Page 696 – Show-Me Institute

Could There Be a Long-Term Benefit From the Health Care Debate?

Posted on January 22, 2010May 5, 2026 by Stephen Feman

The recent Massachusetts election confirmed the fact that the health care debate is far from over. The people in the one state where every citizen nominally has health care insurance have extended their influence to the health care of the nation. Those voters may not have been addressing that issue alone, but their actions will have some effect on us all. Interestingly, depending on one’s political perspective, anxiety had been expressed about every plan being brought forward, not the least of which was the concern about the potential effect of these proposals on constitutional liberties. That may no longer be a problem. Nevertheless, even if another alternative is developed, the evolution of the discussion has helped us all.

In our open free society, there is a benefit associated with the debate itself. Some see an increased awareness of these health concerns as a potential stimulus for continued economic growth. As we know, the United States is in the midst of a profound demographic change. There has been an aging of the population characterized by an increased proportion of persons aged 65 and older. The Congressional Research Service’s demographic charts reveal a great upsurge in the number of older people in this country. By keeping that population healthy, we should all benefit from this preserved human capital. By improving the health and well-being of the generations to follow, additional benefits accrue. As others have indicated, “the accumulation of human capital—in the form of increased knowledge and skills and improved health and longevity” will continue to play an essential role in the economic growth of this country. My contention is that making people aware of these issues has offered some benefit to our society, regardless of the outcome of the debate.

If the investments in American health care that already exist work as expected, there should be a measurable improvement in the long-term functional status of many citizens, both young and old. Not only will the Medicare generation continue to receive benefits, but people that are newly aware of these issues will have a better chance of a healthy life extending into their old age. With many people continuing to be healthy, a small part of the future demand for health care may become reduced over time.

But there is another activity occurring, one discussed less often. In many cases, as people grow older, they continue to work and contribute to the GDP. This had been noted in the past, but few paid attention to it. However, even before people were aware of the developing “sea change” in American health care demographics, there was an increase in the proportion of the workforce older than age 65. Most of those workers are people who are not obligated to work because of reduced economic circumstances. Instead, these individuals have chosen to continue on their jobs, and contribute to society in other ways, because it gives more meaning to their lives.

Going forward, one expects still another “sea change” to develop as a result of the health care debate, but this would be in the doctor-patient relationship arena. What had been a paternalistic situation, with the physician in the role of an all-knowing father, is in the process of shifting. When most patients are older (and more experienced) than their primary care providers, physicians will need to explain their activities in greater detail. The Internet has created a standard of health care knowledge that is free and open to the public. As a result, at every patient interaction, physicians will have to show that their expertise is greater than what one can look up online. Otherwise, why would a patient want to participate? That is, the doctor encounter has to continue to be a “value added” experience that the patient can measure.

At present, from an economic perspective, the prices of health care are not informative, and consumers cannot use dollar-related data to compare physicians and/or hospitals. The existing problem of health care information asymmetry has kept patients at a disadvantage. Reforming that situation may be an added benefit developing from within the current discussions. This seems to be included, to some degree, in every version of the health care bills. No matter on which side of the aisle one sits, everyone appears in favor of improving knowledge.

Great Post About Public Employee Unions in Missouri From Another Think Tank

Posted on January 22, 2010May 5, 2026 by David Stokes

Be sure to check out this article by John Eskew of the Competitive Enterprise Institute, about the unionization of home health care workers in Missouri. It is well worth your time. I recall being part of the 24 percent that voted against this measure. Unfortunately, we were 27 percent short.

Good Story About Autism Legislation on Fox 4 KC

Posted on January 22, 2010May 5, 2026 by David Stokes

John Combest linked today to a very well-written story by Fox 4 in Kansas City. I commend them for asking tough question about the autism legislation that is almost certainly going to be passed and signed into law this year. The answer to the Fox question is that yes, autism mandates will cause premiums to rise for everyone. It may well be a very small increase, and the public good of covering autism may indeed be worth it, but let’s not pretend that this legislation won’t increase insurance costs for everyone.

Jackson County Follows Through With Lawsuit

Posted on January 22, 2010May 5, 2026 by David Stokes

I won’t add much to my TIF post from the other day, I just want to note and link to this Kansas City Star article about the TIF lawsuit in Jackson County. As promised in the press conference the other day by Co. Exec. Mike Sanders, the county has sued the city over the makeup of its TIF Commission. This should be an interesting case, and while much of it focuses on some narrow issues of the board’s procedures and make-up, I hope it can lead to larger debates over who should be making these decisions.

