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

In Defense of High Frequency Trading
23 Sep 2016 07:00:58 CDT -

Washington recently put Wall Street back into its crosshairs when Representative Peter DeFazio (D-Ore.) introduced a bill to levy a 0.03 percent tax on transactions involving stocks, bonds and derivatives. His goal is to reduce "speculative financial trading" and to "curb near instantaneous high-volume trades that create instability in the stock market and in our national economy." Democratic presidential candidate Hillary Clinton advocates taxing high-volume or High Frequency Trading (HFT). This market activity has been under scrutiny since the Great Recession, and especially since the "Flash Crash" of 2010; but, is high frequency trading really to blame for market crashes?

What Is High Frequency Trading? High frequency trading uses highspeed market data and analytics to find small, short-term price differences signaling supply and demand opportunities. These price fluctuations are often the product of predictable behavioral or mechanical characteristics of financial markets. To receive market data as quickly as possible, stock brokers that specialize in electronic trading use advanced algorithms, on high-speed computer systems, in offices close to an exchange -- such as the New York Stock Exchange.

The algorithms allow computers to execute buy and sell orders electronically when a security's price fluctuates. Usually these transactions are executed in microseconds, and the profit is just a cent or a fraction of a cent, per transaction. For example, a firm might buy a stock that is selling for $20.00 on the NYSE, and simultaneously sell it on an exchange in Chicago where the price is $20.01. The firms execute enough of these transactions to make hundreds of thousands of dollars per day.

However, this type of trading is not an exotic activity; 90 percent of personal investors have access to high frequency trading, either directly or indirectly, through their broker.

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For more on Tax and Spending Issues:

Donald Trump's Tax Plan under the NCPA's Model of the U.S. Economy
22 Sep 2016 07:00:57 CDT -

Presidential candidate Donald Trump's revised tax plan (Trump 2.0) would increase private sector jobs by 3 million in 2017, while reducing public sector jobs by 554,000, according to a report by the National Center for Policy Analysis. In other words, for every public sector job lost, over five private sector jobs would be gained. In 2026, more than six private sector jobs would be gained for every public sector job lost. Trump's plan would promote tremendous job growth as well as other economic growth effects:

In the first year (2017), real GDP would increase $985 billion, representing a growthrate of 5.64 percent above Congressional Budget Office baseline estimates. In 2026, this growth rate would increase to 9.36 percent!

Personal income in 2017 would be $646 billion more than CBO baseline estimates, agrowth rate of 3.83 percent. In 2026, this growth rate would increase to 5.64 percent.

Business investment would increase by $191 billion in 2017, representing a 7.16 percent growth. In 2026, this would increase to a substantial 11.72 percent above CBO baseline estimates.

This analysis is based on results from the NCPA's modeling of the U.S. economy, in partnership with Dr. David Tuerck and his team at the Beacon Hill Institute in Boston, Massachusetts.

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For more on Tax and Spending Issues:

Medicare Accountable Care Organizations Continue to Underwhelm
21 Sep 2016 07:00:56 CDT -

Senior Fellow John R. Graham writes at NCPA's Health Blog:

Medicare's Accountable Care Organizations (ACOs), which launched in 2012, were supposed to introduce a significant shift away from paying for "volume" to paying for "value." Critics of Fee-For-Service medicine claim this system causes physicians to do more to patients so they get paid more, notwithstanding benefits to patients. Those critics seldom identify the moral hazard associated with third-party payment (by insurers or governments) as a cause of too many medical tests or procedures.

So, they introduced ACOs, which would increase quality and cut costs by getting rid of straight Fee-For-Services and putting more financial risk on physician groups. If the physician groups pass certain thresholds of cost and quality, they can pocket some of the savings. The 2015 results for Medicare's ACOs have been reported, and the results are underwhelming:

According to the results, over 400 Medicare ACOs generated more than $466 million in total program savings in 2015, accounting for all ACOs' experiences. Of these, 125 qualified for shared savings payments by meeting quality performance standards and their savings threshold.

First, if over two thirds of ACOs (275) did not get to pocket any profits from their participation, they will surely drop out. Second, $466 million is a trivial share of Medicare spending: Less than one sixth of one percent of Medicare part B (physician) spending of $279.0 billion and less than one fourteenth of one percent of all Medicare spending of $647.6 billion. This flawed doctrine is also embedded in the 2015 Medicare physician payment reform legislation, which committed Medicare to sweeping away most Fee-For-Services payments within a few short years, in favor of new payment models designed by the Centers for Medicare & Medicaid Services.

Instead of maintaining third-party payment and getting rid of Fee-For-Service, Medicare should get rid of third-party payment, let seniors spend their Medicare dollars directly, and let the physicians re-design their payment systems in response to patients' demand.

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Medical Prices Rose 10 Times More Than Non-Medical Prices in August
20 Sep 2016 07:00:55 CDT -

Senior Fellow John R. Graham writes at NCPA's Health Blog:

The Consumer Price Index rose 0.2 percent in August. Medical prices, however, continued their upward march, increasing by one full percent -- 10 times more than non-medical consumer goods and services. If prices for medical care had been flat, the CPI would have risen by just 0.1 percent. Hospital services, prescription drugs, and health insurance stand out even within medical care. Price increases for medical care have contributed 42 percent of the overall CPI increase.

Over the last twelve months, prices for medical care have increased seven times faster than prices for non-medical items in the CPI. Price increases for medical care have contributed 36 percent of the overall CPI increase.

Many observers of medical prices decline to differentiate between nominal and real inflation. Because CPI is flat, even relatively moderate nominal price hikes for medical care are actually substantial real price hikes. More than six years after the Affordable Care Act was passed, consumers are seeing no relief from high medical prices, which have increased over twice as much as the CPI less medical care since March 2010, the month President Obama signed the law. 

