Missouri’s Certificate of Need Law Needs to Go

Posted on by Patrick Ishmael

One of the keys to promoting patient health is ensuring that patients can actually access the care they need. Unfortunately, government regulations often get in the way. One such regulation in Missouri (and other states) is the Certificate of Need (CON) law, which essentially regulates the number of hospital beds a community can have and the sorts of equipment that hospitals can purchase.

CON laws were intended to prevent duplication of services, increase care access, and control costs. However, research and experience over the last forty years suggest that while CON laws do stop new players from entering markets, they don't really reduce cost or increase access to care. That result is intuitive; restricting competition in goods and services, whether in health care or in hamburgers, tends to restrict access and raise prices for consumers because incumbent businesses have less incentive to compete for business based on cost and quality. It's why many states have repealed their CON laws, and why Missouri should follow suit.

It's bad enough that CON laws don't accomplish what they were originally intended to do, but CON laws can also be used by incumbent health care players to keep out competition in areas where people are not getting the care they need. One example of this was made clear in a recent St. Louis Business Journal story about long-term care providers demanding that the state tighten up its CON approval process—ultimately to the detriment of patients:

Representatives from the Missouri Health Care Association and the Missouri Assisted Living Association made a presentation during a recent Missouri Health Facilities Review Committee Certificate of Need (CON) meeting calling for a change in how strictly CON procedures are enforced. According to Nikki Strong, executive vice president of the MHCA, too many long-term care and assisted living projects are being approved for areas of the state in which there is no demonstrated need….

Health Facilities Review Committee member William Krodinger said many projects that are in areas where there does not appear to be a need are approved because they are serving patients with a specific need—such as mental health or memory care facilities. Also, he said some areas look like they have an oversupply of available beds on paper because the numbers include projects that have been approved but not yet built, some of which never come to fruition.

Indeed, some health care providers want the state to act as if phantom projects are meeting the needs of Missourians, which would also protect their business models. That's good for incumbent health care providers, but it's bad for Missourians' health and pocketbooks. Rather than secure Missourians' health care, CON laws can actually imperil it. They need to go.

Missouri Dodges A Bullet: Bombardier Seeks Billion Dollar Rescue in Canada

Posted on by Patrick Ishmael

Back in 2008, the Show-Me Institute was staunchly opposed to a plan that could have given aircraft manufacturer Bombardier nearly $1 billion in Missouri tax credits to attract the Canadian company to the state. As Joe Haslag, the Institute’s chief economist, said after the company instead took advantage of tax incentives abroad, Bombardier’s decision to go elsewhere wasn’t necessarily a bad thing at all. For one, tax money given to Bombardier couldn’t have been spent on other state priorities. For another, giving just one company a huge tax advantage was a highly risky gamble for the state, given the thousands of other businesses that otherwise could have had their taxes cut and could have made their own, potentially higher-yielding investments.

Which brings us to 2015: Bombardier, back in Canada, now needs a bailout.

Hours after Justin Trudeau was sworn in as Canada’s prime minister last week, the government of Quebec came calling with a pitch for the biggest state-backed corporate bailout in North America since the financial crisis of 2008-09.
 
Quebec is asking the federal government to make a “significant” contribution to the $1 billion lifeline the province gave the storied Montreal-based company as it struggles to find buyers for its new commercial jets….
 
Ottawa has invested heavily and consistently in Bombardier, issuing more than 1.3 billion Canadian dollars (about US$1 billion) in loans to the company over the last half-century. The Montreal company has paid back C$543 million of the loans, according to recently released figures from Industry Canada, and has also received $650 million in export aid.
 
The province of Quebec is not flush with money, either, and “had a deficit of C$2.35 billion for the last year ended March 31.” Quebec is, however, highly dependent on the Bombardier company for jobs, which only makes throwing good tax money after bad all the more alluring to province lawmakers—though no less misguided.
 
The good news is that Missouri won’t bear the brunt of Bombardier’s troubles, thanks in no small part to the work of good government advocates across Missouri. The bad news is that Missouri still has a serious tax incentive problem at both the state and local levels. Bombardier may be Canada’s problem today, but Missouri has plenty of tax incentive problems of its own. And as we’ve said before, better to get a handle on them sooner rather than later.

St. Louis Mills Auctioned Off for 6 Percent of Its Original Cost

Posted on by Brittany Wagner

The St. Louis Outlet Mall, formerly St. Louis Mills Mall, sold on November 18 on Auction.com for $9 million. The mall’s value—$40 million—has depreciated considerably since 2008 when it was appraised at $117 million.

