Want to increase college-going while saving some dough? Scholarship tax credit programs may be for you, or so indicates a new report from the Urban Institute.
The report, from co-authors Matthew Chingos and Daniel Kuehn, finds that the low-income students who enrolled in private schools via the Florida Tax Credit scholarship program were about 15 percent—or 6 percentage points—more likely to enroll in college than statistically matched public school students. The effect was greater the longer kids were in the program. There was also a small, more tenuous positive effect on associate degree attainment for scholarship users. Topping it all off, while cost was not the focus of the report, the authors note that the superior outcomes were achieved at a saving to the state: “The positive effects are noteworthy in light of the evidence that the FTC program more than covers the foregone tax revenue through reduced spending on the public schools many participants would have attended.”
There are, of course, important caveats to the findings. First, this was not a random assignment study, so unobserved characteristics such as differing degrees of motivation between scholarship users and matched public school students could not be well controlled for. Next, the study only looked at students entering Florida public colleges, though this might have underestimated the program’s positive effects due to low-income private school students tending more to attend private or out-of-state colleges than their public school peers. Finally, there is good reason to question whether credentials represent much increase in real, useful, learning.
Even with these caveats, this is clearly encouraging evidence for school choice. Alas, some of the early media reports about the study seem to want to temper it with mentions of a few recent choice evaluations, focused on standardized test scores, that have not been so hot. Of course, those studies have important caveats too, but more important, the articles I have seen about the Urban report have mentioned the recent spate of negative reports while ignoring the many positive studies that preceded them. Fortunately, the Urban authors give readers one more useful nugget, noting, “Until recently, this research showed neutral to positive effects of private school choice on student achievement.”
The choice debate will continue, but most of the evidence remains on the side of freedom.
In a new report, scholars from the Urban Institute claim ObamaCare premiums "are 10 percent below average employer premiums nationally." There is variation among states. The authors report ObamaCare premiums are actually higher in 12 states, by as much as 68 percent.
At Forbes.com, I explain the Urban scholars aren't making the "apples to apples" comparison they claim to be:
The Urban Institute study instead engages in what my Cato Institute colleague Arnold Kling calls a game of "hide the premium." As ACA architect Jonathan Gruber explained, “This bill was written in a tortured way” to create a “lack of transparency” because “if…you made explicit that healthy people pay in and sick people get money, it would not have passed.” When it did pass, it was due to what Gruber called the “huge political advantage” that comes from hiding how much voters are paying, as well as ”the stupidity of the American voter.”
That lack of transparency has allowed supporters to claim the ACA is providing coverage to millions who are so sick that insurance companies previously wouldn’t cover them, while simultaneously claiming Exchange coverage is no more expensive than individual-market coverage prior to the ACA or than employer-sponsored coverage. When we incorporate the full premium for Exchange plans, the smoke clears and we see Exchange coverage is indeed more expensive than employer-sponsored coverage. There ain’t no such thing as a free lunch.
If you think this is fun, just imagine the shell games we could play with a public option.
Today at DarwinsFool.com, I released estimates of the impact of a potential ruling for the plaintiffs in Halbig v. Burwell, one of four cases currently before federal courts claiming that the subsidies and taxes the IRS is implementing in the 36 states with health-insurance Exchanges established by the federal government are illegal. The Patient Protection and Affordable Care Act repeatedly says those taxes and subsidies are authorized only "through an Exchange established by the State."
Left-leaning groups and media outlets that defend the IRS are attempting to portray a potential ruling for the Halbig plaintiffs as catastrophic, because it would put an end to the subsidies roughly 5 million individuals enrolled in federal Exchanges are currently receiving. As I explain in detail, those commenters ignore three crucial facts. One, a victory for the Halbig plaintiffs would increase no one's premiums. It would merely stop the IRS from unlawfully shifting the cost of those overly expensive PPACA premiums from enrollees to taxpayers. Two, if federal-Exchange enrollees lose subsidies, it is because the courts will have found those subsidies are, and always were, illegal. And three, if the Halbig plaintiffs prevail, the winners in the 36 states with federal Exchanges would outnumber the losers by more than ten to one.
As I explain at Darwin's Fool, here is what the IRS's defenders don't want you to know about the impact of a potential Halbig victory.
- A Halbig victory would free more than 8.3 million individuals from the PPACA's individual mandate. That's how many people in those 36 states the IRS is currently subjecting to the individual-mandate tax without statutory authorization.
- In the 36 states with federal Exchanges, a Halbig victory would free 250,000 firms and 57 million employees from the PPACA's employer mandate. That's how many people the IRS is unlawfully subjecting to the employer mandate.
- The number of winners under a Halbig victory is therefore more than ten times larger than the 5 million people who would lose an illegal subsidy.
