Archives: March, 2010

They Spend WHAT? The Real Cost of Public Schools

Although public schools are usually the biggest item in state and local budgets, spending figures provided by public school officials and reported in the media often leave out major costs of education, and understate what is actually spent.

In a new study, Cato’s Adam B. Schaeffer reviews district budgets and state records for the nation’s five largest metro areas and the District of Columbia. Schaeffer finds that, on average, per-pupil spending in these areas is 44 percent higher than officially reported.

In this new video, Schaeffer explains the whole thing in under three minutes:

Open All of Obama’s Health Care Meetings to C-SPAN

From my op-ed in The Daily Caller:

ObamaCare would dramatically expand government control over health care.

Each new power ObamaCare creates would be targeted by special interests looking for special favors, and held for ransom by politicians seeking a slice of the pie.

ObamaCare would guarantee that crucial decisions affecting your medical care would be made by the same people, through the same process that created the Cornhusker Kickback, for as far as the eye can see.

When ObamaCare supporters, like Kaiser Family Foundation president Drew Altman, claim that “voters are rejecting the process more than the substance” of the legislation, they’re missing the point.

When government grows, corruption grows.  When voters reject these corrupt side deals, they are rejecting the substance of ObamaCare.

If Obama is serious about fighting corruption, he should invite C-SPAN to into every meeting he holds with members of Congress.

Then we’ll see whether he’s lobbying House members based on the Senate bill’s merits, or promising House members judgeships or ambassadorships in exchange for their votes.

What’s going on behind those closed doors, anyway?  Aren’t you just a little bit curious?

Or does corruption only happen when Billy Tauzin is in the room?

Thursday Links

If There’s Money, We Want It! (Whatever “It” Is.)

There seems to be a real trend in Washington to declare support for a bill now, but actually have the bill exist later. It’s been most obvious in the health care marathon, where often purely notional pieces of legislation have been boisterously celebrated or bemoaned for months. It’s also the case with the Student Aid and Fiscal Responsibility Act, which may or may not be tacked on to health-care reconcilation because supporters don’t, you know, want to actually debate the thing. Currently, there is no Senate version of SAFRA, and it’s unclear what changes would need to be made to the House version to make it reconcilable.

So why are so many people willing to take big chances on legislation that only exists in the fertile minds of congresspeople? As this Inside Higher Ed article on community colleges illustrates, it’s often because they want taxpayer money – $12 billion is the community colleges’ hoped for windfall – no matter what:

Sensing the urgency of the moment on Capitol Hill, many community college advocates believe that budget reconciliation is the most likely route for passage of the AGI this year. They argue that time is of the essence for those community college trustees and presidents visiting town for the summit to lobby their representatives and senators without focusing on quibbles over the bill.

“I know there’s a lot of discussion for many of you [about] what’s in the program,” said Jee Hang Lee, ACCT director of public policy. “‘What’s in the final program for SAFRA? What’s in the final program for AGI? What is it going to look like?’ What we’ve heard is that, for the most part, the House and Senate staffs and the White House have something in place. I don’t know what it looks like. I don’t know many people who do know what it looks like. But they have a broad agreement on the structure of these programs, so that’s nice to know that they have because that means it’ll likely get funded.”

Still, he advised visiting trustees and presidents to be direct in their support for the bill and wait until later to work out potential kinks in its specific provisions.

“My point is that you just need to press hard to get this money and get it passed, and we can work out some of the details, I guess, later, I guess through the negotiated rule-making period,” Lee said.

Hmm. And I guess money grabs like these explain a good bit of why the national debt is now approaching $12.6 trillion.

Senator Graham’s Inexplicable National ID Support

Compromise is catnip in Washington, D.C. That’s my best guess at why Senator Lindsey Graham (R-SC) would endorse New York Senator Chuck Schumer’s (D) widely reviled plan to create a mandatory biometric national ID system.

Schumer’s national ID plans have no more definition today than when he wrote about them in his 2007 campaign manifesto Postitively American. Among the thin gruel of that book is a two-page lump displaying more ignorance than understanding of how identity systems work and fail. Schumer doesn’t know the difference between an identifier—a characteristic used to distinguish or group people—and an identification card or system, which does the entire task of proving a person’s previously fixed identity. (My thin gruel on the topic is the book Identity Crisis: How Identification is Overused and Misunderstood.)

“All the national employment ID card will do is make forgery harder,” says Schumer.