Homeschoolers Ask for Charter Status

Posted on January 22, 2010May 5, 2026 by Sarah Brodsky

A group of homeschooling parents in Oregon have applied to form a charter school. They want to continue homeschooling, and to use the charter for in-school resources and to meet weekly with a teacher.

Given Oregon’s track record on charters, I’m not expecting the idea to be approved easily. And I actually hope the district turns down this proposal. I see a few problems with it:

The charter would give each student $1,000 to use for their education. Families’ ideas of educational purchases vary so widely that this is sure to lead to conflicts or allegations of misuse. What if a family thinks a golf lesson is physical education but the charter doesn’t?

It seems extravagant to establish a school resource center for a couple hundred families who won’t spend much time there. People could just go to a public library and access most of the books, maps, or CDs that the charter would provide.

If students in the homeschool charter perform poorly on state tests, other people might view that as an indictment of all homeschoolers. An unsuccessful homeschool charter could provoke stricter regulation of other homeschoolers who were never involved with it.

I would support a charter for homeschoolers if it were structured more like a part-time school. Students could attend the school two or three full days a week, and it could assign homework for them to do with their parents on the other days. Rather than give students money to spend, the school could lend them computers, musical instruments, or other things they need for their studies. Students would still get to spend lots of time at home, but it would be clear to everyone that the charter was a real school and not just a place to stop by for an hour.

Is a part-time charter a good idea for Missouri? Charters can form in St. Louis and Kansas City, so out-state homeschoolers won’t have this option. St. Louis families that want to combine homeschooling and public education are already free to choose the SLPS Virtual School. There might not be enough demand for a homeschooling charter there. That leaves Kansas City. I can imagine homeschooling families in Kansas City forming a charter, especially if they participated in the Missouri Virtual Instruction Program and are looking for something to take its place. However, the charter idea won’t go very far if homeschoolers are satisfied with existing homeschool coops and don’t want help from the state.

How to Build a More Effective Parents as Teachers Program

Posted on January 21, 2010May 5, 2026 by Sarah Brodsky

I’ve criticized the Parents as Teachers program for, among other things, giving services to kids who don’t need help and sending a stiff bill to taxpayers. I’m probably the only one who’s happy to see Parents as Teachers take a $4 million cut in Missouri’s budget.

I don’t like Parents as Teachers the way it has been run for the past couple decades, but I’m optimistic that it can evolve into a better program. Parents as Teachers could move in one of two directions to control costs and better serve families. It would also be possible to split it into two separate programs with different missions.

Here’s the first route Parents as Teachers could take: Continue to serve all interested families, including wealthy ones, but do away with home visits. A Parents as Teachers educator could be stationed at a public library or in a public school. Parents could make appointments to bring their kids to the educator, and there might be drop-in hours too. Some services could be provided to multiple families at once. For example, an educator could teach a group of parents about activities for toddlers, and only parents who still had questions would consult with the educator one-on-one. Holding sessions in a public building would allow educators to direct parents to other resources (such as children’s books in a library), but its main advantage would be efficiency. Home visits to individual families are expensive — and also unnecessary, because educators give much of the same advice to everyone.

The other option is to model Parents as Teachers on the Harlem Children’s Zone’s Baby College program, providing intensive help to the people who need it most. Baby College serves disadvantaged families by restricting enrollment to residents of a neighborhood; Parents as Teachers could likewise confine itself to poor neighborhoods, or it could limit enrollment by family income. Baby College incorporates home visits, but it also brings parents together for a class one morning a week. The group sessions allow parents to get support from each other, and they also allow Baby College to bring in outside speakers. The once-a-week format means Baby College can reinforce what it teaches in a short period of time, unlike Parents as Teachers’ home visits, which might be spread apart by a few months. A Parents as Teachers program resembling Baby College would still be expensive, but at least it would be targeted, and families would get more out of the experience.

Show Me Liberty!

Posted on January 21, 2010May 5, 2026 by Audrey Spalding

Do you have plans tonight? The Saint Louis chapter of Liberty on the Rocks is meeting today at 6 p.m. at Sasha’s on Shaw for wine and, of course, to discuss issues of personal freedom.

Our last meeting, at the Martini Bar, included some heated discussion with the Motorhome Diaries guys about whether anarchy is feasible. It’s cool, though — we’re all Facebook friends now.