- Those 5 million people are "losers" not because they were deprived of an illegal subsidy. Regardless of one's position on the PPACA, we can all agree that courts should put an end to illegal government spending whenever they can. Those people are "losers" because the Obama administration recklessly induced them to purchase overly expensive Exchange coverage with the promise of billions of dollars in subsidies that it has has no authority to offer, and that could disappear with a single court ruling.
I also provide state-level estimates of the number of firms and individuals Halbig would free from these mandates. For example:
- A Halbig victory would free nearly 1 million Floridians from the individual mandate, and more than 16,000 firms and 5.1 million Floridians from the employer mandate.
- It would free more than 1.5 million Texans from the individual mandate, and free more than 24,000 firms and nearly 7 million Texans from the employer mandate.
- A Halbig victory would also enable the 14 states (plus D.C.) that established Exchanges to exempt residents and employers from those mandates by switching to a federal Exchange, as well as create political and economic incentives for states to make the switch.
- If the Halbig plaintiffs prevail, the 14 establishing states (plus D.C.) could cumulatively exempt 3.8 million residents from the individual mandate and exempt 123,000 firms and nearly 29 million residents from the employer mandate.
- California, for example, could exempt 1.7 million residents from the individual mandate, and exempt 32,000 firms and 9.4 million workers from the employer mandate.
- Though those states would lose Exchange subsidies if they switched to a federal Exchange, the much larger number of firms and residents who would benefit could still pressure state officials to make the switch.
- These states could also experience economic pressure to switch to a federal Exchange, because the employer mandate (which increases the cost of doing business) will be operative in their states but not in states that opt for a federal Exchange. Establishing states could therefore lose jobs to federal-Exchange states, unless they become federal-Exchange states themselves.
Click here for state-by-state data on the impact (or potential impact) of a Halbig ruling.
ObamaCare requires each state to open its Medicaid program to all legal residents earning up to 138 percent of the federal poverty level. Supporters estimate this mandate will cost state governments little: the Kaiser Family Foundation’s worst-case-scenario estimates suggest that state Medicaid spending would rise by just 1.2 percent in New York and 5.1 percent in Texas between 2014 and 2019.
In a new working paper titled, "Estimating ObamaCare's Effect on State Medicaid Expenditure Growth," Cato Institute Senior Fellow Jagadeesh Gokhale shows that those estimates are generally far too low. Gokhale finds that all of the five most-populous states -- California, Florida, Illinois, New York, and Texas, which account for roughly 40 percent of U.S. population -- will struggle to cope with rising Medicaid spending even without ObamaCare’s Medicaid mandate. But ObamaCare significantly increases that burden on four of them:
In its first year of full implementation (2014), ObamaCare will increase spending on Medicaid by 9.0 percent in Florida, 22.2 percent in Illinois, 6.4 percent in New York, and 13.5 percent in Texas. Spending in California is projected to be smaller by about 3 percent.
The cost grows over time. The following chart shows the burden that ObamaCare’s Medicaid mandate will impose on these states over the first 10 years of full implementation:
Compared to a world without ObamaCare, state Medicaid spending will decline by 3 percent in California, but increase by 17.1 percent in Florida, 28.1 percent in Illinois, 16.5 percent in New York, and 12.9 percent in Texas over the first 10 years of full implementation.
On a per-taxpayer basis, ObamaCare’s Medicaid mandate is also highly inequitable:
for every $1 in costs imposed on each working-age Texas adult, Floridians and New Yorkers will pay about $1.50, Illinoisans will pay $3.60, while Californians will save a small amount (about 3 pennies).
Gokhale explains that the Kaiser Family Foundation’s projections are lower because they assume that ObamaCare’s individual mandate will not significantly increase enrollment among people who were eligible for Medicaid but not enrolled under the pre-ObamaCare rules. Consistent with other research, Gokhale assumes the individual mandate will encourage people to enroll in Medicaid even if they would not face financial penalties for being uninsured.
Update (3/3/11): The chart and text were updated to reflect corrected numbers.
An Obama administration “fact sheet,” released alongside the interim final rules for several of ObamaCare’s cost-increasing mandates, claims those mandates will reduce the "hidden tax" imposed by uncompensated care:
By making sure insurance covers people who are most at risk, there will be less uncompensated care and the amount of cost shifting among those who have coverage today will be reduced by up to $1 billion in 2013.
According to research by the Urban Institute, that “hidden tax” isn’t very large:
Private insurance premiums are at most 1.7 percent higher because of the shifting of the costs of the uninsured to private insurers in the form of higher charges.
As the Congressional Budget Office repeatedly lectures Congress, "Uncompensated care is less significant than many people assume."
