The Independent Institute


Ambulatory Surgery Centers Saved $38 Billion in Private Health Spending

23743546_MLNew research from the Healthcare Bluebook (sponsored by the Ambulatory Surgery Center Association) indicates the privately insured population saved $38 billion by using Ambulatory Surgery Centers (ASCs) instead of hospital outpatient departments for day surgeries. That figure includes $5 billion of lower out-of-pocket costs paid by patients directly.

What is remarkable is that only 48 percent of procedures (such as joint replacement) that can currently be done in either setting are actually done in ASCs. Assuming it would not be appropriate for three percent of surgeries to be done at ASCs (due to complexity), the study estimates that shifting the balance of procedures to ASCs would save yet another $38 billion. Plus, shifting other procedures, not currently done at ASCs, would save another $56 billion.

Why are private insurers and employers leaving this money on the table? The study notes that hospitals are concentrated and have stronger bargaining power over payers than do ASCs. So, why do not more ASCs open up? Because ASCs are often owned by physicians, laws discriminate against them versus non-profit hospitals. Although federal laws do not discriminate against ASCs as badly as they do physician-owned hospitals, laws in some states prevent new ASCs from entering markets to compete against hospitals. (See this New Jersey law, for example.)

Nevertheless, insurers and employers should be able to do a better job of getting rates down. The California Public Employees Retirement System (CalPERS) reduced costs of joint replacement, cataract surgery, and arthroscopy by $6.4 million in two years by implementing “reference pricing,” whereby high-quality settings with a wide range of fees were paid the same reference price (based on the low-cost providers’ fees). If patients wanted higher-cost facilities, they paid the difference out of pocket.

CalPERS’ reference pricing started in 2008. How can it not be the norm today? Evidence continues to build that health insurance, as it is currently designed in the United States, does not add value.

Califor-ni-ED May Be Coming to a Classroom Near You

15134543 - teacher with a group of high school students in classroomOne export I’d like from California is its pre-Common Core math standards, hailed as the country’s finest. Instead, we’re likely going to get some horrific version of its pending K-12 history and social “science” framework—or as the Hoover Institution’s Bill Evers calls it, Progressive “goo-goo reform.”

Whether or not we live in California, we need to pay close attention to its State Board of Education, which meets on July 13 to consider adopting the new history and social sciences framework. Here’s why.

California has the highest public K-12 enrollment nationwide, with more than one out of 10 school children, nearly 6.3 million. So it’s fair to say that as California goes, so goes the country since textbook companies will be customizing their wares for their largest market before peddling them to other states.

Stanley Kurtz, Ethics and Public Policy Center Senior Fellow, warns in painful detail that if this happens, we should brace ourselves for a hard left turn, even by Left Coast standards.

Should Dissent Be Allowed in Health Care?

An eminent physician has tentatively proposed that published treatment guidelines be accompanied by dissenting expert opinions, much like U.S. Supreme Court decisions.

Daniel Musher, MD, of Baylor College of Medicine, served on the Advisory Committee on Immunization Practice of the Centers for Disease Control and Prevention, which considered guidelines for a dual vaccine approach for pneumococcal vaccination for adults. He disagreed strongly with the published recommendation, but was prevented from publishing his opinion alongside the recommendation.

Dr. Musher believes the publishing of dissenting opinions is very valuable to the progress of knowledge:

As citizens of the United States, we are as much bound by a 5-4 decision of the High Court as a 9-0 vote (although closely passed decisions are more likely to be overturned in future cases).1 Similarly, as practitioners of medicine, until new guidelines are written, we are seriously constrained by, if not actually bound by, existing ones, without regard to the unanimity of opinion in the recommending committee. Nevertheless, there is much to gain from studying dissenting opinions, as was famously shown by the writings of Justices Holmes and Brandeis, many of whose minority opinions, in time, became the law of the land.2 I propose that the failure to publish differing or dissenting views in medical guidelines presents our profession with an inappropriately monolithic view—one that is studied as gospel by physicians-in-training and forced on practitioners by incorporation into a variety of performance measures.

Does Uber Reduce DUIs?

