The FDA decision to loosen regulations has allowed a new market for OTC hearing aids to surface. As tends to happen when the free market is allowed to function, brands now have to compete for the customer if they want to succeed, which leads to much more affordable and better-quality products.

According to the National Institutes of Health (NIH), approximately one in three people between the ages of 65 and 74 and nearly half of adults over 75 suffer from some sort of hearing loss. It’s likely many people don’t want to admit they have trouble hearing and go through the hassle of visiting a specialist, so they don’t take any action to improve their hearing. Hopefully, this increased accessibility of hearing-loss solutions will prompt more Americans to do so. While this is a great step forward in enabling access to hearing aids for the millions of Americans who have mild to moderate hearing loss, those with severe hearing loss still have many barriers, including high costs, to overcome.

To become a hearing-aid specialist in Missouri, a degree in hearing instrument sciences is not enough. A Missouri law requires those who would like to become hearing-aid specialists to obtain and consistently renew a special license that allows them to diagnose, prescribe, and fit people with hearing aids. These sorts of occupational licenses in theory mitigate risks and improve overall quality of services, but they tend to hurt more than they help. A Princeton study demonstrated that even in health-related occupations, “such as dental hygienists, nurse practitioners and opticians . . . licensing restrictions raise the cost of services without improving quality.” The hearing-aid examiner license required by Missouri raises the educational costs and creates barriers for those seeking to become specialists in the field, and in turn likely results in higher healthcare costs for Missourians who need to visit a specialist to obtain their hearing aids.

Kudos to the federal government (something you don’t often hear Show-Me Institute analysts say) for removing an unnecessary healthcare regulation and making hearing aids more affordable and accessible for older Americans. If Missouri wants to help its residents receive more affordable and accessible care, it may want to consider doing the same.

The post FDA Hears the Need for Deregulation appeared first on Show-Me Institute.

That’s why news broken by Samantha Liss at the St. Louis Post-Dispatch should be very welcome to patients in Missouri and elsewhere, as it appears the market for at least some pharmacy services is about to grow:

Throughout the past year, and without much fanfare, Amazon.com Inc. has gained approval to become a wholesale distributor from a number of state pharmaceutical boards, according to a review of public records….

According to a review of records by the St. Louis Post-Dispatch, Amazon has received approval for wholesale pharmacy licenses in at least 12 states, including Nevada, Arizona, North Dakota, Louisiana, Alabama, New Jersey, Michigan, Connecticut, Idaho, New Hampshire, Oregon and Tennessee.

An application is currently pending in the state of Maine.

An Amazon spokesperson told the Post-Dispatch via email that the company does not comment on “rumors and speculation.”

It’s a little complicated, but one of the big questions surrounding the Post-Dispatch report is the ultimate aim of the Amazon filings—that is, whether Amazon wants to open up a pharmacy benefits management business only, or whether a soup to nuts model is also in the tech giant’s future. Does Amazon want to be Express Scripts? Does it want to be Walgreens? Or does it want to be both? I would welcome all of the above, actually, and I suspect millions of Amazon customers would feel likewise.

And despite the failure of our Federal representatives to actually do what they said and repeal Obamacare, there is still reason to be optimistic about the trajectory of care in this country. Along with the reform initiatives above, tech innovations like 3D printing of prosthetics, and much more, the potential entry of Amazon into the pharmaceutical space reiterates that the future of health care as some government product remains anything but assured. After all, people are markets, and markets are powerful things.

The post Is Amazon Getting into the Pharmacy Business? Let’s Hope So appeared first on Show-Me Institute.

In a free market, as workers compete for jobs, businesses also compete for workers. If a worker won’t bring enough value to an employer to justify his/her salary, he or she will not be hired. On the other side, if a business doesn’t provide an attractive wage to a worker, that worker will find work elsewhere. Thus, both sides have to provide enough value to the other.