Liberty on the Rocks is not a Show-Me sponsored event, but I figured that a lot of our blog readers would be interested in attending. If you’re looking for good wine and good discussion, drop by.

Baumol and Health Care Costs

Posted on January 21, 2010May 5, 2026 by Abhi Sivasailam

The New York Times has a nice analysis of health care cost control using the insights of economist William Baumol, whose work reminds us to be wary of indulging in excessive optimism about cutting health care costs with new legislation. Essentially, Baumol has argued that technological improvements do not significantly reduce the demand for health care professionals. Given the inflation of wages and other commodities relevant to health care, Baumol’s work predicts that health care costs are unlikely to rise slower than inflation.

Here’s a good bit:

Dr. Baumol and a colleague, William G. Bowen, described the cost disease in a 1966 book on the economics of the performing arts. Their point was that some sectors of the economy are burdened by an inexorable rise in labor costs because they tend not to benefit from increased efficiency. As an example, they used a Mozart string quintet composed in 1787: 223 years later, it still requires five musicians and the same amount of time to play.

Despite all sorts of technological advances, health care, like the performing arts, suffers from the cost disease. So do other public services like education, police work and garbage collection. While some industries enjoy sharp increases in productivity (cars can be built faster than ever, retail inventory can be managed better), endeavors like health care are as labor-intensive as ever.

Here’s another:

At the same time, demand for health care never lets up. So while slow sales of video games or clothing can reduce prices, health care prices never ease. And while the robots that help build cars have replaced human beings on the assembly line, robots that help out in modern operating rooms are not as economically efficient.

“We do now have robots performing surgery, but the robot is under constant supervision of the surgeon during the process,” Dr. Baumol said. “You haven’t saved labor. You have done other good things, but it isn’t a way of cheapening the process.”

It’s important to note, then, that the most effective ways to cut cost inflation given Baumol’s insight is through market-based means: shock the supply or rein in demand in the market. The current health care proposals passed by the United States Senate and House of Representatives do the opposite. As I’ve written before, both proposals would, by expanding coverage or insurance, impose an economic wedge between the price consumers pay and the price producers receive. When this wedge occurs, over-consumption of resources is all but guaranteed. So, effectively, the health care bills will increase demand and thus increase costs beyond the baseline level of inflation.

Fortunately, there are other options. The Show-Me Institute has written before about certain health care reform proposals, like health savings accounts (HSAs), that restrain demand without exacerbating the harmful effects of an economic wedge. Unfortunately, the House bill and especially the Senate bill attack HSAs and make them significantly less attractive.

Open Enrollment Could Ease Pressure on Districts

Posted on January 21, 2010May 5, 2026 by Sarah Brodsky

One objection to open enrollment is that districts would have trouble accommodating changing numbers of students. I explained in this post why open enrollment needn’t hamper districts’ planning; one reason is that districts could limit the number of additional students they’d accept. In my argument that open enrollment wouldn’t do any harm, I neglected to point out that open enrollment could actually make planning easier for some districts. In particular, districts like Ladue that are experiencing enrollment booms and space shortages would benefit from a policy that allows students to transfer out.

As more people move into the Ladue district, class sizes go up and its schools have to scramble to find space. Some of that enrollment growth is inevitable, because Ladue has a good reputation. But the problem could be mitigated if students were able to choose schools in neighboring districts. Not every family that moves into Ladue does so for education; some choose a house in Ladue for other reasons, and would prefer a school that’s less crowded. Those people wouldn’t mind transferring their children to nearby districts. Other parents originally moved in for the district’s academics, but after class sizes reached a certain point, they no longer thought it was worthwhile to stay. They would also choose to transfer under open enrollment.

Under the current system, people with the preferences I just described can’t send their children to a different school unless they sell their houses and move. That’s a time-consuming process, and many would consider it a last resort in today’s real estate market. So, people stay put and keep their kids in the district, contributing to the crowding problem.

This is not to say that if Missouri institutes open enrollment, everyone would flee Ladue. Rather, some families that care about class sizes would send their children to other districts — perhaps just for a few years, while Ladue acquires more space. Open enrollment would act as a safety valve so that enrollment doesn’t increase faster than Ladue can open new classrooms.

The work of the Show-Me Institute would not be possible without the generous support of people who are inspired by the vision of liberty and free enterprise. We hope you will join our efforts and become a Show-Me Institute sponsor.