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.
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Daily Policy Digest
Provided courtesy of: http://www.ncpa.org/
Daily Policy Digest
- The Impact of Budget Stabilization on Economic Growth
- 07 Mar 2014 07:00:58 CDT -
Spending restraints and tax cuts lead to significant economic gains, say John Merrifield, a senior fellow at the National Center for Policy Analysis and professor of economics at the University of Texas-San Antonio, and Barry Poulson, a professor of economics emeritus at the University of Colorado-Boulder.
Merrifield and Poulson developed a dynamic scoring model to determine the impact of tax reductions and spending constraints on economic growth and fiscal health. The authors applied the model to California, Montana and Utah (choosing one blue state with a poor business climate, one middle-of-the-road state and one conservative state with a strong business climate).
The study simulated a combination of rules to limit taxes and expenditures, capping general fund spending growth at population plus inflation.
- With budget stabilization rules that limited spending in place, all simulations indicated that the states would have seen significant gains in economic growth had they utilized these fiscal measures from 1994 to 2012.
- With spending constraints, California and Montana could have reduced their income tax rates greatly, raising the personal income growth rate. Between 1994 and 2012, the two states could have seen a respective 3 percent and 2 percent gain in personal income.
- California would have reduced spending by 28 percent over the same time period, while the reduction in spending in Montana and Utah would have been 11 percent and 10 percent, respectively.
The model indicates that the revenue generated from income tax cuts would have offset much of the revenue loss from the cut and would have significantly increased economic growth. The authors determined that California would have received a 4 percent tax revenue dividend, while Montana and Utah would have seen respective 2 percent and 1 percent dividends.
Stable spending growth curbs pressures to raise taxes and cut back on spending caps, pressures that would otherwise result from fiscal stress. These state simulations demonstrate how a set of tax and expenditure limits can produce a stabilized budget.
Source: John Merrifield and Barry W. Poulson, "State Fiscal Policies for Budget Stabilization and Economic Growth: A Dynamic Scoring Analysis," Cato Institute, Winter 2014.
For more on Economic Issues:
- Relaxing Licensing Requirements on Nurse Practitioners
- 07 Mar 2014 07:00:57 CDT -
Peeling back occupational licensing restrictions on nurse practitioners could increase access to care for many patients, say researchers for the National Bureau of Economic Research.
How do occupational licensing laws -- which require a license before a person can practice in a specific field -- impact wages costs and quality of care within the health care industry? Physicians, nurses and dentists are all licensed, as are 76 percent of non-physician health workers. The study's authors looked into the regulations that apply to nurse practitioners (NPs), registered nurses who have more advanced education and training than the typical nurse. Usually, an NP completes a master's program or PhD program that provides training for diagnosing common illnesses, managing chronic conditions and prescribing medications.
Laws concerning NPs vary across states, but the three biggest regulations that affect NPs are those that limit their ability to write prescriptions, to practice independently and to receive direct reimbursement from insurers. The authors found that many of these common restrictions actually increase health care costs.
- When doctors are required to supervise NPs when prescribing controlled substances, physician wages increase by 7 percent while nurse practitioner wages decrease by 14 percent. This, the authors say, indicates that there is some substitution between the two jobs.
- Those restrictions also increased the number of physician hours worked by 6 percent to 9 percent while decreasing the number of hours worked by nurse practitioners by 6 percent to 14 percent.
- The price of a well-child medical exam rises by 3 percent to 16 percent due to these laws.
However, none of these regulations appeared to reduce infant mortality rates or malpractice premiums. The authors concluded that restrictive state licensing practices only increase the cost of medical care without increasing the quality of that care. These results indicate that NPs could be the key to increasing access to care for patients by lowering costs and increasing the number of individuals capable of providing routine medical care.
Source: Morris M. Kleiner et al., "Relaxing Occupational Licensing Requirements: Analyzing Wages and Prices for a Medical Service," National Bureau of Economic Research, February 2014.
For more on Health Issues:
- Congress Considers Lifting Toll Ban
- 07 Mar 2014 07:00:56 CDT -
Like many states, insufficient fuel tax revenue has left Wisconsin without the means to pay for its roads and bridges, says Stateline.