You might think that big business might be immune from these forces, but you’d be wrong. Even the largest companies have to offer decent wages to their employees. Take Walmart for example. It has the highest revenue of any company in the world and is one of the largest private employers in America. Even it has to compete for employees. That competition results in jobs paying higher than the (current) minimum wage.

I took the above picture at a Walmart in Saint Louis County last Wednesday. The starting wage is $9.00 an hour, which is higher than the minimum wage. Is Walmart making this offer out of the goodness of its heart? That’s doubtful. They’re probably offering a high starting wage because they recognize that if they don’t workers will head over to Target, Costco, or Walgreens instead.

That’s how the free market is supposed to work. Increasing the minimum wage is popular with the public, but it is not good policy. An individual and a business should negotiate compensation that is mutually agreeable to both parties. Mandating a higher minimum wage will end up mandating unemployment.

The post Employers Need Help-and They’ll Pay Too appeared first on Show-Me Institute.

(As an aside, it was Mr. Krugman, writing in The New York Times in 2011 who stated that “the V.H.A. [Veterans’ Hospital Administration] is a huge success story, which offers important lessons for future health reform.”)

Mr. Krugman’s predictable protestations notwithstanding, there actually is a significant body of empirical evidence finding that, on average, states and countries with lower tax rates tend to grow faster. (See articles in this SMI study.) While economists, like any other group of scientists, debate their findings, there is real-world evidence to believe that reducing taxes can improve the economic lives of a state’s citizens.

Every principles of economics student, even those using Mr. Krugman’s textbook, learns that if you wish to reduce an activity, tax it. Since income taxes are derived from working, basic economic theory predicts that higher income taxes will reduce people’s incentive to work more hours. At the extreme, tax me 100 percent of my income and I’ll just stay home, thank you. So, lowering tax rates in income should reduce this disincentive to work.

Mr. Krugman does not seem to think that lowering taxes matters. The story that Walgreens is contemplating moving its headquarters to Switzerland to lower its tax burden belies that notion. Even if you find this proposed move disturbing, you cannot ignore the simple fact that Walgreen’s likely would not consider relocating if taxes were equal in the two countries. Tax rates really do matter in making economic decisions.

There is no denying the fact that since the Kansas legislature enacted the tax cut in 2012 (it became effective in 2013), the state’s economy has yet to achieve the economic take-off that some promised. Job growth is slower than the national average and, due partly to income shifting in response to the fiscal cliff, the drop in tax revenues in 2014 compared to 2013 has been larger than predicted.

Changes in the tax code cannot be expected to reverse years of weak economic performance overnight. Kansas, like many other states, is still recovering from the effects of the Great Recession. Like most medicines, changes in tax codes should not be expected to deliver immediate cures.

Before Mr. Krugman is anointed as the Cassandra of tax cuts, let’s give the experiment time to take hold. Time will tell, but basic intuition and existing evidence predicts that Kansas’ economic future is brighter today than it would have been without the tax cuts.

The post Give Tax Cuts A Chance appeared first on Show-Me Institute.

The St. Charles County Council voted on July 25 to require a doctor’s prescription when purchasing cold and allergy medications that contain pseudophedrine. Unfortunately, the ordinance imprudently inserts doctors into meth makers’ raw material supply chains. It is difficult to imagine, much less believe, that this ordinance will effectively diminish meth production in Missouri. With a sufficient profit motive, meth makers will seek out alternative arrangements for the procurement of pseudophedrine, perhaps by recruiting doctors as critical prescription suppliers.

In essence, the ordinance will turn otherwise law-abiding doctors into accessories to crime, unwittingly or not. Some will no doubt embrace the temptation to write fraudulent prescriptions, thereby corrupting the practice of medicine.

But this is only the tip of the iceberg. With the resulting increase in the demand for prescriptions, the ordinance further taxes an already over-burdened medical reimbursement insurance system. In an era when concerns for healthcare costs predominate, why should St. Charles County compound the problem by dumping a multitude of cold and allergy sufferers onto the bloated calendars of busy doctors?

