Health Care: The Latest in Medicaid Reform, Federal-Level.
Nina Owcharenko of The Heritage Foundation offers a quick review of where Medicaid's coming from, and what changes are needed.

For starters, Medicaid is part of the triad of entitlement programs (Social Security and Medicare being the others) that account for 44 percent of all federal spending today. Medicaid enrolls approximately 46 million persons, and is now a larger program than Medicare. From 2000 through 2003, it grew at 10 percent a year, an unsustainable rate.

The rest of the policy note describes Bush Administration proposals to change Medicaid. They include the latest in the cat-and-mouse between federal officials who distribute money from Washington and state administrators who game the system, and increased enforcement on asset transfers that allow the wealthy and middle class to make grandma, who would otherwise not qualify for taxpayer funding, appear to be a pauper.

Labels: Medicaid

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Health: Two Tools for Insurance Shopping.
Changes in health care policy still need time to work themselves through the marketplace. Two web sites can help consumers find insurance policies they need.

HSA Insider and ehealthinsurance.com

Labels: Health care

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Taxes: Time for a Tax Limitation Measure in Ohio.
Ohio went from a low-tax to a high-tax state in 1994, and now sees its state government growing at a rate that will double within 14 years.

Higher-tax states experience lower rates of growth than lower-taxed states. So it's time for a Taxpayers Bill of Rights. A PDF version of a report from the Buckeye Institute is here. Having read many such reports, the PolicyGuy commends it as one of the more comprehensive accounts. (permalink)

How to Cure a Deficit? Taking on New Money-Losing Ventures is Not the Way.
The Commonwealth of Kentucky is facing a $29 million deficit. So what does state government do? Create a new state park, complete with a camp ground that will lose $300,000 per year.

The folks at the Bluegrass Institute for Public Policy Solutions must be shaking their heads. (permalink)

Legal: How About Fewer, Not More, Laws?
The Illinois Policy Institute notes that there are now at least 3,300 separate federal crimes on the books, along with 10,000 federal administrative regulations and other codes that regulate behavior.

Amazingly, 40 percent of these restrictions have come about in the last 30 years.

Abdul Hakim-Shabazz, a visiting fellow with the Institute, decries is "the elimination of the intent requirement," meaning that "many business people might find themselves behind bars simply for making a bad business decision and not harboring any ill will towards anyone." (permalink)

Taxes: Raising Taxes Will Weaken the Economy, State
State governments need tax revenue to operate. So what do you do when there's a gap between tax collections and spending obligations? Don't raise taxes! That's the advice of the Illinois Policy Institute, in this policy brief.

The Institute uses the history of Illinois' fairly new (legal) gambling industry. As taxes on casinos rose from 20 percent to 70 percent of adjusted gross receipts, both receipts and foot traffic declined.

A similar story can be told of raising cigarette taxes. (permalink)

Health: Consumer-Directed Measures Work.
While economic theory supports the case for moving health care from third-party payers to involve consumers more directly, theory is not the only support for the move. Experience bears out the value of consumer-directed approaches, such as HSAs and shopping around for prescription drugs, as well.

Here's a note that my CPA sent to a local reporter who wrote about health care plans and pricing:

Topic 1: It is true that relatively few people incur the majority of expenses. As an ex-smoker, I can testify that smoking is an unhealthy lifestyle, as is eating too much which leads to obesity, diabetes, etc. As Mr. Spartz asks: "how can we incent people to engage in healthy lifestyles..." My answer is "hit 'em where it hurts, the pocketbook." We have put up www.HealthSavingsAccountMinnesota.com so people could learn about HSAs. There is anecdotal evidence that people with High Deductible Health Plans have increased their preventive checkups and decreased their
overall health care spending. People are a little more careful how they
spend their health care dollar when it is coming from their retirement money
(the Health Savings Account) than just paying $15.00 for a service. I am
also attaching a five-year claims history for a small business that will
benefit enormously from using the HSA approach. Under current ownership
(11/01/1999 to 10/31/2004) the firm's health carrier has paid $12,308.46 to
providers of medical care and $57,253.24 to the government and its other
enrollees. All or part of that $57,000 could be sitting in the 5 employees
Health Savings Accounts.

Topic 2: We note that a change from $15.00 copay, then 100% plans to a $5,000 family deductible HDHP (High Deductible Health Plan which conforms to Congress' requirements) creates about a 35% decrease in premium on a group insurance plan. The same individual could purchase a $5,000 family deductible individual (non-group) HDHP with an approximate 50% decrease in premium. Why the difference? The state of Minnesota mandates coverages for employer-paid programs that are not mandated for individual plans. Does this affect the 3M's and General Mills's in this state? No. Larger corporations self-insure under ERISA, a federal law, which supersedes state law. It leaves the small business owner who cannot self-insure to pay for the state mandates. While the small business in topic 1 still cannot escape the mandates, they can do a sort of self-insurance by using HSA accounts.

Topic 3: There is a lot of use of ongoing generic medication for cholesterol, high blood pressure, asthma, etc. I recently found out that one can purchase these generics for a fraction of what pharmacies charge. My spouse's generic albuterol which is a $12.00 copay (actually 19.99 at Walgreens) can be gotten at Faircare Rx for $6.49. http://www.faircarerx.com/complist.html. Needless to say, but I still will, Faircare Rx is recommended by us when we set people up with health savings accounts.

Labels: Health care

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Education: The Innovation-Based Case Argument Against Extending No Child Left Behind.
While the public school establishment laments No Child Left Behind as an unfunded mandate, the Heritage Foundation sees NCLB as a threat to the innovation necessary to improve schooling.

From their Education Notebook of March 21:

“America’s high schools are obsolete,” said Bill Gates at a recent Summit of the National Governors Association. “By obsolete, I mean that our high schools—even when they're working exactly as designed—cannot teach our kids what they need to know today. Training the workforce of tomorrow with the high schools of today is like trying to teach kids about today's computers on a 50-year-old mainframe. It's the wrong tool for the times.

He wasn’t kidding. Less than a quarter of 12th grade students are proficient in math, science, or history according the National Assessment of Educational Progress. In international comparisons, American high school students fare poorly. On the Third International Mathematics and Science Study, the U.S. ranked 18th out of 21 countries in 12th grade math and science literacy.2 Many don’t even finish high school. Roughly 70 percent of U.S. high school students graduate on time, and only a third of students graduate with the minimum skills and knowledge to enroll in college.3

Clearly there is a problem. What is the answer? Why not extend the No Child Left Behind Act to high schools? After all, NCLB is focusing the nation’s energy on bringing all students to proficiency in reading and math. It is generating a wealth of achievement information for educators, parents, and the public. It is providing some students, many for the first time, with tutoring or a chance to transfer to a better school. Given these benefits, why not give it a try in high schools?

