour.

There's a grain of truth in here. But the solution is not to eliminate the independent status of e-Texas. Spin off the revenue-estimating job to another office (create one, if necessary), and leave e-Texas alone. As a spokesman for the American Legislative Exchange Council (ALEC) says, "e-Texas is a creative, systematic and institutional approach to saving money in state operations." (permalink)

Changing the Business of County Government in Milwaukee
Milwaukee County Executive Scott Walker [yeah, I hate all those caps in a row, but what am I to do?] continues to shake things up. Among his proposals for the next budget, which stands at $1.13 billion.

- Making county supervisor's jobs part time, and reducing their salary from $50,000 to $15,000.

- Eliminating free bottled water for employees, who will, as Walker says, "drink the same tap water as everyone else." (Milwaukee is notorious for dumping untreated sewage into Lake Michigan during heavy storms. Maybe the county ought to shift some money around to take care of that problem.)

- Contract out some services to the mentally ill and the disabled.

- Make some cuts to arts groups.

- Sell some county-owned land.

On the other hand, Walker does some blame-shifting, proposing that the state highway patrol take over the duties on expressways in the county.

The county has 6,000 employees; a "pension upgrade" by Walker's predecessor requires an infusion of cash. Spending on pensions and allocations for employee sick leave claim 20 percent of tax dollars.

Labels: Public employee pensions

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No Spandex, Please: We're State Employees
When you read about "inappropriate clothing," it's usually about the dress habits of teenagers in their high schools. But this time, the dressers-down who got dressed down are employees of Minnesota's Department of Employment and Economic Development.

Now on the outs: T-shirts, exercise clothes and "shirts with inappropriate words or visuals, or clothes that are sloppy, not clean, or in disrepair." Also on the list: "warm-up suits, jeans (blue or otherwise), capri pants that are tight or shorter than calf-length, revealing or see-through attire, miniskirts or sundresses, leggings or Spandex."

State employees wearing Spandex?

The union objected, calling the guidlines "way too stringent." Management relented on some issues, but on the whole, the department chief held his ground, arguing that with the dress code--updated from what was to "business casual"--"You look better, you feel better, you perform better." (permalink)

"All You Can Eat" Health Care Makes Medicare Sick
The New York Times profiles some Medicare patients and doctors in south Florida. The title of the article: "Patients in Florida Lining Up for All That Medicare Covers."

It isn't a pretty picture. Given Medicare's low reimbursement rate, doctors say they have to rapidly shuffle patients in an out to make a living--a practice that may not lead to the most satisfying of consumer experiences. Doctors are quick to refer patients to specialists--again, to maximize income. "Many patients have 8, 10 or 12 specialists and visit one or more of them most days of the week."

All these visits to specialists mean that Medicare spends more per person in south Florida than anywhere else--but with little to no medical benefit. Says one health care expert at Dartmouth, "In our research, Medicare enrollees in high intensity regions have 2 to 5 percent higher mortality rates than similar patients in the more conservative regions of the country."

The article gives voice to the concern that there's no one constraining overall utilization. That's right--when supply is not limited by price, consumers--in this case, Medicare beneficiaries--will demand an unlimited supply. So they have to respond to the ways in which primary care physicians try to limit demand, by rapid-fire appointments and quickly sending off non-routine care to specialists.

A better approach, not mentioned in the Times, is to make enrolles financially responsible for their care through, for example, Medical Savings Accounts. Only when people see a direct, personal connection to the cost of their care will Medicare operate rationally. And perhaps they will be able to buy more time with their physician and feel less like a loss-leader. (permalink)

County May Sell Golf Course Operations
Arguing that Waukesha (Wisc.) County government must focus on core functions--and that running a golf course is not one of those functions--County Executive Dan Finley is pursuing the sale of the Wanaki Golf Course. " The county, in suburban Milwaukee, owns three courses.

Finley nails the point when he asks: Should Waukesha County have a golf facility when there's plenty of other facilities? Why should county government do it?"

Other members of the county government object, arguing that the course is self-supporting, and that the county ought to sell off two ice arenas, which are not. That's a good idea, too.

