Obamacare Tax Merry-Go-Round

11816719_SGet a load of how Obamacare health-insurance premium taxes work. According to Medicaid Health Plans of America: “This situation results in the federal government taxing itself and taxing state governments to fund the higher Medicaid managed care payments required to fund the ACA health insurer fee.”

It look me a few times to get my head around that. What it means is that Obamacare levies a premium tax on private health plans—including those to contract to provide Medicaid coverage. So, the federal and state governments, which are Medicaid’s payers, pay those taxes. USA Today has summarized what the taxes will cost in some large states:

  • Florida anticipates the tax will cost $100 million, with the state picking up $40 million and the federal government, $60 million.
  • Texas estimates the tax at $220 million, with the state paying $90 million and the federal government, $130 million.
  • Tennessee anticipates it will owe $160 million, with the state paying $50 million and the federal government, $110 million.
  • California budgeted $88 million, with the state paying $40 million and the federal government, $48 million.
  • Georgia estimates the tax on its plans at $90 million, with the state paying $29 million and the federal government, $61 million.
  • Pennsylvania predicts the tax will cost $139 million, with the state paying $64 million and the federal government, $75 million.
  • Louisiana estimates the tax will cost $27 million, with the state paying $10 million and the federal government, $17 million.

* * *

For the pivotal alternative to Obamacare, please see the Independent Institute’s widely acclaimed book: Priceless: Curing the Healthcare Crisis, by John C. Goodman.

Oklahoma: Losing Federal Waiver, Winning Back Rightful Control over Education

Classroom_150By this school year all American students were supposed to be proficient in reading and math according to the federal No Child Left Behind Act (NCLB), the latest iteration of the 1965 Elementary and Secondary Education Act (ESEA). By 2011 it was clear that no state was even close, so the US Department of Education made states an offer far too many thought they couldn’t refuse: in exchange for waivers from federal NCLB/ESEA proficiency and other mandates, states had to agree to adopt “college- and career-ready standards,” aka Common Core. (See also here and here).

Of the 46 states (including the District of Columbia) that have applied for waivers from federal NCLB/ESEA mandates, 43 have been approved as of August 21 according to the US Department of Education’s website.

That number’s likely to start plunging as the feds revoke more states’ waivers in response (or retaliation) to their decision to dump the “voluntary” Common Core national standards and other federal education mandates.

Washington lost its waiver in April because it did not tie student achievement results to teacher evaluations. Kansas was put on notice last year that it is at high risk of losing its waiver, too, for failing to meet teacher evaluation mandates.

Thus far, Indiana, Missouri, Oklahoma, and South Carolina, have rejected Common Core. Louisiana Gov. Bobby Jindal is suing the feds over Common Core now, arguing that federal control over education will cause “irreparable harm.

In May, the US Department of Education responded to Indiana’s decision to dump Common Core and implement its own state standards instead with a letter threatening to revoke the state’s waiver and related funding. However, the feds granted Indiana a one-year extension.

Oklahoma wasn’t so fortunate because it stood up to the feds with one of the strongest anti-Common Core laws on the books for expressly banning any aligning of its tests with national standards.

Yesterday, Oklahoma education officials received a letter from the US Department of Education revoking its waiver altogether, meaning it must start complying with all NCLB/ESEA mandates this year. According to Politico:

The move marks the latest battle between states and the Obama administration over what has been perceived to be heavy-handed federal education policy that will continue for the next few years. ...

“It is outrageous that President [Barack] Obama and Washington bureaucrats are trying to dictate how Oklahoma schools spend education dollars,” Oklahoma Gov. Mary Fallin said in a statement. “Because of overwhelming opposition from Oklahoma parents and voters to Common Core, Washington is now acting to punish us. This is one more example of an out-of-control presidency that places a politicized Washington agenda over the well-being of Oklahoma students.”

Some $20 to $30 million in federal education funding intended to help some of Oklahoma’s poorest schools will now have a lot more strings attached to them, but at least one state lawmaker says that’s a small price to pay for regaining rightful authority over education, as Oklahoma Watch’s Nate Robson reports:

Rep. Jason Nelson, R-Oklahoma City, who helped draft the bill repealing Common Core, downplayed the impact Thursday.

