We Should Pass Seasonal Worker Reforms in the Lame Duck

For years, states have been clamoring for more H-2B visas —which cover seasonal, non-agricultural work — because they’re necessary to keep American businesses alive during their peak seasons. Not only do we need more visas —the annual cap of 66,000 is expanded most years by DHS with an additional 15,000 visas — we need to think of the visas in terms of when the market needs them, like when states declare natural disasters. As Congress continues to debate government funding bills in the lame duck session, lawmakers should look to increase or double visas to ensure we have the necessary labor we need. 

The H-2B visa is a temporary employment visa granted to seasonal non-agricultural workers, such as those who work at resorts or for landscaping companies. Each visa allows the individual worker to work and reside legally in the country for the season—usually up to ten months—or a one-time period of up to three years.  

In order to acquire an H-2B visa, the immigrant’s employer must petition for it. This includes making a definitive showing that there are not enough U.S. workers willing, qualified, and able to do the work, that hiring the foreign worker won’t affect the wages and working conditions of any similarly employed U.S. workers, and that the need is actually temporary.  

The federal government made significant rule changes in 2015 in order to provide more worker protections to both foreign and U.S. workers. These included adding additional U.S. worker recruitment requirements and layoff protections, as well as wage and work hour requirements for foreign workers. They also provided retaliation prohibitions against employers, a prohibition against withholding or destroying any immigration documents, and a prohibition against placing the worker in a job not petitioned for.

Both Democrats and Republicans with businesses in their states have called for a cap increase for years. In many cases, businesses reliant upon these visas to either limit their business or close, thereby also harming their U.S. workers by putting them out of a job. Some states have taken drastic measures in order to keep their businesses open, such as Maine, which conditionally commuted the sentences of a number of prisoners in order to fill the labor shortage.

Labor shortages are exacerbated by the staggering number of recent of disasters. In 2017 alone, states in the U.S. made 135 major disaster declarations, requesting that the federal government provide relief for disasters ranging from hurricanes, to floods, to wildfires and tornadoes — all are increasing both in frequency and economic cost; the wildfires that occurred in Northern California’s wine country this year were the costliest in history, with claims nearing $9.4 billion.

These shortfalls intensify when there are multiple disasters close in geographic proximity or multitude. The 2017 hurricane season is officially the most expensive on record, with two major hurricanes — Harvey and Irma — hitting the same coastlines, and Hurricane Maria ravaging Puerto Rico. All told, the U.S. suffered more than $200 billion worth of damage from 17 named storms.

When Hurricane Katrina stuck New Orleans in 2005, immigrants were welcomed  to the city to work as carpenters, electricians, and plumbers. At the time, it was much easier for construction firms to find laborers in a hurry when it came time to cleanup and rebuild because the Bush administration chose to ignore the legal status of the largely undocumented population that helped rebuild the city. Under the Trump administration, that is no longer the case, and many disaster areas are reeling.

When Hurricane Harvey smacked Houston and devastated the Texas coastline last August, the aftermath saw homes destroyed, vehicles totaled, schools shuttered, drinking water contaminated, and businesses ravaged. The storm caused over $125 billion worth of damage, and displaced 13 million people from Texas, Louisiana, Mississippi, Tennessee, and Kentucky.

In addition to emergency funding, the city desperately needed laborers to erect shelters and temporary housing, restore power, and begin a massive cleanup, but few were available.

About two months after Harvey hit, the Bureau of Labor Statistics reported that there were 227,000 unfilled construction jobs. Even though Houston issued more than double the average number of permits for building single-family homes, homeowners are still waiting for new homes because no one is available to build them.

Employers in the Florida Keys are also reporting devastating labor shortages in the wake of Hurricane Irma. And shortages are not only affecting disaster-torn areas, but areas in need of renovation, and regions seeing growth.

When Harvey hit, job openings in the U.S. reported a record high at 6.2 million, with openings in construction increasing by the third highest number of any industry. Even though construction pay is nearly 10 percent higher — $29.24/hour — than the private sector average, nearly 82 percent of construction firms surveyed from the Associated General Contractors of America report said it will become harder to hire workers in 2018.

The logical step to filling the emergency needs created by national disasters is by increasing the availability of labor through our existing temporary worker visa system. But the government needs to let in more foreign workers — specifically H2A and H2B visa holders — when there are natural disasters that require an influx of laborers.

Permanently increasing the cap would also positively impact the businesses that use this program. The cap is consistently met, and Congress has already been raising the cap each year to deal with the number of applications submitted annually. As businesses continue to expand (as we hope they will), the need for seasonal workers will only increase. It would be beneficial to provide some certainty to the program by increasing the cap permanently rather than leaving businesses to hope and lobby to get the workers they need.

Congress shouldn’t leave town until they address this issue in December.

 

The post We Should Pass Seasonal Worker Reforms in the Lame Duck appeared first on Niskanen Center.