Here is why not: Federal action to improve educational standards comes at a price. For high schools, that price will be too high.

All policies have costs and benefits. Setting standards is no exception. Standards set at the federal level compel uniformity among the states. Such standardization can quash innovation and experimentation, while at the same time requiring costly and sometimes arbitrary adjustments to existing programs that do work.

Given the history of state and local control over schooling, increased federal oversight of states’ standards, testing, and accountability systems under NCLB was a hard sell to those who believe education policy should be determined at levels closer to students. While some have argued it is plausible for the federal government to require the grade schools it funds to impart essential skills like elementary reading and math, federal monitoring of high schools is an inappropriate use of federal power that will interfere with the interstate dialogue on the purpose and improvement of high schools. The idea that American students should achieve basic literacy and competency in math is almost unquestioned. But there is less consensus about the skills that high schools ought to impart.

Moreover, standardization of high school reform will be even more costly because state reforms vary to an even larger degree. This lack of uniformity, however, is not a problem. States and districts are experimenting with a wide range of reforms, including exit exams, dual enrollment programs, smaller and discipline-specific schools, high-tech vocational programs, Advanced Placement, remediation and support programs, college preparatory curricula, industry certification, public and private school choice, technology enhancements, and other reforms.

But there is no simple or single solution. No one state has the answers. Nor would federal standardization of high school testing and standards policy provide the solution. New federal programs are not the answer.

There is broad agreement that this issue belongs to the states. And it was a welcome sight to see, at the recent NGA summit, that governors are committed to the task

Labels: School choice

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Environment: You Can't Please Everyone
Some of the more unrealistic elements of the environmental movement may think that bicycles are a significant way of reducing air pollution. And then there are those who think that bikes are a problem, too.

The Pacific Research Institute notes that a member of the California legislature wants to make bicycles more expensive by levying a special tax.

The justification? Reduce the use of landfills.

Assemblywoman Karnette believes landfills are packed to capacity. She envisions a series of recycling centers that would take old bikes that might be junked and work them into community programs that would loan the bikes to, as one account put it, ?commuters or disadvantaged youth.?

But there is already a well-established market for second-hand bikes, and the "bicycle landfill crisis" has otherwise gone unnoticed. Imposing a tax would weaken that market.

PRI notes that the bicycles are a regular part of life in Sacramento, home of the California legislature. Shouldn't Karnette leave well enough alone? (permalink)

Education: Commonwealth Foundation Takes on Compulsory Unionism.
In one of those odd twists of policy, K-12 teaching is a valued profession--and also a unionized line of work in which seniority trumps competence and performance.

No wonder then, that the Commonwealth Foundation of Pennsylvannia is taking on compulsory unionism in that state. As the brief essay below notes, "unlike other white-collar occupations, teaching remains one of the few professions where salaries have little or nothing to do with competency, demand, or performance."

The Teacher’s Menace: Compulsory Unionism

Matthew J. Brouillette
03.29.05

“I want to urge devotion to the fundamental of human liberty – to the principles of voluntarism. No lasting gain has ever come from compulsion. … [T]he workers of America adhere to voluntary institutions in preference to compulsory systems which are held to be not only impractical, but a menace to their rights, their welfare and their liberty.”

That’s not Ronald Reagan’s view of compulsory unionism, but that of Samuel Gompers – the father of the modern American labor union movement. However, it’s not a philosophy you will find etched on the gray marble, multi-storied headquarters of Pennsylvania’s most powerful labor union, the Pennsylvania State Education Association. They are no respecters of the “fundamental of human liberty.”

As a former teacher and public school board member, I was a first-hand witness to the “impractical” and negative impact of compulsory unionism on the teaching profession. I quickly found that the modern-day, compulsory labor union movement treats teachers not as professionals, but as assembly line workers.

So although the early American model of unionization might still work for automobile workers and candy makers, compulsory unionism in public education has primarily served to harm teachers and hurt the teaching profession. It has driven some of the best educators out of our public schools, while preventing others from getting in.

While I personally refused to join a union as a teacher, I fully support every teacher’s right to voluntarily join and pay dues to a labor union. It’s a right clearly protected in our Constitution’s Bill of Rights.

I am, however, equally opposed to compulsory unionism. No person should be forced to join or pay dues to a labor union as a condition of employment. Clearly, Mr. Gompers would concur that compelling teachers to join and financially underwrite a labor union against their will is a “menace to their rights, their welfare and their liberty.”

Ironically, union bosses frequently lament the fact that teachers are not compensated as well as doctors, lawyers, or engineers. But unlike other white-collar occupations, teaching remains one of the few professions where salaries have little or nothing to do with competency, demand, or performance. This condition exists because of the labor unions – not in spite of them. Instead of allowing teachers who excel in the classroom to seek higher compensation based on merit, standardized union contracts serve to protect institutional mediocrity and reward incompetence in the classroom.

Fortunately for teaching professionals, the introduction of the “Pennsylvania Open Workforce Initiative” provides the first step in freeing teachers from compulsory unionism in our schools. One day, our best educators may finally be able to reap the professional rewards already earned by doctors, lawyers and engineers. Likewise, maybe a few doctors and engineers will one day be permitted to take their skills and knowledge into a public school classroom.

Of course, not all force is bad. Freeing teachers from compulsory unionism will force schools to compete in attracting and retaining good teachers. Administrators would be forced to provide appropriate financial rewards to teachers who excel or risk losing them to a competing school. Mediocre or incompetent teachers would be forced to improve their skills or choose another line of work. Such force in all of these cases serves to benefit everyone except, of course, poorly performing schools, bad administrators, and unprofessional teachers.

By unleashing the entrepreneurial spirit in public education via removing the compulsory power of labor unions over teachers, professional opportunities would become endless for good educators. Teachers could choose to continue working for a school district, but preserve the option to partner with other educators to form for-profit and non-profit consortiums or “private practice” instructional ventures.

But the greatest benefit of liberating teachers from compulsory unionism is that by finally treating educators like other professionals, we would also vastly improve educational opportunities for every child in Pennsylvania.

No, schools aren’t factories, teachers aren’t assembly line workers, and children are certainly not widgets. It’s time we stopped labor unions from treating them that way. (permalink)

Taxes: Sure Enough, Tax Rates Matter
Reducing Marginal Tax Rates Increases Entrepreneurship says a report issued earlier this month by the US Small Business Administration.

Available in PDF files are a research summary and the full report.

In one of those left-hand, right-hand scenarios, governments takes from business ... to promote business, and call for lower tax rates. (permalink)

Education: Professor of Education Says Academics are Overrated.
What schools need now is a lesser emphasis on academics. So says a professor of education.

And you thought schools of education were about teaching people how to teach!

