NCPA - National Center for Policy Analysis
NCPA - National Center for Policy Analysis
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: NCPA

Daily Policy Digest

Reforming Net Metering
16 Apr 2014 07:00:58 CDT -

The use of rooftop solar panels and other on-site power sources -- known as distributed generation -- is becoming more and more prevalent. To encourage the use of these small-scale power systems, many states developed "net metering" -- a billing system that 43 states and the District of Columbia currently employ. These net metering policies, however, need to be reformed, says Tom Tanton, president of consulting firm T² & Associates.

Generally, the policies work like this:

  • Customers who have these power systems are credited -- at the retail electric rate -- for any excess electricity that they create.
  • Electric companies must purchase this excess power at the retail rate when it is sent back to the electric grid -- despite the fact that they could produce the electricity themselves at much lower cost, or they could purchase it at wholesale. For reference, the average retail price of electricity in Wisconsin costs 400 percent more than wholesale.

This requirement -- that companies purchase the distributed generation power at retail -- is essentially a subsidy, transferred from ordinary customers to net metered customers.

  • According to a study conducted for Arizona Public Service, the amount paid by net metered customers is actually below the utilities' costs of serving those customers. This means that non-net metered customers must pay higher prices to cover those costs. Arizona utilities pay three times the cost of electricity under net metering than in the competitive market.
  • According to one California study, customers who do not install net metering devices will pay an extra $1.1 billion in shifted costs each year by 2020.

Because of these cost-shifting policies, net metered customers do not pay grid support costs. Moreover, they actually impose costs on the system because the electric network has to handle power going two ways -- both to the customers, and to take the energy from them.

States need to restructure their net metering policies. Electricity rates should be fair and affordable for all customers, and all who use the electric grid should help to pay for it.

Source: Tom Tanton, "Reforming Net Metering: Providing a Bright and Equitable Future," American Legislative Exchange Council, March 2014.

For more on Environment Issues:

More Puzzling ObamaCare Numbers
16 Apr 2014 07:00:57 CDT -

A new report from the RAND Corporation comes to very different conclusions about the success of the health insurance exchanges, says Megan McArdle for Bloomberg View.

The RAND study followed 2,425 adults -- ages 18 to 64 -- and tracked them over six months, from September 2013 to March 28, 2014. From those figures, RAND produced estimates for the U.S. population as a whole. According to the report:

  • There were 40.7 million uninsured in 2013, a figure that fell to 31.4 million in 2014. However, 4.4 million people lost their insurance during this time, resulting in a net gain of 9.3 million.
  • The majority of that gain came from employer-sponsored insurance and Medicaid coverage. Less than 2 million people who were previously uninsured actually purchased individual insurance policies, whether on or off of the exchanges.
  • Of those who lost insurance, most had previously had employer-sponsored insurance.
  • 3.9 million Americans actually purchased exchange policies from October 2013 through March 28, 2014. Only one-third of these were previously uninsured.
  • Of the 18.2 million on Medicaid for 2014, 3.6 million had been previously uninsured.
  • Those with employer-sponsored health insurance rose from 108 million to 116 million.
  • The number of Americans with insurance designated as "other" dropped by 7.2 million, with those people becoming uninsured or moving to employer-sponsored insurance.

McArdle describes the study as "puzzling," asking why so many people suddenly received employer-sponsored insurance and why so many with "other" insurance lost it. And why is 3.9 million so much smaller than the administration's figures insisting that 7.3 million Americans had chosen exchange insurance plans? While 2,500 is a large sample size, could the numbers have been thrown off by chance? Unfortunately, we will not know the answers to these questions until more information is released.

Source: Megan McArdle, "More Puzzling Obamacare Numbers," Bloomberg, April 9, 2014. Katherine Carman and Christine Eibner, "Changes in Health Insurance Enrollment Since 2013," RAND Corporation, 2014.

For more on Health Issues:

Ten Agencies Doing One Task
16 Apr 2014 07:00:56 CDT -

The federal government sometimes has 10 different agencies running a single program, says USA Today.

A new report by the Government Accountability Office (GAO) reveals just how much duplication exists within our federal programs.

  • Programs addressing AIDS in minority communities takes 10 different federal offices.
  • Autism research has 11 separate agencies.
  • The search for prisoners of war and Americans missing in action is spread across eight agencies within the Department of Defense.
  • And at the Schriever Air Force Base in Colorado, eight different satellite control centers are used to control 10 satellite programs.

In past reports, the GAO has identified 162 areas marked by fragmentation, duplication, overlap and inefficiency. This year, the GAO added 26 new areas to that list. Agencies dispute that duplication is necessarily waste -- responding to its management of autism research across 11 agencies, Health and Human Services argued that multidisplinary research is often required.

Republican Senator Tom Coburn authored the legislation that requires these yearly reports from the GAO, and he urged lawmakers to take this list and make cuts to the budget.

  • This is the fourth year that the GAO has produced these reports.
  • Eighty-three percent of the agency's recommendations have been "at least partly implemented" by the Obama administration.
  • According to Comptroller General Gene Dodaro, Congress has taken up 52 percent of the recommendations.

How much money is wasted because of the duplication? It is impossible to tell. The government does not keep track of which programs each agency is responsible for, so taxpayers are in the dark as to how much money each agency is spending on these programs. Darrell Issa, Republican congressman from California, has sponsored legislation that would require better tracking of spending data on money transferred from Congress to an agency to its final destination. The bill passed the House and is awaiting a Senate vote.

