Charter schools and state takeovers; a tale of two cities

Posted on by Steven Bernstetter

Yesterday the state Board of Education voted to take control of the St. Louis Public Schools district. In the process, the district also lost its provisional accreditation, failing to meet the necessary 6 of 14 requirements to maintain it. Meanwhile, in Kansas City, a nationally recognized charter school has been approved by the state, and is likely to open in July somewhere in the city’s downtown area. KC leaders hope this development will help attract residents with children to the area, diversifying the downtown population beyond young professional couples and singles, and ensuring its enduring viability.

The disparity between the two cities couldn’t be more stark in this light. Though education in KC certainly has its problems, it at least seems to be making progress, whereas the situation in St. Louis seems locked in a perpetual downward spiral. The difference is in the willingness and ability of KC to try new things, like expanded charter and magnet schools; whereas St. Louis prefers to stay the same misguided course in fear of change.

As I noted in a recent post, charter schools are not a cure-all for the many problems faced by our public school system. However, any measure that gives parents an option beyond their local failing public school is a step in the right direction. Mayor Slay seems to at least recognize this point, as he has asked for the authority to authorize and hold accountable new charter schools in the St. Louis area. As a lifelong St. Louisan, it pains me greatly to say this, but St. Louis and mayor Slay would do well to follow KC’s example and expand its charter school program, enabling city residents to choose an education for their children beyond their failing, unaccredited public school.

MetroLink Ridership High, Numerically Speaking Of Course

Posted on by David Stokes

Metro, via the Post-Dispatch, is reporting that MetroLink ridership is exceeding expectations since opening six months ago.  This is a good thing, obviously, but major fiscal troubles still face Metro in the near future:

Metro faces a $28 million operating deficit next summer, partly due to the $14 million to $15 million in operating costs associated with the Shrewsbury line. Fares cover only about a third of that cost.

Metro has asked that state for a significant increase in funding, and that is not going to happen.  They may get a gasoline tax exemption, which would save Metro a few hundred thousand dollars a year, but that is likely the most Metro can realisticly expect from Jefferson City.  In order to make up the shortfall, St. Louis County voters can expect to see a tax increase on the ballot late this year or early next year.  I predict the tax increase will fail – though I will probably vote for it, and I vote for tax increases about as often as Tom Niedenfuer comes through in the clutch.  If and when the tax increase fails, serious cuts to bus service can be expected, and that cycle will more or less continue until bus service is a shell of its former self.  My generally positive opinion toward Metro and MetroLink could change drastically though if the train is late Sunday and I am late to the tournament game at the Dome, though.  Go Salukis!, and yes, I am a complete fair-weather fan when it comes to Southern Illinois.

Virtual School

Posted on by Sarah Brodsky

Some parents are upset that grades 6 through 8 are left out of Missouri’s new online education program for the first year:

Garry Jones, of Kansas City, has a 12-year-old daughter who is home-schooled by her parents because of her asthma and allergies. She will be in seventh grade next year., falling into the gap in the virtual education program.

He said his family and many others with middle school students traveled to Jefferson City to advocate for the bill and now aren’t reaping its benefits.

Online classes are a good idea for children who live in remote areas or who have health problems. But Missouri’s plan is more complicated than it needs to be. Some states, such as Arizona and Florida, pay for students to enroll in privately run virtual schools like k12. Private programs like this have already developed courses in all subjects, at all grade levels. Rather than reinventing the wheel and creating online courses from scratch, Missouri could allow students to choose from existing online courses. That would be easier and less expensive. Most importantly, there would be less chance of the online courses replicating the mediocrity that plagues many of Missouri’s brick-and-mortar public schools.

Taking the CON Out of Certificate of Need Laws

Posted on by Steve Bernstetter

Most industries are open to all firms willing to make the necessary initial investments to enter the market. If I want to open a bar in my neighborhood, can clear the zoning restrictions, and have the necessary capital to rent a space, fill it with booze, and market it to my prospective customers, then that bar will open, with me as its proprietor. This open process creates an environment in which businesses compete for customers, encouraging the innovation that leads to higher quality and lower prices. Requiring a prospective bar owner to obtain a permission slip showing a need for another bar in their neighborhood would obviously be ridiculous. Unfortunately, this is exactly the requirement made by the state of any entrepreneur looking to offer health care services.

