Moving Towards a Consumer-Driven World.
The era of "organization man" is over as far as employment goes. Its grip over health care is slowly loosening as well, and none to soon.

Here's an article from the vault. As appeared on January 8, 2007

Jury is still out on consumer-driven health care plans

John La Plante


Health care will be one of the leading topics of the new legislative session. Should the session end with Minnesota government taking more responsibility?

Before we enter that debate, I’d like to introduce you to John Goodman, one of the most influential men that you may have never heard of.

Goodman heads the National Center for Policy Analysis (http://www.ncpa.org), a Dallas-based organization that promotes private sector alternatives to government regulations and programs. Over the year, Goodman, who holds a doctorate in economics, has called for changing the way that we finance health care.

He’s had some success in getting federal and state lawmakers to listen. Thanks in part to his work, health savings accounts (HSAs) are taking hold. These tax-favored accounts are coupled with high-deductible insurance policies. Currently, 6 million people have an HSA or similar arrangement. The Washington Post recently called Goodman “the man behind the plans.”

So how does they work?

Goodman’s logic is simple, if not universally accepted. In a normal market, buyers demand increasing quality and decreasing costs. But health care is not a normal market. The person who incurs the expense is not the person who pays for it.

Government agencies pay for half of all healthcare spending. Insurance companies pay for most of the rest. To a substantial degree, employers, not individuals, arrange and pay for insurance.

In recent years, businesses have been dropping coverage. Those that retain it move some of the costs to employees. Even so, most people have little direct incentive to care about the cost of insurance or health care. The subsidies they receive are not obvious to them.

HSAs are part of consumer-driven care, a move to make the costs of insurance and health care are made more transparent to individuals. High-deductible plans force consumers to pay attention to costs. The HSAs, funded by employers and employees, grow over time, cushioning the burden of high deductibles. The HSA is used for routine expenses, while the policy becomes a backstop to catastrophic events.

Where Are We Now?
Have Goodman’s ideas given us lower insurance costs and by extension, increased insurance coverage? The Galen Institute (http://www.galen.org) says the results are positive. “Consumerism is working in the health sector,” writes Grace-Marie Turner, president of the organization.

More than half the individuals purchasing HSA-paired insurance plans were previously uninsured, she says. To counter charges that HSAs appeal only to the young or wealthy, she notes that 40 percent make less than $50,000 a year, and half are over 40 years old.

But not everyone is convinced, with many public policy organizations favoring traditional insurance or a single-payer system. Citizens for Tax Justice (http://www.democracyinaction.org), for example, call HSAs “regressive.” It says that even now people are not using all the balances in their accounts, suggesting that the HSA will become the next tax dodge.

Never mind that today’s employment-based system is already regressive. The value of corporate tax breaks for premium costs increases along with a person’s salary.

Further, having money in a health savings account should be encouraged, not discouraged. Consider, for one thing, that the national average cost of a one-year stay in a nursing home exceeds $70,000. If people can build up substantial reserves in an HSA, that money could play a role in meeting the long-term care crunch.

Citizens for Tax Justice also fears that HSAs "will, over time, encourage healthier and wealthier people to leave the traditional health insurance market, which will make health insurance even less affordable for those at-risk workers and families who really need it."

If Galen’s numbers hold up, HSAs will reach across the economic spectrum. The criticism of HSAs dodges the question of whether today’s low-deductible, employer-selected and purchased insurance should be encouraged as the model, or if it is even sustainable in a global economy.

It has high costs, and not only in finances. It discourages employee mobility, which has economic and personal costs. It also ties a person’s most intimate concerns not only to an insurance company but also to the HR department.

There’s a lot that is right in American health care. There’s also a lot that’s amiss. The direction that health care takes from here depends in part on whether you think people can and should take more control over their lives, or whether that role should be given to corporate or public managers.

It’s human to want it all: excellent care, instant access and little cost. But those objectives must be balanced against each other. How will that be done? I’m casting my lot with Clive Crook, senior editor at The Atlantic. As he put it, consumer-driven health care may be "the least-bad option."

Labels: Health care, Legal-Ledger

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Speak Truth to Power: We Need More Roads, Not Light Rail.

The National Surface Transportation Policy and Revenue Study Commission (now that's a mouthful) is holding a hearing tomorrow (April 18) at the University of Minnesota. You can find an agenda here, though there does not seem to be any time for public comment.

The Commission was created by Congress. "The Commission," says its web site, "is working to examine not only the condition and future needs of the nation's surface transportation system, but also short and long-term alternatives to replace or supplement the fuel tax as the principal revenue source to support the Highway Trust Fund over the next 30 years."

The American Association of State Highway and Transportation Officials, AASHTO, which snatched up the domain transportation.org, has already released two reports (out of six) for the committee. AASHTO makes some sensible recommendations, but there are some unhelpful nods towards transit. There are also some calls for transit-oriented development (fine if it comes about voluntarily, not if it's pushed by government) and using transportation planning as a backstop to, if not every social ill imaginable, too many for the competency of public planners.

Labels: Transportation

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What is Enacted by Initiative, and Why?
File this under "I've got think about this some more."

Recently someone pointed out to me that initiative and referrenda are some of the most powerful tools for keeping government in check. Think, for example, of Proposition 13 (California) and the Taxpayers Bill of Rights (Colorado).

And yet when it comes to school choice, every advance that I know of, whether it's Milwaukee, Cleveland, Minnesota, Iowa, Florida, or Utah, has come through the legislative process. When put up to a public vote, the pro-choice cause doesn't have a great record.

