Raise Price of Health Insurance, Senators Urge

Well, that’s not exactly how they put it. Nor is it how the journalists put it. The Wall Street Journal, for instance, explained it this way:

A bill introduced by a bipartisan group of senators – Pete Domenici (R., N.M.), Edward Kennedy (D., Mass.) and Mike Enzi (R., Wyo.) – doesn’t mandate that group health plans cover mental illness. Instead, it requires that plans, if they cover both mental and physical illnesses, treat both with “parity,” or similar benefits, such as deductibles, co-payments and treatment limitations.

AP story here. Neither the senators nor the journalists noted that such mandates drive up the cost of health insurance. So they didn’t have to address the question of why they would be seeking to make health insurance more expensive even as they decry the number of Americans without health insurance.

But it isn’t very hard to see why mandates would raise costs. The more things an insurance policy is required to cover, the more it’s going to cost. “Mental health” is especially vulnerable to cost inflation, as it can cover so many things.

It’s great to have an insurance policy that covers everything you might possibly need. But why should everyone be required to buy a Cadillac policy? Why shouldn’t people be allowed to buy Chevrolet policies if that’s what they want? As economist Merrill Matthews notes, “There’s a range of different things states have required health insurance to cover, including chiropractors, podiatrists, nurse midwives, drug and alcohol abuse counseling, and even, in a few states, hairpieces for people who’ve had cancer treatments.” People could save money if they could buy health insurance policies that didn’t cover some eventualities, such as pregnancy or drug rehab.

But don’t worry–as soon as the Mental Health Parity Act passes, senators will go right back to criticizing insurance companies for their high prices and calling for government to make insurance “affordable” for more people.

Time to Reform “Soviet” Road Pricing

A TCSdaily.com column explains why market-based pricing for road usage would be an improvement over the current system, which encourages congestion by charging the same price (zero) for trips at the peak of rush hour and in the middle of the night:

…congestion pricing is conservative economics at its best. For decades, conservatives have championed market-oriented solutions to highway problems as a means to allocate scarce resources. Congestion pricing gives consumers the opportunity to decide when it is in their economic interest to ride crowded roads, and whether the price charged for a given trip is worth their travel time savings. In the former Soviet-bloc states, the standard way to allocate scarce goods was to set the purchase price low enough for everyone to afford, but to make consumers wait in long lines to buy them. The real price depended on what value consumers placed on their time. This approach is the way we’ve always allocated access to most roadways in capitalist America - access is “free,” just like for a public park. But our real cost skyrockets when we consider the time we spend crawling along in bumper-to-bumper traffic and with no option to pay extra for a faster trip. And even without factoring in the cost of time frittered away listening to satellite radio, highways have never really been “free,” but subsidized by taxpayer dollars. Congestion pricing is not a tax increase, but a user fee, which, conservatives agree, is a better way to divide costs.

The author is right that congestion pricing is not a tax increase. But roads today currently are financed by taxes. So if congestion pricing is implemented, it should be accompanied by a tax cut of equal magnitude to prevent politicians from inadvertently having a new pile of money to waste on other government programs.

Another Bush?

Mitt Romney announced for president today. Listening on C-Span, he sounded to me just like any other politician, with applause lines to appeal to every faction in the Republican party. Here is the transcript.

Like Bill Clinton or George W. Bush on the campaign trail, Romney combines throw-away lines about how government is too big with appeals to fix health care, education, and many other things. “We” need to fix society. ”Our” schools and “our” children need help.  Paragraphs like this reveal a Bush-style policy mish-mash:  

We strengthen the American people by giving them more freedom, by letting them keep more of what they earn, by making sure our schools are providing the skills our children will need for tomorrow, and by keeping America at the leading edge of innovation and technology.

Does Romney think that freedom is something that government gives us? Isn’t Romney hinting that he wants the government to spend even more on schools and technology schemes, while also claiming that people ought to keep more of their earnings? 

Romney also said, “We must transform our government - to become a government that is smaller and less bureaucratic, one with fewer regulations and more freedom for our people.”  But how does he square that with his legislation that greatly increased health care regulation in Massachusetts and took away freedom from state residents as a result of his health insurance mandate?

