Health care’s biggest problem is getting worse

Many liberals and a growing number of Democratic presidential candidates have embraced a bold idea for reforming America’s broken healthcare system. The idea most in vogue—and the most debated—throughout the 2020 election has been to abolish private insurance in favor of a government-run national system, otherwise known as “Medicare for All.” Advocates of “single-payer” generally blame rapacious insurers as the principal villains of the current system, responsible for sky-high premiums and out-of-pocket expenses. Replacing for-profit insurance companies with a government program, the logic goes, would bring lower costs and coverage to everyone

But this singular focus on insurers means that the presidential hopefuls are neglecting an even bigger problem with far-reaching consequences for millions of Americans: the dominance of hospital monopolies in a growing number of health care markets nationwide.

Monopolies, in general, mean bad news for consumers. Health care is no exception. Mounting evidence shows that hospital consolidation exacerbates the system’s worst failings, bringing higher prices, fewer choices, and lower quality care to patients. And it’s only getting worse.

Continue reading at Washington Monthly.

High on Pot Taxes

Originally published in Governing, September 2019

Visit the online menu of marijuana producer <rØØ7>, and you’ll glimpse the blossoming world of artisanal pot—a burgeoning industry made possible by states’ momentum toward legalization. Strains like Sweet and Sour Cindy offer “an earthy mix of grape, apricot and chocolate undertones,” while Millennium Kush consists of “tropical notes” and a “citrus aroma.” “We’re really about trying to promote wellness, whether it’s a straight medical use or de-stressing or whatever else,” says President Kris Krane of 4Front Ventures, <rØØ7>’s parent company.

Krane’s business is booming. He’ll be operating at least 15 stores in seven states by years’ end. Meanwhile, states are hoping his good fortune benefits their coffers as well. Legalization advocates have promised big potential tax revenues from pot sales. In Illinois, which legalized marijuana in June, a study predicted yearly revenues as high as $676 million. Early legalizer Colorado has reaped a windfall of more than $1 billion in total collections since 2014.

Nevertheless, states shouldn’t assume a guaranteed jackpot for their budgets. California collected $82 million in its first six months of sales, falling far short of projected revenues of $185 million. In Massachusetts, revenue officials projecting $63 million in taxes by June 2018 had collected a paltry $5.9 million as of that March. Even in Colorado, revenues may have plateaued, according to a market analysis commissioned by the Colorado Department of Revenue.

Why these disappointments? In California and Massachusetts, regulatory snafus delayed the licensing of stores and, consequently, tax collections. Massachusetts, for instance, had just nine licensed stores three months after legalization, while California had only 620 licensed stores statewide as of April 2019 (a tiny number considering the state’s estimated annual pot production of 14 million pounds).

While smarter regulation could help boost revenues, it can’t change pot’s shifting economics. Most of the nine states where recreational sales are currently legal impose excise taxes based on price, along with general sales taxes. (One exception is Alaska, which taxes retail sales by the ounce.) Sales and excise taxes work well when pot is relatively expensive, but as marijuana cultivation moves out of the shadows and into industrial-scale production, “you’re going to see the price come down and your taxes going down with it,” says marijuana tax policy expert Pat Oglesby.

In Colorado, for instance, the state’s market analysis reports that retail prices for cannabis fell 62 percent from 2014 to 2017. In Oregon, marijuana can now be had for as little as $60 an ounce, compared to $350 on the illegal market, according to Karen O’Keefe of the Marijuana Policy Project.

One way to grow revenues is to increase demand, but encouraging more pot consumption is hardly good public policy. As more states legalize, counting on out-of-state sales is also less viable. Colorado’s “cannabis tourism” accounts for less than 10 percent of sales. States could raise the tax rate or shift to taxing by weight—but face bitter industry opposition. “You can only wring so much out of this industry before you choke it,” says National Cannabis Industry Association spokesman Morgan Fox.

State-owned pot shops are still another option. They’re a long shot, but tax lawyer Oglesby favors them. “It’s like the government liquor store,” he says. “They can adjust the price immediately, they’re very good about keeping kids away, and they can keep the price where they want it.”

