The Massachusetts Health Care Experiment

Posted on by Stephen Feman

The changes in Massachusetts health care fascinate me. A program that Gov. Mitt Romney created in an effort to help his state morphed into something else. From the middle of America, it looks like that state is performing a scientific economic experiment, and the “lab rats” are the people of Massachusetts. The independence of each state is a longstanding American ideal, and the modicum of autonomy that each state has from the federal government allows Massachusetts to experiment with a plan that we may not want to do elsewhere. By reading their lab notes, however, we may learn something that can help Missourians.

Since Romney initiated “An Act Promoting Access to Health Care” in 2006, there has been an expansion of health coverage in that state. Currently, Massachusetts has nearly universal health care (approaching 97 percent), most of it supplied by private health insurance and paid for by a combination of employees and employers.

As many expected, despite the best efforts of the brightest people, costs continue to grow. The report from the Massachusetts Commission on the Health Care Payment System indicates that, “While the U.S. has the highest health care expenditures per capita among other industrialized countries, Massachusetts has among the highest health care costs in the U.S. In 2004, health care costs per capita in Massachusetts reached $6,683, and based on recent history, are projected to grow faster than for the U.S. as a whole.”

Although the cost issues have become a part of the national debate about health care, what seems overlooked is whether these changes will improve health. People can argue about how to pay the bill, but what if the result is no better than what we have now? Recent studies found that throughout the nation, adults receive just 55 percent of recommended care. If that is so, it may not matter who wins the health care debate; the result will still be less than desired.

Some years ago, a RAND experiment found that, in the short run, there were no clinically significant differences between the outcomes of people given free health care insurance and the outcomes of people who paid for health care insurance. Although that study was undertaken with relatively few patients, researchers hoped to find how patient copayments influenced the use of services. Its results, however, included information about whether people did any better with different insurance formats. During the study’s three years, one could “rule out clinically significant benefits from the additional services in the fee-for-service free plan relative to” the other groups. That is, although use of health care systems was related to out-of-pocket costs, during the study’s brief interval the clinical results showed that each group had similar outcomes.

Since completion of the RAND study, numerous investigations have shown economic and biologic long-term benefits to both individuals and society when people have regular access to health care. As stated by the Institute of Medicine, “A robust body of well-designed, high-quality research provides compelling find­ings about the harms of being uninsured and the benefits of gaining health insurance for both children and adults. Despite the availability of some safety net services, there is a chasm between the health care needs of people without health insurance and ac­cess to effective health care services. This gap results in needless illness, suffering, and even death.”

If the data about increasing costs, limited short run benefits, and long term societal values are combined, it seems that current health care reform arguments are aimed wrong. In fact, the Special Commission examining the Massachusetts Health Care Payment System may have just stumbled upon this problem. Their analysis found that fee-for-service health care is a primary cause of increased health care costs. That is because the fee-for-service system rewards service volume rather than outcomes. In the current system physicians are rewarded for doing things to patients, and whether any one gets better has become a secondary goal. That emphasis is wrong.

Now the Massachusetts Commission is proposing further changes. They want to develop another way to pay physicians for the work that doctors do. The new goal is to reward physicians if the patient gets better, and not to pay just for doing tests and procedures. How they are going to do that still remains a mystery. But isn’t it nice that this experiment is being conducted a half continent away, so we can observe it from a safe distance. Maybe we can learn something from them?

The Dangers of House Bill 148

Posted on by David Stokes

Gov. Jay Nixon has vetoed House Bill 148, which is one of those “omnibus” pieces of legislation, in this case involving the rules and regulations for local governments. The gov’s reason for vetoing the bill relate to the following section, which would have been truly awful for Missourians:

