Page 939 – Show-Me Institute

Health Insurance Reform Paves Way for Consumer-Based Care

Posted on June 19, 2007May 5, 2026 by Jason Hannasch

Missourians have reason to applaud the legislative passage of Rep. Doug Ervin’s health insurance reform. With the signing into law of HB 818, Missouri now leads the nation in free-market health insurance reform. This reform will provide flexibility for consumer-driven health care that will allow the 58 percent of small businesses and organizations that currently don’t offer group coverage to make health plans available to their employees. And as consumers gain greater control over their own health finances, they’ll be able to save money and enjoy individualized health care.

Until a few days ago, Missouri’s health insurance laws were relics of the 1940s, biased toward big businesses with one-size-fits-all health plans. Most small businesses find that these group plans are too expensive, and have strict participation and compensation requirements. As vice president of the Show-Me Institute, I ran into this problem last year when I tried to set up a health savings account (HSA) qualified health plan for our organization. At the Show-Me Institute, we’re dedicated to researching and exploring free-market solutions to Missouri’s policy challenges. I wanted to use that same free-market approach in helping my employees gain access to health insurance by allowing them to select individualized health plans.

Although we could make pretax contributions to the health savings accounts, I found that the Show-Me Institute, as a small employer, was at a disadvantage when it came to the premiums. We couldn’t contribute directly to policy premiums of employees’ HSA health plans, and pretax contributions couldn’t be made either—not for the Institute or for employees. Considering all the red tape we were up against, it’s no wonder that only 42 percent of Missouri’s small businesses offer health coverage.

Because we couldn’t meet those requirements, our only option was to give employees bonuses for them to use toward paying premiums. HB 818 was the bipartisan solution to this health policy dilemma. This law puts employees in charge, freeing them to choose their own insurance policies. Employers can now contribute directly to employees’ plans without the burden of mandated contribution amounts. HSAs and individual health plans are portable, so employees are protected even in case of employment changes. HB 818 also gets rid of burdensome employee participation requirements, and even allows part-time employees to participate. For Missouri, these factors will contribute to reducing the rolls of the uninsured.

Despite the difficulties small organizations such as ours have encountered before now in providing HSAs, consumer-driven health care is a hit with Show-Me Institute employees. Rebecca Bruchhauser, our director of development, says her HSA has made a big difference in her health care decisions.

“Participating in a consumer-driven plan has allowed me to be more involved in my health care,” she says. “I’ve chosen new health care providers in order to benefit from greater affordability and quality. I strongly believe that HSAs are part of the solution to the crisis in health care.”

Tim Lee, until recently the Show-Me Institute’s editor, and now an adjunct scholar at the Cato Institute, points out that HSAs provide incentives for people to manage their health wisely.

“HSAs are important because they put consumers in charge of their health care,” he says. “People spend their own money more wisely than anyone else’s, so HSAs also cut costs. The legislature should be applauded for taking this significant step.”

The new HSA legislation makes the benefits of patient choice in health care available to state employees, small businesses, and many who were previously uninsured. As more Missourians reap the benefits of HSAs, our state’s health care system will become more responsive to consumers’ needs.

Jason Hannasch is vice president of the Show-Me Institute.

Cape Officials Consider Very Bad Idea …

Posted on June 18, 2007May 5, 2026 by David Stokes

As reported in the Southeast Missourian, city officals in Cape Girardeau are considering instituting some type of earnings or payroll tax. This is a very poor idea, unless their goal is to make Jackson more successful. If you want evidence of why this is a poor idea, I present a study done by the Show-Me Institute’s very own eminent economist and all-around great guy, Dr. Joe Haslag, on this exact topic.

From the Missourian article:

Councilwoman Loretta Schneider said the council could ask the legislature to change the law if it turns out that a payroll tax proves to be a viable option. "There certainly isn’t any harm in us pursuing it," she said.

Wrong. Right now, business owners considering moving to Cape or expanding in the area could be reading this article and giving surrounding communities further thought. That is the main problem with taxing something as fluid as income. It can move more easily than property.

Cape Girardeau has a low property tax. The city council has been reluctant to consider raising that tax.