- Wisconsin's lawmakers are looking to the use of highway tolls to pay for its transportation infrastructure, though such a scheme is illegal under existing law, as federal law prohibits most states from tolling interstates.
- Wisconsin and others are hoping that Congress will repeal that law this year when the current transportation bill expires at the first of October.
Interstate highway tolls were banned in 1956 with the creation of the interstate highway system, allowing tolls only on the highways that already had them in place. New highways and lanes added to existing interstates are allowed to have tolls, however.
- The federal gas tax stands at 18.4 cents per gallon.
- It has remained at that same level since 1993, despite increased fuel efficiency and inflation.
- The Department of Transportation predicts that the Highway Trust fund -- which is used to fund road projects -- will be depleted by August.
Truckers and delivery companies are opposed to tolls, as are businesses stationed along interstates. Hayes Framme, a spokesman for the Alliance for Toll-Free Interstates -- a group that includes the American Trucking Associations, UPS, FedEx and Dunkin' Donuts -- says, "Tolling existing interstate lanes is the least efficient, least effective mechanism to fund transportation in the long term."
But those in favor argue that states should at least have the option to secure funding through tolls. Patrick Jones, executive director and CEO of the International Bridge, Tunnel and Turnpike Association, says, "From the point of view of the American people, (tolling) is providing another avenue to fund infrastructure that is likely deteriorating." He says that states do not have to toll highways, but, "Just give them the flexibility to do it. Let's have the battle. Let's have the argument."
Wisconsin Governor Scott Walker has expressed interest in building express lanes that would be tolled (which would also increase road capacity), rather than adding tolls to existing lanes.
Source: Daniel C. Vock, "As Highway Money Runs Dry, Congress Considers Lifting Toll Ban," Stateline, February 26, 2014.
For more on Tax and Spending Issues:
- ObamaCare's Failed State Exchanges
- 07 Mar 2014 07:00:55 CDT -
Federal grants to develop state health exchanges cost more than $1.2 billion, says Peter Suderman, senior editor at Reason Magazine.
$677 million was spent to develop the problem-ridden healthcare.gov, but almost twice that was sent to the states in the form of grants to develop their own exchanges. The District of Columbia and 14 states developed their own exchanges, and seven of them are still not performing even close to adequately.
- Oregon's exchange was the most disastrous of the state exchanges. With a total of $303 million in federal grants (the government thought that Oregon's exchange would be a model for all other states), the launch was delayed first for weeks, and then for months. Reports surfaced that independent consultants warned that the site was unworkable before launch, but the Oregon Health Authority actually withheld their payment in order to keep them quiet. Lawmakers have called for a federal investigation.
- Maryland received $157.2 million in federal dollars for a site that failed almost simultaneously with its launch. The state terminated its $193 million contract with its IT contractor in February, and the problems are so bad that state officials have announced that they may scrap the site entirely.
- Massachusetts made the mistake of hiring the same contractor that built the federal exchange, CGI, and the exchange suffered problems from the beginning. Only 5,428 people signed up for coverage during the first three months -- that's less than 1 percent of the state's goal for the first year. All of this after receiving $135.6 million in federal dollars.
- Vermont's $165.2 million in grants could not keep their exchange site -- also built by CGI -- from failing on its very first day. There are still functions that are not working, including insurance options for small businesses. Newsweek reported this month that CGI actually created a dummy demo site in order to pass inspection. Again, lawmakers have called for an investigation.
- Minnesota's exchange director resigned in mid-December after taking a tropical vacation amidst site problems and 14 exchange officials were given bonuses even before the launch. Promises that fixes would be in place by 2014 did not hold true, and an outside group has said that problems will not be fixed by the end of open enrollment March 31. In all, the state received $153.7 million in federal dollars.
- Nevada enrolled only 16,000 out of the 118,000 that the state had expected to enroll during the open enrollment period, with one exchange board member describing the site's failure as "catastrophic." The state received $83.7 million, and officials have now revised their expected enrollee projection down to 50,000.