(6) Authorizes political subdivisions, for tax year 2009, to levy a property tax rate sufficient to generate as much revenue as was produced in the 2007 tax year, excluding new construction and improvements, as long as the rate does not exceed the greater of the rate in effect for the 1984 tax year or the most recent voter-approved rate. Currently, if a political subdivision experiences a decrease in assessed value, the subdivision may increase its tax rate ceiling up to the most recent voter- approved rate in order to receive the same amount of revenue as allowed in the previous year. Beginning August 28, 2009, the bill allows a political subdivision which experiences a decrease in assessed value to roll-up its tax rate to the greater of the rate in effect for the 1984 tax year or the most recent voter- approved rate in order to collect the same amount of tax revenue allowed in the previous year;

Thank God for the veto. I was stunned to see the significant margins by which this passed. I honestly think that many of the legislators who voted for this were not aware of this part. This paragraph nullifies the great work done previously by Sen. Mike Gibbons and property tax activists like Sarah Haenni in 2008’s Senate Bill 711, which made important changes to our assessment system and ends the practice of back-door assessment tax increases. Some of the elected officials who helped lead the effort to pass Senate Bill 711 voted in favor of this bill, and, again, I have to hope that they didn’t know what they were voting on in this very large bill.

We have advocacy limitations here at the Show-Me Institute, so I can’t come out and say that a particular vote or veto should be passed or overridden or whatever. However, we’re entirely free to point out positive or negative consequences of proposed legislation — and the changes in H.B. 148 would have been a disaster for Missouri taxpayers and property owners. Why anyone in the legislature would want to give local governments a blank check to raise property tax rates back to 1984 levels is beyond me. Using 1984 as a baseline for those levels was not a coincidence; it predates the current assessment system, and many 1984 property tax rates were much higher than they are now, given that rates have been lowered over time as property assessments increased.

I don’t want to single anyone out, but I repeat that there some of the people who voted for this bill are those that I cannot fathom supporting the portion quoted above. I am proud that my state rep, Jake Zimmerman, voted against it, as did my friend, John Diehl, and a number of St. Louis County reps of both parties. I just hope that, before the votes on overriding the veto take place, every state rep and senator (this terrible idea passed unanimously in the Senate) knows how much this bill could increase local property taxes.

Barriers to Improvement

Posted on by Sarah Brodsky

The Grade reports that Missouri has joined the Common Core State Standards Initiative. This is how Missouri’s Commissioner of Education defends the decision:

“We now have a patchwork of differing state-developed standards, and that has become a barrier to improving academic performance for all students,” Nicastro said. “The Common Core project is a constructive effort, led by the states themselves, to define academic goals and priorities for all schools.”

It just doesn’t make sense that the variance in other states’ standards is a barrier to improvement here in Missouri. Missouri is free to change its standards without coordinating with any other state.

I also disagree with the idea that all schools need to have the same academic goals and priorities. A magnet high school with a math and science theme is not going to have the same priorities as an arts school. And uniform goals are a bad idea for traditional public schools, too, because no two districts are alike. A district that’s competently teaching basic skills may want to try to cover more content; a district whose students struggle with routine reading assessments might concentrate on literacy.

Each district could do more to improve, and each has to overcome obstacles to succeed. But variance in states’ standards isn’t one of those barriers.

Town Hall Forums Meet “The Clash”

Posted on by David Stokes

Where to begin with the recent spate of news on what I long thought was impossible: making politicians’ town hall forums somehow interesting. As with so many things, The Clash said it first and said it best. I guess the following lyrics no longer apply to conservatives, etc. who have decided they are not going to meekly accept a government takeover of our health care system (even more than it already has):

An’ everybody’s doing
Just what they’re told to
An’ nobody wants
To go to jail!

I share the concerns of some that civic discourse is being harmed by the tone of these meetings. However, I think that the people saying this are longing for a day that never was — or, at least, that ended a long time ago. Political town hall forums (THF) have usually been meaningless dog-and-pony shows that accomplished absolutely nothing, and now they are shouting matches that at least accomplish the goal of letting officials know some people are angry out there. I don’t know whether it’s better or worse than before, but let’s get rid of any idea that, pre-2009, some congressman’s THF was a model of debate, wit, and education. (There are some exceptions to that, however. Kurt Odenwald used to have very good THF’s, with an open opportunity to speak to him.)

