The House is expected to vote today on an expansion of the State Childrens Health Insurance Program (SCHIP). My colleague, Michael Cannon, has frequently written on the problems of this poorly targeted program that moves six children from private to public coverage for every four uninsured children that it covers. However, it is interesting to note that the $33 billion expansion is supposedly paid for primarily through a 61-cent-per-pack increase in the federal cigarette tax. Yet, at the same time, President-elect Obama announced that his choice for Deputy Secretary of Health and Human Services is William Corr, an anti-tobacco lobbyist and executive director of the Campaign for Tobacco-Free Kids. So we can shortly expect the Obama administration to step up efforts to stop people from smoking, thereby reducing the taxes they are counting on to pay for their SCHIP expansion. One hardly knows whether to wish them success.

Thanks to the economic crisis and its impact on state revenues, most states are faced with a tough and unpopular set of choices: which and how many services to cut; how much to raise taxes? Wouldn’t it be great if there were a way to cut taxes while expanding the services available to citizens? As it happens, there is.

I’m in Las Vegas this morning to present a new study showing how broad-based education tax credits would impact Nevada’s finances. Over the first 10 years, I estimate the program would save nearly a billion dollars, and that by its fifteenth year in operation it would be saving $426 million annually. Not only that, per pupil spending in the state’s public schools would actually rise over time under this program.

One of the most interesting things about this study was how easy it was to complete, and how easily it could be reproduced in other states. Last year, economist Anca Cotet and I published a Cato Institute paper presenting a generalized Excel spreadsheet tool for calculating the fiscal impact of education tax credits on any state’s finances, based on some state-specific data input by the user. Using that tool (and in fact refining its model a little) I was able to run the numbers for Nevada quite easily. The only new math in this paper is the calculation of the marginal cost of public schooling in Nevada (the amount district spending rises in response to the enrollment of one additional student, and the amount it falls when enrollment declines by one student).

So if there are any legislators out there fretting over how to balance their state budgets in these difficult economic times, consider education tax credits: they cut taxes while dramatically expanding the range of educational options available to families. And they’re an increasingly bipartisan idea.

• Writing for Independent Advocate, a political blog devoted to “independently minded news analysis,” Wes Kimbell quotes Senior Fellow Richard W. Rhan’s December op-ed about Obama’s proposed stimulus plan.

• The Hill’s Congress Blog posts analysis from Senior Fellow Michael D. Tanner on Barack Obama’s proposals for Social Security and Medicare.

• The International Law and Policy Blog links to Cato Trade Policy Analyst Sallie James’s appearance on Reason TV, discussing presidential trade policies.

• Blogging for the Weekly Standard, Brian Faughnan cites Director of Health Policy Studies Michael F. Cannon’s recent post on Obama’s proposal to eliminate Medicare Advantage, which would oust nine million seniors from their health plans.

• Baltimore Sun financial columnist and blogger Jay Hancock plugs an upcoming forum at Stanford University on the similarities and differences between liberals and libertarians, featuring Cato Research Fellow Will Wilkinson and Vice President for Research Brink Lindsey.

• Writing for the Peace Freedom & Prosperity Movement Web site, Michael Shanklin discusses Cato’s video on the auto bailout.

In their zeal to achieve universal health insurance coverage, President-elect Barack Obama and congressional Democrats are likely to exacerbate a real crisis in America’s health-care sector.

Americans generally receive medical care from a fragmented collection of doctors, hospitals, pharmacists, and other health care providers. All too often, those providers don’t communicate and collaborate. The result is too many unnecessary services and too many medical errors. The problem is particularly acute when it comes to complex patients with multiple conditions.

In a paper released today by the Cato Institute titled, “Does the Doctor Need a Boss?”, Arnold Kling and I explain that government prevents coordination of care, and that improving coordination requires reducing government’s role:

Medical care typically lacks coordination, in part because payment systems such as Medicare have not kept pace with technology and patients’ changing needs, and because many doctors are unwilling to cede authority to a boss. Medicare and other payers continue to pay doctors according to the independent-craftsman model. For example, Medicare’s payment system generally does not reward coordination. Instead, Medicare and other fee-for-service payers tend to favor technologically intensive specialist services over those of general practitioners who might be best suited to play the role of project manager…

In the home-building analogy, it is as if the concrete contractor, the drywall contractor, the electrician, and the plumber all refuse to work under a general contractor. Instead, they each try to do their jobs independently, regardless of the impact on the rest of the project.