Cannabis Corner, in Stevenson, Wash., is so far the nation’s only city-owned pot store. Launched in 2015, the store expects sales of about $1.1 million this year.

But even with maximized revenue, pot taxes will likely only account for about 1 percent of overall state budgets, according to the Institute on Taxation and Economic Policy. The $266 million Colorado collected in 2018, for instance, pales next to the state’s $15 billion in total revenues and $32 billion budget.

The bottom line: States should legalize for public health and safety, not the money. Plugging budget holes with pot? It’s, well, a pipe dream.

The Precollege Racket

Via Washington Monthly

Among the thousands of personal appeals on the crowdfunding site GoFundMe, you’ll find a 2017 campaign for a young woman named Kirstin, a then high school junior with wavy light brown hair, hazel eyes, and a smile that hints at suppressed excitement.

“Kirstin’s Invited to Stanford!” the page, created by Kirstin’s aunt, declares. “My 16-year-old niece has been offered a once-in-a-lifetime opportunity. After working hard her entire school career to achieve a goal, she has done it!”

Kirstin, it turns out, was not admitted as an undergraduate, but was raising funds for an “Intensive Law & Trial” summer program offered on the Stanford University campus. Tuition for the ten-day program runs to $4,095, not including airfare and pocket money. “Stanford, one of the most prestigious law schools in the country, is impressed enough with her to have invited her to this program in Palo Alto, California this summer,” the post continues. “Her extended family is trying hard to raise the deposit of $800.00 by week’s end so this opportunity does not slip through her fingers.”

Search “pre-college” on GoFundMe.com and you’ll find dozens of similar campaigns from hopeful students dazzled by the allure of two weeks on an elite campus. “Going to the Summer @ Brown PreCollege Program would give me a preview of what life would be like if I attend the school of my dreams,” reads a 2018 campaign by Benjina, from Newark, New Jersey. “This program will give me the experience of a lifetime,” writes Yakeleen, a high schooler from Tucson, Arizona, hoping to raise $2,200 to attend Harvard’s pre-college program. “Coming from a low income background while being a first generation student, this is a grand oppurtunity [sic] I intend on taking advantage of.”

These posts reflect the growing trend of summer “pre-college” programs at the nation’s most prestigious universities.

Continue reading at Washington Monthly…

Anti-Fluoride Activism Is Bad, and Not Just for Public Health

Originally published in Governing, July 2019.

In 1901, a Colorado Springs dentist named Frederick McKay noticed many of his patients had peculiarly mottled brown teeth — but far fewer cavities than the norm. The cause, Dr. McKay determined after years of investigation, was high levels of natural fluoride in the town’s water. His discovery eventually led to the widespread fluoridation of public water systems across America and a dramatic decline in tooth decay over the past 70 years.

Numerous studies have shown the protective effects of adding fluoride to water, especially for kids, and the Centers for Disease Control and Prevention hails community water fluoridation as one of the 20th century’s top 10 public health achievements. State and local budgets have benefited too, thanks to lower public expenditures for dental care.

Unfortunately, a significant number of localities are now undoing their investments in fluoridation, thanks to a small but vocal minority of anti-fluoride activists using pseudo-science to trump data. The result has been the spread of misinformation about fluoride’s benefits, as well as higher costs for both taxpayers and families.

According to the anti-fluoridation Fluoride Action Network (FAN), more than 200 communities in the United States and Canada have rejected public water fluoridation since 2010, from small towns such as Sheridan, Wyo., to bigger jurisdictions such as Bucks County, Pa. In Portland, Ore., residents have voted down fluoridation four times since 1956, most recently in 2013. In 2018, at least 13 communities put water fluoridation on the ballot, while many other localities debated the issue at the city council level without a public vote.

Like anti-vaccinators, anti-fluoride activists rely on spurious medical research to argue fluoridation’s hazards. FAN, for instance, blames fluoride in water for everything from cancer to diabetes to low IQ to, ironically enough, tooth decay. “I’ve got a list as long as your arm of different claims,” says dentist Johnny Johnson, president of the pro-fluoride American Fluoridation Society. None of these claims, however, is backed up by valid science or facts.

