Washington Policy Blog

Democrats’ Proposed Health Plan Includes 17 Million Uninsured

The new health care reform plan unveiled today by Democrats in Congress is not universal care.  The Democrat-proposed plan provides for 17 million people to go without health care coverage.  The plan carries other risks, such as:

• It raises taxes during a recession.  Higher taxes, even on the so-called rich, means there would be less money available for investment and job creation, delaying the recovery and increasing hardship for people who are out of work.  Business owners would slow or stop hiring, as they wait to see what their new payroll tax will be, and whether they will be forced to pay the proposed 8% “pay-or-pay” penalty each year.
  
• The government option would crowd out private coverage.  Many workers would be forced onto the government plan against their will, as employers drop their current coverage in an effort to shift health costs to taxpayers.  Yet the President’s family and those of Members of Congress would not be forced onto the government option plan; as dependents of federal employees they would continue to receive first-class coverage.
  
• Eight million people with Health Savings Accounts (100,000 in Washington) might lose their coverage if it doesn’t meet the federal definition of mandated insurance.  Innovative patient-centered medical practices in Washington, such as Dr. Erika Bliss’ Qliance clinic in Seattle, would be forced to close.

Here's a good illustration of how the proposed health care plan would work was released by the Joint Economic Committee.

The House Health Care Bill - The Whole Enchilada

The three committees controlling health care legislation in the US House released their health reform bill yesterday with the usual fanfare. Basically every bad proposal kicking around Washington, D.C., is included in the 1018 page document. Debate on the House floor is scheduled to begin next week.

The lead-off provision is a government "option", ala Medicare,  to compete with private health insurance. Never mind that Medicare started as a "competitive government option" in 1965, ran insurance for seniors out of business by 1970, and currently has a $67 trillion dollar unfunded liability. 

The House leadership then stuffed an insurance  "connector" into the bill to dictate the kinds of benefits people can select and how much they must pay for them. Massachusetts has had a connector plan in place for the past three years. The state is now running almost a $1 billion deficit for its health care spending. It didn't work for Massachusetts, but then a state, unlike the federal government, can' t print money or run deficits for very long.

A lot can be placed in 1018 pages, but other significant provisions include an individual mandate so everyone in the country must buy health insurance or pay a fine, an employer mandate that requires them to purchase insurance for their employees or pay an 8% payroll tax, a class warfare tax on the rich, and a schedule for decreasing provider reimbursement on Medicare and Medicaid patients.

The overall cost is estimated to be $1.5 trillion over the next ten years. Of course, Medicare was 300% over budget by 1990. So much for confidence in the bureaucratic budget process.

Health Care Reform is Losing Steam

A new Rasmussen national telephone survey just released shows the country is shifting to opposition of the Administration and Congressional health care reform plans. Those opposed or somewhat opposed now total 49% with 46% in favor or somewhat in favor of the proposed health care reforms currently under debate in Washington, D.C.

Two weeks ago, Rasmussen polling revealed 50% in favor and 46% opposed. This is almost a 10% shift toward opposition.

As more Americans understand the magnitude and the expense of the proposed reforms, the negative impact of government controlled health care is starting to take hold. A prolonged debate gives more people the opportunity to see these reform plans for what they really are - an attempt to move our entire health care delivery system into the control of government bureaucrats.  

Customer Service Lacking in L.A. Bureaucracy. Surprised?

As Seattle policymakers now say they will postpone consideration of ditching the $25 per employee head tax, a column in Friday's Wall Street Journal should provide a cautionary tale on why it is important for cities and states to endorse policies that encourage entrepreneurial growth.

The column, written by Rick Newcombe, president of Creators Syndicate, is about to move his business and the jobs involved, out of Los Angeles because the city is reneging on its own tax policy. For the last 15 years Creators Syndicate has wrangled with the city over their business tax classification. Mr. Newcombe thought his business, which helps syndicate national columnists, should fall into the "wholesale and retail" classification with a lower tax rate, whereas the city thought the firm fit into the "occupations and professions" which would mean a higher tax rate. 

The fight over the tax classification is nothing out of the ordinary. Businesses often appeal their tax classification. Creators Syndicate took their case to court, prevailed, and the city relented and everything seemed fine (this was in 1994).

But the city started running out of money in 2007:

"Suddenly, the city announced that it was going to ignore its own ruling and reclassify us in the higher tax category. Even more incredible is the fact that the new classification was to be imposed retroactively to 2004 with interest and penalties. No explanation was given for the new classification, or for the city's decision to ignore its 1994 ruling. Their official position is that the city is not bound by past rulings -- only taxpayers are."

Los Angeles just said to the taxpaying public, "do as we say, not as we do."

A bigger hypocritical statement I could not imagine. 

