California’s water crisis – and Governor Jerry Brown’s draconian response to it – could go a…
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A Market-Based Solution to California’s Water Shortage

California’s water crisis – and Governor Jerry Brown’s draconian response to it – could go a long way toward uniting middle class and elite urbanites in a revolt against political favoritism run amuck.

As Shikha Dalmia explains, “The best — and most sustainable — solution to California's water woes would be full-bore markets in which prices can rise and fall with supply and demand. Under such a system, depleting water reserves would have led to price increases long ago, producing an automatic incentive to conserve. More importantly, this would have clearly signaled growing scarcity, spurring new technologies for affordable water generation. All of this would have allowed consumers and businesses to make small adjustments over time without letting the shortage reach a crisis…[more]

April 17, 2015 • 01:32 pm

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Protect Freedom of Choice and Conscience: Repeal ObamaCare! Print
By Ashton Ellis
Wednesday, February 22 2012
The solution to the problem of an employee’s access to contraception is to empower the employee to make her own healthcare decisions in a way that leaves the employer’s conscience untroubled.

The Obama administration’s mandated contraception compromise raises serious constitutional and moral questions.  It also makes one wonder why employees don’t have the freedom to choose their own health plan. 

The answer comes from the late economist Milton Friedman.  In a 2001 report for the Hoover Institution entitled How to Cure Health Care, the Nobel Laureate identified three characteristics of the American health care industry since World War II: (1) rapid advances in medical technology; (2) huge increases in spending, and (3) rising dissatisfaction with the delivery of medical care from everyone associated with it. 

But while technology advances have allowed consumers to enjoy higher quality for less money with products like food, cars and telecommunications, healthcare stands alone for returning less value than its cost would predict.  According to Friedman, the reason for health care’s outlier status is traceable to two bad federal policies. 

The first government blunder was to impose wage controls during World War II.  Billed as a way to ensure economic stability during wartime, the rule had the effect of forcing employers to create fringe benefits to lure top talent.  The most popular of these was employer-provided healthcare.  Initially, employers did not report their healthcare spending as part of the employee’s compensation to the Internal Revenue Service.  When the IRS caught on, employees howled and Congress enacted the second mistake – making employer-provided health benefits tax-exempt. 

The effect of employer-provided healthcare creates two distortions in the market. 

First, it compels employees to accept health care benefits as a larger percentage of their compensation than they otherwise would.  This creates the false expectation that the employer-provided plan will cover everything an employee thinks necessary.  When benefits are curtailed due to annually rising costs, the dissatisfaction so common with healthcare appears anew. 

Second, employer-provided healthcare pushes decisions about coverage and cost away from employees, and onto their employers.  This creates a huge disconnect between the party paying for healthcare (employer), and the one consuming it (employee).  As the contraception mandate shows, an employer and employee’s interests often diverge.  It makes no sense to expect an employer focused on cost containment to put the same premium on coverage options that an employee would likely have.  By separating the end-user from the true costs, federal healthcare policy puts employers in a bind whenever government decides to change the rules (or, in ObamaCare’s case, take over the entire industry one mandate at a time). 

The way out is simple, but not necessarily easy.  Since there are no longer any wage controls, there is no reason for employers to fund fringe benefits instead of higher take-home compensation.  That is, except for the tax-exempt status of employer healthcare spending.  Friedman supported and the Heritage Foundation supports repeal of the existing exemption, but whereas Friedman argued that newly enriched employees would create their own healthcare market, Heritage has a plan to shift the savings to the employee with one change to the tax code. 

In Saving the American Dream, a team of Heritage experts propose transforming the existing exemption into a “uniform, nonrefundable federal tax credit” to assist individuals and families purchase health insurance.  The annual net value of the tax credit would be $2,000 for an individual and $3,500 for a couple or family.  The credit could be used “either to offset the cost of coverage offered through the workplace or to buy insurance outside the workplace.  For most middle-income working families, the value of the credit is similar to the tax relief that they receive for health insurance today.” 

If that approach sounds familiar, it is because it mirrors the premium support voucher that serves as the centerpiece of Paul Ryan’s Medicare reform proposal.  The similarity in reforms springs from the historical development of third-party healthcare.  In How to Cure Health Care, Milton Friedman argued that the existence of employer-provided healthcare established the precedent of an entity other than the end-user paying for health insurance. This made it much easier for government to assume that role when liberals passed Medicare and Medicaid in the 1960s.

The Obama administration is being rightly condemned for compelling religious institutions – whether directly or indirectly – to subsidize healthcare costs they find immoral.  And while it is true the government has no right to dictate coverage terms to private employers, it is equally certain that distorting the healthcare market because of two anachronistic policies makes no sense. 

The solution to the problem of an employee’s access to contraception is to empower the employee to make her own healthcare decisions in a way that leaves the employer’s conscience untroubled.  It is time to protect freedom of choice and conscience: repealing ObamaCare and replacing it with a system that respects the rights and needs of every individual. 

Question of the Week   
How many states comprised the Confederate States of America (CSA)?
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Quote of the Day   
 
"'Clinton Cash: The Untold Story of How and Why Foreign Governments and Businesses Helped Make Bill and Hillary Rich,' by Peter Schweizer -- a 186-page investigation of donations made to the Clinton Foundation by foreign entities -- is proving the most anticipated and feared book of a presidential cycle still in its infancy.The book, a copy of which was obtained by The New York Times, asserts that…[more]
 
 
—Amy Chosick, The New York Times
— Amy Chosick, The New York Times
 
Liberty Poll   

After filing your tax returns for 2014, are you getting a refund or did you have to pay more?