We have lost a good friend in the battle for limited government with the passing yesterday of John Berthoud, president of National Taxpayers Union. John was a scholar, a leader in public policy in Washington, and the head of a very important institution that helps Americans understand the huge cost of their government. John was an extremely kind and honorable person, and he will be missed greatly.
I admit I’m committing an ideological sin, but the World Bank has released its 2008 “Doing Business” report, which ranks 178 countries on regulatory impediments to entrepreurship, and it is a first-rate publication. I realize the World Bank should not exist, and I’m quite aware that many of their activities in other areas hinder economic growth, but this report is very helpful in promoting regulatory competition among jurisdictions. I’ll atone for my sin by coming up with a reason to criticize the international bureaucracy in the near future, but this EU Observer story shows how Doing Business creates pressure for regulatory liberalization:
Thanks to regulatory reforms, Eastern Europe and Central Asia have surpassed East Asia for ease of doing business, a World Bank report says. The report, called “Doing Business” compares and ranks 178 economies and seven regions on the basis of ten indicators related to business regulations. …Several of the region’s countries have also overtaken some Western European economies. Estonia and Georgia for instance, the region’s two top performers, have surpassed most EU members and both hold a spot in the top twenty.
Interest from an NYT reporter the other day prompted me to update data on federal spending by presidential term. The latest data show that the current President Bush is the biggest spender since Bush I, Ford, Carter, or FDR, depending on which spending category one considers.
The table shows annual average spending growth in real, or inflation-adjusted, dollars. It accounts for the different length of each president’s tenure. I have included data for Bush II’s first six years (FY2001 to FY2007).
Looking at the rows in the table:
Comparing the first and last rows shows the difference that interest costs make. Bush II has benefited from low interest costs, which have partly offset high program costs in recent years. That has made Bush II’s fiscal record look a bit better than it actually is because the low interest costs are mainly thanks to four balanced budgets under Clinton.
But isn’t Congress responsible for federal spending? No, Congress shares the responsibility with the White House. Presidents set the overall tone for spending and they hold a powerful veto pen. Bush II’s big spending record, as shown in the data, is reflective of the big spending policy agenda set by his administration.
Former CBO director June O’Neill and Dave O’Neill have a working paper comparing health outcomes in the semi-socialized U.S. health care sector and the fully socialized Canadian Medicare system. From the abstract:
Does Canada’s publicly funded, single payer health care system deliver better health outcomes and distribute health resources more equitably than the multi-payer heavily private U.S. system? We show that the efficacy of health care systems cannot be usefully evaluated by comparisons of infant mortality and life expectancy. We analyze several alternative measures of health status… We find a somewhat higher incidence of chronic health conditions in the U.S. than in Canada but somewhat greater U.S. access to treatment for these conditions. Moreover, a significantly higher percentage of U.S. women and men are screened for major forms of cancer. Although health status, measured in various ways is similar in both countries, mortality/incidence ratios for various cancers tend to be higher in Canada… We also find that Canada has no more abolished the tendency for health status to improve with income than have other countries. Indeed, the health-income gradient is slightly steeper in Canada than it is in the U.S.
There’s also this interesting observation from their concluding comments:
The need to ration when care is delivered “free” ultimately leads to long waits or unavailable services and to unmet needs. In the U.S. costs are more often a source of unmet needs. But costs may be more easily overcome than the absence of services. When asked about satisfaction with health services and the ranking of the quality of services recently received, more U.S. residents than Canadians respond that they are fully satisfied and rank quality of care as excellent.
And this crucial caveat:
One important issue that we do not address concerns the large differential in per capita health care expenditures which are about twice as large in the U.S. Is the U.S. getting sufficient additional benefits to justify these greater expenditures and where should we cut back if cutbacks must be made? Alternatively, what would Canada have to spend to increase their technical capital and specialized medical personnel to match American levels or to eliminate the longer waiting times? And would it be worthwhile to them to do so? To answer these questions more research is needed…
Economist and blogger Glen Whitman has an excellent article in the latest Cato Policy Report on the latest fad in health policy: requiring people to purchase health insurance, a.k.a. an “individual mandate.” Hillary, Arnold, Mitt, John … the kids, they just love this individual mandate! If you read only one article on the topic, let this be it.