Nelson said diverting federal funds for tutoring or transportation is a small price to pay to protect Oklahoma’s education standards from the federal government.

Nelson added that U.S. Secretary of Education Arne Duncan has admitted No Child Left Behind has failed as a law, which is why waivers were granted.

He added throwing Oklahoma back under broken standards will not make Oklahoma students better, and is instead meant to punish the state.

“Because (the U.S. Department of Education) is upset that we’re trying to take back control of our education system, they have taken a punitive action that ought to make it crystal clear we made the right decision,” Nelson said.

It’s likely more state citizens and lawmakers will reach a similar conclusion as the federal government’s unconstitutional overreach into education continues.

Can Taxpayers Recover Hundreds of Millions of Dollars from Obamacare Exchanges?

Money-Spiral-Image-for-PostThe Office of the Inspector General (OIG) of the U.S. Department of Health and Human Services has just released a report on the contracts issued to private vendors to set up the federal pieces of Obamacare’s disastrous health-insurance exchanges. This is only the first of a series of reports, and it limits itself to describing the extent of the problem, not recommending solutions.

The OIG identified 60 contracts that started between January 2009 and January 2014. (That start date is a little mysterious, because Obamacare was not signed into law until March 2010.) The total estimated value of the contracts, when they were signed, was $1.7 billion.

However, only $800 million has been obligated, and $500 million spent. This reckoning goes up only to February 2014, so much more money has surely been spent. What is also shocking is how much money the Obama administration committed after the exchanges were known to be failing. Accenture, for example, won a contract for $90 million in January 2014. As of the end of February, $45 million was “obligated.” In April it was reported as spent.

How can taxpayers recover this money? Obamacare needs to be repealed. Nevertheless, even with Obamacare, no taxpayer funding whatsoever had to be spent on customer-facing government websites. That’s right: Zero, nada, nicht.

“Web-based entities” (as the regulations call them), such as eHealthInsurance.com and GetInsured.com are online health-insurance marketplaces that have existed for years. They were allowed to enroll people in Obamacare and were eager to do so. They were more successful than government websites at enrolling young and healthy beneficiaries.

Bipartisan reform to Obamacare would simply shut down healthcare.gov, seek to recover unspent obligations to private vendors, and hand the whole thing over to online health-insurance marketplaces.

* * *

For the pivotal alternative to Obamacare, please see the Independent Institute’s widely acclaimed book: Priceless: Curing the Healthcare Crisis, by John C. Goodman.

A Riverside High School Thinks Dumpster Diving is a Needed Life Skill for Special Education Students

GarbagePickingApparently dumpster diving is an important life skill for special education students, at least according to some officials at Jurupa Unified School District in Riverside County.

Last week news reports surfaced that special education students at Patriot High School were searching through campus trash cans for recyclables that could be turned into cash as part of a “functional skills program.” According to the Press-Enterprise:

School board members ... didn’t know the Patriot High School program included an activity that had special education students sort through campus trash bins. They said they learned of the issue when complaints were posted on Facebook and then reported in the news media.

Officials have suspended the recycling activity and are reviewing the overall functional skills program...

[Jurupa Unified School District Superintendent Elliott Duchon] said...that “this is standard curriculum” for the program’s students, who routinely collected recyclables such as cans and bottles.

“Up to last week, there has not been one complaint,” he said.

Ann Vessy, Riverside County Office of Education’s executive director of special education, has said such projects are common, though some schools do it different ways.

The functional skills program is carefully tailored for special education students and is part of their individualized education programs, Duchon said. It teaches general life skills such as how to do a budget, purchase groceries and cook meals.

It sounds more like school officials are preparing students for extreme hoarding or cheapskate show auditions—or at least lives of extreme filth, based on descriptions from students and parents:

... parents blasted district officials for fostering a practice they said humiliated special education students and exposed them to germs.

“It is disgusting,” said Carmen Wells, who aired her complaints to the media after learning her autistic son was digging through trash in the hot sun while wearing heavy gloves and an apron on his first day as a Patriot High freshman.

Arianna Lizarraga, a former special education student, sobbed as she recounted her feelings while digging through trash.