Writing in the St. Paul Pioneer-Press, a professor of education tries to score political points off the recent school shooting in Red Lake, Minnesota. Dan Gartell, of nearby Bemidji State University, says that academics are oversold. Schools aren't about teaching; they're for mental health counseling,

Dismissing an emphasis on academics that makes teachers mere "information-crammers," Gartell suggests that without such pesky details as having to ... how can one say this without being too snarky ... teach, teachers, err, "educators," may "perhaps head off mass killings in high schools."

He also laments the fact that public policy (in the form of the No Child Left Behind act) is based on the premise that "the way to close the education gap in low-income/ethnic minority communities is to push for higher test scores."

Do test scores have something to do with educational achievement? The professor seems to disagree. Rather, teachers educators should be free to take on tasks such as" easing them [students] through conflicts since the previous day that may be getting them down." Further, the professor holds that the professionals formerly known as teachers ought to "teach for social-emotional competence."

In other words, schools are not for learning. They're for solving emotional, psychological, and lots of other problems.

But don't governments already employ a small army of people to deal with "social-emotional competence" and other non-academic concerns? Say, social workers, child protective services, family law courts, and welfare offices of various kinds, not to mention the quasi-governmental network of non-profits that live off government grants, and finally, the truly independent groups in the civil society?

Once again, if you're not part of the solution, you're part of the problem, and as this essay suggests, schools of education are too often part of the problem.

For your edification, here's the text of the essay:

It is a mistake to think that the darkest day in the history of the Red Lake Ojibwe Nation is a failure of the Red Lake schools. Red Lake teachers, administrators and community members who toil so hard there to provide education (in an area where perhaps 40 percent of adults are unemployed) are not to blame.

Early media reports about the tragedy reported that Red Lake has "some of the lowest test scores" in the state. That stilted characterization of the Red Lake schools points to the real problem. For reasons of "political accountability," some government officials have decided that the way to close the education gap in low-income/ethnic minority communities is to push for higher test scores: As though educators in these communities, who work against tremendous odds, are shirking and only need the prod of public scrutiny to get learners to perform. (Certainly, the prospect of increased testing is not what made teacher Neva Winnecoup-Rogers choose to return to Red Lake.)

In Minnesota, No Child Left Behind has forced teachers to become information-crammers, rather than the educators most want to be ? educators who can perhaps head off mass killings in high schools, and certainly less terrible, less obvious, failures in "invisible" troubled students.

In Minnesota, there is not the time and the support for the teacher to individually greet students in the morning, easing them through conflicts since the previous day that may be getting them down. There is not the time and support for every teacher, every day, to teach the meaning of a community of learners, of an encouraging classroom, in which cooperative communication is used and the need for rejection and bullying of individual students is eliminated.

Many European schools, and virtually all quality early-childhood classrooms in Minnesota, teach for social-emotional competence, the democratic life skills that every citizen needs. The research shows that when teachers are given time and support and actively teach to prevent school-based oppression, such oppression goes down. And individual students vulnerable for the enduring stigma of bullying and victimization are helped to find an acceptable social place in the class.

But what of the student who has lost a father to suicide and a mother with a brain injury to a nursing home, who feels isolated from the school community, who has serious psychiatric difficulties, who harbors deep hostility and jokes about it?

From the beginning ? from a well-funded, coordinated preschool system and full-time kindergarten classrooms straight on into college ? we need mental health professionals in our schools. These professionals would work with teachers to make their classrooms bullying-free learning communities. They would provide individual screening, assessment and treatment for the sizable number of Minnesota's learners with tangible mental health problems. The mental health professionals would work with other school personnel to build helping, trust-based relationships with families. (Starting with families in preschool would make this task easier than it is now.)

What will it take for our schools to teach for social competence and authentic citizenship, instead of feeling the pressure to teach only for academic performance?

It will take the state actually learning from the spiritual dignity shown by the grieving but courageous residents of Red Lake.

It will take weighing the need for new taxes against the lives of all Minnesotans lost in schools and finally recognizing that new taxes are indeed needed.

It will take reducing state emphasis on academic test scores and fundamentally realizing that schools are here to educate our children for life in a complex, culturally diverse democracy ? a multi-dimensional citizenship of which narrow academic skills are only a part.

It will take replacing the current political accountability some officials cling to with a more enlightened 21st century educational accountability.

We believe Minnesota educators would willingly accept this more valid accountability: to optimize the chances of every student to succeed not just in the "academic classroom" but also in everyday life. The hard lesson of the tragedy in Red Lake is that what happens in school is life. Let us hope our political leaders can become more open to what so many citizens now so painfully understand. (permalink)

Private Schools Save Dollars for Public School Districts.
Public school districts sometimes lament the fact that private and home-school students deprive them of state aid. On the other hand, they benefit from not having the expense of paying teachers, support staff, and so forth, on these same students.

The authors of report from the Nevada Policy Research Institute called (the following is a link to a PDF file) Home Schooling in Nevada: The Budgetary Impact calculate the savings. John T. Wenders and Andrea D. Clements figure that public schools are anywhere from $327 to $471 per pupil better off. (permalink)

Health Care: Insurance Can Be Made Appealing to Youth
Blue Cross of California believes that insurers can attract more youthful, younger customers if they simply try harder. Maybe they're right.

The San Diego Union reports:

Tonik is one of the first efforts by an insurance company to make health care coverage appealing to young adults. Blue Cross designed the slickly packaged plan for 19 to 24 year olds, a notoriously uninsured but reasonably healthy age group (minus the occasional accident). It's name was chosen because of sounded appealing.

[snip]

Blue Cross realized it had an untapped market with young adults after the company got a surprisingly strong response to a plan that was loosely marketed to the age group in 2003. The company launched Tonik at the end of 2004.

[snip]
Through market research, Blue Cross found that young adults think insurance is too expensive, too complicated to understand and too difficult to apply for. As a result, the company makes enrollment available online and eschews all insurance lingo.

Labels: Health care

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Taxes: More on Social Security
My efforts to explain the benefits of Social Security reform continue at the Detroit News web log. Here's a revised list of essays:

This is No Way to Manage a Surplus.

Social Security Reform: Now More Than Ever.

Investments Superior to Status Quo in Achieving Program's Chief Aim.

Opposition to Reform Based on Fear of Individual Rights.

Social Security Debate is a Clash of Visions.

What's Today's System Like?

It's About You, Not the Politicians.

Would You Design the System as It is Today?

So-called Transition Costs Must Be Paid, Even Without Personal Accounts.

Would You Rather Collect $400,000 or $200,000?

The Poor Need Personal Accounts the Most.

Now, You Have No Right To Your "Account."

Moral Posturing a Bad Base for Opposition to Change.

Time To Break Up the Social Security Monopoly.