Labels: Golf

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MSAs may Get Boost from Takeover
According to the Indianapolis Star, local company Golden Rule Financial Corp--which has been a pioneer among and advocate for Medical Savings Accounts--is being bought out by UnitedHealth Group of Minnesota. Golden Rule has 1,100 employees and $830 million in revenue. UnitedHealth is a behemoth in comparison, with 32,000 employees and revenue of $25 billion.

Now, I've done work for groups that have received money from Golden Rule, groups that have tried, in the policy arena, to advocate the increased use of MSAs as a tool of reforming health care. So my first response to this article was "uh-oh. Those grants will go down the drain."

And perhaps they will. Golden Rule has been a family-driven business, meaning that it has been free to be more concerned about ideas than the typical corporate giant. But this may all be to the good. The Star cites an industry analysts who suggests that "Golden Rule's reputation as a pioneer in medical savings accounts is likely what attracted UnitedHealth, the nation's largest health insurer."

Perhaps, then, the Big Money knows that MSAs have a greater role to play in the future. That's good news for health care, and for consumers. (permalink)

Suburban Flight
The Detroit News reports "more than 33,000 young adults left the [metro] region between 2000 and 2002," or one busload a day. (This brings back the line from the 1970s, when people were moving to Texas: Will the last person leaving Michigan please turn out the lights?)

Of course, this has businesses and government officials worried--lost consumers, lost workers, and lost taxpayers. The population loss is not uniform throughout the metro area, though: semi-rural Livingston county (between the state capital of Lansing, and Detroit) had the largest population gain of the 7-county region, and was the only one to gain among the gen x (ages 24-34). Wayne County, home of Detroit, continues its prolonged death, leading the region in emigration.

To be sure, Detroit, like all of the Midwest, will always have a competitive disadvantage when it comes to the weather. But the economic climate and tax policies may have a role not suggested by the article.

Of the 10 metro areas that gained the most in the gen x crowd, six were in low-tax states (Phoenix, Las Vegas, Dallas, Houston, Austin, Provo), though somehow California got 3 area on the list (LA, Riverside, and -- how can this be -- Sacramento).

Governor Jennifer Granholm wants to make Michigan "cool," and an academic quoted in the article suggests that "walkable cities" may be a key component. Expect gen x flight to be used as an excuse to justify land use controls under the guise of "smart growth."

Labels: Cool cities fad

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Contracting out Under Fire
George Newstrom, secretary of technology for the Commonwealth of Virginia, says that he could save taxpayers $100 million (out of a technology budget of $900 million) by a combination of outsourcing and better management.

But that's a difficult sell, especially since some outsourcing goes to other countries. As Newstom says, "We reject moving work from Virginia to Maryland, not to India, to Maryland. We don't even like that."

Still, information technology will be a target for outsourcing, either within the U.S., our outside. It's not an essential function of government. Currently, states spend close to $50 billion on IT. (permalink)

Another Drug Purchasing Pool
The Wisconsin teachers union along with some businesses in the state have announced the formation of Wisconsin, a plan that hopes to get a 5 to 15 discounts on prescription drug costs.

While volume discounts are nothing new, two elements of the plan are worrisome: the involvement of such a large group of government employees could morph into a back-door entry to price controls. And the plan expects to have a preferred list of medications, which would mean that a third party, rather than patients or doctors, would influence or even control what medications are available. (permalink)

More Charter Schools in Michigan
An agreement has been reached in Michigan to expand the number of charter schools--currently maxed out at 150 (the existing cap)--by 135. Showing that school boards of existing governments schools are as much of an obstacle to reform as the teachers unions, the director of the Michigan Association of School Boards says that his group is "dead set against this. We'd be pouring more money down a rat hole at a time when we don't have the money we need to shore up the system we've got."

If anything's a rat hole, it's the existing system by which one school board and one teachers union local has a monopoly on the use of tax dollars within a given geographic area (known as a school district.) Charter schools aren't as good as full school choice, but they do allow some alternatives.