“I’ve been there and it’s not easy,” she said. Lizarraga’s mother, Rhonelda Lizarraga, said her daughter hadn’t told her about her experience until news surfaced about the Patriot High incident last week.

“When she told me, it made me angry because I couldn’t protect her,” Rhonelda Lizarraga said.

School board member Brian Schafer said he could sympathize with the parents’ complaints because he is the parent of a former special education student.

“Digging through trash is not a life skill,” Schafer said. “It’s unhealthy.”

This situation is also completely avoidable. A leading reason why public school officials can be so thoughtless is they oversee a virtual monopoly with a captive clientele.

If these California parents lived in almost any other state, they could immediately transfer their children to public schools outside their resident districts or to public charter schools without huge waiting lists because they’re allowed to expand in response to parent demand, or use any number of publicly and privately financed private school scholarships. If California parents lived in Arizona or Florida they could also have nearly all the state funding students’ current school districts receive for them deposited into education savings accounts (ESAs) instead.

With those funds parents could pay for the current and future educational services that best meet their children’s needs—not those of public school officials who think lessons in rummaging through other people’s trash is all that special needs students deserve.


Competing for Students, Not Federal Funding, Is Still the Best Preschool Policy

school-choice-300x199Washington, DC, is not exactly known for being on the cutting edge of innovation—especially when it comes to competition in education.

Nearly three years ago the Department of Health and Human Services’ Administration for Children and Families (AFC) made headlines for its “controversial” plan requiring Head Start preschool providers to compete for renewed federal funding. The rule changes:

... implement statutory provisions of the Improving Head Start for School Readiness Act of 2007 to establish a system of designation renewal to determine if Head Start and Early Head Start agencies are delivering high-quality and comprehensive Head Start and Early Head Start programs that meet the educational, health, nutritional, and social needs of the children and families they serve and meet program and financial management requirements and standards. This system of designation renewal will determine which grantees must compete for on-going funding.

Prompting this change, in part, were 2005 findings from the GAO documenting widespread financial “improprieties” due to questionable oversight by the ACF of some $6.8 billion that were supposed to help more than 900,000 Head Start students in fiscal year 2004. According to the GAO:

Head Start grantees who were judged out of compliance in a review by ACF in 2000 with one or more of the program’s financial management standards were about as likely to remain out of compliance as attain full compliance over the succeeding 3 years. ...After working with one grantee to correct severe financial management problems for 3 years—including failure to account for over $400,000 in grant funds that were not spent on Head Start services to children and their families—ACF notified the organization that it no longer would receive funding. While ACF may terminate grantees with serious financial weaknesses such as recurring failure to comply with federal management standards, this process is rarely used: ACF most often encourages grantees to voluntarily relinquish their grants. In a small number of cases, ACF must proceed with formal termination, which can be difficult and lengthy owing, in part, to grantees’ right to continued funding during its appeal, regardless of merit, and their ability to finance appeals with grant funds.

For all the tough-sounding talk, not much has really changed under the Designation Renewal System (DRS) implemented in 2011. Most Head Start providers will have their five-year grants almost automatically renewed. Just the worst offenders will have to compete to keep them, roughly 125 (here and here) out of more than 1,600 total grantees, and most of them will likely have their funding renewed, too.

Evidence shows that federal Head Start program funding hasn’t noticeably improved preschoolers’ academic outcomes. Yet President Obama wants universal government preschool for all American four-year-olds—whether parents want it or not.

A better solution is universal options for all. Let taxpayers keep the money that would otherwise be funneled into failing fed ed programs such as Head Start. Let parents save for the preschool options they prefer. Keep them in charge of whether their children’s schools are performing or not. And, make preschools compete for students and their tuition dollars.

But this kind of liberty for parents is the last thing DC politicians or their (virtually lifelong) federal grantees want.

