Barry is a Senior Economist with the National Center for Policy Analysis, one of the most influential think tanks in America today.
The National Center for Policy Analysis (NCPA) is a nonprofit, nonpartisan public policy research organization, established in 1983. The NCPA's goal is to develop and promote private alternatives to government regulation and control, solving problems by relying on the strength of the competitive, entrepreneurial private sector. Topics include reforms in health care, taxes, Social Security, welfare, criminal justice, education and environmental regulation.
NCPA Motto - Making Ideas Change the World - reflects the belief that ideas have enormous power to change the course of human events. The NCPA seeks to unleash the power of ideas for positive change by identifying, encouraging, and aggressively marketing the best scholarly research.
Daily Policy Digest
Provided courtesy of: http://www.ncpa.org/
Daily Policy Digest
- Solving Social Problems with Pay-For-Success Contracts
- 29 Jul 2014 07:00:58 CDT -
In the last six months, New York, Massachusetts and Illinois have each begun "pay-for-success" programs to combat social problems. Now, California is considering launching a similar initiative in the Golden State. Leonard Gilroy, director of government reform at the Reason Foundation, explains how the program would work.
Senate Bill 593 would utilize private-sector ideas, and funds, to address problems such as homelessness and crime recidivism. It would work like this:
- California would set a specific goal in these areas (such as reducing the homelessness rate by a certain percentage).
- Private investors and groups would fund non-profits that would implement social service programs on behalf of the state.
- If the privately funded groups are successful in meeting California's goals, the state would pay them with "success payments."
- If the groups fail, the state owes them nothing; only private investors, not taxpayers, will have lost money.
Gilroy writes that New York recently launched an initiative to reduce recidivism. The state expects $7.8 million in savings if the program is successful in meeting its targets.
Gilroy says that the program is promising, though he cautions California to be careful in writing these contracts in order to minimize taxpayer risk and to closely monitor the private programs' outcomes.
Source: Leonard Gilroy, "California Seeking to Partner With Private Sector in 'Pay-for-Success' Program," Reason Foundation, July 25, 2014.
For more on Tax and Spending Issues:
- Plaintiffs Can Receive Millions Under False Claims Act
- 29 Jul 2014 07:00:57 CDT -
The False Claims Act allows plaintiffs to file what are known as qui tam suits on behalf of the government, alleging the defrauding of government programs. If the Department of Justice decides that a case has merit, it may join the lawsuit. Generally, when the DOJ signs onto a case, it is a good sign for the plaintiff, as nearly all of those cases result in settlements or judgments.
While the government retains most of the money in any case, whistleblowers can collect 30 percent of the total recovery, reports Peter Loftus for the Wall Street Journal.
Most False Claims Act cases involve health care. In 2013, 753 of these lawsuits were filed, two-thirds of which concerned the health care industry. The cases range from allegations of billing fraud in Medicare or Medicaid to misleading claims about drug safety to the promotion of drugs for unapproved uses.
Critics of the law say that it encourages excessive lawsuits that have little merit:
- Of False Claims Act suits filed from 1987 to 2010, 5,400 lawsuits resulted in outcomes.
- Of those, only one-quarter resulted in a settlement or a judgment.
Additionally, some serial plaintiffs have emerged:
- Ven-A-Care, a former pharmacy, specializes in filing qui tam actions. The company has sued at least 35 health care companies, and, after 20 settlements, has received $425 million.
- According to law professor David Freeman Engstron of Stanford Law Schoool, there are at least 25 people or groups that have filed at least five False Claims Act suits since 1986.
One man, Dr. William LaCorte of Louisiana, has received $38 million under the law. Over the course of 20 years, LaCorte has filed 12 fraud lawsuits and has been successful in five of them. LaCorte's most successful case came when he realized that patients to whom he was prescribing a specific heartburn drug were being issued Pepcid, a Merck product, instead. After some investigation, LaCorte found that Merck was giving hospitals a major discount to distribute their product, a violation of Medicaid law because the discount was larger than the discount given to Medicaid.
