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
- Parental Demand for School Choice Will Drive Supply
- 06 May 2015 07:00:58 CDT -
School choice is an education reform premised on a simple proposition: give families more choices, and they will find schools that best fit their children's needs. School choice programs will succeed or fail based on how well they are able to create a marketplace and how deftly they can overcome issues on both the supply (schools) and demand (parents) sides of the school choice equation.
Improving the demand side means collecting and disseminating better information for parents.
- Parents first want to know if a school is safe, then about academic performance, then about all of the other things that the school offers to help make their child a more well-rounded individual.
- School report cards are useful, but parents greatly value the opinions of other parents. Finding ways to include the thoughts of parents, by allowing for star ratings, comment sections, or easy sharing via social media can help ensure information is put to use.
- Parents need help advocating for programs that help their children. Many school choice programs are designed specifically to help low-income families, a demographic group that is often disenfranchised from the political process.
Improving the supply side means creating the conditions that help new schools open and good schools scale.
- Schools need access to financial and human capital. At current funding levels, voucher and tax credit scholarship programs do not provide enough money to finance new buildings, substantial technology purchases, or any of the other upfront costs that come with starting or expanding a school.
- New schools need new teachers and leaders. The skill set that will lead to success in a school participating in a school choice program is not necessarily the same skill set that would lead to success of a traditional public or private school.
- Regulations for school choice programs must be designed with the understanding that they are regulating a marketplace, not a monopoly.
Source: Michael Q. McShane, "Balancing the Equation: Supply and Demand in Tomorrow's School Choice Marketplaces," American Enterprise Institute, April 2015.
For more on Education Issues:
- Small Businesses Affected Most by Government Regulations
- 06 May 2015 07:00:57 CDT -
The interaction between regulation and private industries is highly complex. Since 2008, the federal government has imposed $733.9 billion in regulatory costs. American Action Forum research indicates the cumulative cost of all regulatory compliance devastates small businesses. Specifically, for every 10 percent increase in regulatory costs in an industry, the number of small and medium-size businesses in that industry falls 3 to 6 percent. The number of large businesses, meanwhile, grows 2 to 3 percent.
Generally, regulatory costs are fixed, meaning that if all businesses are forced to deal with hundreds of hours of new paperwork, the costs of hiring an additional compliance officer will fall disproportionately on small institutions.
Here are a few details:
- Today, there are more than 236,000 regulatory compliance officers and they command average salaries of about $66,000 annually.
- A 2013 Minneapolis Fed study emphasized the paperwork burdens and what being forced to hire compliance staff means for small banks. The study found that hiring two additional compliance officers reduced profitability by 45 basis points (roughly half-a-percent) and that one-third of the small banks studied would become unprofitable.
- The Environmental Protection Agency's greenhouse gas regulation reporting rule noted that costs per entity for the smallest firms would be 1.32 percent, compared to 0.02 percent for the largest companies. In other words, for the reporting rule, regulatory costs are 65 times more burdensome for small businesses.
Despite regulatory reform designed to protect small businesses, sheer economies of scale and unchecked regulators have made life for small employers incredibly burdensome.
Source: Ben Gitis and Sam Batkins, "Regulatory Impact on Small Business Establishments," American Action Forum, April 24, 2015.
For more on Government Issues:
- Could Private Exchanges Save Health Care?
- 06 May 2015 07:00:56 CDT -
For many years, employers have struggled with providing health insurance to workers and their families. Competing for high-skilled workers typically requires offering fairly comprehensive benefits (valued at an average of $6,000 for an individual in 2014). Public-sector employers — states and municipalities — are often hemmed in by the old politics of powerful public-sector unions. Not surprisingly, their negotiated benefits are also routinely comprehensive and costly.
Nevertheless, employer-sponsored coverage will change in 2018. Obamacare's "Cadillac Tax" — a 40 percent excise tax on all plans above a specified amount — will make these plans even more expensive. One safety valve, for both private and public employers, may be a new approach to employer-sponsored coverage: privately run health-insurance exchanges.
- A private exchange is a marketplace for private health plans. It enables workers to choose different health plans, weighing alternatives and balancing their costs and benefits.
- In a private exchange, an employer can make a defined contribution to a tax-free group plan chosen by the worker. If the worker purchases a less expensive plan, the worker can keep the difference in savings.
- In a well-run private exchange, self-insured employers can offer greater flexibility in benefit design, allowing workers and their families choice among a variety of health plans offered by multiple carriers.
Real choice and genuine market competition could spark the real health care change America has been waiting for — for far too long.
Source: Robert Emmet Moffit, "A Health Care Revolution on Private Exchanges?" Real Clear Policy, May 4, 2015.
For more on Health Issues:
- Are Africa's Economies Growing While Poverty Increases?
- 06 May 2015 07:00:55 CDT -
This year marks the 20th year since sub-Saharan Africa started on a path of faster economic growth. During that period, growth has averaged 5.2 percent per year. Meanwhile, the number of people on the continent reportedly living under $1.25 a day has continued to creep upwards from 358 million in 1996 to 415 million in 2011—the most recent year for which official estimates exist.
