For Better Health Care Access, Pursue Interstate Licensing

Posted on by Patrick Ishmael

Imagine you got a nasty cut that needed stitches while you were vacationing in Florida this summer. Apart from putting a damper on your trip, would you be concerned that you wouldn't be able to see a Missouri-licensed doctor? Probably not. After all, a doctor based in Orlando is trained the same way as a doctor based in Kansas City; where she's licensed to practice medicine is an afterthought for most patients. Whether the doctor was based in Florida, California, or some other state, we’re usually confident in the care we'd receive.

This fact is important when we talk about the menu of health care reforms that policymakers should be pursuing. After the passage of Obamacare, much of the health care discussion has focused on demand—on the insurance that we buy for our health care and its cost. But another significant source of our health care problems is our limited and artificially restricted supply of physicians.

To make health care in this country better, we need to make the supply of doctors a priority— doctors who are physically present in a state, but also doctors who can reach patients through telemedicine.

Central to achieving this end is the liberalization of interstate licensing for American physicians. Medical licenses should be more like driver’s licenses; a doctor in good standing to practice in one state should be able to provide care to anyone in the country without unnecessary interference from the government.

But with only a few exceptions, American doctors are substantively constrained in their practice by our state lines. State medical boards set the rules for who can practice and how, even though most doctors are trained in exactly the same way. Geography has little to do with the type of training an MD receives, and differences among the requirements of various state licensing boards are usually minor. For underserved Missourians, expanding the number of physicians who can help them would be a significant improvement in their access to care.

Under this reform, physicians could physically come to the state and more freely provide care in person, not unlike the way out-of-state doctors can currently provide care for free under Missouri’s Volunteer Health Services Act. Under the VHSA, doctors whose licenses were issued in other states can give free medical services to Missouri's neediest patients.

Interstate licensing would also give patients more access to telemedicine services, since doctors would be able to cater to Missourians’ needs without having to go through the burdensome process of relicensing.

The need for true interstate licensing reforms has become more urgent as many medical boards are attempting to cement their power and ensure that doctors have to obtain licenses in every state where they might practice—restricting competition for patient services in favor of maintaining a near-cartel market environment for these boards.

This has to change. Missourians already use, with confidence, licensed doctors in other states; it's time our own laws reflect that reality. Our policymakers can put the state on the leading edge of free-market health care reform by pursuing substantive interstate licensing reforms that expand patients' treatment options.

Streetcars: Suddenly a (Poorly Performing) Transportation Service

Posted on by Graham Renz

Despite consistently arguing that streetcars are economic development—not transportation—projects, transit advocates have recently claimed the Kansas City streetcar “really is a transportation project.” But strictly in terms of transportation, how has it performed?

Not as triumphantly as its advocates might hope (or try to suggest).

On an average day in 2015, over 41,000 trips were taken on KCATA’s system. Since its opening in May, the Kansas City streetcar has had an average daily ridership of 6,365, or 15% of total transit ridership. That’s a significant number of boardings, but still substantially lower than a busy bus route (the #70-Grand in St. Louis has over 9,000 boardings a day) and many times more expensive.

Buses outperform the streetcar in others ways, too. First, the streetcar is primarily moving passengers who are already near their destination downtown; it isn’t usually getting people from home to work, etc., like buses currently do. More importantly, the streetcar route has been served by MAX bus-rapid-transit service and local bus service for years. And the streetcar travels in traffic, at the same speed as buses. From a transportation perspective, the streetcar is redundant and unnecessary.

“But streetcars have a greater capacity than buses!” rail advocates reply. Streetcar vehicles can purportedly hold up to 150 passengers; however, articulated buses, with over 50 seats and standing room, can accommodate 75 passengers. The City could simply run two buses for each streetcar to match capacity and enjoy significant cost savings (an articulated bus costs 18% of what Kansas City paid for each streetcar vehicle).

In essence, the streetcar offers a more expensive way to move people along a short, 2.2-mile route that Kansas City’s bus system already serves. Is this really the best use of taxpayer money?

Researchers Estimate Effect of Scandals on University Enrollment

Posted on by Michael Q. McShane

By the latest estimates, enrollment at Mizzou this fall is slated to be down by some 2,600 students. This means $36.3 million less in tuition revenue and an overall budget shortfall of $46 million. The university has already instituted across-the-board cuts and has shuttered whole dorms.

By all accounts, the lion’s share of this decline is due to the protests that roiled the campus last school year. Those events were covered in short and long form in local and national press over the course of several weeks. The charging and ultimate dismissal of professor Melissa Click continues to keep the story alive.

