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

Wisconsin Employers and Workers Suffer under Obamacare
02 Oct 2014 07:00:58 CDT -

The Affordable Care Act (ACA) raises the price of health insurance, affecting the labor market as employers attempt to deal with the rising costs of health benefits. Devon Herrick, senior fellow with the National Center for Policy Analysis, explains how the law is impacting the state of Wisconsin.

Two-thirds of insured Americans have health coverage through their employers. Wisconsin employees are more likely to receive employer-sponsored health benefits than are employees in other states, though the percentage of residents receiving employer-sponsored health insurance has been declining in Wisconsin since 2000:

  • In 2000, 60 percent of Wisconsin employers offered employee health plans, which fell to 50 percent in 2011.
  • In 2000, 72 percent of Wisconsin workers employed in small firms were offered employer-sponsored coverage. That number had dropped to 51 percent by 2010.

The ACA will only contribute to the drop in employer coverage, which has been most prominent among small firms, as costs rise. Health care costs have been on the rise for years; from 2000 to 2011, the average employee premium doubled in price, and family premiums rose by 121 percent. A 2014 survey by Morgan Stanley found that premiums for small employer coverage rose 66 percent in Pennsylvania, 37 percent in California and 30 percent in Kentucky. Wisconsin saw lower, but still significant, increases, with premiums rising 10 percent in 2013 and 9 percent in 2014.

Firms with 50 to 99 workers are required to offer their full-time employees health insurance in 2016. According to the Congressional Budget Office, the cost to provide an employee with health insurance will likely be $5,800 per year or higher in 2016. To think about it in another way, that's equivalent to employers paying a $3 per hour "minimum health wage." Family coverage costs could be twice that amount, says Herrick.

If these firms fail to offer health insurance, what happens? They face a fine (equivalent to $2,000 for each uninsured employee beyond their first 30 employees), meaning that an employer with 50 workers who fails to offer coverage will face a $40,000 fine. How to avoid the fine? Wisconsin employers can reduce their workforce to fewer than 50 employees or limit employees' hours to keep the number of full-time employees below 50. In fact:

  • In 2011, a McKinsey and Company report found that 30 percent of employers will likely stop offering health insurance to employees.
  • A survey by the firm HC Trends determined that 54 percent of small Wisconsin employers renewed their employee health plans early in order to delay compliance with the employer mandate
  • Over 40 percent of small businesses have delayed hiring due to uncertainty concerning the ACA, according to a survey by the Society for Human Resource Management. One-fifth have cut the size of their workforce.
  • In a survey of Milwaukee-area businesses, 6 percent of medium and large employers have reduced some of their workers to part-time, and 22 percent are considering doing so.
  • Wisconsin company Lands' End sent a memo to its workers in 2013 informing them that many employees would see their hours reduced to 29 hours per week as a result of the ACA.

Herrick writes that 10,000 Wisconsin workers will lose, or leave, their employer-sponsored small group insurance plans by 2016 due to the Affordable Care Act.

Source: Devon M. Herrick, "How Obamacare is Affecting Wisconsin's Workers and Employers," National Center for Policy Analysis and MacIver Institute, October 2, 2014.  

For more on Health Issues:

A Better Way to Preserve Endangered Species
02 Oct 2014 07:00:57 CDT -

The Endangered Species Act (ESA) was passed in 1973 to protect endangered animals, yet there is ongoing debate over whether the ESA is achieving its goals. Brian Seasholes, Director of the Endangered Species Project at the Reason Foundation, argues for a new approach in protecting wildlife.

While the ESA is aimed at improving the survival of species, it carries such hefty penalties that landowners, seeking relief from the strict regulations, actually try to rid their lands of the endangered animals. For example:

  • Farmers in California routinely work the soil on their land rather than leaving it alone, in order to prevent the development of a habitat for endangered animals. According to one farmer, "Because of the Endangered Species Act we disc everything, all the time. We are afraid of an endangered species moving in. It costs $25 per acre [to disc]. It's not cheap. But the risk of not doing it is too great."
  • In the Pacific Northwest, landowners cut down timber for fear of creating a habitat. For example, one landowner clear cut his timber a decade before he should have, because he knew that there were owls nearby that might otherwise settle in his trees.
  • In central Texas, landowners cleared out thousands of acres of ashe juniper, in which two birds listed under the ESA lived, following their listing. According to the Director of Resource Protection for the Texas Parks and Wildlife Department, Dr. Larry McKinney, "I am convinced that more habitat for the black-capped vireo, and especially the golden-cheeked warbler, has been lost in those areas of [central] Texas since the listing of these birds than would have been lost without the ESA"

These are just a few examples of the unintended consequences of the ESA. As a result, Seasholes advocates for a new approach to species conservation: the Endangered Species Reserve Program (ESRP). The ESRP would compensate private landowners for their conservation efforts. By replacing the punitive ESA with a flexible, voluntary conservation system, Seasholes contends that the United States could better protect wildlife.

