Topic: Health Care & Welfare

These Scope of Practice Laws Don’t Improve Health Outcomes, Serve Mainly as Barriers to Entry

Scope of practice (SOP) restrictions in health care professions are often portrayed as a necessary intervention to protect consumer health and safety. Given how common this argument is, there have been surprisingly few studies trying to determine whether SOP restrictions actually have any impact on such outcomes. A new working paper seeks to fill this gap in the literature by determining whether SOP laws for certified nurse midwives (CNMs) affect health outcomes. On average, it turns out that the restrictions do not have a significant impact on maternal behaviors or infant health outcomes. Instead, they “primarily serve as barriers to practice and removing these restrictions has the potential to improve the efficiency of the health care system for delivery and infant care.”

SOP laws are determined at the state level, and regulate which activities and tasks certain professions can perform within the state. Physicians are generally unaffected, but other health practitioners are—in this case, CNMs specifically. Their level of restriction ranges from states with “no barriers,” where CNMs do not have oversight requirements, to states with “high barriers,” where they have to be under the direct supervision of a physician and may not write prescriptions. In heartening news, more states seem to be recognizing the wasteful nature of these laws. The recent trend for this specific case has been a move towards a more relaxed scope of practice environment.  

Scope of Practice for Certified Nurse Midwives by State, 1994 vs. 2013

Source: Markowitz et al.

Some Long-Awaited Answers on the Long-Term Impact of Cash Assistance

In the search for ways to reform the flawed current welfare system, some form of basic income guarantee has received more attention. My colleague Michael Tanner has reviewed some of the related pros and cons, but most of those studies confined themselves to the immediate to short-run impact on work, leaving many important questions unanswered. A new paper from Daniel Price co-authored with Jae Song offers one of the first studies to analyze the long-term impact of cash assistance from the negative income experiments that took place last century. Their findings suggest “unintended and unexpected long-term consequences for recipients” and ambiguous effects on their children. It’s important to understand these effects when considering ways to try to address the many problems with the troubled status quo.

In the 1960s and 1970s, when interest in a basic income was at a peak, there were large-scale evaluations of the idea of unconditional cash transfers in the Seattle and Denver Income Maintenance Experiments (SIME and DIME, respectively). Recipients were given an unconditional cash transfer that was phased out as earned income rose, for a period of either three or five years. There were a host of studies analyzing the impact on poverty, work impact, and other measures, but these were more focused on the short-term effects.

This paper is so important because, as the authors explain, “virtually no other research has been conducted on the impact of cash assistance—or, indeed, any other type of government assistance—on beneficiaries themselves long after the assistance has ended.” Some of this is due to data limitations, and the authors are able to combine SIME/DIME date with administrative records from the Social Security Administration and the Washington State Department of Health.

The impact on poverty and material hardship is more straightforward and easier to measure, but some of the effects on work effort and other measures are still not as well understood. In this paper the authors find some evidence that participation did seem to have an impact on both work and earnings later in life for adult recipients. Participation reduced the probability a worker was active in any given year by 3.3 percentage points, and decreased average earnings by $1,800 (about 7.4 percent of mean annual earnings).

Another way to put it: for each $1 in additional government transfers, the authors find that an individual’s discounted lifetime earnings are $4.50 lower. 

Impact on Propensity to Work and Earnings for Parents, by Age

Source: Price and Song (2016).

Notes: Each data point represents the estimate and 95% confidence interval of the coefficient on a dummy for financial treatment status in one regression, limiting the sample to data from individuals when they are a certain age. Earnings variables are based on one observation per year for all years between 1978 and 2013.

Of Agencies and Amendments

Following my recent blog on Obama’s Housing Toolkit, Michael Hamilton took exception with the question: “Who better to determine local needs than property owners and concerned citizens themselves?” and suggested that this type of local-centric thinking raises questions about the reach and influence of constitutional protections for property rights. 

But the Obama Toolkit does not propose protecting or amending constitutional rights. At the federal level, it suggests spending $300 million to modernize cities’ housing regulation, when the only modernization required is a reduction in zoning regulation. Theoretically, this reduction in regulation should cost nothing.

Although the language in the report is anything but explicit, given HUD’s historical preference for withholding funding from communities that fail to do the agency-approved urban policy action du jour, it’s not a stretch to suggest we could see a similar carrot-and-stick approach used by HUD in the granting of “Local Housing Policy Grants.” Actually, HUD is already punishing or rewarding municipalities this way, through the euphemistically-titled Affirmatively Furthering Fair Housing, Community Development Block Grants, Home Investment Partnerships, Emergency Solutions Grants, and other programs.