Why is that? One could argue that the pro-school argument is outspent by teachers unions and other sympathizers of the status quo, and that's certainly true. One could also argue that school choice is not that popular. There's some validity to that point, though it's important to overstate it. (I could look up public opinion surveys, but won't).

Perhaps the difference between the fates of the two causes is that one is easy to understand, and the other is not. Tax cuts, easy to understand. Restraints on government that will mean a reduction in the rate of spending growth? A bit more abstract, but still, it's about money in the bank.

Attaching a metaphorical backpack of money to a child and letting government funding flow to whatever school the child's family chooses? A bit more abstract--and certainly nothing that we have yet to see on a wide scale.

Labels: School choice

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Blog Your Way to a New Job.
Blogging can get you fired if you expose company secrets or goof off during office hours. But can it get you hired as well?

Absolutely, says the Wall Street Journal:

Corporate recruiters have long surfed the Web to vet potential hires, but now they are also surfing blogs to unearth job candidates, expanding their talent pool and gaining insights they say they can't get from résumés and interviews.

[snip]
In addition to blogs that focus on their industry or field of interest, recruiters say they check candidates' blogs about noncareer-related topics for evidence of writing skills and clues to how well rounded they are.

But beware: what you say can come back to haunt you, as well. Said one recruiter:

"Whether you're writing about people you interviewed with or you're making a public statement that can be construed as immoral, these are the types of things an employer is going to look at and consider in their assessment of you as a candidate."

There's nothing remarkable about the cautions in the article. On the other hand, I was for some reason susprised at the suggestion that recruiters actively use blogs not to screen out people (though that happens), but to actively seek candidates. (permalink)

A Cheer for Sam Adams.
Let's hear it for Sam Adams. Not the beer (though that's fine); a new alliance of activists designed to hold government accountable.

Notice that blogging is part of the suggested toolkit. (permalink)

Strange Stuff on the History Channel
I'm doing some relatively mindless work, so I'm flipping through the TV channels.

What do I see on the History Channel?

Planet of the Apes. (permalink)

Think Tanks Debate "Taxpayer Bill of Rights"

As appeared in



November 6, 2006

One of the most contentious fiscal issues to occupy state-level policy over the last decade is the “Taxpayers Bill of Rights.” State-focused think tanks have taken lead roles in advocating and opposing such measures.

The measure is the latest version of tax and expenditure limitations. Some limits require super-majority legislative votes for tax increases, while others tie government growth to growth in personal income.

The Taxpayers Bill of Rights (TABOR) takes a different approach. Used in Colorado for over a decade, it limits the percentage growth of spending and tax collections to the sum of inflation and population growth. It also contains an opt-out: the limit may be exceeded with voter approval, with terms specified on a ballot question.

Colorado’s measure has long been under fire, especially for its so-called ratchet effect. Under TABOR, the official spending limit is adjusted each year to accommodate expanding demands on government. But when tax collections fall—not merely grow at a slower rate, but actually decline one year to the next—the limit is ratcheted downward.

The leading advocate for TABOR is the Independence Institute (i2i.org), a group based in suburban Denver. The institute touts the economic benefits of TABOR. Every person in the state has received an average of $800 in refunds as a result of the law’s requirements. It also credits TABOR for fueling Colorado’s economic growth relative to the nation and region.

A leading critic of TABOR is the Bell Policy Center (thebell.org), of Denver. It argues that the limit requires draconian cuts, and dismisses the role of TABOR in the state’s economic boom. Further, it says that the consumer inflation rate, used to calculate the limit, is much too stingy. Health care inflation regularly exceeds consumer inflation, and health care spending is a major component of public spending. TABOR advocates reply that the pressure applied by the limit is vital for government reform.

The dispute came to a head in 2005, when critics prevailed in a public election. Voters approved letting the state keep $3.1 billion over a 5-year period, money that would otherwise be returned in refunds. TABOR opponents claimed vindication. Pro-TABOR forces, while disappointed, pointed to the election as proof that the limit worked as designed.

The concept is being advanced in elsewhere. In 2006, according to the Bell Center, there have been TABOR campaigns in nine states. Legal and political developments kept plans off the ballot in six of those states. In a few weeks, voters in Maine, Oregon, and Nebraska will vote on some measure of TABOR.

The Maine Heritage Policy Center (www.mainepolicy.org) notes that state and local taxes in Maine, as a percentage of income, are 24 percent higher than the national average. It is conducting an extensive education campaign in favor of the ballot proposal, and says that it has been greatly outspent by opponents.

In years when Maine tax collections exceed the limit, 80 percent of the excess would be refunded to taxpayers, and 20 percent would be placed in a budget stabilization fund. A leading opponent is Citizens United (notabor.org), which says that the plan would “slowly and steadily cut funding for programs like health care, education and services for the elderly.”

Drafters of similar measures face several questions: should it be constitutional, or statutory? Should some of the excess funds be put into a rainy day fund? If so, how much? How should refunds be distributed? Should the goal be to smooth out budget cycles, restrain spending growth, or some of each?

The answers to these and other questions—and the fate of the ballot questions in November—will determine the number and shape of expenditure limits for years to come.


Addendum:
The Secretary of State of Maine published the language of the ballot proposition there, as well as a short pro and con presentation.

The proposal, simply called Question 1 on the official results page, was defeated by a YES vote of 247,175 (46 percent) to a NO vote of 288,971 (54 percent).

You might not think the results are terribly encouraging to supporters of the measure. But given the nature of the opposition to it, that 46 percent of voters approved is remarkable. It took several (three, I believe) times for the Colorado measure to be enacted. Perhaps the same will be true in Maine.

Labels: Legal-Ledger, Taxes

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