Exposing that violation resulted in $23 million for LaCorte. He purchased a boat with the winnings, which, Loftus reports, he named Pepsid.
Source: Peter Loftus, "Invoking Anti-Fraud Law, Louisiana Doctor Gets Rich," Wall Street Journal, July 24, 2014.
For more on Health Issues:
- State Tax Code Cronyism
- 29 Jul 2014 07:00:56 CDT -
Cronyism in the tax code distorts economies and creates an uneven playing field. In a report for the American Legislative Exchange Council, William Freeland, Ben Wilterdink and Jonathan Williams explain why tax carve-outs are nothing more than subsidies under a different name and run counter to sound, fair tax policy.
Lawmakers can encourage economic growth through the tax code in two ways. They can impose low, broad-based taxes without preferences or carve-outs. Or, they can target industries and businesses with tax breaks and preferences.
The latter option, which the authors deem the "growth through central planning approach," creates unfair advantages for some businesses over others. It is cronyism -- the use of policy to benefit a specific group or industry -- and all 50 states have some degree of cronyism in their tax codes.
It is difficult to track state tax cronyism because states measure tax expenditures differently, and some states rarely, if ever, issue a report on tax carve-outs (Alabama, Alaska, Nevada, South Dakota and Wyoming are the five states that issue no reports on their tax breaks). The authors analyzed the numbers that are available:
- Using the most recent year's reporting available from each state, states granted $228 billion in personal income and business tax exemptions and $260.1 billion in sales tax exemptions.
- States also give targeted tax breaks to individual firms. Over the last 20 years, states gave 157,072 in grants to individual companies, according to the New York Times.
The authors explain that tax breaks have the effect of increasing taxes for everyone else: When states issue carve-outs to small groups, tax rates must necessarily rise in order to compensate for the diminished tax base. Favored industries and businesses receive lower tax bills at the expense of those businesses and industries that have not received government favor.
Source: William Freeland, Ben Wilterdink and Jonathan Williams, "The Unseen Costs of Tax Cronyism: Favoritism and Foregone Growth," American Legislative Exchange Council, July 2014.
For more on Tax and Spending Issues:
- Improving Education Would Improve Upward Mobility
- 29 Jul 2014 07:00:55 CDT -
Education is critical to future economic success, write Lindsey Burke and Stuart Butler of the Heritage Foundation, yet too many American students are placed in schools with low-quality teachers. The authors explain that teacher quality is especially important to a child's future:
- Research from Eric Hanushek of Stanford University indicates that, compared to an average teacher, an above average teacher (84th percentile) will increase a classroom's earnings by more than $400,000.
- A very poor teacher (16th percentile), however, will reduce a classroom's earnings by $400,000.
- If the United States replaced just the worst-performing 5 to 7 percent of teachers with average teachers, American students would be able to rise to the education level of students in the nations that currently outrank the United States.
According to Burke and Butler, to improve students' access to good teachers, incentives must change. Tenure and pay based on time served must be replaced with pay based on quality of instruction, and instructors should be evaluated based on student performance.
Another educational factor critical to a child's future success is literacy, yet the United States is performing poorly on that front: only 35 percent of fourth graders are proficient in reading. However, the authors use Florida as an example of a state that has successfully tackled this issue. When Florida quit promoting third graders who could not read to the next grade level, Florida fourth graders made reading gains that were three times the national average.
Burke and Butler write that parental choice is the best way to customize education for students, allowing parents to choose the academic options that best fit their children. But not only do choice policies give students an array of options, but they create competition between educational providers. When schools are at risk of losing students and funding, they are more likely to work to improve their performance.
Source: Lindsey M. Burke and Stuart M. Butler, "Climbing the Ladder of Upward Mobility Through Education," 2014 Index of Culture and Opportunity, Heritage Foundation, 2014.
For more on Education Issues:
- Burning Trash in Sweden
- 29 Jul 2014 07:00:54 CDT -
Sweden sends just 1 percent of its waste to landfills, reports Daniel Gross at Slate.com. Instead, the country recycles and incinerates most of its garbage, turning it into energy.