Presently, any firm wishing to create a new service or spend a certain amount of money on improving an existing service must apply for and receive a Certificate of Need from the state demonstrating a need for that particular service within the health care market. This procedure was introduced by the federal government in the 1970s to control the rising costs of healthcare by eliminating duplication of services. But costs continued to soar, and the federal legislation was repealed in the 1980s, though many states, Missouri among them, still maintain CON requirements. The process of fulfilling these requirements is both costly and time consuming, creating an unnatural barrier to entry that stifles innovation and inflates prices.

Proponents of maintaining current CON laws make two key arguments. First, they assert that CON laws keep prices down and assure both quality and availability of service. Evidence for these claims is spotty at best. Success with and without the program varies greatly from state to state, and it is extremely difficult to separate the differences in care created by CON laws from differences created by other variations in healthcare systems between states. Additional study is required before any solid conclusions can be drawn as to the affect of CON laws on price, quality, and availability. However, conventional economic wisdom holds that when multiple firms compete, quality rises and prices drop. There’s no reason to assume that the health care industry would be exempt from this effect.

Proponents of current CON laws also argue that eliminating those laws would result in a “cherry-picking” effect, in which new specialty hospitals and services would systematically drain the most profitable patients away from the general service hospitals most likely to serve the poorly insured and indigent. They argue that this would render those hospitals incapable of administering those less profitable services. These proponents essentially argue that removing CON laws would foster unfair competition that would further marginalize those already unable to afford decent general health care. The data surrounding this issue is largely inconclusive. However, reforms could be structured to provide incentives for firms serving those customers, thus curbing any “cherry-picking” effect, should one actually emerge.

The cost of care for those who cannot afford it ultimately gets passed on to those who can, driving up the overall cost of health care for everyone. The ideal system provides a variety of options, in both price and quality, for all. Such a system is best achieved in a market where firms are free to specialize to meet consumer demand. Such a market depends on consumers with a variety of options making informed decisions. As such, CON law reforms should focus on increasing the transparency of the market while simultaneously fostering competitive growth within it. A balanced approach to competition, in which artificial barriers to entry, such as CON laws, are eliminated and the healthcare needs of all are well represented, offers the best chance for guaranteeing all Missourians access to affordable, quality health care.

Steve Bernstetter is an intern at the Show-Me Institute and a graduate student in Public Policy Administration at the University of Missouri-St. Louis.

 

School Choice Successes Abroad

Posted on by Timothy B. Lee

There’s been an interesting debate going on about school choice. A persistent theme of the school choice critics is that a free market in education is a pie-in-the-sky fantasy that’s never been tried in the real world, and that the private schools couldn’t expand to meet the increased demand from a wide-spread choice program. Over at the Cato blog, Andrew Coulson sets the record straight:
 

There are two well-established nationwide school voucher programs, one in the Netherlands, the other in Chile. The first was created in 1917, the second in 1982. In both cases, the supply of private schools rose dramatically to meet demand. Roughly three quarters of Dutch students are now enrolled in private schools. In Chile, private sector enrollment doubled within the first decade and passed the 50 percent mark in December of 2005.

Sweden and Denmark enacted voucher programs more recently, and both are seeing the creation of new private schools as a result. Swedish private sector enrollment rose from 1 percent to 10 percent of the student population in a decade, and continues to rise. I discuss this issue at greater length in my chapter in the Cato book: What America Can Learn from School Choice in other Countries.

Turning to Mr. Rotherham’s assertion, I pointed out at our forum that there are vibrant, unregulated, rapidly growing education markets all over the world. In some areas, such as the U.S., Japan, and South Korea, these are niche markets ? mainly after-school tutoring. In other parts of the globe, particularly South Asia and Africa, they are mainstream elementary and secondary schools.

It’s frustrating that special interest groups in Missouri spend so much money opposing a school reform strategy that worked so well around the world.

The REAL ID Revolt

Posted on by Timothy B. Lee

I’m not too worried about the coming of the antichrist, but I think the drive to opt Missouri out of the REAL ID Act is a great idea. Here’s a good YouTube clip of my co-blogger Jim Harper facing off against a national ID advocate on MSNBC last month:

It’s important to keep in mind that if Missouri refuses to implement REAL ID, there’s very little chance of negative repercussions for Missourians. In theory, we won’t be able to use our drivers’ licenses to board airplanes, but it’s extremely unlikely that the Department of Homeland Security would actually blacklist an entire state from air travel. More likely, if Missouri refused to implement REAL ID, it would provide a powerful signal to Congress that the American people don’t want a national ID card.