But simply because this method is employed with regularity, or even with worthy aims, doesn’t mean that we have to favor it. This carrot-and-stick approach is, for one thing, usually unconstitutional. Sadly, an unconstitutional approach is unremarkable in the climate of complete rejection/ignorance of constitutional law in which we exist.

It isn’t that cities or even “concerned citizens” aren’t often inimical to reducing regulation; they are. Property values are bolstered by zoning regulation, giving citizens every incentive to support restrictive zoning. The question is whether we would like federal or state administrative agencies involved in policing this.

But if you remain unmoved on the merits of (un)constitutionality alone, HUD’s ability to effectively and impartially police local municipalities is unproven (see: HUD’s involvement in Westchester, NY). It’s not as if HUD goes after the real zoning or affordability problems (see: San Francisco, CA). In other words, this is just bad policy.

On the other hand, local governments should be prohibited from enacting many types of zoning regulations, and one way to do that is to use higher levels of government—state or federal—to help protect people against arbitrary deprivations of property rights. That’s actually more of a “bottoms up” philosophy, individuals asserting rights, than a top-down one, expanding federal or state agency policing powers.

So, again: is there anything that can be done by the federal or state government to reduce regulations? Probably not constitutionally via agency blackmail but yes, there are things that could be done that are not suggested in Obama’s Housing Toolkit.

The federal government could overturn Euclid v. Ambler, which legitimized zoning regulations via police powers to begin with, or any of the cases that have expanded zoning regulations following it.

The people could amend the Constitution to protect property owners from regulatory takings, though it’s not obvious this would be necessary: a casual reader of the Constitution has good reason to believe that the Fifth Amendment already covers this quite well when it states that “private property [shall not] be taken for public use, without just compensation.”[1] At the federal level, the Constitution really doesn’t need an addendum; it just needs adherents and adherence.

The same thing goes for states. Amending state constitutions to include language that forbids irrational local zoning regulation is fine, though that’s not what is proposed. Using the state equivalent of the Tax & Spend Clause to justify any and all state agency overreach, which is what we often see in practice, is not.

In summary, the federal government’s role is to preserve [property] rights; it is not to create new programs, new schemes, and new mechanisms for controlling cities to ensure that municipalities finally spawn the elusive urban utopia of planner’s fantasies. Property rights should be thought of as originating with the individual – yes, even with property owners who happen to be concerned citizens. Though there is much to be admired in the report overall, this does not seem to be the position of the Obama Housing Toolkit when it comes to federal or state oversight.


1. The takings clause is sometimes used to compensate citizens for full takings (e.g. eminent domain) and less often to protect citizens against regulatory takings (e.g. zoning regulation).

You Gotta Love the Kaiser Family Foundation

The folks at the Kaiser Family Foundation will publish studies that explain how ObamaCare creates “an incentive to avoid enrolling people who are in worse health” such as “by making [insurance] products unattractive to people with expensive health conditions.”

Then, when their own polling shows three of the public’s top four health care concerns are the very sort of health-insurance features ObamaCare pushes insurers to adopt, they spin it as evidence the public does not want Congress to reopen ObamaCare.

Could It Be Unconstitutional to Raise the Obamacare “Tax” for Not Purchasing Health Insurance?

As many predicted, especially us at Cato, the Affordable Care Act is beginning to make health insurance less affordable for many Americans. Part of the problem, in a nutshell, is precisely what my colleague Michael Cannon described in 2009, the young and the healthy avoiding signing up for health insurance and choosing to pay the fine, or, as Chief Justice John Roberts would call it, a tax.

MIT economist Jonathan Gruber, often described as an architect Obamacare, recently said that some of these problems can be alleviated by increasing the “tax” on those without insurance. “I think probably the most important thing experts would agree is we need a larger mandate penalty,” said Gruber.

Depending on how high the penalty goes, there could be a constitutional problem with that. In the opinion that converted the “penalty” into a constitutional “tax,” Chief Justice Roberts described the characteristics of the “shared responsibility payment” that made it, constitutionally speaking, a tax rather than a penalty. One of those characteristics is that the penalty was not too high: “for most Americans the amount due will be far less than the price of insurance, and, by statute, it can never be more. It may often be a reasonable financial decision to make the payment rather than purchase insurance, unlike the ‘prohibitory’ financial punishment in Drexel Furniture.” In Drexel Furniture, also known as the Child Labor Tax Case, the Court struck down a 10 percent tax on the profits of employers who used child labor in certain businesses. One reason the Court struck it down was because its “prohibitory and regulatory effect and purpose are palpable.”