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Oren Cass’s Labor Theory of Value

At the center of Marx’s critique of capitalism is a labor theory of value. Namely, the notion that treating labor as a commodity to buy and sell alienates workers from the act of production, causing feelings of powerlessness, isolation, and self-estrangement — feelings that ultimately lead to revolution. 

It’s through this lens that I read The Once and Future Worker, the latest book from policy thinker Oren Cass. At first blush, the book is a forceful reassertion of classic conservative tropes: that work has intrinsic value; that earned success and self-sufficiency form the foundation for strong communities; and that the devaluing of work and family in favor of hedonistic, protean consumerism has undermined our moral fabric.

But beneath the surface is something much more novel, particularly coming from Mitt Romney’s 2012 domestic policy director. Indeed, far from the usual conservative manifesto, The Once and Future Worker is a scathing critique of globalization, open immigration, and the commoditization of labor — forces which Cass believes have ransacked working class fortunes across three decades of neoliberal hegemony, despite the ideological half-measures offered by bourgeois elites designed to merely absolve them of complicity.

Labor is Not a Commodity

While Cass avoids the usual Marxian jargon, his heterodox message shines through. The book centers around “the Working Hypothesis,” or the proposition that creating the conditions for productive and engaging work should be the lodestar of public policy, particularly for those whose marginal product is low or falling. The Working Hypothesis, Cass argues, stands in contrast to the economic pieties of elites on both the left and right for whom maximizing output, efficiency and consumption are considered the highest goods:

Workers have no standing, in this view of the economy; neither do their families or communities. Households that see their economic prospects plummet or their livelihoods vanish should ask for a government check and be placated when they get one … Like a medieval indulgence, a promise of redistribution cures all.

According to Cass, “maximize growth and redistribute the gains” has become the new “socially liberal but fiscally conservative” — the hollow mantra of an urban professional class for whom rural and working class decline is a statistical artifact of progress. There is undoubtedly a great deal of truth to this diagnosis. On the left, Cass points to means-tested Great Society programs as papering over the consumption deficits of poor households while doing little to build a bridge to productive self-sufficiency. On the right, Cass accuses Republicans and Chamber of Commerce-types of pursuing free markets and globalization, and the creative destruction they have wrought, with a compensating labor-market policy “that could best be described as one of benign neglect.”

The problem is not the market, per se. The market, Cass is happy to acknowledge, is an essential tool for efficiently matching supply with demand. Yet the labor market is unique in one critical respect: “People are not products.” When elites forget this, “Labor becomes one economic input among many.”

Accelerating productivity and automation aren’t to blame for working class woes, either. On the contrary, despite prophecies of robots rendering work obsolete, Cass marshals convincing data to show U.S. manufacturing productivity has essentially stagnated. More importantly, whether job destruction is from automation and globalization has very different implications. When a factory automates a process, output per worker rises and local labor demand may even increase. But when a worker is dislocated by trade, Cass notes, “the facility in which he once worked is likely gone, and the production now occurs somewhere else,” shunting less-skilled workers into lower paying service jobs or onto public assistance.

The Reserve Army of Labor

The harm is more than material. Citing work by MIT economist David Autor, Cass points out that “U.S. regions facing greater competition from China experience lower rates of marriage and higher shares of children born to single mothers and that this effect appeared only when the economic disruption affected male employment.” While cheaper Chinese imports may have grown the “economic pie,” people’s ability to produce matters more than how much they can consume, and that ability cannot be redistributed.

Rather than debate “the future of work,” Cass contends we should focus on the future for work; a future in which technological trends like additive manufacturing and e-commerce spur the creation of well-paying blue collar jobs within the country’s interior. Capitalizing on these trends will require adopting an orientation toward “productive pluralism” in which “people of diverse abilities, priorities, and geographies, pursuing varied life paths, can form self-sufficient families and become contributors to their communities.” That includes ditching the monomaniacal focus on one or two high-prestige career paths in favor of a culture (and multi-track education system) that confers equal legitimacy to a wide variety of modes of work and life, from the journeyman to the stay-at-home mother.

The U.S. labor market is not a hospitable place for those with less than a college degree or minimal technical training, a point Cass extends to our historical immigration policy: “If overall GDP growth is the goal, then all forms of immigration might make sense … But if improving labor-market outcomes for the nation’s less-skilled, lower-wage workers is the central objective, the economic case for unskilled immigration collapses.” Shifting to a skills-based immigration system and forcing undocumented immigrants to leave on a “Last In, First Out” basis, Cass contends, would send the reserve army of unskilled labor AWOL, tightening the labor market for native competitors.

