Show-Me Health Care Outing: A Newt Experience

Posted on by Josh Smith

This morning, six employees of the Show-Me Institute and one of our regular book club attendees found ourselves among 200 other guests at the futureFOCUS 2009 seminar, which featured a presentation from former speaker of the House Newt Gingrich. He made some excellent points that I can only agree with on the topic of health care, including: The public option is likely ill-considered; taxes should be lowered across the board so that individuals will have more money to buy their own health care; and, the present level of bureaucracy is to blame for much of the present cost of health care. He also pointed out that the Canadian system currently does not cover a number of conditions, for which many Canadians cross the border to get treatment; if we adopt a system similar to Canada’s, where will those people go?

Gingrich made one point I did not agree with. After pointing out that the progression of technology will afford new avenues for medical care and scientific progress, he used that as an opportunity to advocate a federally funded project that would study the brain using the latest technology, similar to the Human Genome Project or the Manhattan Project.

Overall, Gingrich was an incredible speaker, and the hour just flew by. During the Q&A, one audience member indicated his disappointment at the lack of outrage at some of President Barack Obama’s proposals. He asked, “Do you have any outrage?” Gingrich waited several beats before responding, and ultimately indicated that, yes, it’s easy to get outraged, but then you’re exhausted and you may not accomplish what you want. It’s better to remain level-headed, slow down the debate, and point out anything false stated by your opponents with calm reason.

This reminded me of a blog post I read awhile back about how anger and emotionality in politics is adaptive. It made sense for our ancestors to get excited about policy decisions, because it could literally mean life and death for the tribe. As modern individuals with the benefit of self-analysis and better reason, however, it is incumbent upon us to follow Gingrich’s great advice and make every effort to withhold anger, instead letting cooler heads prevail. It makes sense that a veteran politician would have learned this lesson already, but it was still impressive to see him articulate it so clearly.

Cutting Health Care Costs With a Chainsaw

Posted on by Caitlin Hartsell

The Congressional Budget Office (CBO) recently published a letter to the House majority leader regarding a proposal to establish a commission to cut Medicare spending. The council would consist of five medical doctors or health care experts who will suggest cuts that the president must approve.

This is the model of the public option, a top-down plan that takes the individual’s (and doctor’s) agency out of health care. As the Baby Boomer generation becomes eligible for Medicare, the program will inevitably expand — expanding a plan while simultaneously requiring cost cuts is counterintuitive. Cuts are best made through increased efficiency and better preventive care, not because a panel of five people decides to stop covering certain procedures.

The CBO estimates that $2 billion can be saved in the latter half of the next decade. However, this amount is minuscule in comparison to the $1 trillion proposed cost of the public option in that same time period.

Two of the more disturbing recommendations from the CBO letter appear on page 5:

  • Setting explicit and feasible quantitative goals for reducing outlays in the Medicare program.

  • Incorporating an explicit fall-back mechanism (such as an across-the-board reduction in payments) if goals for cost reduction are not met.

Health care costs have increased significantly since the creation of Medicare. This can be attributed in part to cost floors and the regulations imposed on doctors by Medicaid and Medicare. As it is, some doctors cannot afford to accept Medicare patients, and some are reimbursed for less than the required procedures cost. These added costs are foisted onto private insurance companies.

The Kaiser Family Foundation estimates that Missouri spent $7,029 per enrollee in 2004, slightly below the national average. Could these costs be lowered? Probably, but outright cuts to what treatments will (and won’t) be paid for will only have a dire outcome for the health care system.

Health care costs need to come down, but mandating cuts is not the best way to achieve that. Instead, increasing efficiency by lowering regulatory barriers or lowering fixed costs through tort reform, in order to lower malpractice insurance rates, would help ensure that patient needs continue to be met. Mandated cuts are just another way of imposing health care rationing.

Headlines Like This Are Part of the Problem …

Posted on by David Stokes

I have a lot of problems with the wording of this headline. Don’t get me wrong — I love KMOX and am listening online to The Charlie Brennan Show as I type this. But this is exactly the type of headline, and media story, that gets people to buy into the blatantly false idea that it is the government’s job to get people out of poverty and manage the economy.

Even if you are of the regrettable belief that it is the proper role of government to manage the economy, headlines like this make it sound like the government somehow is good at doing that. Which it ain’t. Seriously, does anyone believe that even one family is going to be lifted out of the cycle of poverty because the Board of Aldermen and the mayor passed an ordinance? I am not criticizing the elected officials, here; I am just pointing out that headlines like this reinforce economic ignorance.

What Does the State Income Tax Cost Missourians?