Cle Elum Solar Plant: Some Things to Remember

Seattle Times science reporter Sandi Doughton wrote an excellent piece on the potential solar plant in Cle Elum, highlighting some of the opportunity but asking the right questions about potential problems. More information will come out, but there are some elements to watch as this project progresses.

The debate about reducing carbon emissions has centered around two policy directions: technology or lifestyle modification. The focus of most of Washington's climate policy has been on forcing people to change their lifestyle. We've noted repeatedly that these approaches have high cost and low success.

Technology is the approach that is most successful but is also consistent with prosperity. The problem is when politicians try to pick and choose the technologies of the future. They don't pick correctly very often (witness hydrogen or electric cars and biofuels, just to name two recent examples).

There is great initial excitement about the solar project in Cle Elum, but there are some important considerations to ensure that this is truly a successful project and not another taxpayer-subsidized eco-fad.

• Don't be seduced by the "world's biggest."A few years back, Washington also became home to the nation's largest biodiesel plant (disclaimer: I was hired to organize media coverage announcing that deal to build the plant). That announcement highlighted the jobs that would be created, the environmental friendliness of the project and even featured a US Senator promoting the role of government support in creating the project. Today, that plant is not running at capacity and biofuels are a suspect technology when it comes to reducing CO2 emissions. Seattle just stopped buying soy-based biodiesel due to environmental concerns. What seemed sexy just a few years back is a disappointment today.
• Taxpayers pay, profits are privatized. This project makes sense primarily due to government subsidies and regulation. The story notes that "Generous tax breaks and a citizen initiative that requires utilities to get some of their power from renewable sources also add to Washington's appeal." Put simply, Washington's laws give tax benefits for construction and require utilities to buy the energy they produce. Profiting in such a scenario is virtually guaranteed. It is hard to criticize entrepreneurs who take advantage of such an offer, but it should be clear that we are paying to build a solar plant for the right to buy high-priced energy.
• This will likely increase energy costs. As the Times story notes, solar hasn't developed like other technologies "largely because of high costs." The cost of solar photovoltaics is much higher than other forms of energy. For instance, the Kittitas wind project cost $1,920 per installed kilowatt. Solar PV, by way of comparison, costs about $7,000. It will be hard to know what the cost of this project will be until the full financials are released. The project will involve 400,000 solar cells, producing 75MW. The cost is estimated to be "north of $100 million." At $100 million the installed cost would be $1,333 per installed kilowatt, which is much lower cost than other projects, so I'm guessing that it will be well north of $100 million. By way of comparison, the solar panels the city of Seattle wanted to put on Qwest Exhibition Hall cost about $12,500 per installed KW.
• Creating or losing jobs? While job creation will be the highlighted talking point for this project, there is question about whether it will create good jobs. When looking at other solar PV installations, the article notes that "the biggest is a 60-megawatt plant in Spain." A study earlier this year examining Spain's effort to create a "green" economy found that the effort destroyed 2.2 jobs for every one it created. That's part of the reason Spain enjoys an 18 percent unemployment rate.
• Logging for a green economy. Ironically, the site of the solar array is a 400-acre area that has been clear cut in the Teanaway. That is the size of about four large clear cuts. While timber harvests re-grow, however, this guarantees the forest will likely never re-grow. Timber harvesting in the Teanaway has been the target of environmental lawsuits trying to stop the very clearings that are now the location of the biggest "green" energy project in the world.

Our creative, free-market economy is the most powerful force ever conceived to promote the technological innovation that has dramatically increased well-being while reducing environmental impact. Political efforts to pick and choose technologies, however, undermine that creativity, substituting eco-fads for true innovation. As this project moves forward, we'll have a better sense in which category it belongs.

Upside down transportation policy

This, in today's Seattle Times:

As light-rail opponent Emory Bundy and others have noted, the 36-minute ride from Westlake Center to the airport, via Rainier Valley and Tukwila, is longer than the 194 bus, scheduled to take 28 minutes using freeway HOV lanes. Next year the 194 will be dropped, so transit riders heading to the airport will have to take a train.

Tell me again, why spending dozens of billions of dollars on Light Rail is a good idea?

Happy Planet...Unhappy People

This week the New Economics Foundation published its Happy Planet Index of countries worldwide. They note that "the index combines environmental impact with human well-being to measure the environmental efficiency with which, country by country, people live long and happy lives." Like many such analyses from the environmental left, it glorifies poverty and repression.

The Index combines "Life Satisfaction," life expectancy and "Ecological Footprint."