And what about consumers? Certainly, the monetary and inconvenience costs of traveling to — and paying for — doctor’s visits and the time exhausted circumventing the ordinance by purchasing medications in non-regulated jurisdictions are substantial. The St. Charles County Council has voted, in effect, to shift meth-related law enforcement costs onto the backs of innocent cold and allergy sufferers.

This cost shift acts much like a tax on the purchase and consumption of cold and allergy medications. As with a tax, the “effective” price for these medications rises for consumers. Similar to a tax, the result is a deadweight loss as consumers ultimately consume less than the optimal amount of medications.

Seriously, is the real purpose of the “prescription mandate” to engineer a local law enforcement database to better monitor the activities of private citizens? If so, shouldn’t someone conduct a detailed cost-benefit analysis comparing the expected benefits with the known costs? After all, pharmacists are already required to request and to enter personal information into a database tracking consumers of pseudophedrine-based medications.

And what can be done to alleviate the competitive disadvantages and inherent inequities dogging those pharmacies who happen to be located wholly within a prescription mandate jurisdiction? They will certainly lose business to competitors fortunate enough to be situated in non-mandate counties and municipalities. Although a statewide mandate would address this latter concern, it nevertheless would still give rise to the corruption of medicine and tax-imposed deadweight losses, as discussed above.

The war against meth is not a free task. The costs associated must ultimately be borne by taxpayers. The issue is whether the selected means for conducting that war are wise and efficient, implying that all costs and benefits have been carefully weighed and compared.

The post Paging Doctor Meth appeared first on Show-Me Institute.

Meth incidents, I should note, are a count of the number of times that meth labs, dumpsites, or even meth production equipment is seized. The statistic is not, as I once naïvely thought, a count of meth lab explosions, or even labs themselves. The AP’s analysis does not delve into which types of “incidents” are on the rise, just that the total is up. Additionally, an uptick in meth lab incidents could just be an effect of law enforcement cracking down on meth production more effectively. So, already, we should approach the AP analysis with skepticism.

A few years ago, a number of states, including Missouri, limited the purchase of pseudoephedrine, restricted where it could be sold, and began to track those who purchased the drug. The AP says that those restrictions have created a black market trade in pseudoephedrine, the cold medicine.

From the AP:

An Associated Press review of federal data shows that the lure of such easy money has drawn thousands of new people into the methamphetamine underworld over the last few years.

“It’s almost like a sub-criminal culture,” said Gary Boggs, an agent at the Drug Enforcement Administration. “You’ll see them with a GPS unit set up in a van with a list of every single pharmacy or retail outlet. They’ll spend the entire week going store to store and buy to the limit.”

Well, don’t count me among the shocked. After all, it’s pretty common knowledge that regulation and restriction can create all sorts of black markets of perfectly banal commodities, such as “food, cookware, haircuts, clothing, machinery repair, house building—almost everything people use in their everyday lives.” In this case, government restriction has made something that had previously been easy to acquire that much more difficult, thus increasing the price of pseudoephedrine on the black market to far above the, say, Walgreens price.

Recent government regulation of pseudoephedrine appears to have led to a brief decline in meth production after the regulations were put in place, followed by a bounce back as meth producers found other ways to acquire drug ingredients. In the past year there were, as the AP breathlessly tells it, “10,064 meth incidents, a 62 percent rise over the previous two years.”

Yikes, I guess. This means that there are 0.00003278 meth incidents for every person in the U.S. If that’s too many decimal places for you, perhaps a better way of looking at it would be to say that there is one meth lab incident for every 30,505 people. Per year. And that can be as minor as the seizure of “chemicals and glassware.” I personally am more concerned with car fatalities (which are, by definition, fatal and occur three times more frequently than meth lab incidents).

Say you, or perhaps Gov. Jay Nixon, are still concerned by this uptick in meth statistics. Let’s set aside that we don’t know what type of “incident” is on the rise; whether this is attributable to an increase in use or to better law enforcement; whether the previous low points in the statistics were attributable to declining drug production, or just a shift from one type of drug production to another; and the extraordinarily probable explanation that drug producers will figure out how to adapt (as they have already done) to additional government regulation of pseudoephedrine.