One thing that is backed up by facts? Fluoridation saves money — for consumers as well as governments. A 2016 Health Affairs study estimated the nation’s net savings from fluoridation to be nearly $6.5 billion a year from avoided dental costs. Conversely, ending fluoridation can be costly. One study in New York found that residents in non-fluoridated counties were 33 percent more likely to undergo dental procedures, while a Louisiana study found that Medicaid-eligible kids in non-fluoridated communities were three times more likely to get dental treatment than kids in fluoridated areas and at twice the cost.

Dentist David Logan witnessed these impacts firsthand in Juneau, Alaska, where voters ended fluoridation in 2006. The immediate effect, he says, was an increase in cavities among his adult patients, “specifically in older adults where the root surface gets exposed.” Today, his colleagues are seeing many more cavities in kids and at “levels they haven’t seen before in their practicing career.”

All of this is expensive. Logan, now executive director of the Alaska Dental Society, notes that simple fillings cost about $175 in his community, while crowns cost upward of $500. “It’s a very significant amount,” he says, “especially when that cost is disproportionately borne by the public through Medicaid.”

A 2018 study of Juneau’s Medicaid records found that since the end of fluoridation, Juneau’s kids undergo one more cavity-related dental treatment per year than before, at a cost of $300 per child on average. The study also found the highest costs among children under 7, who’ve had no exposure to fluoridated water.

Logan is hopeful this study will help bring fluoride back to Juneau. But he admits he was badly outgunned 12 years ago by the opposition. “You don’t have to have facts. All you need is something sexy to say,” he says. “We had people with lots of letters after their names, but we didn’t put a face on it and got crushed.”

Next time, he says, he’ll be ready, as should all localities where anti-fluoride activists have made a stand. At stake is not just the integrity of science but public budgets and public health.

Continue reading at Governing

The Education Investment States Should Be Making

Originally published in Governing, May 2019

In the midst of record low unemployment, many states are nonetheless struggling with ongoing skills gaps — shortages of workers with the right skills for in-demand jobs.

At the start of 2019, according to the Department of Labor, as many as 7.3 million jobs remained unfilled. These included a substantial number of “middle-skill” jobs requiring some schooling beyond high school but not a four-year degree. They were in fields such as health care, IT, welding and truck driving. The American Trucking Associations, for instance, reported a shortage of 50,000 drivers in 2017.

One reason these gaps exist is underinvestment in career and technical education. Of the more than $139 billion in annual federal student aid spending for higher education, just $19 billion goes to career and tech ed. Students generally can’t use federal Pell Grants to fund short-term, non-college-credit training programs, such as for welding certifications and commercial drivers’ licenses. Federal dollars under programs such as the Workforce Innovation and Opportunity Act are typically limited to the lowest-income workers.

Two states, however, have programs that show how valuable occupational credentials can be. Already, these initiatives are generating big returns by raising workers’ wages, closing skills gaps and driving economic development — and at a price much cheaper than “free college,” another higher-ed funding idea that’s gained popularity in recent years.

In Virginia, the state’s New Economy Workforce Credential Grant Program covers two-thirds of the cost of a credentialing program, up to $3,000 per student. It’s a pay-for-performance model, so community colleges and other training providers don’t get paid until a student completes a class and obtains an approved credential aligned with the state’s annual “hot jobs” list. So far, about 8,000 Virginians have earned credentials through the program since its launch in 2017.

In Iowa, the Gap Tuition Assistance Program pays tuition, books and fees for lower-income students pursuing credentials from approved programs. In 2018, about 2,400 students applied, and 1,000 were accepted. The program boasts an 89 percent completion rate.

Both programs aim to reach workers who don’t qualify for federal aid. “Back in the days when a welding class was going to cost an individual $4,000, someone who was struggling to make ends meet would not come to us,” says Elizabeth Creamer, vice president of the Community College Workforce Alliance in central Virginia. “Now they can.”

Funding credential attainment has been a smart investment in these states — for workers, for businesses and for the public purse. “These are great programs for moving somebody who could be a public burden or isn’t really on track for a good career into getting the skills they need in a high-demand area,” says Jeremy Varner, administrator of the Division of Community Colleges and Workforce Preparation for the Iowa Board of Education. “It’s giving folks economic opportunity they otherwise wouldn’t have and at the same time meeting the very profound industry labor market needs that exist.”