Similarly, Romney said: “For some, healthcare is inadequate. Family expenses and government taxes take a larger and larger bite. America cannot continue to lead the family of nations if we fail the families at home.”

Taxes are too high, but isn’t Romney hinting that he wants to spend even more on health care? Isn’t he saying that the government is failing families by not helping them enough?

I’m not looking forward to another 21 months of this.   

Democratic Governor in Arkansas Pushes Big Tax Cut

Although national Democrats (and some Republicans) have a love affair with higher taxes, Mike Beebe in Arkansas has convinced legislators to approve a big tax cut. To boost growth and competitiveness, his tax cut should have focused on lower income tax rates rather than cherry-picking certain constituencies, but at least he is reducing the state’s total tax grab. The Wall Street Journal opines:

Arkansas Governor Mike Beebe may not be a man from Hope, but the newly elected Democrat is becoming a voice for tax relief within his party. Last year he campaigned on cutting in half his state’s 6% sales tax on groceries. Last week he made good on the promise by striking a deal with a reluctant Democratic legislature. His compromise also repeals income taxes on the poor and cuts sales taxes that manufacturers pay on their utility bills. All told, taxpayers will save $319 million over two years, or what the Governor calls “the largest tax decrease in the history of the state.” …The Tax Foundation reports that Arkansas is the 27th most taxed state in the nation with a heavier tax burden than neighboring Texas and Tennessee, neither of which has an income tax and rank 44th and 47th. The state is expected to have an $840 million surplus this year and could therefore afford additional cuts in its 6% general sales tax and 7% tax on income over $30,100.

Free Kareem Rallies February 15

Friends of freedom will be at dignified rallies in cities around the world on behalf of Abdelkareem, who is awaiting sentencing in Egypt for expressing his opinions on his blog. Rallies will be held in New York, London, Ottawa, Chicago, Bucharest, Washington, Rome, and Paris, and we are hoping for other cities.

In Washington, friends of freedom will gather at noon on February 15 at the Egyptian Cultural and Educational Bureau: 1303 New Hampshire Ave, NW; Washington, DC, near Dupont Circle.

Visit http://www.freekareem.org/ for more details. If you can spare an hour on February 15, please join those who are standing for freedom of speech….and for the freedom of a young man who – agree with him or not – merely spoke his mind.

‘Symbolic Immolations’

Stuart Taylor: “The spectacle of former CEOs Bernard Ebbers and Jeffrey Skilling getting sent to prison for 25 and 24 years, respectively, reminded me a bit of Roman emperors throwing criminals to the lions and bears to gratify circus crowds.” 

Good piece – because he not only hits the white-collar, but the blue-collar sentences as well.  For related Cato work, go here, here, and here.  I invited Taylor to moderate a panel discussion on the disastrous drug war here at Cato a few years ago.

Irish EU Commissioner Understands Benefits of Lower Tax Rates

Charlie McGreevy is a lonely voice in Brussels. Most of his fellow Commissioners believe in bigger government and higher taxes, but McGreevy is from Ireland, and he obviously understands from his own country’s experience that lower tax rates promote growth and create opportunity. Tax-news.com reports:

Internal Market Commissioner, Charlie McCreevy outlined his position on taxation within the European Union, suggesting that ‘higher taxes feed fatter government’. …”Some see taxation as a means of making society more equal. Of levelling down. Of limiting the upside rewards that go with taking risk or working hard. I don’t. …I don’t see taxation as meritorious in its own right. I believe taxes – of all kinds - should be kept as low as possible and that the pressure to get them down should be relentless. I believe also, where there is a choice on how to levy taxes, preference should be given to levying them on spending. Taxes on income are taxes on effort, work and entrepreneurship. Taxes on capital are taxes on investment and risk taking. But it is effort, work, entrepreneurship, investment and risk taking that we need to continue to grow our economic base. And it is that growth that generates the incremental tax revenues that finance sustainable improvements in welfare. It was when taxes on income were raised and the thresholds at which they became payable were lowered that Ireland’s economy and public finances came close to basket case status. When capital taxes on wealth creation and entrepreneurship proliferated non-compliance proliferated with it, and wealth and jobs were driven out. In fact the tax revenues that some of those taxes generated were barely adequate to cover the cost of collecting them.”