Posted on by Joseph Haslag

The recession has dominated economic news of late. As with any downturn, there is an opportunity now to reevaluate the structure of the economy and try to create a situation that will produce the most future growth. More specifically, what is the best tax structure for the Missouri economy? In this article, we quantify the impact that the Missouri individual income tax will have in terms of foregone economic growth.

Even before the recession, Missouri’s economy had suffered relative to the rest of the country. For the last 20 years, the standard of living for the typical Missourian has not kept pace with the national average. The real GDP of the United States increased 34.3 percent between 1995 and 2005, but during the same 10-year period, Missouri reported a more modest 23.8-percent increase. That difference means that Missourians realized a lower standard of living.

Seven states do not have a personal income tax, and two others that levy an income tax only on interest and dividend income. These states have seen their economies grow at a much higher rate than those with an income tax. For example, between 1995 and 2005, Texas saw 53.2-percent GDP growth — a rate that is more than double the rate of increase reported by Missouri.

Without the current 6-percent income tax, the take-home pay for Missourians would increase, leading also to an increase in consumption. This would generally improve standards of living, and attract new businesses to Missouri that want to cash in on the benefits that the lack of an income tax brings. If Missouri were to become the only Midwestern state without a personal income tax, the state would gain a regional advantage.

To quantify the gains Missouri would see without an income tax, we projected the growth rate in Missouri’s real GDP for the next 25 years. In one projection, we assumed that Missouri would continue to grow at the same rate that it has in the recent past. In the second projection, we used an economic model to compute what Missouri’s growth rate would be without a state income tax. Our calculations indicate that Missouri’s real GDP would increase at a 2-percent annual rate if the state income tax were eliminated, as opposed to Missouri’s historic 1.3-percent growth. While a 0.7-percent increase in the growth rate may not sound like much, its impact would be significant for the next generation of Missourians. Indeed, Missouri’s real GDP gains would total $438.6 billion over this 25-year period, a substantial amount that would translate into more jobs and a higher standard of living. This would be a substantial windfall that Missouri cannot afford to forego.

The income tax adversely affects the state’s economic growth. Missouri could go a long way toward catching up by eliminating its state income tax. Although there are significant challenges associated with such a policy, such as the need to replace state revenues in a way that will not impinge upon economic growth the way that taxing income does, Missouri has a relatively small state government, at least in terms of government spending relative to state GDP. Replacing the revenue would be a challenge, but one that could be well worth it. The current recession would be a great time to implement state policies that eliminate the negative effects of an income tax on growth, and instead set up Missouri’s economy to thrive.

Joseph Haslag is executive vice president of the Show-Me Institute, a Missouri-based think tank, and a professor in economics at the University of Missouri–Columbia. Michael Owens and Caitlin Hartsell are interns at the Show-Me Institute.

 

Turning Your Money Against You, Part II

Posted on by Dave Roland

Almost precisely one year ago, I wrote about how some Missouri cities were dedicating your taxpayer dollars to preserve the government’s ability to take property from one private owner and give it to another private owner. As you may remember, the Missouri Municipal League engaged in litigation intended to prevent Missouri’s citizens from voting on the question — using a combination of funds from city governments and contributions from the same commercial developers who are eager to see eminent domain used to their advantage.

Folks, they’re at it again.

Almost as soon as Missouri Citizens for Property Rights got a ballot title from the Secretary of State, the Missouri Municipal League sued in an attempt to make the ballot title recite a parade of imaginary horrors that they claim would follow the end of eminent domain abuse. A couple of weeks ago, Judge Richard Callahan ruled that the Secretary of State’s ballot title could go forward with only one insubstantial adjustment.

The Missouri Municipal League has appealed that ruling, continuing to insist that the restoration of property rights should be described as nothing less than the death knell for America. And, again, they’re calling on your elected officials to pony up your money in order to prevent you from having a say in the matter.

As a “Red Alert” sent out by the Municipal League states:

[A]lthough cities cannot directly contribute to support or oppose any ballot measure, cities may fund public informational campaigns. The City of Springfield has already committed $5,000 to this effort. Other cities are following suit. City contributions should generally reflect the size and financial capacity of the participating city. The League will also continue to coordinate these efforts with private sector “partner organizations” such as the Missouri Chamber of Commerce.

Of course, other cities have a more direct means of trying to prevent your participation in the political process. The city government of Slater, Mo., passed a resolution last week that “urges the citizens of [that] community to refrain from signing a CPR constitutional initiative petition because doing so would be contrary to the best interest of most property owners within the State of Missouri.”

