Daily Policy Digest

Provided courtesy of: http://www.ncpa.org/

Daily Policy Digest

Do Schools Begin Too Early?

18 May 2012 07:00:58 CDT -

School start times vary considerably, both across the nation and within individual communities, with some schools beginning earlier than 7:30 a.m. and others after 9:00 a.m.  Though staggering start times can reduce bus transportation costs, a coinciding negative impact on academic performance may outweigh this benefit.

Proponents of later start times, who have received considerable media attention in recent years, argue that many students who have to wake up early for school do not get enough sleep, and that beginning the school day at a later time would boost their achievement.  Finley Edwards of Colby College uses data from data from Wake County, North Carolina, to investigate this claim.

• Comparing students with similar characteristics who attend schools that are similar except for having different start times, Edwards found that a one-hour delay in start time increases standardized test scores on both math and reading tests by roughly 3 percentile points.
• Using an alternative method in which he followed the same schools over time as they change their start times, Edwards then measured a 2.2-percentile-point improvement in math scores and a 1.5-point improvement in reading scores associated with a one-hour change in start time.
• Finally, using only data from students who experience a change in start time while remaining in the same school, Edwards measured increases of 1.8 percentile points in math and 1.0 point in reading for a one-hour later start time.

This final finding is the most crucial, as it eliminates nearly all conceivable forms of bias.  Furthermore, the increases were widespread enough that they are statistically significant increases, lending credence to proponents of later start times.

Furthermore, perhaps most crucial in this analysis is that disproportionate gains were seen among low-achieving students, suggesting that later start times would help close achievement gaps.

• While the effect of a one-hour later start time on math scores may seem small, it is roughly 14 percent of the black-white test score gap.
• Furthermore, it is 40 percent of the gap between those eligible and those not eligible for free or reduced-price lunch, and 85 percent of the gain associated with an additional year of parents' education.
• These benefits of a later start time in middle school appear to persist through at least the 10th grade.

Source: Finley Edwards, "Do Schools Begin Too Early?" Education Next, Summer 2012.

For text:

http://educationnext.org/do-schools-begin-too-early/

For more on Education Issues:

http://www.ncpa.org/sub/dpd/?Article_Category=27

Sweden's Reputation As a Welfare State Is In Trouble

18 May 2012 07:00:57 CDT -

Sweden has a reputation as the prototypical cradle-to-grave socialist European nation, and the political left has long yearned for America to be more like the Scandinavian nation.  But it now seems that this depiction of the European nation is unfair and misleading, as the country has implemented a series of reforms that have moved it significantly toward the right, says Investor's Business Daily.

The turnaround has been driven in no small part by the election of Fredrik Reinfeldt as prime minister in 2006.

• Reinfeldt took office in October 2006, and by January of 2007 his government had begun tax-cutting.
• It also began cuts in welfare spending as part of a general move toward austerity, attempting to make cuts in its extensive government debt.
• Finally, it has made a concerted effort to deregulate the economy in order to encourage entrepreneurialism and business investment.

This move to the right has yielded significant benefits for a country that was once the quintessentially Left nation of Europe.

• Sweden fell into recession in 2008 and 2009, but it's pulled strongly out of the decline, posting gross domestic product (GDP) gains of 6.1 percent in 2010 and 3.9 percent last year, when it ranked at the top in Europe's list of fastest-growing economies.
• This compares to America's anemic growth over that same period -- 3 percent in 2010 and 1.7 percent in 2011.
• Additionally, while the United States continues to struggle with its jobs problem (unemployment currently sits at 8.1 percent), Sweden's jobless rate has fallen to 7.5 percent.
• Though still higher than the government would like, 7.5 percent is far below the euro zone average of 10.2 percent and significantly lower than the rates in Spain (21.7 percent), Portugal (12.9 percent) and the United Kingdom (8 percent).
• Furthermore, Sweden's government debt as a share of GDP has dipped below 45 percent for the first time in decades and now is situated at a much-preferable 38.4 percent.

Sweden's Finance Minister Anders Borg has emphasized that all of this was accomplished without the massive stimulus spending that was instituted in other countries.  Rather, it was through measures of austerity that Sweden weathered much of the recessionary storm.

Source: "Sweden's Reputation as A Welfare State Is In Trouble," Investor's Business Daily, May 11, 2012.