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For more on Health Issues:

What Is A Health Insurance Market Where No Health Insurance Is Offered?
19 Sep 2016 07:00:54 CDT -

(Senior Fellow John R. Graham writes at the NCPA's Health Blog.  A version of this Health Alert was published by Investors Business Daily.)

Obamacare appears to be in a death spiral, with a shrinking pool of insurers offering coverage, far fewer individuals purchasing insurance than advocates had anticipated, and double-digit price increases making policies unaffordable -- not only to many individuals and families, but to taxpayers, who are required to underwrite the hefty subsidies Washington promised.

The law is not working and its condition is getting worse. The centerpiece of the program, the health insurance exchanges (misleadingly labeled "Marketplaces" by the administration), will pretty much cease to exist within a few more years.

Despite media enthusiasm, Obamacare has not significantly increased the number of insured in America. According to the National Health Interview Survey conducted by the Centers for Disease Control and Prevention, about 70% of U.S. residents, age 18 through 64, had "health insurance" in 2015, the second year of ObamaCare enrollments. This was approximately the same percentage that had health insurance in 2006, before the Great Recession swept away jobs and health benefits.

What Obamacare has done is shift millions of Americans from the medical benefits they previously earned on the job to medical benefits they now receive through government welfare programs, primarily Medicaid.

This is not all President Obama's doing: The shift began earlier, in 1997, when the Republican-majority Congress collaborated with the Clinton administration to expand Medicaid with the addition of the State Children's Health Insurance Program (CHIP).

Obamacare put Medicaid expansion on steroids. And we are now seeing the results. The Congressional Budget Office estimated in February 2013 that the number of people on Medicaid would be 45 million this year. In March of this year, CBO increased its estimate by more than half, to 68 million people. At the same time, CBO's estimate of the number of people who would purchase private insurance through Obamacare exchanges was revised downward from 24 million to 12 million.

The exchanges, of course, were supposed to be "Marketplaces" where individuals would shop and compare prices of policies offered by many competing insurers, like they shop on Expedia or Amazon. They are anything but. According to research recently published by Avalere Health, one third of our country's insurance "rating regions" will have just one insurer offering policies on the Obamacare exchanges next year; more than half will have no more than two insurers. Pinal County, Ariz., was going to have no insurers offering policies (although one insurer has decided to step in at very high rates, after some political bullying).

Obamacare is becoming a Zen philosophical riddle: What is a health insurance market where no health insurance is offered? This lack of consumer choice is intensified by double-digit premium hikes, which even the administration no longer bothers to deny. That's one of the main reasons the exchanges have only half the subscribers previously anticipated: the cost, even with the subsidies.

Nevertheless, the Congressional Budget Office still believes Obamacare will somehow right itself. Of the 12 million individuals currently covered in exchanges, CBO figures 10 million receive tax credits and two million pay their own way without government assistance. CBO estimates those numbers will increase to 15 million and four million in five years, resulting in exchange policies covering 19 million people in 2021.

There is simply no pathway to that outcome. Obamacare gave insurers special subsidies (called "reinsurance" and "risk corridors") worth tens of billions of dollars to finance their losses in the exchanges for the first three operating years. Those subsidies end this year.

The number of people purchasing insurance on the Obamacare exchanges has hit its high-water mark. Premium hikes will continue -- next year, the year after -- and enrollment will decline.

The tragedy is that American health care needs nothing more than a well-functioning, competitive, transparent market for individual health insurance.

The bitterness caused by the 2010 Affordable Care Act, and the administration's unwillingness to admit that Obamacare needs a serious overhaul, has resulted in an environment in which real change appears highly unlikely.

Regardless of who wins the presidency in November, the Obamacare experience has set back real health real reform for years. 

For more on Health Issues:

Taxi versus Uber: The Regulations, the People, the Money and the Future
16 Sep 2016 07:00:53 CDT -

The ride-hailing service Uber is only six years old, yet it has already inspired a host of imitators, such as Lyft, Wingz and Taxify. It has also sparked fierce opposition from the taxi industry, which is being undercut by Uber's business model.

How Taxis Cornered the Ride-sharing Market. When motor cars became widespread early in the 20th century, the Progressive Era was in full swing. Progressive politicians believed that economic competition is wasteful, and supported greater regulation of business. At the municipal government level, various progressive reforms of the taxi industry included price fixing, limiting the number of taxicabs, mandating how fares are collected, dictating the hours of operation and eliminating competing taxi companies. In many cities, drivers were required to purchase and display medallions, signaling they were allowed to operate in that market.

These regulations generated higher prices that ensured the profitability of the taxi companies and led to a black market for medallions. Because taxis without medallions were illegal and the number of taxis in a market was capped, the taxi supply was artificially lowered, raising the cost of medallions. Progressive Era laws remain in many American cities; currently, a black market license costs as much as $400,000 in Boston, Mass. -- which is still less than the official price. High costs deter startup companies, few of which can afford to purchase six-figure medallions. However, in the past few years, taxis have faced competition from self-described ride-sharing services. (These are more accurately described as ride-hailing or ride-booking services because ride-sharing services include noncommercial programs that allow commuters to pick up passengers to qualify for high occupancy vehicle, or HOV, lanes.) The commercial ride-sharing services utilize smartphone technology to circumvent local transportation regulations.

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For more on Economic Issues:

Health Policy Digest

Provided courtesy of: NCPA

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...


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...


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...


Related Information:
NCPA - National Center for Policy Analysis Web Site

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