Interestingly, just last month, researchers at Harvard Business school estimated the enrollment impacts of scandals at the nation’s top 100 universities. While they narrowly defined “scandals” as sexual assaults, murders, cheating, and hazing incidents, it’s easy to imagine large-scale protests of alleged racism and professors assaulting students as functioning similarly.

The researchers found that, on average, a scandal that gets long-form news coverage will decrease university enrollment by about 10 percent in the following year, which they say is roughly equivalent to losing 10 spots in the US News and World Report rankings. While schools that have experienced scandals are less likely to have another in the five years following one, the damage is done.

Quantifying these effects underscores the importance of solid management of our universities. Yes, some of these instances are out of the university’s control, but how they handle them will determine how the media, and prospective students, respond.  

Getting Less out of More: Kansas City’s Declining Tax Base

Posted on by Graham Renz

The use of incentives such as TIF and abatements appears to be eroding Kansas City’s tax base.

In the chart below, the blue line shows the total assessed value of real property in Kansas City, Missouri. The red line shows the percentage of that property value that is taxed. Clearly, the two measures are heading in different directions; as more and more real estate is developed in the city, a lower and lower percentage of property value is taxed.

The excessive use of tax incentives appears to be leading to a decoupling of assessed value (AV) and taxable value (TV). That is, as the city experiences more and more growth, its tax base stagnates. Normally, TV would rise (or fall) at the same rate as AV.

The gap between the two has been steadily widening since the mid-2000s. In 2000, AV was 49% greater than TV, but in 2015, it was 59% greater. And that 10% isn’t chump change. If TV tracked AV at a constant rate, in 2015 there would have been an additional $200 million on the tax rolls. That means the city, school district (KCPS), library (KCPLS) and other jurisdictions are missing out on tens of millions of dollars each year. In 2015 alone, the city, KCPS, and KCPL together lost out on nearly $36 million in revenue. Instead of funding education and essential services, those dollars went to wealthy developers—developers with no real need for public financial assistance.

So, despite the claims of developers and officials, the use of incentives in Kansas City is contributing to a hollowing out of its tax-base. Even though there are more and more shiny new buildings, the city is collecting taxes on an ever-shrinking percentage of them to support essential government functions.

Kansas City Streetcar Failing by Its Own Standards

Posted on by Patrick Tuohey

On July 12, the Kansas City Downtown Council posted an item on its blog in which the Streetcar Authority marketing director was quoted as saying,

“Streetcars do more than simply improve mobility,” said Donna Mandelbaum, marketing officer for the KC Streetcar. “In Kansas City, the entire community is looking to the Downtown Streetcar to fuel economic growth by promoting development, raising property values, attracting businesses and residents, and helping to redefine our city, streetcars benefit everyone.”

Let’s examine these claims one by one:

What Kansas City did was spend $51 million per mile to build a streetcar. It’s neat to ride, and ridership is higher than predicted for now. But then that was true elsewhere before ridership numbers tanked. Voters may decide that spending hundreds of millions more on an expansion is a good idea, but it certainly isn’t because the streetcar is driving development, improving transit, or attracting business and residents.

Outsourcing Public Education

Posted on by James V. Shuls

We ask a lot of our public schools. We ask that they not only educate children, but also transport them and feed them. Many provide before- or after-school care for students. We expect schools to serve students regardless of their learning needs. They must maintain buildings, parking lots, and playing fields. When a teacher is sick, they have to find temporary staff to fill the gap.

Many public schools are unable to do all of this. To meet the needs of students, they often—to borrow a word from the business world—“outsource” jobs. Just like your paycheck gets printed by an outside company or your office is cleaned by an independent janitorial service, schools often hire a private company to manage the district’s bus services, to provide before- and after-school care, to cook children’s meals at lunch time, and to clean the buildings. Schools contract with outside healthcare professionals or private schools to meet the needs of students with special needs. A district can even contract with an outside management firm to run the school if they want. Some schools are even outsourcing who teaches your children, at least when they have a substitute teacher.

Filling all of the vacant classrooms when teachers are absent can be a challenge for school district officials. Some districts hire full-time aides who act as floating subs, filling in here and there as needed. Others employ a cadre of retired teachers, individuals looking to gain experience in the profession, or others simply looking for part-time work. The process of recruiting, hiring, and placing substitute teachers can be cumbersome. Rather than hire an assistant superintendent or other central office staff member to take on this responsibility, some schools have begun outsourcing this job to a private company.

In Saint Louis, for example, Kelly Educational Staffing provides this much-needed service to several school districts. As Dale Singer of St. Louis Public Radio reports, the privatization of substitute teachers has been a success. In Normandy, a district that has had many struggles in the past few years, “the rate of filling classrooms with substitutes had been in the 55–60 percent range”; with Kelly, “that figure rose to around 90 percent.”

