Tag: vouchers

Medicare Reform: Throwing Wasserman-Schultz ‘to the Wolves’

On CBS’s Face the Nation, Democratic National Committee chair Rep. Debbie Wasserman-Schultz (FL) said this of the House Republicans’ Medicare reform plan:

Republicans have a plan to end Medicare as we know it. What they would do is they would take the people who are younger than 55 years old today and tell them ‘You know what? You’re on your own. Go and find private health insurance in the healthcare insurance market, we’re going to throw you to the wolves and allow insurance companies to deny you coverage and drop you for pre-existing conditions. We’re going to give you X amount of dollars and you figure it out.

That ‘s the version of Wasserman-Shultz’s quote that the Washington Post’s Glenn Kessler sent me.  Kessler also told me that the DNC cited me as a source for Wasserman-Shultz’s claims:

Michael Cannon: The Ryan Plan Would Provide More Subsidies To Seniors With Pre-Existing Conditions But Wouldn’t Guarantee Coverage. Michael Cannon, the Director of Health Policy Studies at Cato said during congressional testimony on the Ryan plan, “Thank you for the opportunity, Congressman. I think that lots of – all seniors under the chairman’s proposal, as I understand it, will be able to obtain health insurance coverage. And that’s the – that is because the payment they receive from the federal government to purchase that coverage will be adjusted for income so that lower-income people will get larger vouchers if you will. He doesn’t call them that, I’ll use the V word. And they’ll also be risk-adjusted so that people with severe illnesses will get larger vouchers and be able to purchase insurance coverage that will cover a lot of people who have a pre-existing condition. [HEARING OF THE HEALTH CARE, DISTRICT OF COLUMBIA, CENSUS AND THE NATIONAL ARCHIVES SUBCOMMITTEE OF THE HOUSE OVERSIGHT AND GOVERNMENT REFORM COMMITTEE, 4/5/11]

The Actual Amount More Seniors With Pre-Existing Conditions Would Receive Had Not Been Set Out In The Ryan Budget. Michael Cannon, the Director of Health Policy Studies at Cato said during congressional testimony on the Ryan plan, “That would be a result of the rules, the specific risk-adjustment rule that haven’t been spelled out in his budget. But you would have sick people getting a lot more money.” [HEARING OF THE HEALTH CARE, DISTRICT OF COLUMBIA, CENSUS AND THE NATIONAL ARCHIVES SUBCOMMITTEE OF THE HOUSE OVERSIGHT AND GOVERNMENT REFORM COMMITTEE, 4/5/11]

Empasis in original.

Kessler judged Wasserman-Shultz’s claim to be “bogus.”  FactCheck.org said it was “simply wrong.”

Kessler quoted me in his fact-check, but I think he left out the most important parts.  So here’s my entire email response to Kessler:

This is some high-octane idiocy.

Ryan’s plan says that insurance companies could not turn away seniors.  I’m not sure whether that means only (A) that insurers must issue a policy to all applicants (i.e., guaranteed issue) or whether Ryan’s plan would go further and (B) prevent insurers from charging sick enrollees more (i.e., price controls).  I hope Ryan would not include such price controls, but I see hints that that’s where he’s leaning.  If so, then the Ryan plan would include the very government guarantee that the DNC is complaining isn’t there.   It’d be a lousy guarantee, but it’d be there.

Regardless, the DNC’s attacks are still bunk.

If insurers can charge sick Medicare enrollees whatever they want, and Medicare gives sick enrollees enough money to cover those higher premiums, who needs price controls?  High premiums aren’t scary if you have the money to pay them.  A fair question would be whether the vouchers would be large enough.  The best evidence available (from the Dartmouth Atlas) suggests that one third of spending in traditional Medicare is pure waste.  That is a huge margin of safety: it means that the vouchers could be one-third less than what a Medicare enrollee would otherwise spend without reducing access to necessary care.  The quotes they took from me completely undercut their attacks on the Ryan plan.  I hope they keep quoting me.