For text:

http://news.investors.com/article/611249/201205111844/swedish-model-brings-economic-growth.htm

For more on Economic Issues:

http://www.ncpa.org/sub/dpd/?Article_Category=17

Reducing Profitability of Oil Companies Would Harm Regular Americans

18 May 2012 07:00:56 CDT -

The Obama administration proposed raising taxes on domestic oil and gas producers in its fiscal 2013 budget.  Such taxes would, if approved by Congress, harm the economic performance of the industry and encourage investment overseas.  Moreover, such new taxes would hurt American shareholders, the primary owners of these companies, says Diana Furchtgott-Roth, a senior fellow at the Manhattan Institute.

Looking first to the tax increases themselves, it can be seen that these fiscal efforts unfairly target the oil and gas industry, leaving similar industries untouched.

• President Obama suggested raising $5 billion in 2013 and $41 billion over the next decade from tax increases on oil and gas, more than on any other industry.
• In addition to specific taxes on oil companies, repeal of "last in, first out" accounting methods would cost the industry another $26 billion over 10 years.
• Furthermore, a substantial share of international tax increases and Superfund taxes would affect the oil industry, raising another $21 billion, for a total of about $88 billion over 10 years.

In assessing the impacts of these policies, it is also crucial to look past the effects on the corporations to understand what lost profits will do to oil and gas company owners.  And while many Americans may think that these corporations are dominated by a small few mega-wealthy individuals, the truth is that their primary backers can be found in the nation's retirement funds.

• Data show that the officers and directors of oil companies hold an insignificant fraction of shares of the largest five oil companies, ranging from 0.11 percent for Exxon Mobil to 1.4 percent for Occidental Petroleum, undermining the depiction of mega-wealthy individual owners.
• Indeed, Occidental Petroleum is the only one of the firms where ownership by officers and firm directors exceed one percent of outstanding shares.
• Private and public pensions, on the other hand, own 31 percent of all U.S. oil and natural gas companies.
• Also, individual Americans own 3 percent of funds directly, and 28 percent through mutual funds.

Reducing the profitability of these companies will undermine their contributions to these pension and mutual funds, thereby harming regular Americans and robbing them of excellent investment returns provided by these companies over time.

Source: Diana Furchtgott-Roth, "Who Really Owns the Oil Companies?" Manhattan Institute, April 2012.

For text:

http://www.manhattan-institute.org/pdf/ir_11.pdf

For more on Tax and Spending Issues:

http://www.ncpa.org/sub/dpd/?Article_Category=25

The Role of Regulation and Distribution Channel in Drug Safety

18 May 2012 07:00:55 CDT -

Drug safety is a global health problem.  Unsafe drugs cover drug products that have been made to appear like the real thing by counterfeiters, as well as substandard products made by legitimate manufacturers.  However, the World Health Organization has thus far failed to distinguish between the two -- a distinction that is crucial for a number of reasons, say researchers with the National Bureau of Economic Research (NBER).

• First, poor quality drugs differ greatly in active ingredient from absolute counterfeits; the former usually has at least some active ingredients, while the latter almost always has none.
• Second, the amount and composition of ingredients have important impacts on patient health.
• Finally, counterfeit and substandard drugs often require different types of remedy to prevent their spreading, as one usually entails intent while the other does not.

To this end, the researchers conducted an extensive analysis by differentiating between substandard and counterfeit drugs in the following way:

• All drugs that pass a visual check and contain at least 80 percent of the correct active ingredient are classified as "passing."
• All drugs that pass a visual check and contain some but less than 80 percent of the active ingredient are labeled "substandard."
• All drugs that fail a visual inspection or contain none of the active ingredient are labeled "counterfeit."

Following this model, the NBER study obtained the following results:

• Of 1,437 samples of Ciprofloxacin from 18 low- to middle-income countries, 9.88 percent of the samples fail the tests and 41.5 percent of the failures are counterfeits.
• Products that are registered by western regulators or the World Health Organization have the highest passing rate of (98.5 percent).
• Products registered with local authorities also have a greater passing rate (93.5 percent) than non-registered products (69.8 percent).

This study also yielded interesting results in pricing.  Substandard drugs are priced 30.3 percent lower than comparable generics in the same city but counterfeits offer almost no discount relative to the genuine version they aim to mimic. These findings suggest that substandard and counterfeit manufacturers are likely to follow different business strategies.

Source: Roger Bate, Ginger Zhe Jin and Aparna Mathur, "Counterfeit or Substandard? The Role of Regulation and Distribution Channel in Drug Safety," National Bureau of Economic Research, Working Paper 18073, May 2012.

