Picking Winners and Losers Using Health Care Regulation

Posted on by Christine Harbin

Typically, when I discuss how government picks winners and losers in the marketplace, it’s in the context of targeted tax credits in Missouri. The practice of picking and choosing is disadvantageous for overall welfare because it increases the cost of doing business for non-favored groups. This places them at an artificial competitive disadvantage and makes it difficult to compete against groups that enjoy the government’s favor.

According to an editorial in the Wall Street Journal, the government is picking winners and losers
by exempting some companies from regulation, and not others. From the editorial:

One of these effects [of the health care law] is the spectacle of employers going hat-in-hand to the Department of Health and Human Services (HHS) for waivers from some of the law’s more onerous provisions. […]

It’s not hard to connect the dots. The Obama administration is using waivers to reward friends. On the flip side, business executives will be discouraged from contributing to the president’s opponents or from taking any other steps that might upset the White House or its political appointees at HHS.

Providing special exemptions to some is a tacit admission that the cost of providing health care under the new regulations is prohibitively high. From the perspective of overall welfare, it would be better if the the federal government enacted a policy that favored no groups over others.

Contributors to Show-Me Daily have previously discussed the negative consequences of the Patient Protection and Affordable Care Act. In particular, the measure will will ultimately limit health care coverage because it eliminates limited-benefit health insurance plans known as “mini-meds.” Additionally, it will likely increase unemployment, particularly among those with low incomes, because it increases the cost of labor to an employer.

An Open Letter to Missouri Attorney General Chris Koster

Posted on by Brenda Talent

Dear Atty. Gen. Koster:

To date, 20 out of the 50 states have joined a multi-state lawsuit challenging the constitutionality of the recent federal health care reform law. That case, Florida v. United States Department of Health and Human Services, Case No. 3:10-CV-19-RV/EMT, is currently pending before U.S. District Judge Roger Vinson. Other states are expected to join the lawsuit by Jan. 10.

The law at issue is defective on its merits; it raises the cost of health care, intrudes into decisions that should be reserved to individuals and businesses, limits the availability of health insurance, and increases the deficit at a time when the federal debt is already threatening the solvency of the nation. But I urge you to join the lawsuit because of grave concerns over the constitutionality of the law and, in particular, of the individual health insurance mandate.

The individual mandate requiring Americans to carry insurance overreaches the federal government’s authority under the Constitution’s commerce clause. Health care is just one among many goods and services that individuals in Missouri purchase, and courts have never interpreted the commerce clause as giving the federal government the power to require individuals to purchase a product. To put it simply, a person’s decision not to buy health insurance is not an act of “commerce.” If the commerce clause justifies this kind of intrusion, there is literally no limit to the power of the federal government over the lives and freedom of the American people.

Missouri voters understand the constitutional infirmity of the health care law. When they passed Proposition C last August with more than 71 percent of the vote, they signaled strong opposition to the individual mandate. In view of this expression of the popular will, and the implications of this expansion of federal power, I urge you to join the states that have filed this constitutional challenge in an effort to protect the liberty of their citizens.

Most respectfully,

Brenda Talent
Executive Director, Show-Me Institute

 

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You Are Now Free to Move About Franklin County

Posted on by David Stokes

Let us now be pleased by small victories. Actually, it’s a big victory if you live in Washington, Mo., and care about liberty. The Washington City Council has wisely chosen to end the city’s use of red light cameras. Hopefully, many more Missouri cities will make the same decision.

A online shout-out to former intern Phil for bringing this story to my attention.

Attorney General Chris Koster Should Join the Multistate Health Care Lawsuit in Florida

Posted on by Christine Harbin

When they passed Proposition C last August, Missourians demonstrated their overwhelming opposition to the federal health care reform law. They voted for freedom and against federal takeover of their health care. Although Prop C may prove to be more ceremonial than legally effective, it established the state of Missouri as a bellwether for health care reform. Just last month, a federal judge in Virginia struck down the individual mandate component. Because the health care package that President Barack Obama signed into law last year hasn’t yet been overturned, it’s important that Missourians continue fighting to restore freedom in health care.