Whose Life it It, Anyway? (permalink)

Pentagon Commission Offers Lessons in Public Finance.
The Mackinac Center for Public Policy has published my latest commentary on public finance. This one's about the process of closing obsolete military facilities, a task facilitated by the Base Realignment and Closure committee.

Here's an excerpt:

"Public relations campaigns will be waged throughout the country, as state and local political and business leaders tout the number of jobs "created" by this or that military installation. ... But for the public at large, alternate uses of taxpayer money ? money that could have been retained by individuals and used to support privately-directed business activity ? must not be forgotten." (permalink)

Health Care: Auto Makers, Union to Clash.
Yet another retrenchment: General Motors will cut its white-collar staff by 2,000.

An article in the March 21 Wall Street Journal notes the following interesting bit about the role of health care costs:

Separately, a spokesman for DaimlerChrysler AG yesterday confirmed a Detroit News report that the auto maker's Chrysler unit has negotiated an amendment of its contract that allows the company for the first time to charge UAW workers annual health-care deductibles of from $100 to $1,000 a year.

The agreement, which covers about 35,000 union employees, retirees and their families enrolled in certain health plans, relies on a clause Chrysler has negotiated in its UAW contracts since 1982. That clause allows the company to renegotiate terms if health costs rise beyond certain limits.

Did you catch that? The unionized work force at Chrysler will pay deductibles for the first time.

Third-party payment with no visible cost to employees? No wonder Big Auto's health care costs keep rising. (permalink)

Education: Per-Pupil Spending Up Significantly.
Can you ever have "too much" spending on schools? To many people, that's an absurd question. Yet perhaps it's time to actually look at the numbers.

In a policy brief released today for the Flint Hills Center for Public Policy, I review a decade of spending increases in Kansas. (A similar story could be told elsewhere).

Even though student enrollment in the state is now barely 1 percent more than it was in 1993, inflation-adjusted spending is up 22 percent since then. Spending is close to $10,000 per student, too. That's not a sign of weak public support for schools. And for this (as I have argued elsewhere), Kansans still get only a so-so performance, at least judged by standardized tests. (permalink)

Education: Does "No Child Left Behind" Require District Consolidation?
A state official in PA now argues that in light of No Child Left Behind, school consolidation is the next step in school reform.

Over a week ago, the Commonwealth Foundation of Pennsylvania argued that school consolidation actually costs money.

That didn't sit too well with the author of a legislative proposal to further consoidate the state's school districts. What follows is a give and take between Rep. Lescovitz and the Foundation on the question of consolidation. It's quite a charged exchange.

Rep. Lescovitz Responds to the Commonwealth Foundation Commentary on School District Consolidation Proposal

03.15.05

It has become clear to me that reading comprehension skills are lacking among select organizations in Pennsylvania. On March 11, the Commonwealth Foundation released a statement that leads me to believe they are not for quality, accessible, fair and equal education for the students of Pennsylvania. Additionally, it would seem they are for continued separation of the economic classes.

This foundation should realize that testing is here to stay, especially considering the federal No Child Left Behind mandate. Schools and teachers are now being pressured into teaching for the test rather than teaching students. The important point the foundation missed was that I am trying to create a level playing field to make sure these mandated test results are valid.

The Pennsylvania System of School Assessment test, now used due to President Bush’s No Child Left Behind, was never meant to be a standard test for evaluating and comparing schools and students statewide, but rather used for in-house evaluations of curriculum meeting state education standards. Since standardized tests are here to stay for comparing schools, a system with uniform curriculum, books and materials lends well to more equitable and measurable testing validity.

For those who missed it, the foundation’s letter voiced support for deconsolidation; which would only further dilute the validity of standardized testing. My plan would consolidate the administration, curriculum and materials of the state’s 501 school districts to 67 or less based on a county or regional structure. Although costs may be reduced with this plan, the foundation’s comments reflect they missed the true purpose. Costs per pupil, union negotiations and increasing costs for education were never a part of my proposal.

If the foundation had contacted me and read my news releases instead of fabricating the intent of my legislation, they would have learned my true intent was creating a more equitable means of evaluating education and providing more opportunities including magnet schools and greater coordination between educators.

Additionally, the foundation seems happy with unequal treatment and an endorsement of keeping a class-based system of providing education for all students. It would seem the foundation supports President Bush’s No Child Left Behind but adopts a more conservative view of the “old South’s” education system before the 1960s civil rights act – that a separate and unequal education system is good enough for all students of Pennsylvania.

No Child Left Behind has forced the need for consolidation. We can’t fit our current system of evaluating student progress into a broad federal mandate. We need a more valid means of evaluating progress and targeting where improvement is needed.

When every student has success, we all succeed.

So, yes as they said in their letter, “I’m back.” But to be honest, I never left. I never stopped working to improve education and the quality and equality of life for all Pennsylvanians. Again, if we are going to have standardized evaluations, we must have a level playing field.

####

And here's the response from the Commonwealth Foundation:
Commonwealth Foundation Responds to Rep. Lescovitz

03.22.05

Dear Rep. Lescovitz:

I welcome your response to my proposal to de-consolidate Pennsylvania’s public school districts. However, your defense of your proposal to further consolidate school districts is not based in either fact or experience.

In addition, I find it astonishing that you admit that “Costs per pupil, union negotiations and increasing costs for education were never a part of [your consolidation] proposal.” That you ignore these critical issues of importance will be very disturbing to all taxpayers, particularly given the already high cost of public education in Pennsylvania. By ignoring that which will not go away, your proposal opens the door to all kinds of unintended, but real, consequences—all of them bad.

By consolidating the “administration, curriculum and materials of the state’s 501 schools districts to 67 or less (sic)” you will, for example, produce broader district-wide collective bargaining. That will give the unions more monopoly clout. It also means public school employee wages, salaries, benefits, work rules, etc., would be homogenized across Beaver County’s 14 school districts alone, to say nothing about the 38 districts in Allegheny and 14 in Washington Counties, portions of which you also represent.

Likewise, as you admit, your proposal will serve to further homogenize the curriculum across disparate school districts. Not only are districts not all the same, but even the schools within present individual districts already have children with differing needs and abilities. My essay emphasizes that different conditions exist now, and your expanded one-size-fits-all approach will only make it more difficult to serve the needs of individual students.

Even Albert Shanker, the late president of the American Federation of Teachers, recognized that effective change doesn’t come from the top down when he said:

“It’s time to admit that public education operates like a planned economy, a bureaucratic system in which everybody’s role is spelled out in advance and there are few incentives for innovation and productivity. It’s no surprise that our school system doesn’t improve: It more resembles the communist economy than our own market economy.”

So let me make clear the broad outline of the public school de-consolidation I recommend. It is based on the factual observation that private (and public charter) schools almost never have any administrative structure above the school level, and they deliver at least comparable education results. They are about one-third to one-half the size of public schools and operate at about 60-65 percent of the per pupil cost. In these schools, all the important decisions are made at the school level where the best information about student needs and teacher performance exists, and these differ widely from school to school.