The culprit is not market forces, but government interventions that protect physicians from competition from better-coordinated providers.

Licensing of medical professionals, state health insurance regulations, corporate-practice-of-medicine laws, and policies that encourage fee-for-service payment (i.e., Medicare, Medicaid, and the federal tax code) hold at bay the market forces that would improve coordination of care…

Improving coordination of care requires two consumer-empowering reforms:

First…consumers should control the money that purchases their health insurance, and should be free to choose their insurer and health care providers.

Second, state licensing regulations make it difficult for corporations to design optimal work flows for health care delivery. Under institutional licensing, regulators would instead evaluate how well a corporation treats its patients, not the credentials of the corporation’s employees. Alternatively, states could recognize clinician licenses issued by other states. That would let corporations operate in multiple states under a single set of rules and put pressure on states to eliminate unnecessarily restrictive regulations.

By centralizing control in Washington, the ruling Democratic left will give new strength to the protectionist forces that have blocked quality improvements in health care.

The Washington Post reports:

Robert Rubin, a key figure in the U.S. financial boom as Treasury secretary and then as a senior adviser at Citigroup, announced his retirement from the troubled New York bank yesterday in the latest sign that Citigroup wants to break from its recent past.

Rubin joined Citigroup in 1999, soon after the company emerged as a financial services giant. He has since earned more than $115 million as Citigroup has suffered through setbacks and missteps that culminated in a November bailout by the federal government….

Citigroup, the long-time champion of free markets and deregulation, is increasingly dependent on the federal government, which has invested more than $50 billion to help it weather the economic crisis.

After we’ve invested $50 billion in the company, seems like we ought to call it Taxpayergroup. It’s not really a private company more, though private parties like Rubin may still profit handsomely from it.

Matthew Holt implausibly says no.

Tom Daschle is a former majority leader of the U.S. Senate, and president-elect Barack Obama’s pick to head the Department of Health and Human Services. Daschle will also head up the Obama administration’s health care reform efforts.

Which is why Daschle’s proposal for a Federal Health Board has received so much attention. Holt reports:

the main role of the Federal Health Board would be as a cost-effectiveness review organization with teeth—in that Medicare, Medicaid & FEHBP would all be bound to follow its guidelines.

Holt continues:

Critics on the loony right … will call this rationing.

What’s interesting about that comment is that Holt merely associates the “rationing” claim with people who are loony. He doesn’t actually say they’re wrong. In fact, Holt himself writes:

we need to make cardiologists in Miami behave like cardiologists in Minnesota with a consequent impact on the incomes of doctors, hospitals and stent & speedboat salesman in high cost areas … If the Federal Health Board has teeth, that’s what it’ll do, and the AMA, AHA, AdvaMed, PhRMA et al know it. Which is why the PhRMA front organizations have been railing against cost-effectiveness for so long.

So Holt acknowledges that the point of comparative- and cost-effectiveness research — and Daschle’s Federal Health Board — is to do something that would reduce the incomes of doctors, hospitals, and drug/​device manufacturers. That something would be so dramatic that it has the providers and manufacturers up in arms and funding front organizations. If that something is not refusing to pay for some medical services — i.e., rationing — then what is it?

Rationing medical care is not just essential, it’s unavoidable. And the way we ration medical care today is unconscionable. But so too would be having the government ration medical care. Which is probably why proponents of government rationing don’t want to call it that.

• Writing on National Review’s blog, John Hood cites Michael New’s recent op-ed, “The Right Way to Bail out California” and William Poole’s new article on the Fed’s massive expansionary policies.

• While running an online poll on Sanjay Gupta’s appointment, Ann Althouse quotes Michael D. Tanner on his views about the office of surgeon general.

• Jason Shafrin cites a December Cato forum in which panelists Glen Whitman and Ezra Klein debated the state of the nation’s health care. A podcast from the forum, “Does America’s Health Care Sector Produce More Health?” is available here.

• Insider Online contributor Alex Adrianson blogs about the most recent edition of Cato Journal, with an article by J.R. Clark and Dwight R. Lee that examines the relationship between government interference in the market and censorship.

• Brad Warbiany, a writer for The Liberty Papers, cites Tad DeHaven’s recent post arguing against increased government spending.