Currently, a bipartisan group of more than 20 state attorneys general and elected officials are asking a judge in Florida to invalidate the federal health care reform law. Missourians should encourage their attorney general, Chris Koster, to join this multistate lawsuit, which resumes on Jan. 10. In my view, the precedent that Missourians set by approving Proposition C could be continued if Attorney General Chris Koster joined the lawsuit.

The following are some facts related to the lawsuit:

  • Twenty attorneys general are challenging the Affordable Care Act (ACA), the health care reform law that Congress passed earlier this year, in a courtroom in Pensacola, Fla. They are arguing that the law is unconstitutional and would set a dangerous precedent.

  • The case involves two arguments. The first is that the requirement for all Americans to purchase insurance is unconstitutional. The second is that expanding the eligibility requirements for Medicaid, the joint federal-state health insurance program for the poor, threatens state sovereignty and will burden state budgets.

  • The states party to the suit are Florida, South Carolina, Nebraska, Texas, Utah, Louisiana, Alabama, Michigan, Colorado, Pennsylvania, Washington, Idaho, South Dakota, Indiana, North Dakota, Mississippi, Arizona, Nevada, Georgia, and Alaska. Additional states, such as Wisconsin, are considering joining.

  • Americans are divided in their support for the health care legislation. Only 42 percent of Americans say they have a generally favorable view of the law, while 41 percent say the opposite, according to a poll by the Kaiser Family Foundation in December 2010.

Missouri voters were the first to oppose this attempt by the federal government to take control over health care. As Missourians, we live in a democracy. We should have a government that represents the demonstrated wishes of Missourians in this matter, thereby advancing liberty with responsibility by promoting market solutions for health care policy.

I will discuss the effort to encourage Attorney General Koster to join the Florida lawsuit on the Mike Ferguson show on the Eagle 93.9 FM tomorrow, Jan. 6 at 5:00 p.m in Columbia. I encourage our readers to tune in or listen online.

The French Find a Free-Market Solution to Historic Preservation

Posted on by Christine Harbin

When I was driving into work today, I heard a story on NPR about how a private company is turning a dilapidated part of the French Palace of Versailles, the Hôtel du Grand Contrôle, into a luxury hotel. According to the story:

[Deputy Administrator for the Palace of Versailles] Hautchamp says Versailles doesn’t have the $7 million it will take to restore the building, which is why it turned to Belgian hotel company Ivy International. The company will renovate the mansion and turn its 23 bedrooms into a luxury hotel.

A percentage of the profits will be paid back to the Palace of Versailles in rent. The restoration is the first in a series of commercial projects aimed at saving French monuments.

Not only is this a rare opportunity to apply knowledge from my French major in a professional capacity (it’s the plight of the liberal arts major, n’est-ce pas?), this story illustrates how practical solutions to public policy problems exist in the private sector.

Turning Versailles into a hotel will have many positive consequences. More people will be able to enjoy the building than they do in the status quo, or if it were in ruins. Additionally, taxpayers won’t be forced to pay for the restoration, nor will the restoration compete with other government programs for funds. Another positive consequence is that the building and its history will be preserved. The following quote in the article particularly illustrates this point:

“It surprised me at first,” Denise Mosset says. “But if we don’t have the money to restore it, this is better than letting it fall into ruin.”

This story is particularly relevant to Saint Louis, which has beautiful architecture, limited financial resources, and competing needs for these resources. The city of Versailles found a free-market solution to historic preservation, and the city of Saint Louis would be wise to investigate the same. Policymakers in Missouri could learn a lot from the French.

Additionally, and parenthetically, this story represents how, in free economies, individuals can improve their quality of consumption over time. In the past, Versailles was a building that could only be enjoyed by the super elite (the French monarchy). In the present, it will be enjoyed by non-elite guests every day.

Tattoo You

Posted on by David Stokes

I think tattoos should be treated like champagne. As many of you know, only sparkling wine from a certain part of France can legally be sold as “champagne.” Along those lines, I think that only tattoo artists born or trained on the planet of Tatooine should be allowed to refer to their work as a tattoo. For everyone else, it should just be “ink.”

Whatever it is called, Missouri wants to raise the taxes and fees on it. Not surprisingly, for those who follow this blog and know the real motivations behind occupational licensing and taxing, some current tattoo shop owners support the tax and fee increase. KOMU reports (emphasis added):

“Surprising to some, some artists think fees should go up because it will help get the people who do tattoos illegally out of the market. Dean Jones, managing owner at Living Canvas in Columbia, says the possible increase does not bother him at all.”