In Iowa, which allocates about $2 million to the program annually, workers who earned a credential and found a job in a new industry increased their wages an average of 37 percent, according to the state’s analysis. Workers who moved from agriculture to manufacturing raised their wages by as much as 138 percent.

In Virginia, Creamer says her graduates see average wage increases of between 20 and 45 percent as they go on to good-paying jobs at regional powerhouses such as Amazon, Altria and DuPont. Results like these are one reason Virginia is growing its investment from $4.5 million in 2017 to a projected $13.5 million by 2020. The program has also encouraged the state’s community colleges to build better partnerships with local businesses so they can produce the talent companies need. “We’re not just training and hoping someone gets a job,” says Creamer. “We know they will.”

As Students Debts Mount, A New Form of Repayment Emerges

Originally published in Governing, March 2019

An ambitious group of seniors from Oregon’s Portland State University devised a creative plan in 2012, dubbed “Pay Forward, Pay Back,” to deal with spiraling college costs and student debt. In exchange for deferred tuition, students would contribute a chunk of their post-graduation earnings to a fund for future students, ultimately creating a self-perpetuating pool of aid passed from one generation to the next.

Unfortunately, Pay Forward, Pay Back quickly hit the wall of fiscal reality. Despite the embrace of legislators, the state’s Higher Education Coordinating Commission concluded that the deferred tuition plan was unaffordable, costing as much as $20 million a year for 20 years to benefit just 1,000 students annually.

Yet interest in new ways to finance college remains very strong, especially as average in-state tuitions at four-year public universities have roughly tripled since 1998, total student debt topped $1.5 trillion in mid-2018 and state grant aid has stayed flat.

Rather than look to public money, however, some states are exploring novel alternatives to traditional student debt, ideas that would rely on private and philanthropic financing. Of particular interest are so-called income share agreements (ISAs), which proponents argue has the sex appeal of Pay Forward, Pay Back, but poses less risk to the public purse. Six states considered ISA-related legislation in 2018, according to the Education Commission of the States. In 2019, California could launch the nation’s first statewide ISA pilot.

Perhaps the nation’s best-known ISA program so far is a private one. Purdue University’s Back a Boiler program, begun in 2016, allows students to get a grant toward tuition. The grant is to be repaid as a fixed share of post-graduation income for a certain number of years, depending on major and projected earnings. For example, a computer science major with a $26,000 ISA grant would pay 7.3 percent of his or her income for seven years. If this student makes the expected median salary, total payments should be slightly cheaper than a traditional student loan.

The biggest benefit, though, is if the student’s career plans don’t pan out or the economy craters. Under a traditional loan, interest and principal would accrue regardless of borrower hardship. But ISA holders are unburdened by that risk. “This idea of shifting risk from student to school is one of the beautiful ideas behind ISA,” says Mary Claire Cartwright, vice president of information technology at the Purdue Research Foundation, which administers Back a Boiler. “We’re telling students, ‘You’re going to get a great job when you graduate, and if you don’t, we’re here to catch you.’”

So far, Purdue has issued $6.5 million in ISA contracts to more than 750 students, many of whom, Cartwright says, are first-generation students. And according to tech startup Vemo, which administers ISAs, more than 30 universities now have them, as do coding boot camps and trade schools.

While ISAs and other innovations are no silver bullet, states could benefit from experimenting with loan alternatives. First, they could expand their arsenal for making college more affordable, especially if lean budgets disallow expanding grant aid. Second, states could benefit from graduates’ economic success if schools have an incentive to ensure students get jobs to pay back their commitments.

In California, a bill by Republican Assemblyman Randy Voepel to establish an ISA pilot at the University of California system failed to make it past the state Senate last session, but unanimously passed the Assembly. Supporters are optimistic, and its success could pave the way for other state experiments. Federal legislation to recognize and regulate ISAs also enjoyed bipartisan support last Congress and is set for reintroduction this year as well. All this could mean good news for future students.

You’re out of prison. Now it’s time to get your driver’s license back.