Sweden produced 1,070 pounds of garbage per person in 2010. But in 2001, Gross reports, the country began a recycling program, reducing the amount of trash that goes to landfills from 22 percent to 1 percent in 2012.
- The trash that is not recycled (50 percent) or sent to a landfill (1 percent) is incinerated at one of its waste-to-energy (WTE) plants.
- Sweden has 32 of these plants, which burned 2.27 million tons of waste in 2012.
- Today, WTE produces 8.5 percent of Sweden's electricity.
Could the United States, which produces 1,600 pounds of garbage per year per person, use WTE? Fifty-four percent of American trash goes to landfills, while 12 percent is burned. While much of the opposition to WTE has focused on emissions, Gross explains that WTE is not as carbon-intensive as it appears:
- Burning trash emits 2,988 pounds of carbon dioxide per megawatt hour of electricity produced. This is higher than coal (2,249 pounds per megawatt hour) and natural gas (1,135 pounds per megawatt hour).
- However, much of that waste (such as paper and food) would have released carbon dioxide over time, naturally. According to the EPA, just one-third of the WTE carbon dioxide emissions are actually due to the fossil fuels used to burn the garbage, making WTE emissions closer to those of natural gas.
Twenty-three states in the United States have WTE facilities, notes Gross, but the amount of waste that they burn is relatively small.
Source: Daniel Gross, "Forbranning for All!" Slate.com, July 21, 2014.
For more on Environment Issues:
- Detroit's New 3-Mile Light-Rail Line
- 28 Jul 2014 07:00:53 CDT -
Construction on a $137 million, 3.3-mile light rail line will begin in Detroit next week, reports Reason.com.
One quarter of Detroit households do not own cars, depending instead on the city's bus service. But rather than fund more buses, the city has decided to build a light rail line that makes little financial sense:
- Despite Detroit's size (139 square miles), the new rail line will not serve travelers beyond a three-mile stretch.
- Even if the rail cars were packed full with riders, the fare that has been proposed for the travel ($1.50) would not cover operating expenses.
The federal government has given Detroit $41 million in taxpayer subsidies to build light rail, and supporters have asked for another $12 million for the project.
Unlike light rail, buses would be able to move in and out of neighborhoods, and for considerably less in operating and maintenance costs. Despite these realities, cities across the United States are moving to expensive, inefficient light-rail lines.
Source: Jim Epstein, "Is Detroit's New Light Rail Line America's Greatest Boondoggle?" Reason.com, July 24, 2014.
For more on Environment Issues:
Health Policy Digest
Provided courtesy of: http://www.ncpa.org/
Consumer Driven Health Care
- Health Care Reform Tax Will Hurt Franchisees
- 04 Oct 2011 12:43:58 GMT - When the employer mandates go into effect in 2014, many franchised businesses will be motivated to reduce the number of locations and move workers from full-time to part-time status...
REAL CLEAR MARKETS
- Saving Jobs from Health Reform's Harmful Regulations
- 04 Oct 2011 12:43:58 GMT - If the rate of health care cost growth had not exceeded general inflation, a typical family would have had $545 more per month in spendable income instead of $95 -- a difference of $5,400 per year...
- Does Health Insurance and Seeing the Doctor Keep You Out of the Hospital?
- 04 Oct 2011 12:43:58 GMT - Gaining health insurance and using more primary care services leads to more hospitalizations as a result of physicians' discretionary decisions regarding aggressive and intensive treatment...
AMERICAN ENTERPRISE INSTITUTE
- The Case for Competition in Medicare
- 04 Oct 2011 12:43:58 GMT - A well-functioning marketplace would set in motion the forces needed to transform American medical care into a model of efficient patient-centered care...
- Potential Effect of Health Care Reform on Emergency Department Utilization Not Clear
- 04 Oct 2011 12:43:58 GMT - In 2010, 71 percent of emergency physicians said that they expected emergency department visits to increase due to the implementation of the Affordable Care Act...
NEW ENGLAND JOURNAL OF MEDICINE
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