The Index rates Costa Rica as the #1 country in its list. The US comes in at 114. Additionally, the following countries rank ahead of the US (I've also added the country's political rights as rated by Freedom House - 1 - full rights, 7 - no rights)

• Vietnam, 5th - 7
• Cuba, 7th - 7
• Bhutan, 17th - 6 (32 percent below poverty line)
• Laos, 19th - 7
• Mexico, 23rd - 2
• Pakistan, 24th - 6
• Bangladesh, 31st - 5 (42 percent below poverty line)
• Tajikistan, 34th - 6
• Venezuela, 36th - 4
• Syria, 38th - 7
• Burma, 39th - 7
• Haiti, 42nd - 4 (Poorest country in the Western Hemisphere, 80 percent below poverty line)
• Uzbekistan, 45th - 7
• Yemen, 50th - 5
• Palestine, 56th - 5
• Iran, 90th - 6 (The 2009 ranking is due out soon, and we can reasonably expect a 7)
• Belarus, 104th - 7
• Malawi, 107th - 4 ($800 annual average income, 53 percent below poverty line)
• Chad, 109th - 7 ($1,600 annual average income, 80 percent below poverty line)
• Lebanon, 110th - 5
• Congo, 112th - 6
• United States, 114th - 1

The results mirror other studies showing that some believe that greenness requires poverty. Sadly, such poverty is seen too often as "quaint" by wealthy Western environmentalists. As filmmaker Phelim McAleer says "quaint may be the most evil word in the English language."

These results are not surprising since they are based on the work of Herman Daly of the University of Maryland. In his 1996 book Beyond Growth he outlines his approach to the problems of growth and development, which he describes in one chapter as "Marxian-Malthusian." In describing the economic and environmental challenges in Northeast Brazil, he writes:

A Marxian-Malthusian definition of social class, in terms of control versus non-control of both production and reproduction, fits the Northeast, and offers a possibility for integrating the valid insights of both traditions. This is important because with the current rebirth of Marxist economics in Brazilian universities, Malthusian insights are in danger of being lost or discarded... The democratization of control over reproduction is no less (and no more) important than the democratization of land ownership in the Northeast.

The "New" Economics Foundation sounds like some very old economics that led not only to vast human misery but unfathomable environmental destruction.

This week the New Economics Foundation published its Happy Planet Index of countries worldwide. They note that "the index combines environmental impact with human well-being to measure the environmental efficiency with which, country by country, people live long and happy lives." Like many such analyses from the environmental left, it glorifies poverty and repression.

The Index combines "Life Satisfaction," life expectancy and "Ecological Footprint."

The Index rates Costa Rica as the #1 country in its list. The US comes in at 114. Additionally, the following countries rank ahead of the US (I've also added the country's political rights as rated by Freedom House - 1 - full rights, 7 - no rights)

• Vietnam, 5th - 7
• Cuba, 7th - 7
• Bhutan, 17th - 6 (32 percent below poverty line)
• Laos, 19th - 7
• Mexico, 23rd - 2
• Pakistan, 24th - 6
• Bangladesh, 31st - 5 (42 percent below poverty line)
• Tajikistan, 34th - 6
• Venezuela, 36th - 4
• Syria, 38th - 7
• Burma, 39th - 7
• Haiti, 42nd - 4 (Poorest country in the Western Hemisphere, 80 percent below poverty line)
• Uzbekistan, 45th - 7
• Yemen, 50th - 5
• Palestine, 56th - 5
• Iran, 90th - 6 (The 2009 ranking is due out soon, and we can reasonably expect a 7)
• Belarus, 104th - 7
• Malawi, 107th - 4 ($800 annual average income, 53 percent below poverty line)
• Chad, 109th - 7 ($1,600 annual average income, 80 percent below poverty line)
• Lebanon, 110th - 5
• Congo, 112th - 6
• United States, 114th - 1

The results mirror other studies showing that some believe that greenness requires poverty. Sadly, such poverty is seen too often as "quaint" by wealthy Western environmentalists. As filmmaker Phelim McAleer says "quaint may be the most evil word in the English language."

These results are not surprising since they are based on the work of Herman Daly of the University of Maryland. In his 1996 book Beyond Growth he outlines his approach to the problems of growth and development, which he describes in one chapter as "Marxian-Malthusian." In describing the economic and environmental challenges in Northeast Brazil, he writes:

A Marxian-Malthusian definition of social class, in terms of control versus non-control of both production and reproduction, fits the Northeast, and offers a possibility for integrating the valid insights of both traditions. This is important because with the current rebirth of Marxist economics in Brazilian universities, Malthusian insights are in danger of being lost or discarded... The democratization of control over reproduction is no less (and no more) important than the democratization of land ownership in the Northeast.

The "New" Economics Foundation sounds like some very old economics that led not only to vast human misery but unfathomable environmental destruction.

Public versus private health care costs

Depending on your perspective, the decision yesterday by the Public Employees Benefits Board (PEBB) to raise premiums, deductibles, and co-pays for public employees is either a "travesty" or common sense reality.