Via the Washington Post

George Henry, a fast-talking man in his early 40s, takes two buses and a subway each day to attend an intensive Baltimore job-training program catering to ex-offenders. Over a six-month course with several dozen other men at the Civic Works Center for Sustainable Careers, Henry has been learning how to weatherize homes — to blow insulation, fix drafty windows and work in cramped attics. Fellow trainees learn solar-panel installation, brownfields cleanup, landscaping and other skills for jobs where a felony conviction isn’t an automatic disqualifier.

For Henry, the toughest thing about life after prison hasn’t been learning new skills, the dangers of working in construction or even his criminal record. His biggest hurdle has been not having a driver’s license, the result of a license suspension for about $700 in unpaid traffic fines he still owed when he left prison. Without a valid license, getting to class on time has been a daily challenge, and his prospects for finding a job he can get to without access to reliable transportation are dim. “It’s the weight of the tickets,” Henry said. “You can’t drive and be productive.”

Continue reading at the Washington Post.

The Rise of Do-Gooder Corporations

Originally published in Governing, January 2019

Azavea is a 65-person software development company based in Philadelphia. Its business is helping governments and nonprofits use geospatial data to achieve various public goals, such as improving traffic flow or reducing pollution. Many would call Azavea a dream employer. It shares its profits with its workers, buys locally, pays generously for training and allows employees to spend 10 percent of their time on personal projects. “We’re very much a people-first, employees-first company,” says CEO Robert Cheetham.

A growing number of firms are, like Azavea, on the leading edge of corporate reforms to make American businesses better stewards of the environment and worker well-being. They are so-called benefit corporations, whose charter explicitly allows them to pursue purposes other than sheer profit. Many are also certified, meaning they’ve met strict standards set by the nonprofit B Lab. More than 2,600 certified “B Corps” operate globally, according to the group, including such well-known brands as ice cream maker Ben and Jerry’s, women’s clothier Eileen Fisher and crowdfunding platform Kickstarter.

Now, an increasing  number of governments are facilitating the growth of benefit companies. At least 34 states and the District of Columbia have passed laws — most of them within the past six years — that allow companies to organize as legally recognized benefit corporations. Legal status confers a potentially significant advantage for a company: protection from shareholder liability if executives fail to maximize profit in pursuit of other goals.

Legalizing B Corps

Thirty-four states, including the District of Columbia, have passed laws recognizing benefit corporations. Another six are currently considering such legislation.

(Source: B LAB)

One state that affords such protection is Pennsylvania, but the city of Philadelphia goes even further. It offers a tax credit of up to $8,000 for sustainable businesses — either those certified or those that can show they meet similar standards of social and environmental responsibility. Christine Knapp, director of Philadelphia’s Office of Sustainability, said the city launched the sustainable business tax credit in 2012 on a pilot basis, limiting it to 25 companies and capping the credit at $4,000. Growing demand led to the credit’s expansion in 2015, and while the current credit is capped at 75 businesses on a first-come, first-served basis, further expansions could come when the credit is reauthorized in 2022. “We want to recognize the businesses leading by example,” she says, “but also encourage other businesses to take some action.”

Andrew and Jenn Nicholas, husband-and-wife co-founders of the graphic design firm Pixel Parlor, say the credit has been a big help to their 10-person company. “It’s a challenge to be profitable and provide benefits to our employees,” says Jenn Nicholas. “Every tiny bit helps, and it feels like somebody is looking out for us when the general climate [for small businesses] is the opposite.”

At the much bigger Azavea, the credit has had a smaller bottom-line impact. Still, says Cheetham, “symbols matter. It’s a powerful symbol when you’re going to other businesses and trying to attract them into the city.”

For state and local governments, this business-led reform is well worth encouraging. Research has shown that benefit companies are a boon for workers and their communities and could encourage a much-needed shift in national corporate culture — away from the single-minded focus on shareholder profit. In short, benefit corporations are a refreshing countertrend that could ultimately prove more effective than prescriptive efforts to regulate corporate behavior. They prove, says Anna Shipp, executive director of Philadelphia’s Sustainable Business Network, that “an equitable society and a thriving economy are not mutually exclusive but interdependent.”