What can explain these divergent trends? Five factors can account for sub-Saharan Africa's disappointing poverty numbers:
- The first is the region's rapid population growth of 2.6 percent a year. While African economies are generating more income, that income has to be shared among an ever-increasing number of people.
- The second factor is the depth of Africa's poverty compared to poverty elsewhere. In 2011, the average person living in extreme poverty in Africa lived on 74 cents a day, whereas for the rest of the developing world, it was 98 cents.
- The third factor is that even though inequality is not rising in most African countries, inequality is already at unusually high levels. Where initial inequality is high, it is to be expected that economic growth deliver less poverty reduction, since the absolute increases in income associated with rising average incomes will be that much smaller for the have-nots versus the haves.
- The fourth factor is that there is adegree of mismatch between where growth is occurring andwhere the poor are on the continent.
- The fifth and final factor concerns data quality. Poverty estimates are drawn from household surveys which in most African countries are conducted infrequently. Those that do take place often suffer from operational glitches that affect the credibility of the results.
The dissonance between Africa's growth performance and its poverty numbers is a striking phenomenon that demands an explanation.
Source: Laurence Chandy, "Why is the Number of Poor People in Africa Increasing when Africa's Economies Are Growing?" Brookings, May 4, 2015.
For more on Economic Issues:
- Good Jobs and The Prospect of a Better Future is More Important than Good Intentions
- 06 May 2015 07:00:54 CDT -
The in rioting Baltimore over the past week was part of a bigger trend in some of our core cities towards social and economic collapse. The geography of fear remains very much what it was a half century ago. The most dangerous places in the United States in terms of violent crime tend to be heavily black cities, led by Detroit, Oakland, Memphis, St. Louis and Cleveland. Baltimore ranks sixth.
Perhaps the biggest sign of how limited the urban renaissance has been is to look at the growth of precisely the kind of highly concentrated poor areas like those that blew up in Baltimore. Besides the gap between blacks and whites, there is also a growing one among African-Americans themselves. The black suburbanites in Baltimore not only make more money than their urban counterparts but their life expectancy is at least eight years longer.
African-Americans came to Baltimore and other northern cities in large part to work in industrial businesses that flourished in mid-century America. Yet most of those jobs are now gone, leaving behind those who must scramble to find work in the growth industries of today — education, technology and medical services. The places where these industries have grown often produce not more opportunities for poor people or minorities but rather a subtle form of "ethnic cleansing."
Baltimore proves that the "great inversion," positively affects a relatively small part of the urban population, particularly in historically black cities. Clearly, what is occurring then is not an urban kumbaya seen in TV ads for fast food and web services, but a hardening of class and racial divisions.
It would be far better if some CEOs or investors came to the old Chesapeake city bearing plans for expanding jobs and opportunities. That, at least, would begin to address the economic and social isolation that finds its expression in fires on the street. Good jobs and the prospect of a better future is what ultimately matters.
Source: Joel Kotkin, "America's Cities Mirror Baltimore's Woes," New Geography, May 3, 2015.
For more on Economic Issues:
- Small Businesses Need Saved From Obamacare
- 05 May 2015 07:00:53 CDT -
A number of independent sources confirm Obamacare is harming small businesses. According to a paper published by the American Action Forum last September, the increased burden of regulations and rising health insurance premiums have reduced pay in firms with 20 to 99 employees by at least $22.6 billion annually, and has led to 350,000 job losses. Employees who kept their jobs have seen a decrease in pay of just under $1,000 annually.
Relief for the smallest businesses alone is not helpful because it makes it more expensive to grow. Although businesses with fewer than 50 employees are exempt from the requirement that they offer their workers so-called "affordable" government-approved policies (the employer mandate), the mandate only imposes a high marginal cost to hiring a 50th worker.
NCPA senior fellow John R. Graham says there is an opportunity to amend the Affordable Care Act to minimize its harm to small businesses. Obviously, Congress cannot repeal the entire ACA, because President Obama must sign any amendment this summer.
Amendments that would specifically help small businesses include:
- Complete elimination of the employer mandate nationwide.
- Restoring insurance regulation to the states by eliminating the Secretary of Health and Human Services' power to define "Essential Health Benefits" and other Obamacare regulations such as Minimum Loss Ratio for health insurers (which reduce the number of insurers competing).
- The most important regulation to eliminate is the age band of 3:1. Section 1201 of Obamacare gives the secretary power to dictate this, which means an insurer cannot charge a 64-year-old more than three times as much as a 19-year-old. This artificially increases the premiums of young people, making it more expensive to hire them. A more accurate age band would be about 5:1.
- Flatten Obamacare's tax credits as much as possible to reduce the marginal income tax "cliffs" that harm the incentive to work.
- Eliminate the mandate for individuals to buy health insurance through an exchange in order to have their premium reduced by a tax credit. This will allow state governments to get out of the health insurance exchange business and eliminate the risk that small businesses will be taxed to finance their operations.
Source: John R. Graham, "Protecting Small Business from the Effects of Obamacare: Opportunities after King v. Burwell," National Center for Policy Analysis, May 4, 2015.
For more on Health 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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