I remember my first visit to “the Mills” shortly after it opened in 2003. The 1.2 million square foot building was bustling with people. The line for Panda Express was more like that of an amusement park ride than a mall food counter.

Today, only 77 percent of the mall is occupied (the average occupancy rate for malls is 92%). “Ghost town” is the best way to describe what I saw during my visit last November. The stores I once frequented as a teen were gone—replaced by metal bars and “for rent” signs.

You could look at the decline of the Mills Mall as a sign of the times—malls are out, online shopping is in. In fact, survey data supports this conclusion. In 2014, 34% of Americans said they did more than half of their shopping online—a 99% increase from the 2006 shopping season.

It’s certainly true that digital retailers like Amazon have disrupted the shopping industry, but the decline of the Mills Mall signals more than just the need for mall rats to find a new place to hang out. The failure of the Mills exemplifies why governments shouldn’t use tax increment financing (TIF) as a mechanism for economic development.

TIF is a method of attracting businesses to blighted communities through government subsidies. In 2003, an $18.5 million TIF in conjunction with a $34 million transportation district helped fund the mall’s development. In a 2006 Primer on TIF, UMSL professor Kenneth Thomas pointed out a few problems with this instance of TIF use.

  • The building of the Mills Mall displaced sales tax revenue from Northwest Plaza in St. Ann, a shopping complex nearby.
  • The project was environmentally harmful—the mall and surrounding road system was constructed on top of a wetland.
  • The median income in the community was $52,656—hardly blighted.

Hazelwood’s Economic Developer David Cox told the St. Louis Business Journal, “If the developers could have looked into a crystal ball, they probably would have built it smaller.”

But that underscores another problem with funding large development projects like the Mills—crystal balls don’t exist.

The construction of the Mills Mall had promised 3,000 new jobs. Only half that number was realized.

The Mills Mall points to a serious need for TIF reform in Missouri. Malls may, indeed, be on their way out. Inappropriate uses of TIF should follow suit.

All Too Many Missouri Students Are College Bound, but Primed for Failure

Posted on by Michael Q. McShane

Numbers are beginning to roll in on the performance of Missouri’s students on several major national assessments administered last year. Brace yourself for the findings—they are deeply troubling.

More than three-quarters of Missouri’s class of 2015 took the ACT, an admissions test that is also designed to tell whether students have a strong likelihood (a 75 percent chance) of earning a “C” or higher in introductory college courses in four subject areas. For English, the minimum required score to be deemed “college-ready” is 18, for math it is 22, for reading 22, and for science 23 (all out of 36).

Only 30 percent of students scored college-ready in all four tests. In other words, seven out of ten were judged to be unprepared for college in one or more of the four areas. While a high of 71 percent of students scored college-ready in English, the scores dropped sharply in the other subjects: 51 percent in reading, 44 percent in math, and 42 percent in science.

Even more troubling is the performance of African-American students. Only 6 percent of African-American students scored college-ready in all four tests. On the individual tests, 37 percent of African-American students scored college-ready in English, 19 percent in reading, 13 percent in math, and 12 percent in science.

On advanced placement (AP) exams—which indicate how many students are likely not only to pass, but to excel in different subject areas—the state did even worse. Here the gold standard is a score of 3 or better on a 1-to-5 scale, enabling high-scoring students to obtain advance credit for courses such as calculus and physics prior to their arrival at college.

Though class-wide numbers are still emerging, it is already clear that Missouri, once again, has under-performed all but a handful of other states in AP tests. This is the same story as last year, when only 9.5 percent of Missouri graduates passed at least one AP exam. In Massachusetts—the highest performing state—28 percent of graduating students, or three times as many as in Missouri, passed one or more of the tests of college-level proficiency in challenging subjects.

Out of approximately 20,000 African-American high school juniors and seniors in public schools in Missouri last year, only 55 black students met the standard in AP English literature, 44 did so in U.S. history, 24 in calculus, 8 in chemistry, 7 in physics, and 6 in computer science. In total, that is just seven of every thousand students who are already working at a college level in one or more of these subjects while still in high school.

The numbers tell an alarming story. First, our schools are underperforming across the state. Preparing only 30% of students for college-level work isn’t going to work. Second, our schools’ poor performance is particularly egregious for black students.

We need to upgrade our education system almost everywhere, but a good start would be providing choice for African-American students trapped in the worst public schools. A school system that empowered parents rather than bureaucrats to make the most important decisions in children’s lives would maximize the likelihood of reversing these troubling statistics.