But some businesses, according to Shipp, may need a little encouragement to refocus their mission on doing good. Laws to recognize benefit corporations’ legal status is the first step, she says; following Philadelphia’s lead with a tax credit could be the next catalyst.

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The path to 2020 for Democrats: Get something done

Via the Los Angeles Times

Emboldened by their new majority in the House of Representatives, Democrats are understandably eager to exercise their power.

Some House members believe the way to do that is with an aggressive, sharply partisan agenda aimed at both calling out President Trump for his egregious behavior and demanding immediate action on longshot legislation such as single-payer healthcare.

A new survey commissioned by the Progressive Policy Institute (PPI) and conducted by Expedition Strategies suggests that’s a terrible idea. To win in 2020, Democrats should resist the urge to turn the House into the new headquarters of the anti-Trump resistance or to initiate battles over legislative priorities favored by party liberals that have no hope of passage.

 

Continue reading at the Los Angeles Times

How Opportunity Zones Could Transform Communities

The new federal program could lure fresh investment to distressed areas. But the clock is ticking.

Originally published in Governing, November 2018

Twenty years ago, the rural hamlet of South Boston, Va., was a thriving blue-collar, middle-class community. Most of its residents were employed in manufacturing, such as at the nearby Burlington Industries textile plant and Russell Stover candy factory, or out in the tobacco fields.

Today, the once vast tobacco industry is largely derelict (China is now the world’s leading producer), and the Burlington plant and Russell Stover factory are closed. “We lost about $100 million in payroll out of this community over four years,” says South Boston Town Manager Tom Raab.

This is a familiar story for the nation’s rural areas, but Raab is optimistic about a turnaround. He is pinning his hopes, in part, on the new “opportunity zones” program passed in last December’s federal tax overhaul. It could generate billions in economic development for distressed communities like South Boston — provided they get the help they need.

Opportunity zones represent a breakthrough approach to community development. The program relies on an ingenious mechanism for spurring investment: Instead of tax credits or other traditional subsidies, investors are offered a temporary tax deferral for capital gains reinvested in designated opportunity zones. For investments held longer than 10 years, that deferral becomes forgiveness — a huge boon.

Unlike under past tax credits, there’s no cap on the amount that can be invested. What’s more, the process is simple. Instead of purchasing tax credits through a secondary market, investors simply create a “qualified opportunity fund” as a vehicle for making investments. The Economic Innovation Group (EIG), which developed the opportunity zone concept, estimates that as much as $6.1 trillion in unrealized gains held by both corporations and households might be waiting to be tapped.

Figures like these, as well as the benefit’s structural advantages, are why states are hopeful. “We’ve already had a number of inquiries and meetings with potential investors,” says Virginia Secretary of Commerce and Trade Brian Ball. “A lot of businesses are looking for opportunities to reinvest.”

A couple of potential hazards, however, could derail the ability of places like South Boston to reap the program’s benefits. One is federal regulations on implementing the program, which the Treasury Department has yet to issue and finalize. Speed is of the essence here. Opportunity zones expire in 2026, and certain benefits are not available for investments made after 2019. Final regulations are expected early next year, but the current administration has proven anything but predictable.

A more significant hazard, however, is that both investors and opportunity zone communities will need extensive matchmaking to find each other. “A governor’s job doesn’t end with the zone selections — it begins,” says EIG co-founder John Lettieri. “You may not get a single dollar of investment if you don’t work for it.”

Therefore, states will need strategies for marketing and promoting their zones, as well as identifying promising investors and steering them toward the best opportunities. This kind of support will be vital for places like South Boston, which is competing against roughly 8,700 other opportunity zones for investment dollars.

As a community of under 8,000 people in rural south central Virginia, the town has no budget for slick promotional materials to court wealthy potential investors. Town leaders don’t rub elbows with Silicon Valley venture capitalists, either. Identifying investors, Raab says, is “one more ball to juggle” along with understanding the mechanics of the new program and dreaming up opportunities investors may find attractive.

All of these challenges are eminently fixable if states step up to the plate. In the meantime, places like South Boston are waiting for the opportunities that could and should be their due.