When I used the Sunshine Law to compel the city to produce all documents its officials considered before adopting this resolution, all they could provide was a PowerPoint presentation created by the Missouri Municipal League — meaning, apparently, that city officials did not even consider the actual text of the proposed amendment, much less seek out any alternative interpretations. Instead, they resorted to the Orwellian suggestion that a constitutional amendment designed to protect the property rights of all Missourians would somehow be bad for property owners.

This should not be tolerated. Fortunately, it seems that some people have recognized this and are taking action. The Post-Dispatch reported just the other day that some citizens in Pacific, Mo., have demanded that their city withdraw from the Missouri Municipal League.

If enough people put pressure on their city governments to do the same, the Municipal League may have no other choice but to start respecting property rights instead of continuing their defense of eminent domain abuse.

Columbia’s History With Eminent Domain Abuse

Posted on by Dave Roland

This weekend, the Columbia Business Journal ran a tremendous article (part one of what looks to be a series) discussing how that city used eminent domain to demolish a thriving part of its black community. I’ve discussed previously how, particularly in the mid–20th century, cities would frequently use eminent domain to accomplish “Negro removal.” I had not previously been aware of Columbia’s own experiment with this racist enterprise, and I’m thankful to the Business Journal for bringing it to light.

The Color of Technology

Posted on by Sarah Brodsky

When I first glanced at the title of Bill Schrier’s latest blog post, “Gray, Not Green, Technology,” I thought he must be referring to green jobs. Those are the jobs in alternative energy that aren’t productive enough to sustain themselves in the marketplace, but that are supposed to be the professions of the future (if the government subsidizes them, that is). Wasting resources on jobs that wouldn’t exist in a competitive environment is antithetical to the goal of saving and conserving resources, so I would readily classify such programs as “gray” rather than “green.”

However, reading further I see that Schrier isn’t referring to any specific policy; he’s wary of technological progress in general. Here’s why he thinks green technology is a myth:

Technology contains scarce minerals mined from the earth. It uses a lot of plastic (plastic comes from oil, right?). It takes a lot of water and toxic chemicals to make electronic components. An integrated circuit or chip factory uses as much water and power as a small, not-very-green, city.

Using technology is injurious, both to the environment and to people.

I’m starting to wonder why he took the job of Chief Technology Officer for the city of Seattle!

Schrier doesn’t consider all the materials and brainpower that would be wasted if we tried to do the same tasks without the benefit of technology. For example, imagine if there were no Internet and blog posts had to be printed in newspapers. You would have to deliver the newspapers several times a day in order to deliver information as quickly as a blog. Maybe you’re thinking, “They should just print them once a day and people could do without reading blog posts as soon as they’re written.” But then you have to take into account all the resources that would go to waste because of a lack of information — all the poor decisions that could have been prevented had people known more, sooner.

Even if you accept Schrier’s premise that technology is harmful, you must admit that technology is here to stay. And, because it is, the smartest thing to do is to create more new technologies, because they are cleaner, greener, and more efficient. It’s a good thing we didn’t stop developing computers when they were the size of rooms. Let’s welcome technological innovation and the environmental benefits it’s sure to bring.

Locavore Movement Takes Too Few Factors Into Account

Posted on by Abhi Sivasailam

James McWilliams, author of Just Food, discusses in a recent issue of Forbes magazine how the practice of buying local does not necessarily support the aim of reducing environmental impact.

McWiliams begins by citing a 2006 academic study in New Zealand that determined Londoners could reduce their environmental impact by purchasing lamb imported from New Zealand rather than lamb produced in England, because factors other than transportation often play a far larger role in environmental impact.

Mcwilliams continues by discussing how economies of scale in production can positively distribute environmental costs:

To choose a locally grown apple over an apple trucked in from across the country might seem easy. But this decision ignores economies of scale. To take an extreme example, a shipper sending a truck with 2,000 apples over 2,000 miles would consume the same amount of fuel per apple as a local farmer who takes a pickup 50 miles to sell 50 apples at his stall at the green market. The critical measure here is not food miles but apples per gallon.

We’ve argued on this website before that locavore policies constitute a new form of protectionism. This is true, but likely not a very compelling line of reasoning for locavores.

In this case, the economically efficient and environmentally efficient solutions do not have to be polarly aligned. Locavores should understand how their actions may fail to uphold the values they are rooted in, because of logistics and unintended consequences that haven’t been thoroughly considered. It’s even more important to view with a skeptical eye any legislation, government purchases, or changes in trade policy based on the reasoning that local consumption equates to environmentally friendly consumption.

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