Experts widely acknowledge that traditional Medicare exposes seniors to unnecessary and even harmful services.  And Medicare is rapidly consuming more and more of every American’s paycheck.  I can’t imagine anything more irresponsible than defending Medicare as we know it.

Don’t Let the Aphorism Be the Enemy of Thought

I am often told that pointing out the serious shortcomings of government-funded school vouchers and the relative superiority of education tax credits is a case of “making the perfect the enemy of the good.”

It’s isn’t.

That is a misapplication of Voltaire’s famous aphorism. What the aphorism exhorts is that we not pursue an unattainable perfection when a good alternative is within reach. Education tax credits are not only attainable, they are usually easier to obtain than vouchers. Consider a recent example: Pennsylvania’s state House has voted 190 to 7 to expand its existing EITC tax credit program while the state Senate has been deadlocked for weeks looking for the bare minimum of votes to pass a voucher bill.

On top of that, it is dubious to cast vouchers as “the good” when they will expand the scope of compulsion of taxpayers to funding many new types of schooling to which they might well object, impose heavy new regulations on private schools (homogenizing the available “choices”), and more pervasively curtail direct payment by consumers in favor of third party government payment.

Even those who may not be fully convinced that vouchers are inferior should pause before trying to enact them in states that already have education tax credit programs with good growth prospects. Why make the dubious the enemy of the pretty darned good?

Educational Freedom in Pennsylvania

The Pennsylvania state House has just passed an expansion of its existing k-12 scholarship-donation tax credit program. The vote was a deafening 190 to 7 in a state that has voted Democratic in every one of the last five presidential elections.

Nevertheless, there is serious opposition to this expansion of education tax credits in the Senate, where several prominent lawmakers prefer a voucher bill. It’s not clear which path the legislature will ultimately take, but there seems to be considerable agreement on the goal: giving parents true freedom of choice in education.

A key point to consider, then, is which type of program is most likely to preserve the freedom and diversity of the education marketplace, thereby giving families a meaningful range of alternatives to choose from. I ran a regression study on precisely this question last fall (now forthcoming in the peer-reviewed Journal of School Choice). What I found is that vouchers impose a large and statistically highly significant burden of additional regulation on private schools while tax credits do not.

This is not the only advantage of the tax credit program, but it is a compelling one.

Ensuring that Indiana’s New Voucher Program Lives up to Budgetary Expectations

A new voucher program in Indiana looks likely to be signed by Gov. Daniels soon, but without a slight modification it may not have the benign budgetary impact that is expected.

As written, the program could have a significant negative impact on state finances if families claim both the vouchers and funds from the state’s existing education tax credits.

There is nothing that precludes children who receive a voucher from also topping off that amount with private funds from the existing education tax credit program. That means a voucher student could accept, for example, $4,500 in government funds and then apply for a tax credit scholarship that reduces state revenue by, say, $2,000. The voucher student would cost the state $6,500, not the $4,500 that would be counted on the books. If state funding is 100 percent sensitive to enrollment, the state would save $5,000 on that student switching, and the net impact on state finances would be a $1,500 loss. In other words, the program could have a negative net impact on state finances due to double-dipping.

From a fiscal standpoint, the state would show an apparent “savings” based on the $4,500 voucher, but this would fail to take into account the reduced revenue due to the credit. And the law requires these on-paper-only savings to be passed out to public schools districts. The result? The state government could be out $7,000 on the student in this example, not the $4,500 it paid out in a voucher. The net impact wouldn’t be neutral, it would be a $2,000 loss.

This scenario looks only at how the vouchers might impact state finances. At the local level, the program is likely to have a strongly positive impact on the resources available for each student. But a school choice program’s impact on state finances – ensuring financial transparency, certainty, and a neutral or positive impact – is a critical concern in its own right.

Critics of expanding educational freedom always claim, incorrectly, that school choice programs are a drain on public resources. But the double-dipping that is allowed under this program could inadvertently prove them right – it would also make Indiana’s existing education tax credit program a mere appendage to the new government voucher system. In short, it’s an unforced error, and worth fixing.