Sensible de-consolidation would reduce school districts to central office management functions only, such as accounting. Monies would be distributed to individual schools on a per pupil basis. Budgets and collective bargaining would be administered at the school, not the district, level. Open enrollment would give parents a choice among public schools, with all tax money following the student. Principals would really be in charge of their schools.

You are correct when you state that “standardized tests are here to stay for comparing schools.” I would add that value-added tests are also coming for comparing teachers, which is why the PSEA continues to fight all testing.

With each school operating independently, as I propose, and parents having a choice among them, value-added test results that show how teachers and schools compare will give parents the information to make sensible choices for their children. If one school were performing poorly, as measured by the PSSA tests, parents could move their children elsewhere and take their local tax and state aid dollars with them.

Believe me, Mr. Lescovitz, parents and children voting with their feet will get school administrators’ corrective attention far quicker and more effectively than another curriculum mandate from one of your distant school district offices.

Finally, I take umbrage with your desperate attempt to defend your consolidation proposal by playing the race card and characterizing my proposal as “class-based,” like the “‘old South’s’ education system before the 1960s (sic) civil rights act,” and one that provides “unequal treatment.”

Indeed, the reality is that you and your union allies are the intellectual heirs of Gov. George Wallace, who blocked access for African-Americans into the University of Alabama, and Gov. Orval Faubus, who tried to prevent the integration of Little Rock High School in the 1950s. By blocking children from attending schools of their choice, you and other school choice opponents continue to prevent students from escaping schools that fail them.

It is my proposal that would bestow the power of public school choice on every parent and child in Pennsylvania. It is your paternalistic, top-down, homogenizing consolidation proposal that would continue to trap students in monopoly, one-size-fits-all schools, many of which are awful. The result has been a costly jobs program that produces mediocre education, at best.

Sincerely,

John T. Wenders, Ph.D.
Senior Fellow, Commonwealth Foundation
Professor of Economics, Emeritus, University of Idaho

Labels: Charter schools, Education, School choice

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Taxes: Taxpayers Bill of Rights Would Benefit Arizona
Even as the Taxpayers Bill of Rights is under political assault in Colorado, advocates in other states try to adopt a version of their own.

The Goldwater Institute reports that the real, per-personal spending growth of Arizona government was 43 percent in the 1980s and 22 percent in the 1990s.

The result of this growth: a spending structure that could not be sustained in an economic downturn. The state has run a deficit three years running.

It's time, the institute says, for a tax and expenditure limitation, preferably, a taxpayers bill of rights. (permalink)

Budgets: There's More than You Can See
What's the size of your state's budget? It's easy to underestimate it.

The publisher of KSSmallbiz.com illustrates the problem by discussing the budget of Kansas state government.

For example, the state general fund in the Sunflower State is only 42 percent of "all funds" spent by the state. There are, of course, federal funds, dedicated funds (such as highway money) and so forth.

Further, Kenneth L. Daniel notes, some spending has shifted over time from "all funds" to the "general fund" category, making it important to take care while making historical comparisons.

The same logic most likely holds true in most states. (permalink)

Social Security Needs Reform. Personal Accounts are a Way to Go.
While this blog deals primarily with state-level politics, its author has been writing a lot about Social Security for the Detroit News.

Here are some of the entries:

Investments are Superior to Status Quo.

Opposition to Reform Based on Fear of Individual Rights.

Social Security Debate is a Clash of Visions.

What's Today's System Like?

It's About You, Not the Politicians.

Would You Design the System as It is Today?

So-called Transition Costs Must Be Paid, Even Without Personal Accounts.

Would You Rather Collect $400,000 or $200,000?

The Poor Need Personal Accounts the Most.

Now, You Have No Right To Your "Account."

Moral Posturing a Bad Base for Opposition to Change.

Time To Break Up the Social Security Monopoly.

Whose Life it It, Anyway? (permalink)

Colorado To Test Taxpayers with TABOR Waiver Request.
Colorado's Taxpayers Bill of Rights (TABOR) offers a built-in restraint on government spending growth. This fall, voters will be asked to exercise one of TABOR'S provisions to let state government keep some of its excess money.

The Denver Post has the details.

Bill Owens, who came under fire from advocates of fiscal restraint for his willingness to strike a deal on increasing the state limit, defended himself in a letter written to the Wall Street Journal (subscription required).

He wrote, in part,

I want to use specific provisions contained within Tabor to ask taxpayers' permission to retain an additional $500 million to stabilize Colorado's budget. My plan preserves Constitutional limits on spending and revenue as well as the requirement that voters have a key voice in fiscal matters.

Specifically, Tabor was written to permit government, when necessary, to ask voters to keep dollars that would otherwise be returned to taxpayers. Your own prescription for Colorado's fiscal health would instead take dollars that would otherwise be returned to taxpayers in the form of refunds and lock them up in a "rainy day fund" -- and then allow government to spend from that fund without a vote of the people.

Given the pro-tax increase majorities in both houses of the legislature, it's arguable that Owens struck the best deal he thought he could, rather than making a change of commitment from a low-tax champion.

On the other hand, his apparent rejection of a rainy day fund is disappointing. Though budget stabilization funds (as they are formally known) can be useless and even harmful if they are allowed to get too big, it's unfortunate that Colorado doesn't have such a fund. It looks like they won't start one anytime soon. (permalink)

Education: Competition for Public Schools Weakens in Detroit.
Enrollment in Catholic schools affiliated with the Archdiocese of Detroit has declined 47 percent in the past five years, from 7,674 to 4,100.

The One result: 14 schools will close, affecting 2,241 students and 180 teachers.

Among the casualties: athletic powerhouse St. Martin De Porres and Dominican High, the last all-girls Catholic school in the city.

The schools have had a $3 million operating deficit for five years, and they carry $16 million in debt, too.

So what's up with the decline? Increased enrollment in charter schools (free of charge to parents)? Great improvements in the Detroit Public Schools?

A Detroit Free Press article cites Cardinal Adam Maida as saying that mmigration to the suburbs was to blame.

Labels: Charter schools, Education

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New Policy Group in Tennessee
There's still some bugs to work out, but if you're interested in Tennessee policy, check out the Tennessee Center for Policy Research (TCPR).

Tennessee's health care policy is of particular interest, even to citizens and policy makers outside the Volunteer State. TennCare was one of the earliest, ambitious state-level health care plans. Some dubbed it HillyCare Lite, and the program has not exactly gone forward as predicted.

The president of TCPR, Drew Johnson, hopes that the debate over TennCare will put the free market back into health care. (permalink)

Education: Policy Failure is Expensive.