It is very interesting to see Rep. Lacy Clay largely blame unions for the recent unfortunate events in Mehlville. I have attended events (although not recently) where the SEIU showed up with the intent of disruption. It can be very intimidating. I mean, not to me, because I am a total badass, but, you know, to other people.

(Note: I can’t find the free version of the 2001 Post-Dispatch article about my fight, so I have to link to the Salon article about another one.)

Language: “Armory of the Human Mind”

Posted on by Sarah Brodsky

This brief report on the new Spanish-language version of the state attorney general’s website mentions the English-language amendment. Although, as the article correctly points out, the amendment deals with official debates and meetings, and doesn’t affect websites, I’m sure some people will oppose the Spanish website for the same reasons they supported the amendment.

One possible objection to translating state websites is that it compels taxpayers to pay for an unnecessary translation that most of them will never use. This argument has some merit, especially if the translation is repeated in multiple languages that few people speak. However, a translation into one or two major languages may be worth the cost. The up-front expense of translation could prevent costs that would be incurred later because of misunderstandings or ignorance. Some will say, “People should just have to learn English,” but they should consider that learning a language takes time. Do we want foreign-language speakers to remain ignorant of state laws and government for the months or years it takes them to learn English? Furthermore, government publications often contain jargon that would be confusing for non-native speakers, even if they have learned English well enough to get along in daily life.

Translating a website doesn’t get the government involved in new spheres of activity. It doesn’t impose new restrictions on the market. It just makes the English website understandable to more people.

New Study Compares Tax Systems in Missouri, Tennessee

Posted on by Eric D. Dixon

A few of you may not have noticed that late last week, we released a brand-new case study on our main website, “All Caught Up: How Tax Policy May Have Allowed Tennessee to Outgrow Missouri,” by Jenifer Zeigler Roland, the Show-Me Institute’s director of publications, and Dave Roland, one of the institute’s policy analysts.

The study finds that although Missouri was once the unquestionable leader in terms of population and GDP, Tennessee gradually caught up throughout the 1900s in almost every economic metric. Although many factors certainly contribute to Tennesse’s growth and Missouri’s relative stagnation, one of the most illuminating pieces of data is that Missouri levies a state income tax on its citizens, while Tennessee does not.

Empirical research shows that tax policy has a marginal but significant effect on how people choose where to live — voting with their feet to minimize their tax burdens. Economic growth tends to flow to areas with lower tax burdens, and although Tennessee has a higher sales tax than Missouri does, its overall tax burden is unquestionably lower. If Missourians want their state to once again become an economic powerhouse, they should encourage a sensible tax policy that’s both low and consistent, and that eliminates as much dead-weight loss as possible. That means thinking hard about eliminating Missouri’s state income tax.

Read the entire case study here.

Thoughts on Liberating Learning: Technology on All Fronts

Posted on by Sarah Brodsky

In this chapter of Liberating Learning, the authors introduce some applications of technology that they believe will transform U.S. public education. The central examples are: an online charter school, charter schools that incorporate a few hours of computer use into the traditional school day, and computer programs that track student achievement and predict state test results.

Each of these examples has made its mark on a tiny segment of the education market. We’ll have to wait to see which of them will change public schooling more broadly. I expect online charter schools like the one discussed in this chapter, as well as online schools run by states and traditional districts, to have the greatest effect on the education market as a whole.

Here’s why: Online schools give parents a choice, and they potentially compete with all the public schools in a wide area. That means they affect many students besides the ones who actually take classes. It’s like when a new brick-and-mortar charter school comes to town, and the neighboring schools have to work harder to retain students. The difference is that an online school could attract students from across a whole state, so it provides instant competition in every district.

Using computers more effectively within a traditional school is beneficial for the students already enrolled, but it does little for the rest of the market. The authors of Liberating Learning expect other schools to respond as parents demand accountability, but unless parents can make a credible threat that they’ll leave, schools have little reason to respond to their demands.