Time and again we see benefits from outsourcing public services to private companies. Yet, many fail to see how private school choice programs, such as vouchers or tax credit scholarships, could yield the same benefits. Indeed, the same principles apply to both situations.

When a public school chooses to outsource services, they make a voluntary decision. Companies compete for their business and district administrators choose the company that they believe will best meet their specific needs. If the company fails to perform, the representatives of the school district can choose to take their business elsewhere. The same can be said for school choice. When parents have options, they are able to choose the school that will meet their needs. That’s the beautiful thing about a market—it allows people to voluntarily get the services they need.

We should celebrate when public schools find a way to better deliver public education by collaborating with the private sector. Similarly, we should celebrate when parents are given the ability to choose their child’s school.

While Missouri currently allows public schools to outsource just about everything, it does not extend that opportunity to parents. It is time for that to change. Parents should be given the opportunity, through vouchers or tax credit scholarships, to enter into the educational marketplace and contract with the school that is going to best meet their child’s needs. 

Tax Credit Scholarships Can Help Kids and Save Money

Posted on by Michael Q. McShane

Today we’re releasing a paper I co-authored with Marty Leuken, Director of Fiscal Policy and Analysis at the Friedman Foundation for Educational Choice. The paper estimates the fiscal impact of a hypothetical $50 million tuition tax credit scholarship program in the state of Missouri.

We’ve been talking about scholarship tax credits here at the Show-Me Institute for some time now, but for those who might be new to the topic, such a program would give a tax credit to individuals or organizations that donate to a nonprofit that grants scholarships to K-12 students. That is to say that (with a 100% credit) if you owe the state of Missouri $1000 but you donate $1000 to a scholarship-granting organization, you would pay zero in state taxes. There are currently 21 tax credit scholarship programs in 17 states across the country educating almost 225,000 students.

We estimate a variety of results based on different assumptions about how many students might participate and how many scholarships would be offered, but the long and the short of it is that most likely such a program would save states and districts money.

How is this possible? It is actually pretty straightforward. As long as the value of the scholarship that students receive is less than what the state currently spends per student, the state will come out ahead. Given the structure and uptake rates of similar programs around the country, this is the most likely scenario for Missouri. Additionally, while districts would receive less funding from the state if children leave public schools to take advantage of scholarship opportunities, districts will also have fewer students to educate, which has the opportunity to have more money, per pupil, remain in district coffers.

Scholarship tax credits are controversial, but they really shouldn’t be. Structured appropriately, they can give students better options and save money at the same time. Families win, schools win, taxpayers win. It’s a slam dunk.

Missouri Drops in CNBC Ranking

Posted on by Rik W. Hafer

CNBC has just released its annual ranking of America’s top states in which to do business.

After comparing more than 60 measures across states, all from publicly available data, CNBC put Missouri at a mediocre 31st in 2016. This is down five notches from its 2015 position of 26th. (Utah gained the top spot; a complete listing is available at http://www.cnbc.com/2016/07/12/americas-top-states-for-business-2016-the-list-and-ranking.html.)

Where a state lands in CNBC’s annual ranking may not be that important. But if that state is headed in the wrong direction or seems mired in the lower tiers, that could well signal that something is amiss. The table below reports Missouri’s overall rankings in the CNBC study since 2012. In all five years Missouri has had a middling outcome, though its 2016 showing is the worst. And the last three years show a downward trend.

The table also shows the areas where Missouri did its best and worst since 2012. The state has done well in the areas of “cost of doing business” and “infrastructure.” The former category looks at a state’s tax climate and government incentives to lower costs of doing business. This is a double-edged sword: Providing companies with corporate welfare may lower costs of doing business but it also impairs market forces. Infrastructure focuses on transportation: lower commuting times, the value of shipments by air, water and land, and the quality of roads and bridges improve a state’s score in this category.

On the negative side, Missouri often ranked nearly dead last when it comes to “work force” and “quality of life.” Workforce captures the education of the workforce, the ability to retain and attract workers, and workforce productivity. Quality of life encompasses factors like crime rates, quality of health care, and overall population health. While some measures included in quality of life are based on subjective survey responses (e.g., local attractions) most of this category gets to the idea that when businesses plan to relocate, there are noneconomic aspects at work.

Even though state boosters may discount CNBC’s ranking, consider the fact that three of Missouri’s neighbors—Iowa, Kansas, and Nebraska—attained a higher overall rank than Missouri every year since 2012. Suppose their promoters will use this information to our disadvantage?