52389336_MLI’ve written extensively on the benefits of ride-sharing companies like Uber and Lyft. I’ve discussed how these companies, using the technology in smart phones, allow customers to request a ride and track their vehicle and driver. The firms operate in hundreds of cities and in more than 20 countries.

These companies have received an immense amount of criticism. From their pricing system, to supposed “safety concerns,” a variety of individuals and groups have called for the regulation of these companies. Others have suggested they be banned outright. Most recently, the city of Austin, Texas expelled Uber from the city for failing to comply with regulation.

I’ve argued at length that it is politics, not safety, and certainly not consumer welfare, that is behind the Uber backlash. Decades ago, cab companies and governments found they could enter into a mutually beneficial exchange through regulation. Cab companies would be granted licenses in exchange for a fee. These licenses would work to artificially increase fare prices while simultaneously limiting competition. In order to “play the game” you’d have to a license. This barrier to entry effectively prevented taxi firms from having to compete for customers–they were the only game in town. Governments, meanwhile, saw benefits in the form of the fees paid by cab companies.

Which States Get the Biggest Piece of the Federal Education Funding Pie?

Now that school is out, there’s time to do some much-needed housekeeping, including a review of states’ shares of federal education funding.

Education expert Richard Innes, an analyst at Kentucky’s Bluegrass Institute, used Census data to see which states get the highest shares. Turns out, a handful of taker states should be writing thank you notes to taxpayers in the vast majority of giver states, based on Innes’ analysis.

On average, federal dollars (which, of course, come from taxpayers in the states) account for less than 10 percent of all education funding, with state and local sources making up the vast majority.

Five states exceeded this federal funding average, approaching or exceeding 15 percent: Mississippi, Louisiana, South Dakota, New Mexico, and Arizona. The actual dollar amounts vary, but they range between $195 million for South Dakota to nearly $1.2 billion for Arizona.

As Innes explains, “Of course, this federal money is far from ‘free’.” That’s because states have to agree to a variety of mandates. “Some have been OK, others are terrible. But, all result in a dilution of state and local control of education without any really dramatic evidence that the feds know better than we do. Furthermore, this is being driven by a relatively small total contribution from the federal government in comparison to a rather massive amount of state and local education dollars,” according to Innes.

The Uneasy Relationship Between Progressivism and Freedom

nanny state red rubber stamp over a white background.The United States was founded on an ideology that viewed the role of government as the protection of individual rights. That view of government was pushed aside by the ideology of Progressivism toward the end of the 1800s. The Progressive ideology envisions a government that not only protects individual rights but also looks out for people’s economic well-being.

A natural tension exists between Progressivism and freedom. Partly, this is because looking out for the economic well-being of some often lowers the economic well-being of others. Increasingly, Progressives also argue that people would be better off if government made their choices for them rather than giving people the freedom to make their own choices.

One motivation for the Progressive ideology was the perception that people who held substantial economic power were using that power to exploit those with less power. Thus, the Interstate Commerce Commission was established in 1887 to regulate railroads to keep them from exploiting shippers, and the Sherman Antitrust Act was passed in 1890 to limit the ability of concentrated economic interests to exploit others.

More Evidence Against Health Insurance

33201864_ML (1)David Lazarus of the Los Angeles Times, whose columns on health policy tilt heavily towards single-payer advocacy, has done a great service to the cause of consumer-driven health care: In a recent piece he describes how much more sense it makes to pay cash prices for health services than to pay what your health insurer “negotiates” supposedly on your behalf.

Five blood tests were performed in March at Torrance Memorial Medical Center. The hospital charged the patient’s insurer, Blue Shield of California, $408. The patient was responsible for paying $269.42.

Tests that were billed to Blue Shield at a rate of about $80 each carried a cash price of closer to $15 apiece.

“This is one of the dirty little secrets of healthcare,” said Gerald Kominski, director of the UCLA Center for Health Policy Research. “If your insurance has a high deductible, you should always ask the cash price.”

Not all medical facilities will be open to sharing their cash prices with an insured person, Kominski said, but many will.

Vanderbilt, Stanford Rape Cases Show Need for New Approach to Campus Sexual Assault

Source: Southern Yellow Pine Publishing

Available on pre-order from Southern Yellow Pine Publishing.