In "The Education Deficit in the Lone Star State," a report for the Texas Public Policy Foundation, Christopher Hammons lays out the cost of poorly performing schools. (The 32-page PDF is here.)

Though per-pupil spending in Texas nearly tripled from 1960 to 2000 (even adjusted for inflation), the state loses over $13 billion per year due to a badly performing education system. The loss comes from "lower earning potential and poor productivity of workers, increased spending on social programs, direct costs of remediation by institutes of higher education and employers, and personal losses that may affect individuals for a lifetime and the state for generations."

All this reminds me of one reason why outsourcing to other countries (offshoring) is as attractive to companies as it is. Combine an education system that fails too many people with regulatory and tax burdens imposed on employers, many would-be employees wear this "sign" around their necks: "I'm very expensive and I don't know very much."

As a country, we generally can't find our comparative economic advantage in low wages (nor should we want to). Instead, we benefit from having a workforce equipped with skills, the most important of which is to learn new skills. By not using competition--the very dynamic that keeps any economy strong--in education, we impose a tremendous cost on all of us. (permalink)

Education: Merit Pay is a Recruitment Tool.

One problem that poor (and poorly-performing) school districts face is attracting good teachers. If you're thinking of entering a difficult work environment, and your future pay will be tied not to your performance, but to your seniority on a union scale, why bother? Go to the more pleasant school.

Writes Xiaochin Claire Yan of the Pacific Research Institute,

Teacher salaries, the largest portion of education spending, are distributed to the detriment of the most needy students. Senior teachers cluster around wealthy schools with good environments, loading more resources at already well-off schools. The newest and least qualified teachers are left with the toughest schools. No amount of additional spending under the status quo will get more qualified teachers to the kids who need them the most. Our schools don?t just need more resources; they need serious reform in how the resources are being used.

Labels: Education

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Education: School District Consolidation Saves Costs Money.
Buy the jumbo size of potato chips and you save some money. Buy schooling in bulk (bigger school districts), and you pay ... more.

The Commonwealth Foundation for Public Policy Alternatives offers the case against school district consolidation. In brief, consolidation is inflationary, not cost-cutting measure because it weakens competition among schools.

Because of some technical difficulties, I'm not linking to the piece itself. Here it is, in full:

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De-Consolidate Pennsylvania’s School Districts
John T. Wenders, Ph.D.
March 11, 2006

He’s ba...ack!

Two years ago, State Rep. Victor Lescovitz (D-Beaver County) introduced legislation to consolidate Pennsylvania’s 501 school districts into 67, one for each county. Fortunately, his proposal never made it out of committee.

But now he’s back, touting the same plan for consolidation, the very definition of a bad idea whose time never was.

If Mr. Lescovitz were interested in improving education for both students and taxpayers, instead of pushing a demonstrably failed idea, he should instead design a plan to go in exactly the opposite direction—deconsolidation.

The simplistic idea behind consolidation is that it will allow school districts to reap economies of scale, reduce costs, boost efficiency, while leaving everything else unchanged. The reality is that when districts consolidate, enough things change so as to bring about just the opposite the intended result.

Over the long haul, consolidation sucks power upward and away from parents and students into top-down, centralized, and inflexible political arrangements, where unions and other special interests have more political clout. Accountability declines, and the character and role of the schools move from bottom up to top down management. The result has been higher—not lower—per pupil costs and worse education for students.

Consolidation is nothing new in Pennsylvania. In the mid-1900s, the Commonwealth had 2,530 school districts. During the 1960s and 1970s, the number of school districts in Pennsylvania fell to 505 districts. Today there are 501. Over the same period, school size increased greatly, resulting in schools that are often too large.

If Mr. Lescovitz’s theory were correct, all this consolidation should have produced lower per-pupil costs. Instead, these consolidations were accompanied by rising per-pupil costs—costs which came to be borne increasingly by non-local sources.

Nationally, from 1960 to 1980, per-pupil expenditures, in constant dollars, increased a whopping 138 percent. And as real per-pupil spending sextupled from the end of World War II to today, the local share of public school funding dwindled from 80 percent (early 1900s) to 45.4 percent in 2000.

This nationwide shift in funding away from the local level has not gone as far in Pennsylvania, where 56percent of school funding still comes from local taxes, but power has still moved upward to Harrisburg. There, special interest groups are better able both to secure larger hikes in school funding and to divert much of the incremental increases toward themselves and their members—away from the children who are supposed to be served.

What did we get for this massive increase in education spending and centralization of funding and decision making? Not much. The data show gradually improving pupil performance until the early 1960s. From then until the early 1980s, during which Pennsylvania underwent massive district and school consolidation, scores plummeted so much that, by the end of this period, high school graduates were about one and one-half years behind their predecessors of the early 1960s. There has since been some recovery in scores, but all test scores are well below what they would have been had the pre-1960s trend continued.

It all happened because consolidation discouraged competition and education diversity. Economist Sam Peltzman has found that over the years the deterioration in pupil performance was greatest where the shift in funding from local to state sources was greatest. He also found that the upward movement of power added to union influence, a conclusion reinforced by the research of Harvard economist Caroline Hoxby.

Consolidation simply extends the power of the monopoly public schools, reduces diversity and competition, and increases the clout of the unions in district-wide bargaining.

Consider teacher pay and work rules. Teacher unions bargain at the district level. As districts become larger, negotiators on both sides are farther removed from direct knowledge of individual teachers and schools. District-wide, inflexible pay schedules and work rules become more homogenized and detached from the performance of real teachers and schools.

Based on the evidence, Mr. Lescovitz’s consolidation proposal will further raise education costs and reduce student performance. Conversely, de-consolidation would stop escalating costs and improve student performance.

Sensible de-consolidation would reduce the school districts’ role to central office management functions only. Monies would be distributed to individual schools on a per-pupil basis. Budgets and collective bargaining would be administered at the school, not the district, level. Open enrollment would give parents a choice among schools, with money following the student. Principals would be in charge of their schools.

If Mr. Lescovitz is really interested in controlling costs and improving student performance he would sponsor legislation to enable this kind of de-consolidation. His present proposal for more consolidation goes in exactly the wrong direction.

# # #

Dr. John T. Wenders is a senior fellow at the Commonwealth Foundation (www.CommonwealthFoundation.org), a non-partisan, non-profit public policy research and educational institute located at the foot of the Capitol in Harrisburg, and Professor of Economics, Emeritus, at the University of Idaho.

Labels: Education, School choice

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Health Care: Do HSAs Play in ... Wichita? Yes.
The value of health savings accounts won't be realized without banks and other financial institutions getting in the game. That's starting to happen.

Last week, Intrust Bank became the first locally-based bank in Wichita to offer HSAs, which complement high-deductible (and lower-cost) insurance policies. It joins UMB Bank of Kansas City, Missouri, in offering the accounts in the American heartland.