Source: Brian Seasholes, "Fulfilling the Promise of the Endangered Species Act: The Case for an Endangered Species Reserve Program," Reason Foundation, September 2014. 

For more on Environment Issues:

Are American Retirees Facing a Crisis?
02 Oct 2014 07:00:56 CDT -

Politicians across the country are claiming that Americans are facing a retirement crisis, with estimates of retirement unpreparedness ranging from 53 percent to 84 percent of Americans. As a result, many lawmakers have called for more Social Security benefits, as well as for limits on the tax incentives aimed at encouraging private retirement plans (insisting that the plans have failed).  

But Andrew Biggs, resident scholar at the American Enterprise Institute, and Sylvester Schieber, independent pension consultant, write in the Wall Street Journal that the "retirement crisis" is wildly overstated. Consider:

  • The Organization for Economic Cooperation and Development determined in 2013 that the average American retiree has an income equivalent to 92 percent of the typical American income. That figure was much higher than those in other countries (81 percent in Scandinavian nations, 85 percent in Germany and 77 percent in Belgium).
  • American retirement incomes are the second highest in the world and 53 percent above the average OECD retirement income.
  • American retirees tend to have a higher standard of living than they did during their working years. In 2012, the median 67-year-old had an income that exceeded his average earnings during his career.

In the future, this trend should actually improve, according to Biggs and Scieber, as the typical American born between 1966 and 1975 is expected to have a retirement income that is 110 percent of his average working earnings (higher than the 109 percent level of those born during the Depression), with retirees using IRAs and 401(k)s more to fund their retirement.

Increasing Social Security benefits, they say, is not the answer. As public pension systems become more generous, retirees tend to collect less income for other sources (work and their own savings). In fact, OECD data indicates that an additional dollar of public pension benefits leads to 94 cents less in income from personal savings or a person's employment, with negative implications for economic growth.

Source: Andrew G. Biggs and Sylvester J. Schieber, "The Imaginary Retirement-Income Crisis," Wall Street Journal, September 30, 2014.

For more on Tax and Spending Issues:

How to Lower the Price of Gas
02 Oct 2014 07:00:55 CDT -

Gas prices have remained high for years. When one pays for gas, the majority of the cost covers the price of crude oil -- 67 percent of the price of gasoline. Other costs include refining (14 percent) and taxes (12 percent), followed by retail and transportation costs. The amount of taxes vary depending upon the state. While the federal gasoline tax is 18.4 cents per gallon (and higher for diesel fuel, at 24.4 cents), states charge between 12.4 cents per gallon in Alaska to 52.6 cents per gallon in California.

Heritage Foundation Fellow Nicholas Loris identifies a few things that lawmakers could do to lower the price that Americans are paying at the pump. These include:

  • Getting rid of the crude oil export ban. Currently, Americans are restricted from exporting crude oil. Yet, according to a study from information firm HIS, lifting the ban would reduce gasoline costs by eight cents per gallon and create 1 million additional jobs by 2018.
  • Lift drilling bans and approve Keystone XL. Alaska's ANWR contains 10.4 billion barrels of oil, and America's coasts are oil-rich, yet they are subject to an exploration ban. New production would increase supply and push down prices, and approving the Keystone XL pipeline would yield benefits to the U.S. economy.
  • Get rid of the ethanol mandate. Refineries are required to blend ethanol into gasoline each year - an amount which increases annually. According to the Congressional Budget Office, the ethanol mandate alone will increase the price of gas by 13 cents to 26 cents per gallon by 2017.
  • Do away with the Jones Act. The Jones Act requires goods shipped over water between two American points to be transported on an American ship. The law inhibits competition, driving up prices. According to the International Energy Agency, repealing the law would cause gas prices to fall by 15 cents.

Loris reminds readers that gas prices have an impact beyond the pump, raising the price of food and other goods and services, all of which have their own transportation costs. As prices rise, economic growth and job creation slows.

Source:  Nicolas Loris, "5 Policies That Would Make Gas Cheaper," Daily Signal, September 30, 2014.