Let’s say that the governor, or even AP reporters, suggest instead that pseudoephedrine be put behind a prescription wall. Only those who have a prescription from a doctor would be allowed to purchase cold medicine. Would that solve the problem? And would that step be worth it?

Okay, yes, those were rhetorical questions. For the first question: Of course not. If meth producers are paying individuals to buy up pseudoephedrine until they hit government-imposed purchased limits, it certainly seems likely that those producers would pay individuals to take the additional step of getting prescriptions to buy up pseudoephedrine. I suppose such a policy would help at least one group of people: Those who could get a perscription and then sell pseudoephedrine to meth producers. I bet that they could get a better price.

The second question is one that I’ve already answered on this blog, and has the same answer as the first: Of course not! There are so few “meth incidents” that to reduce them even by half hardly seems worth the cost to everyone else of either having to go to the doctor’s office when they have a cold, or forgoing treatment.

Again, I’d like to remind legislators, governors, and reporters that health care costs are a huge issue that seems insurmountable at the moment. Regulations like these are bound to increase those costs: Either individuals will have to pay for a doctor’s time in order to obtain a prescription for cold relief, or, if that person has a low co-pay, this regulation will raise health insurance providers’ costs, which will most certainly result in health insurance premium costs rising.

I hope that politicians and reporters will find some other, less intrusive issue to sensationalize for personal gain.

(H/T for post title suggestion to John Payne.)

The post I’m Just Disappointed That the AP Didn’t Play Up the “Dickensian Aspect” a Bit More appeared first on Show-Me Institute.

Gosh, it was only a year ago when U.S. senators and representatives were debating provisions of a large-scale, mostly unread health care bill. One of the biggest issues at the time prompting the discussion of health care policy was the concern that U.S. health care costs are rapidly increasing, for both the government and the private sector.

Nixon’s proposal flies in the face of previous and current attempts to decrease health care costs. Requiring residents to see a doctor to obtain a prescription for, say, Sudafed vastly increases the cost for both individuals and health insurers.

For example, if I am sick tomorrow and need nasal decongestant, I will head to the nearest Walgreens and pick up the generic version of Sudafed for about $5. The entire process will take me less than 15 minutes. However, if I am sick in the future and the prescription requirement has been implemented, the additional cost to obtain medicine will include a visit to my doctor. The monetary cost to me could still be relatively low, if I have a low co-pay, but if I am uninsured, have a high co-pay, or a high-deductible health insurance policy, I may have to pay a great deal more. Meanwhile, my health insurance provider will pay whatever cost that I don’t, resulting in — all else being equal — higher health insurance premiums. All for the privilege of seeing a doctor. Because the state says so.

Now, I know that some, including the governor and Attorney General Chris Koster, will argue that these increased costs are worth it if meth-related accidents decrease. But this ignores that a number of other state laws have already been implemented specifically to eliminate meth production (and access to decongestant). The governor, in his press release, enumerates other restrictions already in place:

By law, pseudoephedrine must now be sold behind a pharmacy counter and buyers are limited to purchasing no more than 3.6 grams, or 120 standard tablets in a 24 hour period, and 9 grams, or 300 standard tablets, in a 30-day period. On Sept. 28, a new state rule took effect, giving authority to the Missouri Department of Health and Senior Services (DHSS) to work with law enforcement and pharmacies on a new database that automatically blocks over the limit sales of pseudoephedrine and allows law enforcement agencies to track pseudoephedrine purchases in real time.

So, Missouri government already limits the purchase of pseudoephedrine, restricts where it can be sold, and tracks those who purchase the drug. What else can the state do, short of making nasal decongestant illegal?