In a 4-3 vote, the PEBB members decided:

"Due to the state’s budget shortfall, the HCA required that the medical plans meet a budget target that would keep the average employee contribution at around 12%. To do this, the plans increased the costs of certain benefits, deductibles, and out-of-pocket maximums. The employer will continue to pay 88% of the premium costs, based on enrollment across all PEBB medical plans."

This "average employee contribution at around 12%" compares very favorably to those in the private sector that still have jobs and health insurance. According to a 2008 study on state health care costs by the Washington Alliance for a Competitive Economy:

“State employee health care benefits are generous, and the 12 percent share of premiums paid by employees is low. A recent Towers Perrin survey of 200 large employers found that the average employee’s share of health care premiums was 22.6 percent in 2008, up from 20.1 percent in 2003 (Towers Perrin 2008).”

Despite this fact, PEBB member Greg Devereux (head of the Washington Federation of State Employees) had this to say about the vote:

“This today is an absolute travesty...They (the Legislature) won’t tax anybody else, but they’ll tax state employees…I think it’s a crime. The Legislature didn’t have the guts to provide the health care funds. They are destroying the quality of the workforce in this state.”

Needless to say Devereux was among the no votes.

Meanwhile the Seattle Times reports:

"In what is becoming an annual ordeal for policyholders, Regence BlueShield is raising premiums for 135,000 individual health-plan members in Washington by an average 17 percent on Aug. 1.

It is the third consecutive year that the state's largest provider of individual coverage has boosted rates by double digits. And it comes after two other insurers, Group Health Cooperative and LifeWise Health Plan of Washington, recently imposed similarly steep premium increases."

Considering the average public employee versus private employee health care costs, was the PEBB's decision "a crime" or instead grounded in economic reality?

It appears the only alternative would be taxes increases or additional service cuts to provide the benefits demanded by Devereux and others.

BC's Inefficient Car Trade-In Program

Two weeks ago we looked at the Cash for Clunkers program and the high price it paid to reduce a small amount of CO2 emissions. British Columbia has a different version that is praised by the Sightline Institute in Seattle.

They praise the program because it not only applies to cars but to bikes and buses:

The Scrap It program is focused on energy efficiency and reducing CO2. The best way to do that is to incentivize better miles per gallon along with alternatives. Most people won’t trade a clunker that is the sole mode of transit for a bike, but many people would get rid of a second car in the driveway for a bike.

The question is, does it make sense as a way to reduce CO2? The answer is that it is better than the Cash for Clunkers program, but is still a poor way to reduce CO2.

The program has a calculator that measures the reduction in CO2 and then determines if you qualify to receive an incentive payment of $1,250 or $2,250. For example, I found that had I traded in the car I bought when I graduated from college, a 1993 Saturn SC, for a Prius today, I would qualify for the $2,250 and reduce CO2 emissions by 2.25 metric tons (tonnes) a year. Assuming I would have kept my Saturn for another ten years, I would reduce my total emissions by 22.5 tonnes. Under those (extremely favorable) circumstances, the program pays $99.56 per tonne of CO2, more than five times the going rate for CO2 on the European market. If the car lasts only five years, the calculation gets much worse, costing nearly 11 times the going rate for CO2 emissions reductions.

Just to test the limits of this idea, let's say I traded in my Saturn for a bike and didn't drive a car for the next 10 years. The BC government will give me $1,200 to trade a car for a bike. Even in those wholly unrealistic circumstances, the program spends $31.58 per ton of CO2, or about 66 percent more than the going rate for CO2 on the European market.

Those who truly care about the environment need to remember that waste of money is waste of resources. By ignoring the cost of projects, we spend money poorly that could be used to promote other environmental projects.

This is a problem with so many politically-picked solutions. The judgment about whether the program is worth supporting is not based on effectiveness or bang-for-the-buck but on a political calculus about whether it sounds good and rewards constituents with taxpayer money.

Status of Puget Sound Traffic Congestion

The Texas Transportation Institute just released their newest Mobility Report. Using a Travel Time Index (TTI), the report measures and tracks congestion among the nation's biggest cities.

In Seattle, the TTI fell from 1.30 in 2006 to 1.29 in 2007. This means during the peak times, the average commute was 29% longer than it should have been under free flow conditions. The report also shows that the Seattle region ranks as the 20th most congested city (of the cities measured in the report). This is down from 17th in 2006.

Despite a slight fall in traffic, the cost of congestion rose to a new high, from $1.556 billion in 2006 to $1.591 billion in 2007.

Most data shows that Vehicle Miles Traveled (VMT) is flat or even falling in the last couple of years. This is a result of the economy and unemployment. Some assume that a permanent shift from driving to transit is taking place. While others believe transit is not absorbing the majority of the shift: US Transit Increase Captures Only 2% of Road Use Decline in 2008

The Bureau of Transportation Statistics has this table that shows mode share in the most common forms of traveling to work.

I think most of the shift is captured by more people working from home. But you can decide for yourself.