Study: Direct Primary Care and Concierge Care Different in More Ways Than One

Posted on by Patrick Ishmael

Last month the Show-Me Institute released our paper on direct primary care, a patient-centric physician practice model that generally cuts out insurance middlemen. I say "generally" because colloquially, both patients and doctors sometimes use the words "direct primary care" and "concierge care" interchangeably, even though there are important differences between the practice models. To clarify: concierge care doctors typically bill insurance for their services, whereas "pure" direct primary care providers typically do not.

But the difference between concierge and direct primary care isn't just academic; the terms also appear to be related to the price of the services rendered by these nontraditional physician practices. According to a study by Phillip Eskew and Kathleen Klink published this month in the Journal of the American Board of Family Medicine, practices that simply self-describe as a concierge service are more than twice as expensive as direct primary care on a monthly basis.

We found the public perception of the term concierge as having higher prices holds true. Self-described DPC practices charged a lower average monthly fee ($77.38) than DPC practices that self-described as concierge ($182.76). Concierge practices such as MDVIP and MD2 have listed average periodic (monthly) fees of $137.50 and $2083.33, respectively; these periodic fees are billed in addition to standard fee-for-service office visit and procedural charges that would be encountered in any traditional medical practice.

In other words, while they sometimes use these terms interchangeably (and for understandable reasons given their similarities), both doctors and patients should be mindful that these models differ in very important ways, and that pricing is perhaps the most important difference. Making that fact clear is especially important for patients seeking cost-effective treatment plans with direct primary care physicians—because in the process of trying to find one, they could balk at the price tag they might find if they're only looking at "concierge" practices.

Missouri Paycheck Protection Is Back for 2016

Posted on by John Wright

It appears that the sponsor of last year’s paycheck protection bill will reintroduce the bill in 2016. Paycheck protection safeguards government employees’ right to choose whether their money goes to union political activity. The freedom to support only the political speech you agree with is a fundamental right protected by the first amendment. For Missouri’s government workers, this right is sometimes ignored.

Last year’s paycheck protection bill would have required government unions (such as teachers unions and unions representing state employees) to obtain permission from employees before using dues or fees for political activity. The bill would have required unions to seek permission from employees only once each year; however, for that school teacher or social worker who opposes the politics of union bosses as a matter of conscience, such protection can make a big difference.

Consider the story of Terry Bowman, who started an organization dedicated to providing a voice to union members who feel silenced and marginalized by the union political establishment. Or Andrew Palmer, a public school teacher who started Conservative Teachers of America to provide an alternative perspective on public education. Both of these men bucked the mainstream opinion of their workplaces in order to make sure their voices were heard. This can be hard to do, but it’s a lot easier when the law protects people who swim against the current.

Driving Still Dominant in Saint Louis, Kansas City

Posted on by Joseph Miller

When considering investment in transportation infrastructure, be it road, rail, or river, it is important to think about what type of infrastructure people will actually use. In Missouri and around the country, many planners have a “build it and they will come” mentality, essentially hoping that increased spending on planners’ preferred options (read: public transportation) will result in a transformation of habits. There already is a narrative that people are abandoning their cars for public transit, if we will let them. Saint Louis is spending money like that is the case, as public transit will receive around half of total federally aided transportation investment in the near future. However, the latest Census Bureau data provide little evidence that heavy investment in public transportation is having any effect at all on Missouri’s commuting habits.

That data indicate that driving is still king, and unlikely to be dethroned any time soon. In 2014, 79% of commuters in Saint Louis City either drove alone or carpooled to get to work. In Saint Louis County, that number was more than 90%. In the Kansas City area, almost 90% of commuters drove alone or carpooled. As for public transportation use, the numbers remain quite modest. Saint Louis City had 10% of its commuters use transit, but in Saint Louis County and Jackson County that number was less than 3%.

If we consider what the numbers in terms of long-term trends, our writing from last year on this subject remain relevant:

Transit’s share of commutes in Missouri and its major cities has slowly decreased over the last few decades; a lower percentage use transit now than in 1990. Taking 2000 as our baseline year, the nadir of public transportation use in the United States as a whole, 1.49 percent of Missourians used transit for their commutes. After 13 years and well over a billion dollars of investments, transit’s share of commuters has remained essentially flat.

Nothing has happened to refute those observations. In fact, from 2013 to 2014 transit commuters as a percentage of all commuters decreased in Saint Louis City, Saint Louis County, Jackson County, and Clay County, as the chart below demonstrates:

Chart: Commuter modes

All of the recent changes have been small and may be within the margin of error. This means we cannot say that transit is definitely drawing a lower percentage of riders than they did last year. But we can say that the Census Bureau’s 2014 data, much like data from previous years, show no evidence of either a rapid rise in the preference for transit or a rapid decrease in preference for driving in Missouri’s largest cities. 

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