In fact, a good example of these policies at work can be found in Oregon, one of two states that have enacted prescription requirements for pseudoephedrine. According to Oregon’s Narcotics Enforcement Association, in late 2004, the state began requiring photo identification from purchasers of medicine containing pseudoephedrine, and the state required that those medicines be sold behind the counter. In 2005, the state tightened these restrictions, requiring the medicines to be sold behind pharmacy counters, and began tracking purchasers of the medicines. Those restrictions led to a dramatic decrease in the annual number of “meth lab incidents.”

In 2004, Oregon reported 448 meth lab incidents. In 2006, the count was down to 63.

But that wasn’t low enough for Oregon. In July 2006, a new rule was set: Medicines containing pseudoephedrine could only be purchased with a prescription. And that odious requirement, which almost certainly has pushed up health care costs in Oregon, appears to have resulted in the elimination of roughly 40 meth incidents per year (Oregon now has about 20 each year).

There are a few things I don’t know, but suspect may be at work. First, how do we know that Oregon’s policies have stamped out dangerous drug-related incidents? It may be that Oregon’s pseudoephedrine restrictions have merely encouraged meth producers to produce different illegal drugs instead. Furthermore, these numbers are for recent years. In the future, meth producers may figure out a way of acquiring pseudoephedrine that will bypass the restrictions.

All the while, more Oregonians have to go to the doctor in order to obtain cold medicine. Is the cost of their time and the resulting increase in health care costs worth it? I don’t think so.

Rapidly increasing health care costs are not a new problem. From our most recent three U.S. presidents:

Former President Bill Clinton:

Small businesses will continue to face skyrocketing premiums and a full third of small businesses now covering their employees say they will be forced to drop their insurance. Large corporations will bear bigger disadvantages in global competition, and health care costs will devour more and more and more of our budget.

Former President George W. Bush:

We share a common goal: making health care more affordable and accessible for all Americans. The best way to achieve that goal is by expanding consumer choice, not government control.

President Barack Obama:

Then there’s the problem of rising cost. We spend one and a half times more per person on health care than any other country, but we aren’t any healthier for it. This is one of the reasons that insurance premiums have gone up three times faster than wages. It’s why so many employers — especially small businesses — are forcing their employees to pay more for insurance, or are dropping their coverage entirely.

Regulations and restrictions like the prescription requirement proposed are certainly part of the health care cost problem. I hope Missouri’s governor will realize that, and withdraw his proposal.

The post Well, That’s One Way to Increase Health Care Costs appeared first on Show-Me Institute.

On the topic of food, my next stop along my journey was to grab a bite to eat at Bread Co. While scanning the menu on the wall, I noticed something I hadn’t ever seen before in Missouri — the calorie counts of all the food posted right next to the offerings. Amazing again! Free information at my disposal to make a decision about my health.

Why get excited over something so mundane? For one, there was a free exchange of useful information. The price system — much like the nutritional information system — is an amazing way of communicating information quickly and accurately. Second, in both instances the information was freely provided. Missouri restaurants, unlike some in New York City, are not required by law to include caloric information on their menus. But businesses here are still free to post that information as upfront as they’d like.

Best of all, businesses that choose to be more open with their information freely elect to bear the costs of collecting that information. The burden is usually on the customer to sort out the nutritional value of her food, but in some cases it may be in a restaurant’s business interest to display information more explicitly, or even to be more charitable. The result is a free and fair exchange of information or money that leaves both parties better off.

Ultimately, the most fascinating part of my journey was the fact that the businesses and I were free to choose. The businesses chose to offer certain services and bear those costs in the hope of attracting or retaining more customers. For my part, I could have purchased a sports physical if I wanted, but I didn’t need to. I could have purchased the healthiest sandwich on the menu, or the least healthy. I could have ignored the caloric content completely, and ordered dessert for dinner. No one got to tell me what to order, and I could have left the restaurant altogether if I had wanted. Information freely available at my disposal helped shape my decisions.

As usual, the more freedom and information we have as a society, the better choices we can make for ourselves and those we care about. And that’s always something to get excited about.

The post A Free-Market Journey appeared first on Show-Me Institute.