CON Job

Posted on by Timothy B. Lee

Over at our main website, Steve Bernstetter has a great article about the need to ditch monopolistic “certificate of need” laws. If you want to open a laundromat or a Chinese restaurant, you don’t have to fill out paperwork demonstrating that your services are “needed.” The decision of which businesses are “needed” is made by consumers in the marketplace, not government bureaucrats. But in Missouri’s dysfunctional health care marketplace, you can’t enter the market until you’ve gotten approval from the state. Check out Steve’s article to learn more.

Eric Mink’s Talkin ’bout Bridges

Posted on by David Stokes

Eric Mink has an excellent article in the Post-Dispatch today about the proposed Mississippi River bridge.  It is carefully researched and thorough and I agree with much of it, though not all of it.  He quotes from a study funded by East-West Gateway that concluded there will not be enough drivers willing to pay the toll to make a toll bridge a viable option.  On this blog I have previously mused as to whether we really needed the billion-dollar bridge with so many free bridges available and thought that the smaller, MLK-coupler idea could work well, as a toll or free bridge.  In the interest of brevity, I am not going to focus on the many parts I agree with, ’cause that’s boring, but on his comments about Public-Private Partnerships. 

Mink writes about P 3’s that have built other major roads around the US:

In March 2004, the Government Accountability Office issued a report examining six major P3 projects in the United States. (www.gao.gov/new.items/d04419.pdf) Overly optimistic traffic and revenue projections figured in three of the six. In its planning stages, the Dulles Greenway outside Washington, D.C., projected first-year traffic at 33,000 vehicles per day; it got 10,500. Today, after 12 years in operation, it has yet to turn a profit, and, according to a story last week in the Washington Post, "its debt has nearly tripled."

Another P3 project, the Southern Connector toll road in Greenville County, South Carolina, projected first-year traffic at 28,000 vehicles per day; it got about 14,000. Two years after it opened in 2001, Standard & Poor’s downgraded its rating on Connector bonds to "junk" status.

And using a slightly different measuring unit, the Pocahontas Parkway in Virginia, according to the GAO report, projected 840,000 transactions per month (one vehicle passing through one toll point) for 2003 but got only about 400,000; its bond ratings were downgraded. Both the Pocahontas and Dulles roads have since been bought out by Australian companies.

What Eric’s article is missing is why this is such a bad thing that some of these projects, and we should carefully note that 3 of the 6 measured projects are apparently doing very well, are not doing as well as projected?  To my, this is nothing but capitallism at work.  The roads are not going to disappear because the bonds have been lowered in status.  Who cares if the highway bond is junk if the road is in good condition, and I see nothing in this article or elsewhere that says the roads in question are in disrepair.  In fact, a new compnay just purchased two of the roads above, so someone thinks they are a good investment.  A P 3 is formed, it invests in roads, some of them dont’ generate as much traffic as expected, the P 3 needs to decide what to do now: lower the toll, etc.  This happens in capitalism and the communities still have the roads that private money financed.  So that is my main question about an overall great article from Mr. Mink.

IT + Healthcare = Money Saved

Posted on by Steven Bernstetter

Governor Blunt has been on tour recently, promoting a new system for cataloging and sharing patient information between doctors and hospitals. According to Senate Majority Leader Charlie Shields, R-St. Joseph:

"The amazing thing, if you listen to the hearing and the testimony," is that "there’s widespread agreement that we need to do this. This is about changing the health-care system to focus on patient needs, to focus on wellness, prevention and be patient-centric. That’s not a Republican issue. That’s not a Democratic issue. That’s a Missouri issue."

The idea is pretty simple: keep track electronically of a patient’s past medical history, current ongoing treatments, potential future problems, etc., and make those records accessible to any doctor in the state treating that patient. This will ensure a continuity and consistency in treatment, making it easier for doctors to anticipate and react to problems quicker, catching and preventing illness earlier while its easier to manage. 

The potential for savings is great, as most diseases, especially cancer, are most easily treated at their earliest stages, eliminating the need for more expensive and risky treatments later in the course of the illness. It will also enable doctors to more effectively collaborate in treating the same patient, avoiding problems with overlapping or conflicting treatments. As described by Sen. Shields:

"Every day you see the elderly person come in with a bag full of prescription drugs in a Ziplock. There may be 12 drugs in there, and three of them interact with each other, and then they wonder why they’re sick," he said.

Electronic records will be an excellent way of overcoming these difficulties, saving patients and taxpayers money by eliminating the need for treatment of side effects from prescription drug-related complications.

With the cost of healthcare in America spiraling out of control, and more and more Americans finding themselves without coverage, something must be done to bring costs down and make care more affordable for everyone. Keeping healthcare systems at the technological forefront by combining Information technologies with medical technologies will help achieve this.

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