For text:

http://www.nber.org/papers/w18073.pdf?new_window=1

For more on Health Issues:

http://www.ncpa.org/sub/dpd/?Article_Category=16

The Human Disaster of Unemployment

18 May 2012 07:00:54 CDT -

In 2007, before the Great Recession, people who were looking for work for more than six months accounted for just 0.8 percent of the labor force.  In 2010, however, the long-term unemployed accounted for 4.2 percent of the workforce, and this figure would be 50 percent higher if we added the people who gave up looking for work, say Dean Baker, co-director of the Center for Economic and Policy Research, and Kevin Hassett, director of economic policy studies at the American Enterprise Institute.

Long-term unemployment of this magnitude is without precedent.  In each recession of the last 50 years, the economy has contracted only to bounce back in a short time.  However, the social and economic ills of the recent downturn are substantial and without real precedent.  This is especially true of the impacts on the nation's oldest workers.

• Older workers have seen the largest proportionate increase in unemployment in this downturn: the number of unemployed people between ages 50 and 65 has more than doubled.
• A worker between ages 50 and 61 who has been unemployed for 17 months has only about a 9 percent chance of finding a new job in the next three months.
• A worker who is age 62 or older and in the same situation has only about a 6 percent chance.

These employment figures can have severe effects on the wellbeing of the population as a whole.

• Economists Daniel Sullivan and Till von Wachter estimate a 50 to 100 percent increase in death rates for older male workers in the years immediately following a job loss.
• This higher mortality rate implies that a male worker displaced in midcareer can expect to live about one and a half years less than a worker who keeps his job.
• This is partially explained by a recent study that found that a 10 percent increase in the unemployment rate would increase the suicide rate for males by 1.47 percent.
• Joblessness is also associated with some serious illnesses, including cancer, heart disease and psychiatric problems.

A possible solution for job losses in future recessions can be borrowed from the German playbook.  Work sharing encourages employers to reduce their workers' weekly hours and pay instead of implementing layoffs.  States make up some of the lost wages from their unemployment funds.  Work sharing allows workers to stay employed while potentially saving public dollars.

Source: Dean Baker and Kevin Hassett, "The Human Disaster of Unemployment," New York Times, May 12, 2012.

For text:

http://www.nytimes.com/2012/05/13/opinion/sunday/the-human-disaster-of-unemployment.html?_r=3&pagewanted=1

For more on Economic Issues:

http://www.ncpa.org/sub/dpd/?Article_Category=17

Growth of Consumer-Directed Could Save Billions Annually

17 May 2012 07:00:53 CDT -

Over the past decade, many employers have introduced consumer- directed health plans that proponents claim will engage consumers by giving them "skin in the game" through higher deductibles and by emphasizing personal responsibility for their health and health care decision making, say researchers in the journal Health Affairs.

• Consumer-directed health plan enrollment has increased from 4 percent of all employer-sponsored insurance in 2006 to 13 percent in 2010.
• A recent survey reported that more than half of large employers offered a consumer-directed health plan option in 2011, and another 13 percent of large employers planned to offer one for the first time in 2012.
• The affordability of the plans will encourage their expansion after 2014 with the implementation of the Affordable Care Act, which will in effect penalize large employers who do not offer affordable coverage.

The growth of these plans, which usually entail employees paying for uncovered medical expenses out of personal health savings accounts, are substantial and diverse.  Consider the scenario in which consumer-directed plan enrollment grows from its current level of 13 percent to 50 percent of the total employer-sponsored enrollment.

• Continued cost pressures, combined with the financial incentives in the Affordable Care Act, make the 50 percent level plausible over the coming decade.
• Estimates peg the national savings in health care expenditures at $57.1 billion annually.
• Savings of this magnitude would account for 7 percent of all health care spending for the population with employer-sponsored insurance and 4 percent for the nonelderly population as a whole.

Nevertheless, consumer-directed health plans do suffer from several pitfalls that policymakers will need to address if the plans are to be made viable on a national scale.  Specifically, a recent study showed preventive treatments were negatively affected in the first year of consumer-directed plan enrollment, despite plan provisions that reimbursed some of these preventive services.

Source: Amelia M. Haviland et al., "Growth of Consumer-Directed Health Plans to One-Half of All Employer-Sponsored Insurance Could Save $57 Billion Annually," Health Affairs, May 2012.

For text:

http://content.healthaffairs.org/content/31/5/1009.full.pdf+html

For more on Health Issues:

http://www.ncpa.org/sub/dpd/?Article_Category=16

Health Policy Digest

Provided courtesy of: http://www.ncpa.org/

Consumer Driven Health Care

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