Likewise, these mandates’ effect on uncompensated care will be less significant than the Obama administration would like you to think. Using data from the Centers for Medicare & Medicaid Services and a reasonable assumption of 6-percent annual growth, total private health insurance premiums in 2013 will be in the neighborhood of $1.1 trillion. So the administration is boasting that these mandates will reduce the 1.7-percent “hidden tax” imposed by uncompensated care to 1.61 percent.
Indeed, the whole of ObamaCare may not do much to reduce the “hidden tax” of uncompensated care. After Massachusetts enacted a nearly identical law, the Urban Institute reports, "high levels of emergency department (ED) use have persisted in Massachusetts. Specifically, ED use was high in Massachusetts prior to health reform and has stayed high under health reform." A lot of uncompensated care comes in through the ED.
Finally, notice how a 1.7-percentage-point premium surcharge is a bad thing if President Obama is ostensibly rescuing you from it, but a good thing if he's imposing it on you.
Even if Democrat Martha Coakley wins 50 percent of the vote in the race to fill the late Sen. Ted Kennedy's (ahem) term, there are other numbers emanating from Massachusetts that present a problem for President Obama's health plan.
On Wednesday, the Cato Institute will release “The Massachusetts Health Plan: Much Pain, Little Gain,” authored by Cato adjunct scholar Aaron Yelowitz and yours truly. Our study evaluates Massachusetts' 2006 health law, which bears a "remarkable resemblance" to the president's plan. We use the same methodology as previous work by the Urban Institute, but ours is the first study to evaluate the effects of the Massachusetts law using Current Population Survey data for 2008 (i.e., from the 2009 March supplement). Since I’m sure that supporters of the Massachusetts law and the Obama plan will dismiss anything from Cato as ideologically motivated hackery: Yelowitz's empirical work is frequently cited by the Congressional Budget Office, and includes one article co-authored with MIT health economist (and Obama administration consultant) Jonathan Gruber, under whom Yelowitz studied.
Among our findings:
- Official estimates overstate the coverage gains under the Massachusetts law by roughly 50 percent.
- The actual coverage gains may be lower still, because uninsured Massachusetts residents appear to be concealing their lack of insurance rather than admit to breaking the law.
- Public programs crowded out private insurance among low-income children and adults.
- Self-reported health improved for some, but fell for others.
- Young adults appear to be avoiding Massachusetts as a result of the law.
- Leading estimates understate the cost of the Massachusetts law by at least one third.
When Obama campaigns for Martha Coakley, he is really campaigning for his health plan, which means he is really campaigning for the Massachusetts health plan.
He and Coakley should explain why they're pursuing a health plan that's not only increasingly unpopular, but also appears to have a rather high cost-benefit ratio.
(Cross-posted at Politico's Health Care Arena.)
In a new study titled, "Obama's Prescription for Low-Wage Workers: High Implicit Taxes, Higher Premiums," I show that the House and Senate health care bills would impose implicit tax rates on low-wage workers that exceed 100 percent. Here's the executive summary:
House and Senate Democrats have produced health care legislation whose mandates, subsidies, tax penalties, and health insurance regulations would penalize work and reward Americans who refuse to purchase health insurance. As a result, the legislation could trap many Americans in low-wage jobs and cause even higher health-insurance premiums, government spending, and taxes than are envisioned in the legislation.
Those mandates and subsidies would impose effective marginal tax rates on low-wage workers that would average between 53 and 74 percent— and even reach as high as 82 percent—over broad ranges of earned income. By comparison, the wealthiest Americans would face tax rates no higher than 47.9 percent.
Over smaller ranges of earned income, the legislation would impose effective marginal tax rates that exceed 100 percent. Families of four would see effective marginal tax rates as high as 174 percent under the Senate bill and 159 percent under the House bill. Under the Senate bill, adults starting at $14,560 who earn an additional $560 would see their total income fall by $200 due to higher taxes and reduced subsidies. Under the House bill, families of four starting at $43,670 who earn an additional $1,100 would see their total income fall by $870.
In addition, middle-income workers could save as much as $8,000 per year by dropping coverage and purchasing health insurance only when sick. Indeed, the legislation effectively removes any penalty on such behavior by forcing insurers to sell health insurance to the uninsured at standard premiums when they fall ill. The legislation would thus encourage "adverse selection"—an unstable situation that would drive insurance premiums, government spending, and taxes even higher.
See also my Kaiser Health News oped, "Individual Mandate Would Impose High Implicit Taxes on Low-Wage Workers."
And be sure to pre-register for our January 28 policy forum, "ObamaCare's High Implicit Tax Rates for Low-Wage Workers," where the Urban Institute's Gene Steuerle and I will discuss these obnoxious implicit tax rates.
(Cross-posted at Politico's Health Care Arena.)