I love how they make a big deal in the story about shops that don’t give out after-care instructions for their “illegal” tattoos. It took me less than 10 seconds to find online all the after-care instructions you would want.

I am not opposed to all regulation of the tattoo industry. I think statewide licensing of individual artists is unnecessary, and many other tattoo regulations are absurd, but basic sanitary inspections by county health departments seems reasonable.

I have news for people who believe that a higher license fee will keep people from performing tattoo work illegally: Higher costs and increased regulation may mean that more people — not fewer — will start doing the work “illegally.”

The state should get out of the business of regulating tattoo artists, and leave public health issues to local health departments.

Subsidizing the Missouri State Fair

Posted on by Christine Harbin

 

A regular Show-Me Daily reader alerts me to an article in the Kansas City Star reporting that the Missouri Development Finance Board recently issued $343,000 in tax credits toward a new livestock pavilion at the Missouri State Fair.

While representing the Show-Me Institute at the Missouri State Fair last August, I noticed that the state government already has a large footprint on the fairgrounds. Most notably, there is the Missouri Department of Transportation’s expansive Highway Gardens, which I have discussed previously on this blog. There were many private companies represented at the state fair (e.g., farm equipment manufacturers, RV and trailers, etc.), but they were located on a section of the fairgrounds that was comparatively compact.

To what extent is the state government crowding out private investment at the state fair? Has the state government investigated whether a private company would be willing to sponsor the livestock pavilion or the highway gardens?

Additionally, this presents a possible opportunity for tax credit stacking. Will the livestock pavilion feature cows that received qualified beef tax credits? As Thomas Duda has explained in the context of subsidizing housing developments, tax stacking contributes to the crowding out of private investment.

Furthermore, this fact from the article thoroughly disappoints me:

The board waived its normal two-presentation requirement for applicants in order to approve the State Fair project under its 2010 allotment of tax credits […].

If the government doesn’t go through its review process, what’s the point of having one at all? What attributes make a project worthy of skipping review? Are these attributes completely arbitrary and subject to political pressure?

New Year’s Resolutions for Missouri Public Policy: From the Cutting Room Floor

Posted on by Christine Harbin

My recent editorial, “New Year’s Resolutions for Missouri Public Policy,” ran in the St. Louis Beacon and the Joplin Globe, and was linked to by Combest.

The following are additional resolutions that didn’t make the final list. I tried to model these after resolutions that individuals commonly make for themselves. I thank my colleagues for their collaboration, and I encourage our Show-Me Daily readers to leave additional resolutions in the comments section.

  1. Get Out of Debt:
     
    This year, state and local governments in Missouri should resolve to get a handle on their finances. Policymakers can accomplish this by holding off on the pork barrel spending projects and fitting in time for fiscal fitness. Eliminating and reducing debt will have positive fiscal consequences in the future, because the state will not be spending tax monies on interest on debt. Government should resolve to live within its means, as an individual does. There are many policy areas that could save money. For example, school districts could elect against giving superintendents health care for life.

  2. Eliminate Clutter:
     
    The state government should conduct a top-down, bottom-up review of all state agencies and regulations to eliminate waste, inefficiency, and government intrusion unrelated to public health and safety. To accomplish this, policymakers may pursue public-private partnerships, privatize services, eliminate underperforming programs, etc.

  3. Get Organized:
     
    The state can take measures to reduce bureaucracy and red tape, especially huge mistakes and oversights in its expenditures. For example, the state government is issuing targeted tax credits too quickly to keep track of them. According to an article from the Associated Press, 56 businesses, nonprofit groups, and individuals in Missouri have failed to meet the mandates of a 2004 state law that requires annual progress reports after receiving tax credits. The state government awarded $2 million in tax credits to a convicted embezzler for a development project in Cape Girardeau. With better organization, scandals like this would be much less likely.

  4. Find a Job:
     
    The state unemployment rate continues to exceed 9 percent. Missouri would attract a greater number of businesses to the region if it implemented strategies that reduce the cost of doing business in the state. Specific strategies that policymakers can implement are: eliminating personal and corporate income taxes, reducing occupational licensing requirements, and eliminating property tax surcharges.