Fewer Choices and Higher Premiums in the Affordable Care Act’s Exchanges

People shopping around on the insurance exchanges when the Affordable Care Act’s Open Enrollment period begins next week will find that the choices they have are limited and that insurance premiums have gone up significantly. A new brief from the Department of Health and Human Services reports an average increase of 22 percent for benchmark plans, and consumers in some states will face hikes as high as 116 percent in Arizona. 

The high profile exits of Aetna and UnitedHealth were covered at the time, but the report gives new insights into the aggregate effects of smaller exits and discontinuations as well. In the states included in the HHS brief, there was a net reduction of 73 issuers from last year, with Iowa and Maine being the only states to see a net increase in the number of issuers.

As might be expected, this significant drop in the number of issuers has led to a corresponding reduction in the number of choices available to consumers in most states. The trend prior to this year had been a reduction in the number of counties with only one insurer, but that quintupled this year in the wake of insurer exits, from 182 last year to 960 this year according to calculations by Sarah Frostenson.  In this year’s open enrollment 21 percent of the consumers in the 38 states the HHS brief included only had one issuer to choose from, and only 56 percent had three or more. The weighted average number of qualified health plans to choose from in a county dropped from 47 to 30.

Not So Fast on a Universal Child Benefit

Sam Hammond and Robert Orr of the Niskanen Center have published a very thoughtful paper proposing the establishment of a Canadian-style Universal Child Benefit. They make a compelling argument that replacing the current mish-mash of child-centered social welfare programs with a single cash benefit would be both more efficient and more humane than what we have today. But, before we get carried away and rush down the road to another new entitlement, there are many questions that need further exploration.

Hammond and Orr call for the elimination of eight existing programs (the dependent tax exemption, the portion of food stamps (SNAP) going to child recipients, five separate school nutrition programs, and the dependent care credit). They would also fold the existing Child Tax Credit (CTC) into their new benefit. This would free up $147.5 billion annually, allowing for a $2,000 per child cash grant on a budget-neutral basis.  The benefit would be phased out for incomes above $75,000 for single heads of household and $110,000 for a married couple.

There are several important advantages to this approach. First, cash is almost always preferable to in-kind programs. Cash payments are transparent, treat recipients like adults, and allow for greater flexibility of individual preferences and circumstances.  Moreover, the shift to cash will help break up the concentrated lobbying power of special interests who benefit from in-kind programs, reducing the constant pressure to increase benefits.  In general, as I have argued, we should be transitioning our entire social welfare system to cash.

Second, Hammond and Orr’s approach would treat families more equitably.  For example, current benefits reward parents who purchase external child care services, but do not benefit traditional stay-at-home parents.  Existing programs also tend to benefit those individuals, often more educated and even middle-class, who have the time and expertise to navigate the bureaucracy, rather than those families most in need.  A universal child benefit would extend benefits to many who have not been able to access them.

And, third, a universal child benefit could help reduce poverty.  Hammond and Orr estimate that their proposal would reduce poverty by 1.7 percentage points and bring some families out of deep poverty, using the Supplemental Poverty Measure.  If we can reduce poverty without any increase in expenditures, that has to be considered a positive.

Why then am I cautious about heading down this road?  First, while Hammond and Orr are sanguine about the effect on work incentives, I am less so. No doubt, the availability of funds for child care would help many mothers enter the labor force. But, at the same time, previous studies with guaranteed cash benefits have resulted in a decline in work participation.  Most recently, a study by David Price and Jae Song found some evidence that cash-assistance could lead to unintended and unanticipated long-term reductions in work effort for adult recipients, although it’s not yet clear what the underlying mechanisms are.

We should also recognize that a child benefit is a reward for having children, not for work.  Should we be in the business of redistributing from childless families to those with multiple children?  For that matter, should we be in the business of rewarding child-bearing by families well above the poverty level?  We may well want to offset the cost of having children for the poor, but do we want to do the same for the families earning $110,000?  And, what does this say about the relationship between individuals, the state, and the choices we make?

Finally, and most importantly, Hammond and Orr envision their proposal as a substitute for existing social welfare programs.  In this regard, they are heading down the road to a Universal Basic Income (UBI) advocated by Charles Murray. However, many liberal advocates of a UBI or child benefit see such a program as being added on top of existing welfare programs. Indeed, Hillary Clinton has called for doubling the current credit for children ages 4 and under, and eliminating the earnings exclusion for refundability.  Such an add-on approach would both increase dependence on government and be unaffordable. 

In particular Hammond and Orr’s call for eliminating child SNAP and school nutrition benefits would be heavy political lifting.  The demagoguery from advocates of the current welfare state would be amazingly easy.  That doesn’t mean that it’s an approach that shouldn’t be pursued.  It does mean that it should be pursued with great caution.