Labels: Charter schools, Education, School choice

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Seattle Voters Just Say No to Latte Tax
Coffee drinkers and non-coffee drinkers alike voted no on a measure to add 10 cents a cup to "any coffee beverage containing a half-ounce or more of espresso." It would not have applied to other forms of coffee, however. The measure, which failed with 68 percent of the vote, was an end around a failed attempt to persuade Washington legislators to impose a state income tax. Money raised by the tax--estimated to be anywhere from $1.8 million to $7 million--would have gone to subsidies for day care and preschool programs. The proponent of the measure blamed its defeat on a fear that the tax would hurt small business owners. I suppose that's progress, though I would also hope that the public would turn a skeptical eye to the idea of taxpayer funded day care. (permalink)

We Want Choice, Too
A group of Hispanic parents and activists have announced plans to seek a charter school for Prince George's county, in Maryland. They say the Prince George's school district has failed to pay enough attention to immigrant children. They also say that the schools ought to do more to encourage parental involvement in education. Currently, Maryland has only one charter school, making it a national laggard. For one thing, charter school organizers must first seek local school board members for permission.

Charter schools are at best a halfway solution to full education choice, however.

Labels: Charter schools, Education, School choice

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Chicago Third Airport Proposal Not Dead Yet
Bensenville and Elk Grove Village, two west suburban municipalities that have fought Chicago's plan to expand O'Hare International Airport, have teamed up with south suburban University Park and Park Forest to advance a third airport. Three of the four municipalities have agreed to chip in $650,000 of taxpayer dollars to promote the idea of building a single-runway airport at Peotone, 40 miles of the Chicago Loop. (Midway Airport lie in southwest Chicago; O'Hare, in northwest Chicago.)

The coalition has hired LCOR Incorporated of Berwyn, Penn., and SNC Lavalin in Montreal to come up with a plan. The State of Illinois suggests that the third airport--favored by the governor, who also wants to exand O'Hare--will cost $500-$600 million to build. The coalition's consultants say that the number will be "millions of dollars less," though the Daily Herald does not give an exact number in its report.

As the newspaper puts it, perhaps dryly, "backers of the Peotone plan still face major obstacles, such as getting the land, the money, and cooperation from airlines and politicians to make it work."

There is no sense to this plan. Airlines are committed to the hub system, and don't want to spend the money. So it's not going to work. Backers suggest that a company that doesn't use hubs, such as Jet Blue, could find a new field attractive. (Southwest, like Jet Blue, uses point-to-point scheduling. It has revitalized Midway.)

Here's what the Daily Herald has to say: "Backers of the proposal said the airport near Peotone, some 40 miles south of Chicago's Loop, is not meant to draw passengers away from O'Hare, but primarily would draw from people who live in the South suburbs and Indiana, which is part of Midway Airport's passenger base."

Elk Grove and Bensonville have fought O'Hare expansion tooth-and-nail (and with tax dollars). They also advocate a plan that will not draw passengers away from O'Hare. It looks to me like a waste of tax dollars, even in support of the stated goal of stopping new runways at O'Hare. (permalink)

Congressman to Constituents: Fire Me
Indianapolis is home to Eli Lilly, a research-based pharmaceutical company with over 6,000 employees. It's also the home of Representative Dan Burton, who wants Congress to permit the importation of prescription drugs from Canada and other countries. Such a measure would harm the fiscal health of Lilly, and perhaps the physical health of everyone else.

While one member of Congress (not Burton) says that it is "immoral" for U.S. consumers to pay more for drugs than people in other countries, companies such as Lilly do so because (a) drug prices are cheaper elsewhere thanks to price controls; (b) even at cheap prices overseas, they make some money; (c) if the drug companies refuse to sell the drugs at government-dictated prices, the governments will strip the drug companies of their patent protection, and give them away to generic drug makers. I've been told (but have not yet verified) that this would be permissible under the World Trade Organization rules that most countries observe. (There is, I would guess, a provision that perhaps forced licensing or the removal of patents in case of "dire medical emergencies," or something.)

Representative Burton appeared at a "town hall" meeting, and stood down the noisy anti-importation crowd, many of them Lilly employees, retirees, and consumers.

As the Indianapolis Star recalled the scene: Burton told the crowd he will continue to push for the bill despite the opposition from Lilly that's likely to lose him re-election votes. "I am going to win anyhow," he said. "You are going to have to live with it."