Medicare Fees: The RUC Is Bad, but There’s No Point in Regulating It

priceless_180x270Politico recently ran an interesting story on the Relative Value Scale Update Committee—the “RUC”—a body convened by the American Medical Association that fixes the fees that Medicare pays physicians. It describes the absurdity of a committee of physicians fixing fees that the government pays physicians, and demonstrates how the RUC pays primary-care practitioners much less than specialists. Here is how it works:

William Hsiao, the economist who designed the Medicare Prospective Payment System, determined Medicare’s fees as follows: “He put together a large team that interviewed and surveyed thousands of physicians from almost two dozen specialties. They analyzed what was involved in everything from 45 minutes of psychotherapy for a patient with panic attacks to a hysterectomy for a woman with cervical cancer. They determined that the hysterectomy takes about twice as much time as the session of psychotherapy, 3.8 times as much mental effort, 4.47 times as much technical skill and physical effort, and 4.24 times as much risk. The total calculation: 4.99 times as much work. Eventually, Hsiao and his team arrived at a relative value for every single thing doctors do.” (Rick Mayes and Robert A. Berenson, Medicare Prospective Payment and the Shaping of U.S. Health Care, Baltimore: Johns Hopkins University Press, 2006, p. 86.)

The Politico story also described a lawsuit which asserts that the RUC should be regulated like a Federal Advisory Committee, and not allowed to operate in secret as if it were just another committee of a private professional society. The American Medical Association’s rebuttal of the Politico feature is exactly what one would expect from an inside-the-Beltway mindset:

When providing input to Medicare, the RUC and others must follow principles established decades ago by economists at Harvard University that are required by federal law and regulations.

In recent years, the committee has evaluated (AMA login required) more than 1,700 medical services accounting for $38 billion in Medicare spending. The committee has sent recommendations to the Centers for Medicare & Medicaid Services for reductions or deletions of 935 services, resulting in a redistribution of more than $3 billion in the Medicare program.

In fact, the committee’s complicated work has long garnered the praise of government officials.

Imagine that: The RUC not only fixes prices, but fixes prices according to regulations “established decades ago”! What could go wrong with that? Substitute “groceries”, “auto parts”, “clothing”, “athletic equipment”, or anything else for “physicians’ fees”, and you immediately see how ridiculous the whole thing is. Can you imagine a committee where hockey coaches and baseball coaches get together to give the government advice on the relative prices of pucks versus baseballs?

Nevertheless, regulating the RUC as a Federal Advisory Committee would not solve the fundamental problems. First, the federal government should simply not be fixing medical prices, any more than it should fix prices of groceries for people receiving food stamps (SNAP). Second, I do not pretend to know the value of a family doctor versus another specialist, but it is certain that a third-party payer (government or private insurer) will have a much harder time understanding what a primary-care doc does during an office visit than an orthopedic surgeon does during a knee replacement. Specialists will always be paid more when prices are fixed this way, whether the process is transparent or not.

* * *

For the pivotal alternative to Obamacare, please see the Independent Institute’s widely acclaimed book: Priceless: Curing the Healthcare Crisis, by John C. Goodman.

California Senate Arrest Rate Higher Than Any Large California City

24931026_MThree California state senators have been arrested this year.

In February, State Sen. Ron Calderon was arrested for accepting bribes, wire fraud, money laundering, and falsification of tax returns. In March, State Sen. Leland Yee was arrested for gun trafficking and taking bribes. In August, State Sen. Ben Hueso was arrested for driving drunk.

As the graphic below shows by the Sacramento Bee, the California Senate arrest rate is higher than any of California’s 25 largest cities and more than twice the statewide rate. The Senate’s arrest rate would be even higher if State Sen. Roderick Wright was included, but he was arrested last year, and ultimately convicted this year of perjury and voter fraud.

Where is anchorman Ron Burgundy when you need him: “Stay classy California Senate.”

Screen Shot 2014-08-27 at 4.57.20 PM

Price Transparency Lowers Healthcare Costs

priceless_180x270study recently published in Health Affairs describes how price transparency drove down the cost of MRIs by almost twenty percent from 2010 to 2012. Compared to patients who did not have the advantage of transparent pricing, patients who knew what their MRI procedure would cost saw a cost reduction of $220 per procedure. Further, price transparency was associated with a significant shift from hospitals to outpatient facilities.

This result is just the beginning. It was not a result of true consumer-driven health policy, but an intervention by an insurer. When a physician referred a patient for an MRI, the insurer required prior authorization before paying for it. When the patient called for prior authorization, the customer-service rep was able to give the patient the choice of a lower-cost provider in the same area. Importantly, the insurer’s rep was able to tell the patient how much he or she would save by using the lower-cost provider.