I am certainly not going to say Cape should raise their property tax. Their budget issues, like just about every municipality’s, are almost certainly about growth in payroll and benefits for city employees. Their first choice should be to cut employees or programs. I never cease to be amazed at the number of things government people think are essential but really aren’t. Rearyard trash pick-up in Ladue and Clayton, to pick but one example. But if the people of Cape Girardeau, who know much more about their own city than I do, insist on raising taxes, an increase in the property tax would be a much better way to go. There are good state programs available to help the senior citizens that might be disproportionately hurt.

The Mayor of Cape Girardeau uses a common, but erroneous, argument for the payroll tax targeted toward commuters.

"They come in, they use our roads, our infrastructure. They use things that Cape citizens paid for, then they leave," he said.

Where to begin? First of all, commuters generally pay sales taxes wherever they work for lunch, happy hours, gasoline, shopping, etc. The businesses they work for pay commercial property taxes and business license fees in order to have the right to have someone come into Cape to work. The idea that commuters get a free ride on local taxpayers is absurd. You hear it all the time from city residents justifying it for St. Louis. They never even consider the very large numbers of city residents who work in St. Louis County and pay no earnings tax there, even though they still have to pay it to the city. Are city residents who work in Clayton getting a free ride from Clayton? I don’t think Clayton feels that way — and that is one of the many reasons why Clayton has been so successful.

Maybe They Should Attend the University of Phoenix

Posted on June 18, 2007May 5, 2026 by Sarah Brodsky

John Combest is, as usual, doing half my job for me. He links to an article in the Southeast Missourian about a proposed community college:

At this point, the focus is on identifying needed job skills and the post-secondary education required to develop such skills, superintendents said.

"Being one of the larger school districts in the area, we are very much interested in what is best for our students and also for the region," Jackson schools superintendent Dr. Ron Anderson said. "I will be interested to see what data will be generated."

This just isn’t so complicated as they’re making it sound. The skills people need in southeast Missouri are the same skills people need anywhere else. Private schools like the University of Phoenix have no trouble figuring out what people want to learn, even without the help of state studies.

On the Right Track?

Posted on June 18, 2007May 5, 2026 by Sarah Brodsky

An editorial in the Post-Dispatch praises Rick Sullivan, the executive officer of the new board in charge of the St. Louis public schools:

Mr. Sullivan also sent a positive signal by declining the salary to which he is entitled for his service. That underscores that his principal concern is helping the city’s schoolchildren — and that he is well aware of the financial challenges the district faces.

This move was politically smart, but by itself it doesn’t mean very much. There’s a mistaken idea that schools can’t help kids if they have any motive of profit or personal benefit. But for-profit and private schools do a pretty good job. It would be better if the executive officer accepted a salary and ran the schools like a for-profit business than if he made nice gestures but didn’t change the status quo. We’ll see whether Sullivan can be as effective as he is tactful.

The Proposed Official-Language Amendment

Posted on June 18, 2007May 5, 2026 by Sarah Brodsky

The Washington Missourian (by way of Combest) reports that Tom Schlafly has found a possible problem with the proposal to make English the official language of Missouri:

Schlafly, a history buff, noted that legislators took this action in the presence of of the Great Seal of Missouri, on which the state’s offical motto is written — in Latin — Salus populi suprema lex esto (The welfare of the people shall be the highest law.)

How would a proposed amendment effect (sic) Missouri’s official motto?

Despite the fact that our state motto is in Latin, we don’t see legislators conducting debates or cities holding meetings in Latin. They use English instead.

I’m Thinking of a State (Part 2)

Posted on June 18, 2007May 5, 2026 by Sarah Brodsky

The Springfield News-Leader jumps on the bandwagon and publishes a fanciful vision of a future Missouri:

I recently asked a group of fourth grade students what they would vote for if children could vote. Their answers were so simple and yet so profound. They said they want to be the smartest they can be when they leave school. They want time to play, time to read and food and medicine for those who are hungry or sick. Children want things to be fair. They want to be safe. They want everyone to get what they need. And they want us to protect the Earth.