For more on Environment Issues:

Does the Common Core Testing Assessments Make Sense?
02 Oct 2014 07:00:54 CDT -

Two state consortium groups, funded with federal dollars, are working to perfect testing under the Common Core State Standards. Students taking the assessments will be tested via computers, and many experts are expressing concern that the computer-based testing bears little resemblance to the actual mathematics work that will take place in the classroom.

Liana Heitin of Education Week reports that students taking tests developed by the Partnership for Assessment of Readiness for College and Careers (PARCC) and the Smarter Balanced Assessment Consortium will face complex word problems on computer screens. Many math questions require answers in narrative form. After students are presented with a question, they must use an "equation editor" to input numbers and symbols, followed by a section in which they must "show or explain" how they got their answer.

PARCC and the Smarter Balanced group insist the tests are superior to those done on paper, but others say the tests are nothing like the mathematics exercises that students will be doing during the school year:

  • According to Martin Garzman, director of the Center for Elementary Mathematics and Science Education at the University of Chicago, "The primary tools kids use to solve problems and justify their answers every day in math class and required by the common core aren't available for kids to use during these tests. We're going to get tests that are just going to frustrate people and are going to really underrepresent what students know."
  • Alsip, Illinois, Assistant Superintendent Jan Mulqueeny witnessed field testing of the PARCC assessment last year. "I saw [4th grade] students writing their answers to the problems through drawings and creating tables and a variety of ways. But when they tried to replicate that in the text box and with the equation editor, they were totally stymied. When you picked up the student scratch paper and saw the work they did, and saw what was on the screen, there was certainly a discrepancy."
  • James Pellegrino, education professor, says that math problems can be solved in a variety of ways, many of which can be difficult to write out in narrative form. "The worry is [the platform] narrows the scope of what students can do, and the evidence they can provide about what they understand."

Twenty-six states intend to use one of these assessments.

Source: Liana Heitin, "Will Common-Core Testing Platforms Impede Math Tasks?" Education Week, September 30, 2014.

For more on Education Issues:

Federal Spending Spree at End of Fiscal Year
01 Oct 2014 07:00:53 CDT -

Yesterday marked the end of the 2013-2014 fiscal year. And because agencies cannot carry their funds over from year to year, explains Brianna Ehley of the Fiscal Times, federal agencies tend to spend September 30th on a shopping spree, spending the rest of their funds before they lose them.

In 2013, federal agencies spent $50 billion in the last week of the fiscal year -- the Department of Veterans Affairs purchased $562,000 worth of artwork, while the Department of Agriculture bought $144,000 in toner. The Department of Defense spent $5.5 billion on September 30, 2013, sending emails to employees telling them to spend the rest of their funds.

This year, spending has again exploded. Already in September, the IRS has purchased $2.4 million in toner, while the Department of Homeland Security spent more than $15,000 on two pianos. The American embassy in New Delhi, India, bought $20,362 in alcohol.

According to a study by a pair of Harvard and University of Chicago researchers that analyzed spending from 2004 to 2009, 8.7 percent of all federal spending takes place during the last week of a fiscal year. Additionally, the researchers found that the last-minute purchases (those that took place during the last week of the year) were between 2.2 and 5.6 times more likely to be lower quality products, likely due to the hasty decision making associated with the hurried spending.

Diana Furchtgott-Roth of Economics21 explains the incentives behind the spending. Not only can agencies not roll over their annual funding dollars, but failure to spend what was allocated to them in the federal budget could lead to future spending cuts. As a result, agencies try to justify their funding by spending it all, each year. Furchtgott-Roth suggests a different approach:

  • For all unspent funds, agency employees could be given a bonus equal to 10 percent of their salaries or half of the entity's unspent dollars, whichever is smaller. Agency administrators would be responsible for denying their employees bonuses if they instead chose to spend the rest of their funds.
  • Or, she suggests that agency employees receive pay increases or decreases as a result of increased savings or spending from year to year, encouraging employees to compete to cut costs.

Efforts should be made to align the incentives of agencies with the interests of taxpayers.

Source: Diana Furchtgott-Roth, "Federal Workers Are Rewarded When They Waste Your Money," Economics21, September 30, 2014; Brianna Ehley, "Reckless Federal Shopping Spree Could Squander $50 Billion," Fiscal Times, September 30, 2014.

For more on Tax and Spending Issues:

Health Policy Digest

Provided courtesy of: NCPA

Consumer Driven Health Care

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The Case for Competition in Medicare
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