Said Bob Harbison, Intrust's vice president for business development, "We think that most of what we consider standard health plans will go away... and people will move to high-deductible plans." As for business, Harbison told the Wichita Eagle, "We're getting a lot of interest."

Will this movement of the financial sector into health care be met with groans from advocates of government-financed-and-run health care? Perhaps; there is always a small minority of people who think that "profit"--something the banks are clearly counting on earning--is a dirty word.

But for the rest of us, the move of financial institutions to start offering HSAs shows that the trend to consumer-driven health care is well under way.

Labels: Health care

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Health Care: Pay Cash for Meds? You Betcha.
Eliminate the middleman, flatten the organizational chart, and save money. Why not bring a similar approach to the purchase of medicine, and pay cash?

Citizens' Council on Health Care is holding a forum on this subject. Here's the announcement:

If you care about the price of prescription drugs, don't miss next week's public forum!

The innovative owner of a "cash-only" pharmacy business in Minnesota will talk about how it works and why patients (and taxpayers) can save money by paying cash for prescription drugs!

It might even be cheaper than your co-pay!

I think you'll be amazed. I was!

I met with Mr. [Sean] Kacsir for an hour, and decided you should have the same opportunity to hear what he has to say. This forum, our second in CCHC's "Doing Health Care Better" series, is for legislators, but free and open to the public.

FEATURING:
Sean Kacsir, president of MedSave Prescription Discount Pharmacy

TOPIC: "CASH-BASED PHARMACY"
DATE: Wednesday, March 16, 2005
TIME: 4:30 - 5:30 p.m.
ROOM: 300 South (3rd floor across from elevators)
PLACE: State Office Building
ADDRESS: 100 Dr. Rev. Martin Luther King Blvd (could be Constitution Ave in MapQuest), St. Paul, MN
It's a grey 6-7 story building between the State Capitol and Sears at the corner of Rice and University. Come down University Ave if you want to avoid the freeway traffic of I-94.

PARKING: Public parking lot at the corner of Aurora and Rice (Aurora is one block south of University Ave.): 75¢ per hour. Bring quarters.

Come listen, learn, and save!

YOUR RSVP is appreciated for planning purposes. Just reply with "I'm Coming March 16"

Twila Brase RN
President, CCHC
651-646-8935

[RSVP to CCHC here] (permalink)

Health Care: More Choice for Medicaid Patients
Medicaid ill serves the taxpaying public, its enrollees, and the medical profession. So what should policy makers do? Make it more consumer friendly.

Says Devon M. Herrick,
A few years ago, for example, Arkansas, Florida and New Jersey began experimenting with what is referred to as cash and counseling. In this program, certain Medicaid recipients were offered the chance to control a portion of the dollars spent on their non-health care needs.

These experiments worked well because patients had greater choice over their providers, and the providers looked to the patients as customers, rather than to the state. Now, about half of the states have received waivers from the U.S. Department of Health and Human Services for similar demonstration projects.

Herrick is an adjunct scholar of the Flint Hills Center for Public Policy.

Labels: Medicaid

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Health Care: Promote Health By Depending on Cigarette Taxes?
Kathleen Sebelius, governor of Kansas, has suggested insuring more people by depending on cigarette taxes.

Though the state's Medicaid budget has increased 65 percent in the last five years, and Sebelius wants to add more, by increasing the cigarette tax by over 100 percent, to $1.29 a pack.

State Rep. Brenda Landwehr, who chairs the House Budget Subcommittee on Social Services, says "I think it would be unwise at this time to expand our Medicaid program.

I've already argued that a similar proposal for Oklahoma was an inferior way of expanding health insurance coverage. In a companion piece, Steve Anderson argued that the numbers in Governor Henry's plan didn't add up.

Labels: Health care, Medicaid

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Education: Testing is Worthless Without Accountability.
Simply reporting test results doesn't have much of an effect on schools. Imposing negative consequences on schools that turn out students with lousy test scores does have an effect.

That's the conclusion of a new report from the National Bureau of Economic Research. (More here), look under "Accountability."

(Hat tip: SCSU Scholars.) (permalink)

Transportation: Toll Roads Coming to You?
Toll roads may be coming to North Carolina and Minnesota.

Among the proposals in North Carolina: a $10 fee for everyone taking I-95 (the Boston-to-Miami corridor) through the state, and roads in the Research Triangle Park area.

While you would think this idea would bring a populist backlash, it hasn't. Says one Transportation department official: "Local support for these things has been incredible. In five public meetings, we've only had one person say anything negative at all."

Perhaps the issue is flying--or driving--under the radar. Or perhaps dissatisfaction with the status quo is causing the public to reconsider its opposition to tolls.

A survey conducted late last year in Minnesota showed support for tolls on a highway that connects downtown Minneapolis with its western suburbs.

I-394, currently has an HOV (carpool) lane; starting sometime in May, the road will have a HOT (high occupancy vehicle OR toll) lane.

While it's easy to denounce tolls as double taxation -- "Hey, we already paid for that road," a quick reality check reminds us that road maintenance costs money, too.

Obviously there are ways that states can improve their methods of building and maintaining roads, and it would be a pity if tolls served as a cushion to prevent necessary innovations in project management and policy changes (such as repealing "prevailing wage" laws that inflate labor costs.)

But tolls can be useful in financing and traffic management. (The Reason Public Policy Institute offers a lot of resources on the subject, by the way.) For information specifically about tolls (from an enthusiastic supporter of congestion pricing), check out TollRoads News.)

Labels: Transportation

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Health: Who Pays for Long-Term Care?
Welfare isn't just for the stereotypical single mother with a poor education and minimal job prospects. It's also for middle-class individuals who turn to Medicaid to pay for long-term care in their old age. And it's slowly eating the budgets of states around the country.

So what should be done about it? Stephen Moses (Center for Long-Term Care Financing) and Josh Wiener (RTI International) debated the question last year in a forum available here. It's a "Crossfire" kind of format, with people talking on top of each other, and "inaudible" comments. Still, it's not a bad introduction to the question. And it has the benefit of offering two very different prescriptions.

Moses gives a brief "how we got here" introduction, and it seems that Wiener agrees with the diagnosis.

But the two men differ in their suggested outcomes: Moses thinks the market for long-term care insurance can be improved through various policy choices, including doing away with the current policy that lets people qualify for Medicaid (and its financing of long-term care) regardless of how much home equity a person has.

Weiner, by contrast, thinks that this is only a minor part of the solution. Further, he values the notion of "social insurance" implied in the welfare state, and thinks we ought to expand taxpayer funding of long-term care, even if it means adding another 4 percentage points to the payroll tax.