No, that’s not all it would do: It would also subject every employment decision to the federal government’s approval. It would make surveillance of law-abiding citizens easier. It would allow the government to control access to health care. It would facilitate gun control. It would cost $100 billion dollars or more. It would draw bribery and corruption into the Social Security Administration. It would promote the development of sophisticated biometric identity fraud. How long should I go on?

Senator Graham’s take is equally simple: “We’ve all got Social Security cards,” he said to the Wall Street Journal. “They’re just easily tampered with. Make them tamper-proof. That’s all I’m saying.”

No, Senator, that’s not all you’re saying. You’re saying that native-born American citizens should be herded into Social Security Administration offices by the millions so they can have their biometrics collected in federal government databases. You’re saying that you’d like a system where working, traveling, going to the doctor, and using a credit card all depend on whether you can show your national ID. You’re saying that bigger government is the solution, not smaller government.

The point for these senators, of course, is not the substance. It’s the thrill they experience as nominal ideological opponents finding that they can agree on something, securing a potential breakthrough on the difficult immigration issue.

They’re only ”nominal” ideological opponents, though. Chuck Schumer has always been a big government guy—and long a supporter of having a national ID, despite the lessons of history. Lindsey Graham is not really his ideological opponent. Typical of politicians with years in Washington D.C., Graham is steadily migrating toward the big-government ideology that unites federal politicians and bureaucrats against the people.

A Tale of Two Frauds

The President has announced a government crackdown on Medicare and Medicaid fraud. The effort appears to be an attempt to make it easier for Americans to swallow the health care “reform” he’s trying to shove down their throats. As House Republican leader John Boehner correctly asked, “Why can’t we crack down on fraud without a big-government takeover of health care?”

As I’ve noted before, improper payments made by Medicare and Medicaid is may well be $50 billion more than the already appalling $100 billion annual figure the president cited. Administrative efforts to rein in fraud and abuse are welcome, but they won’t solve the huge and fundamental inefficiencies of these programs. Because the law requires government health care programs to quickly get payments out the door, Uncle Sam will always be engaged in a costly game of “pay and chase.”

The broader problem is that government programs aren’t subject to market discipline. Policymakers and administrators have little incentive to be frugal because they face few or no negative consequences when playing with other people’s money.

Most of us have noticed how good private companies can be at reducing fraud. I recently received a call about questionable charges on my Discover credit card. After quizzing me on a list of purchases made with my card in the past 24 hours, it became clear that someone had gotten control of my account. Discover immediately closed the account, opened an investigation, and removed me from any liability for the fraudulent charges.

What amazed me is that I only had about $300 worth of charges on my card. It’s not a big account and thus not a big money maker for Discover. Yet, within 24 hours of a string of suspicious charges, the company was right on top of it before I even realized anything nefarious was going on. Private markets don’t always work this well, but government programs almost never do.

What Is ‘Meaningful’ Health Insurance? Who Decides?’

Noting that premium increases, such as Anthem’s proposed 39-percent hike in California, have caused individuals and employers to purchase less coverage, Kaiser Family Foundation president Drew Altman writes:

Rising health care costs and insurance company practices are leading not just to more expensive premiums, but to skimpier, less comprehensive coverage as well; slowly redefining what we have known as health insurance. To be sure, some economists argue that this is precisely what should happen…But this is not likely how regular people see it. Appropriate cost sharing is one thing, but we may be reaching the point in the individual market where the policies many people have simply cannot be considered meaningful coverage.

Of course, this is the whole idea behind President Obama’s proposed tax on high-cost health plans: higher prices will cause people to purchase less coverage, which will temper health care spending.

But whether Altman is correct depends on what the meaning of “meaningful” is.  When individuals pare back the amount of insurance they purchase, they are revealing what they consider to be meaningful coverage.  (The same is true when employers opt for less-comprehensive coverage, though employers’ revealed preferences are obviously a poor proxy for what their workers value.)

If Altman thinks the coverage that individuals are choosing “cannot be considered meaningful coverage” (note the passive voice), he is implicitly stating that individuals are not the best judges of their own welfare.  And the only way to devise an alternative definition of meaningful coverage is through the political process.

It is difficult to argue that the political process does a better job of selecting meaningful coverage.  That process forces many consumers to purchase coverage that they don’t find meaningful (e.g., chiropractic, acupuncture, circumcision), that they find offensive (e.g., abortion, contraception, in-vitro fertilization), or for treatments that are downright harmful (e.g., high-dose chemotherapy combined with autologous bone-marrow transplant for late-stage breast cancer).

Letting consumers reveal their preferences is possibly the worst way to define “meaningful coverage.”  Except for all the others.