This is something that healthcare providers resist mightily—for obvious reasons. As a consequence, more expensive providers, especially hospitals, dropped their fees significantly. This resulted in a 30 percent compression of prices.

It is a step in the right direction. The Health Affairs article notes that government dictating price transparency has no effect—as discussed previously at this blog. Nevertheless, there is a lot further to go. For example, one-third of the patients had zero co-pay or deductible, and so were completely insensitive to price. Also, it still requires too much bureaucratic intervention. Why should a patient have to call the insurer to figure out the best price for the service?


Chicago Teachers Union Boss and Classic Champagne Socialism

indexIt’s a busy time of year for Chicago Teachers Union President, Karen Lewis. Two years ago just in time for Labor Day, she was helping organize the city’s first teachers’ strike in more than 25 years—a move that was highlighted at the Midwest Marxist Conference. Last year she was busy blaming the Chicago Public Schools district’s $665 million budget hole on rich people, and blasting Rahm Emanuel for being, as she put it, “Mayor 1%.”

This year Lewis is considering a mayoral run, and it turns out she too is near the dastardly top percent. The Chicago Sun Times reports:

Karen Lewis, the Chicago Teachers Union president now considering whether to run for mayor, has frequently railed against the influence of the wealthy....

Lewis isn’t as wealthy as Emanuel, a multimillionaire who made his fortune during a short stint as an investment banker. But she makes more than $200,000 a year and has an ownership interest in three homes, records show.

That includes vacation homes in Hawaii and in the upscale “Harbor Country” area of southwestern Michigan, where Emanuel has a second home, property records show.

In all, Lewis earns just $15,000 less than Emanuel. About $156,000 of Lewis’ compensation and “non-taxable benefits” comes from the CTU, plus tens of thousands more from the Illinois Federation of Teachers, where she serves as executive vice president.

Lewis’ earning practice is a far cry from what she was preaching a few years ago, as the Chicago Sun Times continues:

When she first ran for CTU president four years ago, Lewis promised not to make more than the highest-paid teacher....Chicago Public Schools’ payroll records show no teacher makes as much as Lewis’ $136,890 CTU base salary.

... Lewis said she didn’t break her promise not to make more as union president than Chicago’s highest-paid teacher makes, saying her CTU salary is for working the full year, rather than a 39-week school year.

Lewis admits she is indeed among the top 5 percent of Americans in terms of income, but she makes no apologies for it:

I don’t live extravagantly. ...We [Lewis and her husband] are comfortable...We are not poor. We have never been poor. Does that mean I don’t have the pulse of [the poor]? I don’t live in luxury. I don’t hang out with wealthy people. I have always been solidly middle class. ... I’m not going to apologize for [my salary]. I don’t think that’s wrong. I did what we are told to do. You are supposed to go to school, become educated. I have an Ivy League diploma. I have two master’s degrees.

Three homes, two advanced degrees, and an Ivy League education is hardly having a “pulse” on the poor. What’s more, the way Lewis gets her pay indicates she has taxpayers of every income bracket by the jugular.

Under current law, the Chicago Public Schools system acts as a government collection agency for the CTU by withholding “agency fees” from classroom teachers whether they’re CTU members or not.

Based on the latest available information from the CTU website, during the 2013-14 school year both annual dues paid by members and “agency fees” withheld from non-members both amounted to $1,052.49 per year.

No one who believes in the free market should begrudge Lewis or anyone else the opportunity to earn a living or spend one’s hard-earned income as he or she pleases.

The reason Lewis’ hypocrisy is making national news is that she could never hope to enjoy the fruits of other people’s labor as she does now if taxpayers and rank-and-file teachers weren’t compelled into bankrolling the lucrative government monopoly that pays her so handsomely.

Parental Choice, Not Common Core, Is the Key to Academic Accountability

school-choice-300x199The more the public learns, the less it likes Common Core national standards, based on findings from various polls throughout this year. Two new national polls add even more fuel to the anti-Common Core fire.

The first by Gallup and PDK International notes that last year only around one-third (34 percent) of American adults had even heard about Common Core. That figure has jumped to 81 percent this year, and fully 60 percent of respondents now say they oppose it—largely because the standards are rigid and lack academic rigor.