The op-ed talks about the "common good" and argues for more spending on public schools and government programs. But it inadvertently points out the problem with this approach:

Would we underfund education if we knew it was our child who would not receive the educational intervention she needed?

Would we fail to fund health care for children if we knew it was our child who could not see a doctor if he were sick?

The answer, of course, is "no." And that’s why it’s important to put parents in charge of their children’s education and health care. When parents get to make choices for their children, they have their best interests at heart.

A For-Profit School in the Post-Dispatch

Posted on June 18, 2007May 5, 2026 by Sarah Brodsky

An interesting article in the Post-Dispatch illustrates some of the differences between private and public schools:

One day, Henderson saw "one of those stupid pop-ups" appear on her computer screen from the University of Phoenix. She filled out a form on a whim and was soon contacted by a school representative, Dawn Owens, who is now the school’s St. Louis director.

Owens pursued Henderson for five months, but Henderson said she was too "petrified."

She finally relented and enrolled in 2003.

The article describes how Annazetta Henderson, who is in her 40s, dropped out of a public high school and struggled with many personal challenges before earning a bachelor’s degree from the University of Phoenix. The school then allowed her to select someone else to receive a scholarship, and she chose her sister.

The University of Phoenix has a very different view of students than Henderson’s public school did. Can you imagine a public school pursuing a drop-out for months and encouraging her to continue her education? And contrary to the perception that for-profit schools are interested in earning money instead of caring for students, the University of Phoenix actually involves former students in the process of awarding scholarships.

The One (Hundred) Million Dollar Man.

Posted on June 18, 2007May 5, 2026 by Maurice Harris

Over the weekend, the St. Louis Post-Dispatch printed an article about Paul McKee Jr., who is known for developing the Winghaven subdivision in St. Charles. Yet this article focused on the $100 million tax credit he lobbied for, through Lt. Governor Peter Kinder, and was put into the economic development bill in the last house session, which would give out a tax credit for people who redeveloped blighted urban areas in Missouri. McKee bought up hundreds of parcels of vacant properties in north St. Louis before this bill was created. To sum up, he would be the only person eligible for this tax credit at the moment:

In Jefferson City, criticism has focused on whether the tax credit bill
was designed solely for McKee. Some legislators were upset that the
far-reaching measure was tucked into the governor’s economic
development bill.

Also, at this moment, McKee seems to be a bad landlord for the more than 400 properties he owns, according to April Ford-Griffith, the alderman for the area that McKee has bought the most property in:

The alderman said that properties linked to McKee are left unkempt,
with uncut grass and open entrances that invite crime. She has heard
many complaints about the properties, though she said she does not know
what McKee plans.

Economic development in this sense is a bad thing. It’s not the power of the market leading development here, but a bloated tax credit that, in itself, is a bad idea — and it’s developed for one person rather than for a whole group. Redevelopment should involved investors putting in their own money, not taking taxpayers’ dollars to pay for what they want.

Merit Pay in the New York Times

Posted on June 18, 2007May 5, 2026 by Sarah Brodsky

Here’s an article in the New York Times about the growing popularity of merit pay:

Scores of similar but mostly smaller teacher-pay experiments are under way nationwide, and union locals are cooperating with some of them, said Allan Odden, a professor at the University of Wisconsin who studies teacher compensation. A consensus is building across the political spectrum that rewarding teachers with bonuses or raises for improving student achievement, working in lower income schools or teaching subjects that are hard to staff can energize veteran teachers and attract bright rookies to the profession.

This is why the Missouri State Teachers Association has been thinking about merit pay. It doesn’t make sense to give spectacular teachers the same pay as uninspiring ones. Not surprisingly, though, the concept hasn’t caught on with the NEA:

The National Education Association[…] has adopted a resolution that labels merit pay, or any other pay system based on an evaluation of teachers’ performance, as “inappropriate.”

The NEA complains that teachers’ wages lag behind those in other professions. When you consider the benefits and vacation time teachers receive, that gap narrows or disappears. But in a way, the NEA is right. The most talented teachers earn far less than they would if they applied their skills to other jobs. Merit pay would reward expectional teachers so that they won’t be pushed out of teaching.

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