CEOs to Governors: Raise Production Goals and Quality Standards

A group of CEOs called on the nation’s governors this week to raise U.S. business standards. Speaking at the National Press Club in Washington, DC, the CEOs declared that state governments have been misleading consumers about the quality of the goods they’re buying. One retired Fortune-500 CEO declared that:

America’s standing as the most innovative and prosperous nation on earth depends on our ability to boost business’ productivity. As business leaders, we are pledging to stand with governors who commit to high production and product quality standards in scientific and technological fields.

Even today, most readers probably recognize the preceding paragraphs as satirical (I hope!). The idea that it would be helpful to have bureaucrats set production volume and quality standards for high-tech industries is ludicrous on its face. How tragic it is, then, that this event actually took place… with one small twist: the CEOs were calling for more central planning in science and technology education.

Having spent nearly 20 years studying the relative productivity of different types of school systems, it is hard for me to understand how such brilliant business leaders could have arrived at such a profoundly mistaken conclusion. If they care at all about the goals they have set out to achieve, they would be well advised to stop listening to those who are currently advising them, and to look at the evidence on what actually does raise educational productivity. I’ve summarized that evidence in a short piece for the Washington Post, in a journal paper reviewing the past 25 years of worldwide research, and in a book surveying 20 centuries of school systems.

Distilling the findings of that work into a single sentence: it is the freest and most market-like education systems that, throughout history, have done the best and most efficient job of serving both our individual needs and our shared ideals.

Teachers, it turns out, are people. And like other people, they respond to the freedoms and incentives of their workplaces. As a result, the same structures and conditions that optimize the operation of other industries also optimize the operation of school systems. Xerox makes good copiers and Intel makes good chips because they have competitors who will eat their lunch if they don’t; because they have the freedom to explore new and better ways of serving their customers; and because they are rewarded very handsomely for innovations that successfully serve those customers.

Want education standards to rise? Give educators those same freedoms and incentives — and stand back.

“Winning”

I have an op-ed in the Huffington Post today arguing that it’s possible to ensure universal access to education without compelling anyone to support types of instruction that violate their convictions. This eliminates the central objection that the ACLU and ADL have given for their opposition to private school choice. Indeed, if those organizations really care about freedom of conscience, they should prefer the policy solution I outline to the status quo system in which every taxpayer is compelled to support a single government organ of education. Or is there some other reason why the ACLU and ADL oppose liberating American education?

Feel free to chime-in in the comments section on Huff Po.

Government Can Tax Your Income, But It Doesn’t Own It in the First Place

As Andrew and Adam have already explained, today’s decision in ACSTO v. Winn, though grounded in the technical legal doctrine of “standing,” is a big win for school choice and state flexibility in education reform.  Even more importantly, it makes clear that there is a difference between tax credits and government spending; to find that tax money was used for unconstitutional ends here would have assumed that all income is government property until the state allows taxpayers to keep a portion of it.  That is not, to put it mildly, how we think of private property.

Of course, even had the Court found that Arizona’s scholarship scheme involved the use of state funds, the program would have been insulated from Establishment Clause challenge because it offered the “genuine and independent choice” that the Court has long required in such cases (most notably the 2002 school voucher case of Zelman v. Simmons-Harris). Many layers of private, individual decisionmaking separate the alleged entanglement of taxpayer funds with religious activities: the choice to set up a scholarship tuition organization (STO), the choice by an STO to provide scholarships for use at religious schools, the choice to donate to such an STO, the choice to apply for a scholarship, and the choice to award a scholarship to a particular student.  

Far from being an impediment to parental control over their children’s education or an endorsement of religious schooling, the autonomy Arizona grants taxpayers and STOs ultimately expands freedom for all concerned.  For more on that, see Cato’s amicus brief.

Also interesting about the case is that it offers us Justice Elena Kagan’s first significant opinion, for the dissenting four justices.  While not surprising that she would be in dissent here, in a “conventional” 5-4 split – although the “conservatives” adopted the position advocated by the Obama administration – there do appear to be some eyebrow-raising turns of phrase.  I won’t comment until I finish reading the opinion, but Ed Whelan offers an initial reaction at NRO’s Bench Memos blog.