Archives: 07/2009

What Keeps Poor Kids Out of College?

In his Washington Post column today, Jay Mathews suggests that poverty isn’t what keeps poor, especially urban kids out of college. The problem according to Mathews, is that too few schools prepare these kids to enter and succeed in college in the first place. True, so far as it goes. But, no doubt due to his long-standing aversion to writing about policy rather than individuals, Jay neglects to mention the policy solution to the problem he has correctly identified.

There’s ample econometric evidence showing that private schools boost high school graduation rates, college acceptance rates, and college graduation rates, especially for urban minorities, over the levels seen in public schools (and after appropriate controls for student and family background). Policies that give these studens easier access to private schools should thus improve their college prospects significantly.

And you know what, there’s even a way for Jay to write this up as a human interest story: just interview kids from the DC voucher program who credit it with helping them get into college. And perhaps ask them what they think of the fact that Congress, ed. sec. Duncan, and president Obama have decided to kill the program that gave them a boost up the ladder to higher education.

Jay?

Message to the International Community: There’s Separation of Powers in Honduras

Roberto Michelleti, the interim president of Honduras, has an op-ed in today’s Wall Street Journal that should be read by members of the international community that continue to push for the immediate restoration of Manuel Zelaya to the presidency.

Michelletti states that

“The Honduran people must have confidence that their Congress is a co-equal branch of government. They must be assured that the rule of law in Honduras applies to everyone, even their president, and that their Supreme Court’s orders will not be dismissed and swept aside by other nations as inconvenient obstacles.”

The message is clear: there’s separation of powers in Honduras, and the country’s authorities cannot simply ignore the rulings of both Congress and the Supreme Court in order to reach an agreement. The international community, which is supposedly acting on behalf of democracy, should know that.

Nader Supports Health Savings Accounts?

In a recent article Ralph Nader attacks several critics of Obama’s health care reform proposal, including Cato:

Now enters the well-insured libertarian Cato Institute with full-page ads in the Washington Post and The New York Times charging Obama with pursuing government-run health care. A picture of Uncle Sam pointing under the headline “Your New Doctor.” Nonsense. The well-insured people at Cato should know better than to declare that this “government takeover” would “reduce health care quality.”

I agree that Cato employees are “well-insured” – a description so appropriate that Nader used it twice in a single paragraph. At Cato we have Health Savings Accounts, which are probably the closest thing to free market health insurance allowed by law.

It’s nice to see Nader, a proponent of socialized medicine, praise HSAs. But it’s unfortunate that his preferred options for health care would abolish HSAs entirely.

Washington Post Misrepresents Individual Mandates

Here’s a poor, unsuccessful letter to the editor I sent to The Washington Post:

Like Car Insurance, Health Coverage May Be Mandated” [July 22, page A1] paints a misleading picture of proposals to require Americans to purchase health insurance – i.e., an “individual mandate.”

First, the article lacks balance.  It cites three politicians who support an individual mandate but none who oppose it, a group that includes a majority of Republicans.  The article claims an individual mandate “has its roots in the conservative philosophy of self-reliance,” even though most conservatives, including the movement’s flagship magazine National Review, oppose the idea.  The closest the article comes to offering an opposing perspective is one conservative who has supported an individual mandate in the past and may yet again, just not yet.

Second, the article makes the demonstrably inaccurate claims that an individual mandate “lowers overall costs” and “help[s] keep premiums down” by adding more young and healthy people to the insurance market.  Forcing healthy people to purchase insurance does not affect premiums for sicker purchasers, because insurers set premiums according to each purchaser’s health risk.  The article confuses a mandate with price controls, which force low risks to pay more so that high risks can pay less.

Finally, if an individual mandate reduced overall costs, then health care spending would be falling in Massachusetts, which enacted the nation’s only individual mandate in 2006.  Instead, overall health spending is rising, and the rate of growth has accelerated under the mandate.  Rising health spending implies rising health insurance premiums, which has also been the Massachusetts experience.

Market Bets that ObamaCare Won’t Cut Costs

According to Don Johnson of The Health Care Blog:

Speculators seem to be betting that a watered down health insurance reform bill won’t hurt health insurers, hospitals, drug makers or medical device and supply manufacturers.

Stocks for almost all of these health sectors and for exchange trade funds that track health stock indexes turned higher last week.

In other words, those with real money at stake don’t believe that health reform will hurt the firms that make a living off of America’s highly inefficient health sector – President Obama’s assurances notwithstanding.

Johnson provides seven possible explanations for this development, including:

3. If the very liberal Coastal Democrats who lead Congress and most of the five committees drafting health insurance legislation want to get the support of Democrats from Western, Midwestern and Southern states, they’ll have to up Medicare payments to providers in those states. This is bullish for hospital chains, which operate mostly in the fly-over states…

6. Proposals to tax millionaires to pay for covering the uninsured and increasing benefits for others are in trouble, if not dead on arrival.  The economy’s in no shape to be stalled by tax hikes, and there appear to be enough Democrats opposed to the tax to stop it.

7. While the so-called Blue Dog Democrats are stalling health insurance reform for economic and ideological reasons, the Congressional Black Caucus has made it clear that it won’t support a bill that the Blue Dogs will support. Throw in the opposition by anti-abortionists who don’t want the legislation to use taxpayers money to pay for abortions, and you have a pretty complex political problem for President Obama, Sen. Majority Leader Harry Reid (D-NV) and Speaker Nancy Pelosi (D-CA). While the Speaker claimed Sunday that she has the votes to pass health insurance reform, few believe her.

Gallup Poll: Federal Reserve Makes the IRS Look Good

A recent Gallup Poll surveyed the public’s impression of how various federal agencies were doing their job.  Of the agencies evaluated, on the bottom was the Federal Reserve Board.  Only 30 percent of the respondents rated the Fed’s performance as either excellent or good.  I can understand now why Chairman Bernanke felt the need to take his act on the road.  Even the IRS managed to get 40 percent of respondents to see its job performance as excellent or good. A majority of the public, 57 percent, sees the Fed’s current performance as either poor or fair.

The result is not just driven by a general public disdain for federal agencies; over a majority of respondents thought such agencies as the Center for Disease Control, NASA and the FBI were doing an excellent or good job.

Nor is the result driven by public ignorance or indifference to the Fed; only a few years ago, back in 2003, 53 percent of Americans said the Federal Reserve was doing an excellent or good job and only 5% called its job performance poor.  But then, the Fed was also giving us negative real interest rates at that time as well.  Perhaps there’s a good reason to insulate the Fed from short-term public and political pressures.  Let’s hope Chairman Bernanke does not read these results as an excuse for repeating the Fed’s 2003 monetary policies.