- Hawaii's $205 million in federal grants did not seem to go very far. The exchange was taken down for two weeks immediately after launch and enrollment has been very low. Only 4,300 people have signed up, the lowest number in all the states.
Source: Peter Suderman, "ObamaCare's Failed State Exchanges," Reason Magazine, February 27, 2014.
For more on Health Issues:
- State and Local Tax Policy Primer
- 07 Mar 2014 07:00:54 CDT -
A state's choice of tax instrument determines the efficiency, equity and collectability of the tax, says Justin Ross, assistant professor of public finance and economics at the School of Public & Environmental Affairs at Indiana University.
Ross looks at four tax policy instruments: individual income taxes, consumption taxes, real property taxes and corporate taxes. How does the choice of tax instrument impact revenue, fairness and collection costs?
According to the study, five criteria should be used to evaluate tax policy: economic efficiency, equity, transparency, collectability and revenue production. Using these criteria, Ross analyzed the most common state tax tools and determined which states were collecting the most revenue from each type of tax.
- Individual income taxes exist in 41 states and some localities. The taxes are generally progressive, and collectability is generally high because it is based on federal tax returns. In 2011, Pennsylvania collected $1,864 per capita in individual income taxes, the highest among all states.
- Consumption taxes are sales taxes on goods and services. The sales tax is often preferred to other taxes that punish savings and investment and earnings; however, because consumption declines with income, the tax is generally regressive. This is why food is generally exempt from the sales tax. States collect an average of 30 percent of their revenue from a general consumption tax; in 2011, 17 states' sales tax collections exceeded their income tax revenues.
- Real property taxes are the main source of local revenue, and how equitable the tax is depends on how accurate the property value estimation is. In 2011, Vermont collected $1,525 per capita in property taxes -- the highest of all the states -- followed by Wyoming ($500) and Arkansas ($327).
- Corporate income taxes are generally a small portion of state revenues, and they are very inefficient. In 2011, per capita corporate income taxes were at $1,003 in Alaska and $443 in New Hampshire. Four states do not collect corporate income taxes -- Washington, Nevada, South Dakota and Wyoming.
In total, Georgia had the lowest total state tax collection per capita in 2011, at $1,639, followed by South Carolina, South Dakota and Arizona. The states collecting the most per capita were Alaska -- at $7,708 -- followed by North Dakota ($5,627) and Wyoming ($4,347).
Source: Justin M. Ross, "A Primer on State and Local Tax Policy," Mercatus Center, February 25, 2014.
For more on Tax and Spending Issues:
- Commodity Prices Follow Gold
- 06 Mar 2014 07:00:53 CDT -
Gold and industrial-metals prices are leading indicators of inflation, says R. David Ranson, a senior fellow with the National Center for Policy Analysis.
Changes in the prices of commodities -- goods that are uniform and widely-traded, such as metals or textiles or foodstuffs -- are generally attributed to higher or lower demand. But commodity prices are also determined by the value of the currency in which those prices are expressed, usually the U.S. dollar.
Looking at the long-run history of the dollar, Ranson analyzed the prices of various commodities over time.
- Gold and industrial-metals are leading indicators of inflation.
- The prices of industrial-metals (such as copper, aluminum, lead, nickel, steel scrap, tin and zinc) fluctuate widely, but they correlate with inflation. High commodity prices coincide with high inflation, as evidenced by the consumer price index (CPI). The CPI tends to rise more rapidly after industrial-metals prices rise, and vice versa.
- Any major movement in gold prices is followed by a corresponding change in commodity prices over the next year or two.
- Gold prices change more rapidly than industrial-metals and other commodities. For textiles, fibers, foodstuffs and crude oil, it takes a minimum of three years for the effects of gold price changes to be reflected in the prices of those commodity groups.
Ranson also looked at the relationship between real gross domestic product growth and changes in metal prices, finding that the relationship was purely cyclical. While growth has a short-term effect on metals prices, that effect does not last.
Since June, writes Ranson, the price of gold has been rebounding and metals prices have also begun to climb.
Source: R. David Ranson, "Commodity Prices Follow Gold -- A Leading Indicator of Inflation," National Center for Policy Analysis, March 6, 2014.
For more on Economic 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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