Source: George Korte, "Government Often Has 10 Agencies Doing One Job," USA Today, April 8, 2014.

For more on Government Issues:

$2.1 Trillion in Untaxed Profits Abroad
16 Apr 2014 07:00:55 CDT -

More than $2 trillion in foreign profits were held by U.S. corporations abroad in 2013, says Reuters.

U.S. corporations do not pay income tax on their overseas profits (something known as income tax deferral) unless they bring those profits back into the United States.

  • Between 2008 and 2013, the amount of profits held overseas by American corporations almost doubled.
  • General Electric alone had $110 billion overseas, followed by Microsoft (at $76.4 billion), Pfizer (at $69 billion) and Merck (at $57.1 billion).

This corporate tax issue has been at the center of congressional debate on tax reform. Some lawmakers have advocated getting rid of offshore deferral, and others have pushed for a "tax holiday" that would allow these corporations to bring foreign profits back into the United States at a low tax rate. Democratic Senator Max Baucus, former finance committee chairman, had made a number of tax reform proposals before leaving to become ambassador to China. Senator Ron Wyden has taken over Baucus' post.

Analysts do not anticipate any real reform action until after the mid-term elections in November, but Americans can expect to see a push for a tax code overhaul in 2015.

Source: Kevin Drawbaugh and Patrick Temple-West, "Untaxed U.S. Corporate Profits Held Overseas Top $2.1 Trillion: Study," Reuters, April 8, 2014.

For more on Tax and Spending Issues:

United States Must Preempt Deflation
16 Apr 2014 07:00:54 CDT -

Deflation is a threat that needs to be taken seriously, says John Makin, a resident scholar at the American Enterprise Institute.

Deflation is a severe problem, and once it occurs, an economy is in for a tough ride. As such, policymakers must act preemptively and strike to deal with deflation before it becomes a major issue. Inflation indices have been falling in the United States, as well as in China and Europe, all of which have experienced more inflation than forecasted by experts. The U.S. government needs to act now to deal with this threat.

The Federal Reserve, in recent months, has taken the position that the United States' move toward deflation is only temporary, assuming that inflation, which has dropped below 1 percent, will soon move back toward 2 percent. This assumption is dangerous. Similarly, neither the European Central Bank nor the Chinese have taken efforts to slow deflation. Why this complacency?

  • Policymakers at the Federal Reserve, International Monetary Fund and European Central Bank argue that their "measures of expected inflation are well-anchored."
  • This is unwise, and once deflation does hit, it will be too late to avoid it -- history has shown this. When Japan slid into deflation in 1994, JPMorgan Chase said, "What is that no one seemed to be expecting it." Furthermore, it reported, "When deflation was getting under way, the OECD anticipated positive inflation through the end of the forecast horizon."
  • In addition, leaders contend that inflation that sits between 0 percent and 2 percent is unlikely to experience abrupt changes. There is little evidence for this claim.

Deflation is self-reinforcing, because when prices fall it reinforces the desire of households and firms to hold onto cash -- they can earn investment returns by doing nothing with their money. So when deflation appears, it tends to accelerate.

Policymakers must combat this threat before deflation takes hold.

Source: John H. Makin, "Now Is the Time to Preempt Deflation," American Enterprise Institute, April 2014.

For more on Economic Issues:

Innovative, Unique, Even Revolutionary: Surgery Center of Oklahoma
15 Apr 2014 07:00:53 CDT -

A free market alternative for public employees started in Oklahoma City has the potential to save taxpayers billions of dollars nationwide and revolutionize the way Americans pay for their health care, says

Devon Herrick, a senior fellow at the National Center for Policy Analysis, told Oklahoma that the agreement for the Surgery Center of Oklahoma to provide lower cost medical procedures to Oklahoma county employees is innovative and potentially revolutionary.

"The bottom line is taxpayers (and employers) desire to get value for what it spends on health benefits," Herrick says. "The best way to do that is to align the incentives of workers and taxpayers (and employers). Consumers will seek out these bargains if they are given the appropriate incentives and the tools to do so."

  • The Surgery Center drew national attention two years ago when it became the first hospital group in the country to set and disclose to patients the cost of each of its medical procedures.
  • Prices for Surgery Center procedures are generally a fraction of those of competing hospitals that bill through traditional health insurance.
  • recently calculated the cost of 10 surgeries through late March at the Surgery Center at a total of $58,565. Comparable cost at other hospitals for those 10 procedures would have been over $200,000.

Should hospitals across the country offer competitive pricing to local, county and state employees with health care coverage underwritten by taxpayers, the cost savings could be in the billions of dollars.

Traditionally, health plans allowed enrollees to go anywhere for care with little regard for costs, Herrick says. By contrast, the Surgery Center offers a cost incentive alternative for quality care.

"If more employers would reward enrollees for choosing a place like the Surgery Center of Oklahoma, within a short while other hospitals and providers would begin to match the prices," according to Herrick.

Source: Patrick B. McGuigan, "Innovative, Unique, Even Revolutionary: Surgery Center of Oklahoma,", April 11, 2014.

For more on Health Issues:

Health Policy Digest

Provided courtesy of: NCPA

Consumer Driven Health Care

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Saving Jobs from Health Reform's Harmful Regulations
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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...


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...


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