The second poll was released by Education Next. It finds a smaller proportion of Americans opposes Common Core, but that opposition has doubled from 13 percent last year to 26 percent this year. Meanwhile, about one out of five Americans remain “undecided,” 22 percent last year and 21 percent this year.

Significantly, the Education Next poll shows that opposition to Common Core national standards is intensifying across the board. Comparing results from 2013 to 2014, opposition among Democrats grew from 10 percent to 17 percent. Opposition among Republicans more than doubled from 16 percent to 37 percent, while opposition among teachers more than tripled from 12 percent to 40 percent.

The phrasing of the questions relating to Common Core matters and helps explain differences in the results, and Education Next Editor-In-Chief Paul E. Peterson explains that while Americans generally favor academic standards, the term Common Core is “toxic,” responsible for around a 15 percentage point public approval drop.

Most Americans would agree that students should achieve basic levels of literacy and numeracy, as well as have working knowledge and skills relating to civics, history, and science. That doesn’t mean, however, that the federal government has the constitutional authority or the expertise to impose national standards.

Common Core proponents insist that the standards are rigorous and prepare students for college and careers. Not true. Leading experts have publicly denounced those claims (see here, here, and here).

But the solution is not, as American Federation of Teachers President Randi Weingarten suggests, to abandon essential objective assessments that gauge students’ academic achievement. In a prepared response to the Gallup/PDK poll release, Weingarten stated:

Given this path, support [for Common Core] will continue to drop as people no longer see standards or standardized tests as helping children...They, like many teachers, see them instead as setting up public education for failure.

Standards and standardized tests do not set up public education for failure. Not educating students does.

Most Americans favor measuring student achievement against objective standards—not the say so of dues-paying, unionized teachers. In fact, as the Education Next poll suggests, the last thing most Americans want is a return to a by-gone era when parents and the taxpaying public were kept in the dark about how well (or poorly) American students were actually performing in core subjects.

On the other hand, federally-driven “accountability” under No Child Left Behind and its previous iterations dating back to 1965 resulted in student achievement scores based largely on games not actual gains in student learning.

As long as the federal government and powerful political special interest groups control education, parents and the taxpaying public will remain in the dark about just how well students are actually doing in school. Teachers’ union leaders fight objective measures of student achievement. Washington politicians and unelected bureaucrats devise elaborate, expensive testing regimes that purport to be objective, but in reality they’re based on benchmarks that are so low significant numbers of students are deemed performing when, in fact, they have not mastered basic knowledge and skills. (See also here, here, and here).

For all the PR to the contrary, federal laws intending to improve accountability in education have failed because parents are not empowered to choose their children’s schools. Even assuming publicly reported student and school performance results were accurate, that information is not actionable. Chances are, parents whose children have remained trapped in failing schools don’t need a federally mandated testing regime to tell them that. They’re likely painfully aware of that reality already.

Parental choice in education is the best approach to genuine accountability in education.

Let parents pick the schools they prefer for their children. Most will likely choose schools that regularly inform them of their children’s academic progress based on objective assessments that tell them how well their children are performing relative to their peers nationally and worldwide.

And those tests already exist. Homeschooling parents, for example, use a wide variety of rigorous and cost-effective assessments, including beginning and end-of-year tests to measure their children’s academic progress, standardized tests that assess basic skills, and norm-referenced tests so parents can compare their child’s performance to that of students nationwide.

There’s also no shortage of Advance Placement exams, college entrance exams, pre-college entrance exams, and international assessments can also be used to see how well students perform relative to their peers in dozens of countries around the world.

And, let’s not forget, standards previously in place by states such as California, Indiana, and Massachusetts were already widely considered among the strongest nationwide, so there was no need to reinvent the wheel with Common Core if improving student achievement were truly the goal.

Better incentives, not more imposed mandates, are what schools need to implement reliable measures of student achievement. Given the option, most parents would probably choose schools that test students in core subjects. Some parents may want more testing, some parents may not want any at all, but schools would feel powerful pressure to meet parents’ demand for reliable information about how their children are performing academically if the alternative is losing students and their associated funding to other schools.