I hope not--for it may mean that many people won't get to live as long, if price controls get so bad that they restrict the development of new, more effective drugs. (Currently, it takes roughly $800 million to bring a new drug to market.) (permalink)

Illinois Gov Suggests Illegal Drug Deals
No, Governor Rod Blagojevich isn't pushing illegal drugs--but he is suggesting that state money be used to buy prescription drugs from Canada. Under FDA rules, such a practice is illegal. It's also bad public policy.

Drugs in Canada are cheaper than they are in the US, but only because Canada, with its single-payer system, imposes price controls on drugs and rations services. This really isn't a model that the U.S. should emulate. (permalink)

Milwaukee Mayor Holds Line on Taxes
Milwaukee's mayor, John Norquist, presented a budget that does not increase tax rates. ""I think it's the right thing to do, and I think it's good for the city to reduce the amount of its spending because the citizens can only afford so much," the mayor says.

That's good, as far as it goes. But an even better point is that even if the residents could afford to pay more, that doesn't mean that government should do more. Perhaps the alderman of the city will take this opportunity to look for ways to save money and improve services by jettisoning any extraneous functions and putting some of the others up for competitive bidding. (permalink)

Tax Dollars for Arts Cut in Half
Doing more with less--or perhaps less with less--has been the mantra of many a private corporation. Now it's a reality facing arts groups in Michigan, after the state cut out half of its annual appropriations.

Too bad it didn't go all the way; government funding often corrupts the arts, sets off political battles, removes the requirement that arts groups be self-sufficient, and robs Peter to pay for the amusement of Paul. (permalink)

Detroit Public Library to Charge Outsiders
Some 60 percent of users of the Detroit Public Library do not live in Detroit--and hence, don't pay for its operations. Actually, they do pay a small amount now, since some state tax dollars do go to the library. But as those dollars ($1.8 million) are being eliminated, the library board is considering imposing a fee on non-residents. Neighboring library systems charge non-residents anywhere from $35 to $150 a year.

This is a reasonable idea. It's easy to administer--hand over cash, get a library card--and it imposes some of the costs directly on the people who benefit from it. (permalink)

Fire Them All! I'll Take a Job!
Negotiators for the state government in Minnesota want government employees to shoulder a higher burden of health care costs. Union officials (state workers have unions? Yes) are recommending that employees reject the Pawlenty administration's latest offer. Voting on the pact has begun (by mail, presumably), and continues through September 29. Pawlenty has activated the National Guard and directed it to begin training to help in nursing homes and hospitals.

Well, good for the guard--though I suspect that few of its members thought that changing bedpans would be part of their duties. In times of rhetorical flourish, proposals to restrain the growth of increase in social programs are sometimes characterized as abandoning the poor. Looks like government workers, not politicians, may be the ones to do that.

A friend of mine, upon reading the above-linked article from the Twin Cities Business Journal, has this comment: Fire them all! I'll take a job!

Again: to the extent that unions "work" in the private sector, it's because labor and management, facing opposing incentives, must come to terms in a way that is acceptable to the marketplace. But with the public sector, the opposing interest of management doesn't exist--both management and union benefit from increased public spending. Both must work politically, of course, to elect legislators favorable to the task of raising taxes. But this union-and-management partnership creates yet another voting block pressing for the expansion of government programs for the insiders rather than the general good of the public. (permalink)

Time to Update Zoning
Chris Fiscelli of the Reason Public Policy Institute argues that zoning laws need changing. Typically, cities enact zoning regulations based on a multi-year plan (sometimes as long as 30 years) that strictly segregates, say, residential from commercial uses. Hence, everyone drives to the strip mall. "With this type of land use regulation, it should not be surprising that much of suburbia looks as it does," he writes.

Fiscelli criticizes zoning, as practiced, as being insufficiently flexible for a changing society. (Indeed, how can one expect what will happen to housing, shopping, and business needs over a 30-year span?). It can also be a tool of snobbery and even racism, not to mention imposing a series of tastes.

While I've thought of some of this before, Fiscelli points out an interesting situation: zoning may produce outcomes that can be criticized from different, even opposing viewpoints. "At a practical level, zoning tends to foster development patterns that conflict with smart growth objectives while using a process objectionable to free market advocates."

Fiscelli offers the alternative of flexible zoning, a "concept that embra