Missouri’s Ranking in CNBC’s Top States for Business

 Year

Overall rank

Highest rank

Area

Lowest rank

Area

 2016

31

9

 Infrastructure

49

 Workforce;  quality of life

 2015

26

11

 Cost of doing business

47

 Quality of life

 2014

23

11

 Cost of doing business

48

 Quality of life

 2013

26

5

 Infrastructure

48

 Workforce

 2012

27

12

 Cost of doing business

38

 Workforce

 

It Could Be Worse. Not Much Worse, but It Could Be Worse.

Posted on by Joseph Haslag

The Bureau of Economic Analysis recently released data on real GDP for all 50 states. Since Missouri’s growth in recent years has been nothing short of dismal—it was the 49th-fastest-growing state for the period 1997 through 2014—I thought it would be worthwhile to review the most up-to-date data for clues about what’s going wrong, and how it might be fixed.

The chart below plots the average annual growth rate for each of the 50 states and for the United States as whole for the period 1997 through 2015. The good news is that Missouri’s average annual growth rate increased from 0.93 percent when computed over the 1997 through 2014 period to 1.02 percent when computed over the 1997 through 2015 period. Missouri reported a 1.29 percent growth rate in its real GDP between 2014 and 2015. No one really jumps for joy when growth rates are reported at 1.3 percent for a year; however, Missouri did manage to stagger its way one rung up the ladder, from 49th-fastest to 48th-fastest growing state economy over the period from 1997 through 2015.

Overall, the story for Missouri is little changed compared to a year ago. Since the late 1990s, Missouri’s economy has increased at half the rate of that of the United States as a whole. Eighteen years is not a terribly long time, and we all hope that Missouri’s future will be brighter. But the question remains: Why has the Missouri economy reported such slow growth over the past eighteen years?

The answer is not simple. Note that the ten fastest growing states are: North Dakota, Texas, South Dakota, Oregon, Utah, Colorado, California, Idaho, Arizona, and Oklahoma. There is no one clear feature shared by these ten states that can account for their economic success. Some of them do have natural resources and have benefitted from being able to dig a hole in the ground and extract things that are valuable to the rest of the world. But that is not the only explanation. For example, Arizona, Idaho, Oregon, and Utah (at least) do not fit the oil/natural gas story. Alternatively, the ten states with the lowest growth rates are Michigan, Louisiana, Missouri, Mississippi, West Virginia, Maine, Ohio, Kentucky, Illinois, and New Jersey. No single attribute these states might have in common would account for their struggles, either.

Income tax rates cannot, alone, explain the differences in growth rates. The nine states with no earned income taxes (followed by rankings) are: Alaska (40), Florida (20), Nevada (16), New Hampshire (25), South Dakota (3), Tennessee (30), Texas (2), Washington (13), and Wyoming (11). The nine states with the highest marginal income tax rates (followed by rankings) are: California (7), Hawaii (37), Oregon (4), Minnesota (17), Iowa (23), New Jersey (42), Vermont (26), New York (29), and Maine (46). The mean rank for the nine states with no income taxes is 17.8 while the mean rank for the nine states with the highest income tax rates is 25.7.

Overall, the evidence does not prove, but does suggest, that income tax rates do matter for economic growth. Of course, a host of other factors matter as well. In order to assess the role of income tax rates on growth, the ideal test would involve holding everything else constant. In other words, you would want to examine a parallel version of New Jersey, for example, but one with a lower income tax rate. Holding everything else constant, economic theory suggests that New Jersey would grow faster.

The broader message is that lots of factors that influence a state’s economic growth rate. Each state is an experiment in which tax rates, school quality, and various government services are provided endogenously by state policymakers. The bundle of policies and regulations is too large and complicated for us to identify how each one matters. And on top of the political attributes, there are the things that lie underground, or on the ground itself (or the ocean front—or lack thereof), that people living in each state can consume. All policymakers can do is to try and manage the factors they can influence in a way that will help their state grow faster.

In case you are wondering, Kansas ranked as the 29th-fastest-growing state over this period. So, why can’t Missouri grow at least as fast as its neighbor? It’s a frustrating question, because we have a Gordian knot of regulations, laws, and policies that make it difficult to determine specific causes of our stagnation. Not only have policymakers failed to move Missouri in the right direction in the 21st century, but the complexity of our state’s problems prevents us from understanding why various initiatives have failed to produce their intended results. In my view, it seems like a good time for Missouri to review its entire spectrum of policies. For instance, we have not had a constitutional convention in this state since 1947. Maybe it is time for an institutional overhaul.

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