  5. Lose Weight:
     
    Just as individuals need to lose weight to remain fit and healthy, cities and other taxing districts need to save money by cutting out the fat whenever possible in order to remain fiscally sound. Policymakers in Missouri should take steps to limit this growth. Individual governments in Missouri can share resources, consider consolidation or disincorporation when appropriate, and contract with private service providers as much as possible. Individuals make the tough choices to eat less for better health. Taxing districts can make those same hard decisions to outsource, privatize, consolidate, or share services in order to perform key public services at as low a cost as possible. (Hat tip: David Stokes!)

  6. Spend More Time With the Kids:
     
    Missouri can take measures to improve educational outcomes, such as increasing school choice. A specific strategy that policymakers can implement would be to expand access to charter schools and virtual schools, the latter of which can provide 24-hour education services to meet flexible schedules. It’s important to note that the most successful charter schools lengthen both school hours and the school year in order to help students catch up with their peers in other schools. (Hat tip: John Payne!)

  7. Quit Smoking:
     
    Even staunch environmentalists now understand that the total carbon emissions from the use of ethanol are worse than the emissions from the fuel that ethanol replaces. Energy specialists recognize that it takes more energy to produce a unit of ethanol than the energy that unit returns. It’s bad for your health, your wallet, and the environment. It’s time for the state of Missouri to quit subsidizing, mandating, and abusing this substance.

  8. Travel Less:
     
    Gov. Jay Nixon has the habit of holding ribbon-cutting ceremonies for subsidized projects around the state, and then billing the expenses to other agencies. These travel expenditures come at the expense of other programs because they compete for the agencies’ services. Taxpayers in Missouri would be better off if they weren’t footing the bill for these trips, because they could keep a greater proportion of their earnings. (Hat tip: Audrey Spalding!)

  9. Spend More Time With Family and Friends:
     
    Just as an individual resolves to “Spend more time with family and friends,” a state government can resolve to increase the level of civil society interaction in Missouri through privatization. Instead of seeing government employees take care of your water utility, or going to a government-sponsored health clinic, we can interact with members of our community that we choose to do business with privately. This resolution could also describe hanging out with a family member or friend while they African-braid your hair or examine your horse’s teeth, even though they do not have a license.

Massachusetts Repeals Liquor Taxes; Should Missouri, Too?

Posted on by Christine Harbin

Residents of Massachusetts have a special reason to celebrate the new year. Beginning Jan. 1, the state repealed its 6.25-percent sales tax on alcoholic beverages.

Liquor taxes are a kind of so-called “sin tax,” a topic that that contributors to Show-Me Daily have discussed before. The primary purpose of such taxes is to discourage behaviors that may be considered socially undesirable, and the secondary purpose is to generate revenue for the government.

Sin taxes have a marginal nature, which is illustrated in this example from Massachusetts. Liquor stores that are located close to the Massachusetts border will particularly benefit as a direct consequence of the repeal — they will experience increased sales from nonresidents. Similarly, stores that are located on the other side of the border will likely experience fewer sales. This illustrates how rational individuals tend to think on the margin, another topic that we have blogged about previously. From an interview of a liquor store owner published in the Tauton Daily Gazette:

“It wasn’t a mass exodus [when Massachusetts instituted a liquor tax]” Matias said. “You would still see Rhode Island plates in the parking lot. They just wouldn’t come as often. If you saw a guy every two weeks, now he might come once a month.” The repeal is expected to be a boost for the South End stores. An Ocean State resident is more likely to make the trek to Massachusetts now that the savings is significant.

Compared to other states, Missouri assesses some of the lowest tax rates on alcoholic beverages (and on cigarettes, too). Similar to the illustration provided by the aforementioned article, a marginally higher number of individuals purchase these products in Missouri instead of in their home states because of the difference in tax rates.

Should Missouri eliminate its tax on alcoholic beverages, too? A disadvantage of that policy change would be that state government would miss out on revenue. Massachusetts, for instance will miss out on $100 million as a consequence of eliminating its tax. However, as an advantage, stores in Missouri would experience a higher volume of sales. Policymakers are always looking for ways to encourage economic activity and job creation. Perhaps repealing the liquor tax could be a means to achieve these goals, in part.

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