On June 20, 2016, a jury convicted Vanderbilt University football player Brandon Vandenburg of rape after just 4 1/2 hours. He was found guilty on eight counts, meaning he could get 15-20 years in prison. Many are comparing the Vanderbilt case to the Stanford University rape case, where former collegiate swimmer Brock Turner was convicted of sexual assault with attempt to rape. But this is a mistake. The two cases are very different, and the implications for campus sexual assault policy are significant.

I’ve spent the last three years researching and writing a book on campus sexual assault, Unsafe on Any Campus? College Sexual Assault and What We Can Do About It, and it’s slated for official release on July 28th. This problem is enormously complex, and two important observations (among many others) became very apparent : 1) not all rapists are the same, and 2) the criminal justice system is poorly suited to address campus sexual assault.

The Vanderbilt and Stanford cases have several similarities: They occurred at what many would call elite universities,* they involved athletes, alcohol played a crucial role, and the victims were unconscious (or near unconscious) when they were attacked. One other factor puts these cases in a league of their own: the defendants were convicted of the underlying crime of sexual assault and rape. This happens in fewer than 10% of cases brought to prosecutors, a startling statistic I unpack in my book.

Gov. Jerry Brown Proves Me Right on Public Pensions

46617166 - human hands exchanging money on blue background, closeup shotAs part of a year-long national campaign promoting my book California Dreaming: Lessons on How to Resolve America’s Public Pension Crisis, I’ve been saying that it’s impossible to have both public governance of defined-benefit public pension plans and responsible management of these plans. Politicians face strong perverse incentives to mismanage the plans for their own benefit. Recently, California Gov. Jerry Brown proved me right, once again.

Twice since April 2016, the Brown administration has negotiated new labor contracts—one with the California Correctional Peace Officers Association and another with the California Statewide Law Enforcement Association—that undermine sound management of the pension plans and undercut the PEPRA public pension reforms.

According to Jon Ortiz of the Sacramento Bee, as part of these new contracts, covered employees no longer need to pass a physical-fitness test to receive a $65 monthly fitness incentive payment. The $65 will now be included in base pay, and the total $780 per year becomes pensionable income and subject to future pay raises. But Ortiz noted: “Under Brown’s 2013 pension [reform] law, fitness pay doesn’t count toward retirement benefits,” and with these new labor agreements, “Voila! Loophole created.”

This illustrates how government pension debt has ballooned to about $950 billion in California and $5 trillion nationally. When the public isn’t looking, politicians make deals with government unions to ratchet up pension benefits—sometimes in small ways and sometimes in large—in exchange for votes and campaign contributions. Politicians, including Gov. Brown, talk the pension-reform talk when the public and the media are focused on the issue, but as soon as they turn away, politicians make deals that undo the reforms they supported earlier.

Gary Johnson’s Road to the White House


Yes, he’s a long shot, but Gary Johnson, Libertarian candidate for president, has the best chance to make it to the White House of any Libertarian candidate so far. To have a chance, he only has to pick up enough electoral votes to keep Clinton or Trump from getting an electoral majority.

The Constitution says that if no candidate receives a majority of the electoral votes, the House of Representatives chooses the president from among the top three electoral vote recipients. If the election between Clinton and Trump is close, Johnson would only have to win a few states (maybe only one) to be one of the top three electoral vote recipients. The Constitution gives no preference to any of the three candidates when nobody wins an electoral majority. When no candidate had a majority in the 1824 election, the House chose John Quincy Adams for president even though Andrew Jackson had more electoral votes.

If Johnson picked up enough electoral votes to keep Clinton and Trump from winning outright, the majority Republican House of Representatives would then choose either Clinton, Johnson, or Trump to be the next president. It is easy to see that a Republican House would not choose Clinton, but it is also likely they would favor Johnson over Trump. Johnson is a former Republican governor, but as the Libertarian candidate, choosing Johnson would also be a way for them to claim they are being non-partisan by not choosing the Republican or the Democrat.

For this to happen, Johnson will have to win some electoral votes, which means that rather than running a truly national campaign, the Libertarian party should target a few states that are most likely to swing their way. I have to think that the Libertarian party and the Johnson campaign have already figured this out. Sure, it’s a long shot, but because of the way the electoral college system works, it is well within the realm of possibility.

Gary Johnson could be our next president.