Whitman adds a post-script to that article in a recent post:
Something I don’t mention in the article is why some free-market types support the individual mandate. In short, I think the reason is that they have given too little attention to the political dynamics of such a mandate, instead naively assuming that the mandate could be crafted once-and-for-all in a wise and lobbying-resistant fashion.
Picking the worst government program would be a huge challenge, but picking the worst funding system is much easier. Programs involving joint federal-state funding contain built-in incentives to expand the size of government because politicians at either level can buy more votes by expanding the program, knowing that they only have to pay (depending on the formula) a share of the cost. In other words, lawmakers can promise $1 worth of goodies for, say, 50 cents. This is one of the reasons why Medicaid is a fiscal disaster. It’s also why welfare reform was a step in the right direction (the old system funneled more money to states when they added more people on the dole, creating a terrible incentive system). Unfortunately, politicians generally make things worse rather than better, and a Wall Street Journal editorial (sub only) shows how the SCHIP program is encouraging more government:
Schip was created in 1997 to help insure children from low-income families, but it has since become a stealth vehicle to expand government control of health care. Schip expires next week, and House and Senate negotiators are hashing out a “compromise” that would expand the program by about $35 billion over the next five years (plus a budget gimmick concealing at least $30 billion). … Many states like New Jersey have been taking advantage of Schip’s “flexibility” and covering more affluent children, their parents, and even childless adults. In a tardy response to this trend, the federal Department of Health and Human Services announced in August that before states could further expand their Schip programs beyond 250% of poverty, they would have to enroll 95% of children below 200% of poverty. …For several years the number of uninsured New Jersey children under 200% has held steady, while New Jersey’s Schip rolls have grown by about 10% a year. One major reason is that the state continues to enroll families with incomes up to $72,275. … Governor Corzine could always tax his own residents to pay for this largesse. Then again, New Jersey already has one of the worst tax burdens in the country, and Trenton has raised taxes five times in the last six years. For the Governor, the political beauty of Schip is that it allows New Jersey to finance its spendthrift ways on the backs of more responsible states.
Today’s Washington Post seems impressed that the State Children’s Health Insurance Program has made strange bedfellows:
A broad coalition — including liberal health policy advocates and their usual foes, the health insurance lobby — endorsed the SCHIP bill, urging House Republicans to get on board and the president to sign it…
The White House is looking increasingly isolated on the issue. America’s Health Insurance Plans, the largest insurance lobbying group, endorsed the measure yesterday, undercutting Bush’s contention that the bill is a step away from private insurance and toward government-run health care.
“It repairs the safety net and is a major movement toward addressing the problems that states and governors have been trying to address, which is how to get access for children,” said Karen Ignagni, the group’s president.
In a recent paper on SCHIP, I explain why the health care industry is lining up in support of a massive expansion:
Support for SCHIP (and Medicaid) expansion comes from an alliance of “bootleggers and Baptists.” Economists often explain support for government policies (e.g., restrictions on alcohol sales) in terms of those who truly believe in the merits of the policy (i.e., Baptists who oppose alcohol consumption) and those who benefit financially from the policy (i.e., the bootleggers who sell illicit alcohol).
The “Baptists” behind SCHIP expansion are those who believe that the way to increase health care quality and access is for government to finance and control the delivery of care. An example would be left-wing advocacy groups such as Families USA. Expanding SCHIP and Medicaid to enroll more and more Americans serves their goal of eventually enrolling all Americans in government health care programs…
The “bootleggers” behind SCHIP expansion include those who stand to gain financially from greater government subsidies for health insurance and health care. They include several lobbying groups: America’s Health Insurance Plans, and the insurers it represents; the Pharmaceutical Research and Manufacturers of America and the drug manufacturers it represents; the American Medical Association and the physicians it represents; and the Federation of American Hospitals and the for-profit hospitals it represents. State officials who support SCHIP expansion, such as California’s Governor Schwarzenegger and the rest of the National Governors Association, also belong in the bootleggers category because increasing federal SCHIP spending benefits them politically: it enables them to provide new subsidies to voters at a fraction of the cost.
It would be nice if serious media outlets like the Post could acknowledge that the health insurance lobby has a financial interest in the legislation it supports.