Here are two quotes that show some of the themes of the debate:

Moses: "The reality in this country is you can ignore the risk of long-term care, avoid the premiums for private insurance, wait until you get sick, and the government pays. It's been that way for forty years, and as a consequence, we have this nursing-home-based welfare-financed system that institutionalized our whole World War II generation unnecessarily. We need to change those incentives."

"For reasons that, frankly, escape me," he says, "if you are unlucky enough to get Alzheimer's disease, then you know, we are—our societal response is basically, you know, “Come back to us after you have impoverished yourself and then, you know, we'll provide you with some financing and some services.”

But, you know, the fundamental issue here, and I think you put your finger on it, is, is this really an issue where it's sort of up to the individual and their family? Or is this a societal concern that we as a society as a whole are going to sort of step forward and say that people who need these kinds of services are going to get them regardless."

Moderator Morton Kondrake tries to put an ideologically summary to the debate as thus: "we have here Sweden and Margaret Thatcher."

Labels: Health care, Medicaid

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Economic Development: Trying Too Hard to Be Cool.
Economic development policy is prone to fads, as government officials swerve from one idea to the next in the search for jobs and increased tax revenues. The latest idea is to chase the "creative class" with that might be called "Pleasant Life Planning 101."

Michigan's governor is pursuing this idea, articulated by Richard Florida, in her "Cool Cities" initiative. In today's Current Comment from the Mackinac Center for Public Policy, I explain why this isn't such a hot idea.

Labels: Cool cities fad

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Could School Choice Programs Save Taxpayer Dollars?
Contrary to claims that school choice will "drain money from public schools," choice programs just might save money.

Why? Private schools often (stereotypes aside) have lower operating costs than public schools.

In the case of one state, the Josiah Bartlett Center for Public Policy (no relation to that fake president on the TV show!) estimates that New Hampshire taxpayers could save $32 million over eight years by using a means-tested program that provides voucher money on a sliding scale.

The Center's report, in PDF, can be found here.

Labels: Education, School choice

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Health Care: Medicaid is the "Monster in the Road."
Medicaid is the "Monster in the road," says Ohio's governor, Bob Taft.

He's right. And the reason it's a monster is that it's a government-funded program with no element of personal involvement or responsibility. Already nearly half of all medical spending is paid for by governments of one form or another.

The politics of changing Medicaid don't look encouraging. Most governors want more money out of Washington than they want flexibility, while the Bush Administration wants less money and more flexibility on the state level. Given where we're going, more money would not be a bad price to pay if states actually start making substantial, market-oriented reforms.

Labels: Medicaid

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Health Care: Medicaid Funding is Like Handing Out Credit Cards.
A fundamental problem with Medicaid is that it imposes little or no sense of fiscal cost on people enrolled in the program. You may spend your own money wisely, but the temptation to squander someone else's is great.

It's against that backdrop that the Illinois Policy Institute issues this warning:

Would you give your credit card to a perfect stranger?Absurd isn?t it? However, that is exactly how Illinois manages its Medicaid Program.

Unless we figure out how to fix it, Illinois will find itself exactly where you would expect to find yourself if you gave your Visa to a stranger.

When you or I purchase health insurance, or choose our employee benefits, we make decisions based on what services we need and how much we will pay. Medicaid enrollees use services as they wish with no ?costs? to consider. Even when seeking treatment for something as routine as a cold, a Medicaid enrollee can enter the ER and seek treatment on demand rather than be bothered with making a doctor?s appointment like everyone else. The result is that taxpayers are stuck paying for an expensive ER treatment, instead of a reasonable doctor?s visit ? and the difference is enormous.

Illinois? Medicaid program costs taxpayers $7 billion per year. Over $6 billion comes from the state?s general fund (nearly a quarter of the overall appropriation). That comes to about $570 per person or $2,300 for a family of four. Instances exist where a family can pay more for Medicaid than for their own insurance. For example, a state employee supporting a family of four pays about $2,000 per year for HMO coverage.

Illinois currently has 1.8 million Medicaid enrollees. One in seven Illinoisans are covered by the program. Two out of every three nursing home residents and one out of three children are covered. Elected officials seeking votes continue to expand the program ever further beyond the federal poverty line. For example, an Illinois family of six with an annual income of $50,000 is Medicaid eligible. Despite what Governor Blagojevich calls the worst financial crisis in the state?s history, Medicaid eligibility has been expanded in five of the last seven fiscal years, and this year the Governor vowed to expand the program to 200% above the poverty line.

As currently configured Medicaid is unsustainable. Since 1999 the program has grown at 8% per annum and, if present trends continue, the program will double in costs every nine years. It does not take an expert to determine that the current trend ends with bankruptcy. At some point Illinois will be forced to reform; it?s not a question of if but of when.

Illinois is not unique, of course. Most states operate in a similar fashion. But it's time for all to inject some principles of personal control and personal incentives (much like a health savings account) in its taxpayer-funded health care programs. Of course, it would also help if public officials could stop expanding government rolls, crowding out the market for private insurers.

Labels: Health care, Medicaid

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Education: How About a Little Efficiency in the University?
More money for college professors? The chairman of one state u's economic department has a few questions.

In particular, he objects to the use of "effort" (government spending per $1,000 of personal income) as a guide to setting funding levels. "This statement assumes no efficiency gains in education can accrue to taxpayers; that taxpayers cannot shift funding to other items because their demand for higher education changes ... or that more money would be well spent."

A similar problem afflicts efforts to "cap" government spending in general to a fixed percentage of personal income. (permalink)

Education: "The rally was about the system, not about education."
Government lobbying government is a big business. The other day, school bus after school bus pulled up to the Minnesota state capitol and let off students and teachers from government-run schools, all there to create a theater. The goal? Pressure state government to spend more money on local government schools.

Craig Westover observed the scene, and noted that The rally was about the system, not about education.

For if education was paramount, there wouldn't be so much fear and loathing of school choice and competition in schooling.

Labels: Education, School choice

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Cell Phone Use and Driving.
More motorists than ever are using cellular phones while they drive ... In 2004, at any given daylight moment, an estimated 8 percent of all motorists in the U.S. , or about 1.2 million drivers, were using cellular phones (both hand-held and hands-free) while operating their vehicles. This compares to 6 percent in 2002 and 4 percent in 2000.

So says the National Highway Traffic Safety Administration (NHTSA).

(The results of the agency's 2004 survey can be found in PDF format here.)

The policy take? I don't know. Driving while talking on the phone, even with a hands-free device, is a distraction. Then again, so is loudly singing along with the radio, and I don't think we're going to have an enforceable ban on radios any time soon. (permalink)

Health: Political Grandstanding on Prescription Drugs Threatens Quality of Life.
The fear of lawsuits--encouraged by political harangues--means that drug development is heading towards a no-risk world, which is risky indeed.

From today's Wall Street Journal editorial:
Tysabri had received accelerated approval from the FDA just three months ago because clinical trials had shown it to be twice