Despite Admirable Goal, Autism Bill Ill-Conceived

Posted on by Josh Smith

The Post-Dispatch has the latest about Gov. Jay Nixon’s struggle to ensure medical coverage for all Missouri children who have autism. I have selected a truly arcane method of judging his argument; in it, I’ll praise his intentions and convictions, while drawing critical attention to the reasonableness of the proposal itself.

The ancient Greeks divided argumentation into three criteria: “ethos,” the ethical credibility of the speaker; “pathos,” the emotional appeal of the speaker; and “logos,” the logic of the speaker’s argument. In this case, Nixon’s ethos is admirable — he wants to help these children and their families. To determine his pathos regarding this matter, look no further than this report about his level of conviction. However, as far as sober logic is concerned, his proposal is ill-conceived.

It goes like this: Autism among children is on the rise, and the treatment is prohibitively expensive. Many families can’t afford the treatment or the insurance coverage that would pay for it, but if we force insurance companies to cover all autistic children, the cost of the treatment would be spread among all the insurance company’s premium paying customers.

The economic logic of this is dubious at best. It externalizes the cost of what should be an internal transaction, forcing many people to pay for something that they will see no benefit from. The plight of autistic children is very sad, and my heart goes out to the families affected by it, but it is unreasonable to make the paternalistic decision to reallocate the money of those who buy insurance. Deadweight loss would inevitably result in such a scenario, and, like other subsidies — especially those for issues that can be so emotionally moving — the question quickly becomes, “Why pay for this treatment and not that one?” A compelling emotional argument can be made in favor of subsidizing all manner of medical care, but someone has to pay the resulting bill.

Criticism is not particularly useful without a proposed alternative. I submit that there are many people right here in Missouri — not just insurance customers — that would be willing to part with a modest amount of money in order to ensure that those who can’t get autism coverage because they can’t afford it are provided for. I would rather see a voluntary system, be it a charity campaign, or a checkbox on your state income tax form or license plate renewal application, etc., with wording along these lines: “Would you like to contribute 1, 5, or 10 dollars to provide help for poor autistic children?” The people who contribute to such a fund would not necessarily be the people who buy insurance, but this would eliminate the deadweight loss.

Sarah Brodsky has been a prolific writer about the topic of mandatory autism coverage, with a great op-ed and several blog posts, all of which are worth reading.

Ridiculous Lawsuit Over Assessments in Jackson County

Posted on by David Stokes

Talk about having your cake and eating it, too. School districts loved it when property values skyrocketed throughout this decade along with their budgets. But now that values of fallen, KCTV reports that several school districts around Kansas City have filed suit to prevent the county assessor from lowering property values. These people are living in an alternate universe. The state Constitution already protects the taxing districts by allowing them to roll up their tax rates to a revenue-neutral level in the rare years like this when property values decline. Is that good enough for them?

Of course not. Yesterday’s Post-Dispatch documented how teachers throughout St. Louis are getting their standard pay raises despite the economy, and the districts just assume that taxpayers will pick up the slack even as many of them have seen declines in their own income. At least the schools in St. Louis have, so far, followed the law and not filed a lawsuit.

When you base a tax system on property values, as we do in Missouri, you have to take the good with the bad. Sometimes, but not often, values will go down. For the school districts to sue in order to force the use of last year’s assessments — which everybody knows are no longer accurate — is the absolute height of bureaucratic arrogance.

How about this for an example of a typical made-up PR claim, from the KCTV story, in which the people filing the lawsuit to make taxpayers pay more actually claim to be protecting homeowners:

The source [from one of the public school districts] said the problem for homeowners is if they go to sell their home, most buyers will not go over the county’s assessed value, so sellers could get much less then what their home is worth.

I think many home purchasers don’t even know the assessed value of a home when they buy it. Most of them certainly don’t care. The idea that they won’t go over the assessed value is ridiculous. People generally know just the market value of a home, and that the current market values are lower than they were in the past.

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