The first job for which I ever received a paycheck was developing photos at Walgreens, right around the time I turned 18. I made $6 per hour, and developed lots of photos and stocked lots of sodas and milk during my time there. I never felt entitled to any more money than the people I worked for back then felt inclined to pay me, and I now understand the economic rationale for my relatively low pay back then: I wasn’t very productive.

Compared to Jonathon, or even to the photo clerks who had been there longer than me, it was obvious that I couldn’t do what they did in the same period of time. Jonathon mowed several lawns every week because he made it a point to develop relationships with customers that would last all summer, and touched base with them to make sure they were getting the service they wanted. More senior Walgreens clerks were better at juggling many tasks and completing all the little tasks that needed doing, often because they had both experience and initiative.

By and large, people earn in proportion to what they produce. The Post-Dispatch ran a very well-written op-ed today by 17-year-old Miles Larson, which seems to lack this insight (link via John Combest). Larson argues from an assumption that, given the opportunity, businesses will pay their employees as little as possible. This is true in a sense, but ignores the fact that businesses employ people at all because they produce something valuable. If the value of their production is much higher than the wage they are paid, it creates an incentive for competing businesses to offer to pay them more, and steal them away as an employee. Usually employers are smart enough not to let that happen — not least of which is because they don’t want to have to train a replacement. Most of the time, they just pay employees what they are worth.

There’s a reason that so many teenagers earn minimum wage: They are simply less productive than older, more experienced workers. As one study from the Show-Me Institute pointed out, most workers who earn minimum wage are young and still in school, while older workers — even poor ones — tend to earn well above minimum wage.

Younger workers earn less because they are less productive, not because employers are predatory. Minimum wage is not a refuge for the poor and underprivileged, it is a barrier preventing people whose labor is worth less than $7.25 per hour from selling their time to employers, leading to greater unemployment among the very demographic that minimum wage laws are ostensibly designed to protect.

The post A Minor Point About Minimum Wage appeared first on Show-Me Institute.

A new Walgreens development in Creve Coeur has attempted to exploit a loophole in Creve Coeur building restrictions that stipulate a 25-foot buffer between commercial and residential properties. Because the new Walgreens development lies adjacent to parts of unincorporated West County, the council argues that the rule is irrelevant because the affected properties are outside the Creve Coeur city limits (so they can basically build on their front lawn).

Despite what some staff members might say, there is a difference between responsible zoning regulations and statist rule. Some libertarians would argue that zoning laws are unnecessary, and that any damage done to an individual’s property value by a neighbor’s property use decisions could be recovered in court.

As much of a lawyer’s paradise as that might be, I find it hard to believe that the court system could support (objectively) competing claims about the damage to property from aesthetic changes. In other words, if I build a life-size AT-AT walker on my front lawn (which, believe me, would be awesome), my neighbors might object. But who are they to claim that I’ve “damaged their property value?” It might be worth a whole lot more now to someone like this guy.

And surely there are third-party “owners” who are adversely affected by a lack of zoning protection. What about the bank that services the affected Creve Coeur home mortgages? Don’t they have a real interest in the value of the property? If Walgreens builds right next to a house whose value suddenly plummets and the owners fall into foreclosure, the bank holding the (now worthless) title takes a hit. Can they sue Walgreens? Who’s to decide whether or not it was the Walgreens development that affected the property value?

In fact, I would argue that zoning laws actually help clear the market, enabling people to invest resources in a property with some faith that their home won’t suddenly plummet in value because a neighbor begins to run a strip club out of their basement. I don’t pretend to believe that zoning laws are a “good thing” or even the best way to organize society, but my feeling is that even if a libertarian paradise is ideal, we should take baby steps in order to achieve it. Plummeting into anarchy is not going to make anyone “freer.” And if you don’t like the zoning laws in your area, move to somewhere where they don’t really exist.

So, no, I can’t support the Village Law. I agree with David Stokes.

The post Two Posts With One Stone appeared first on Show-Me Institute.