Against Global Capital

Underlying Cass’s principle of productive pluralism is, in essence, a call for a diversified national development strategy. Marxian and other heterodox critics of globalization have long pointed out the way the World Bank and IMF’s “competitiveness” model of global development pushed poor countries into a static comparative advantage. While the remarkable growth of countries like Japan, Taiwan, and South Korea would have been impossible without trade liberalization, it is now widely accepted that their success depended on rejecting the laissez-faire model in favor of industrial policies that promoted investment in secondary industries and moved them up the value chain. As Cass notes, “Today, China is the primary practitioner of this mercantilism, and its gargantuan scale is producing unprecedented economic distortions.”

Yet Cass’s complaint is less with China than with our failure to fight back. While China steals our intellectual property and pushes an aggressive Made in China 2025 program, the United States suffers from having, in a sense, turned the World Bank’s neoliberal advice inward, producing a bifurcated comparative advantage in either low cost labor, or a few extremely high valued-added sectors that demand tertiary education outside the cognitive reach of most. It’s time to take the economy out of autopilot and deliberately promote industries in which ordinary people can add value. That’s less a matter of picking winners and losers, Cass maintains, than it is of enforcing a framework for balanced trade and capital flows, with smart public investments in areas like advanced manufacturing. Quoting the Indian economist Jagdish Bhagwati, Cass’s position is forthright: “It is time to shift the burden of proof from those who oppose to those who favor liberated capital.”

Policymakers should at least stop making the situation worse. In a detailed chapter on environmental policy, Cass rails against EPA regulations and the tendentious use of cost-benefit calculations for hastening the industrial sector’s decline. “Where, for instance, do deaths of despair fit into the calculus?” writes Cass, referencing research from Anne Case and Angus Deaton showing a dramatic spike in substance abuse, liver disease, and suicide among older whites—”the equivalent of nearly five hundred thousand extra deaths between 1999 and 2013.”

The New Source Review rule is particularly counterproductive, Cass argues. The rule was introduced to avoid disrupting existing facilities, while subjecting new facilities or ones undergoing major upgrades to onerous environmental reviews. As a result, if a manufacturing plant decides to expand, it risks triggering a review not just of its new facilities, but of older facilities that were previously grandfathered in. “An investment that once looked attractive might not go forward at all,” Cass notes, even if the upgrade would improve productivity and environmental impact simultaneously.

The push for environmental stringency at all cost may seem to contradict Cass’s supposition of an elite ideology based on maximizing output — “finally, something besides dollars and cents that counts.” Yet from day one, environmental policies have been enacted in order to correct supposed market failures or price negative externalities. As such, “clean air” becomes just another part of the ever expanding economic pie. This argument doesn’t quite work, however, as the flexibility of economics leaves open the question of why those externalities are the focus and not others.

It’s at this point that it becomes clear Cass’s problem is not with consumption or efficiency-based arguments per se, but with the way ostensibly neutral methods of “evidence based policy” are used to advance class interests. This classic dynamic of Marxian political economy must be painfully obvious for Cass as a senior fellow of the Manhattan Institute, where he has repeatedly witnessed the interests of New York City professionals trump the livelihood of the upstate region, despite being an economy devastated by deindustrialization. Look no further than Governor Cuomo’s statewide fracking ban.

Workers of America, Unite!

According to Cass, empowering American workers will ultimately require strengthening the relevance of labor unions, noting that “private-sector union membership has been plunging for decades, from 36 percent of the workforce in 1953 to less than 7 percent in 2017.” While the left points to right-to-work laws with some justification, the cause of the decline is much deeper. Federal labor regulations and transfer programs have supplanted much of what unions exist to negotiate in the first place. Meanwhile, the bargaining model prescribed by the National Labor Relations Act forces union bosses and management into an adversarial relationship that is both prone to abuse and ill-suited for the twenty-first century service economy.

Wholesale labor law reform could give workers space to experiment with new models of collective action, like worker co-operatives. Instead of being adversarial, a co-operative model of labor representation would strive to balance the competing interests of labor and capital. “Co-ops representing workers in negotiations with an employer could also provide a market-based alternative to the government’s employment regulation,” Cass argues, allowing much of the tax-wedge created by employer mandates to be waived.

Needless to say, adopting a worker co-op model across the board would be significantly disruptive, like Elizabeth Warren’s co-determination proposal on steroids. Nonetheless, “solidarity,” Cass notes, is a central component of Christian social teaching. It underlies John Paul II’s description of worker associations as essential “not only in negotiating contracts, but also as ‘places’ where workers can express themselves.” Germany’s worker councils, for instance, “are present at almost 90 percent of firms with more than five hundred workers and have significant authority not just to hold discussions but also to make operational decisions.” With the rise of the gig economy and fissured workplace, a smart labor reform would promote worker solidarity and input while (hopefully) preserving the benefits of flexible new forms of industrial organization.

Just Wage Theory

Taken together, the arguments in The Once and Future Worker present a coherent critique of hyper-globalization paired with a strategy for re-empowering the working class, from controls on the free flow of labor and capital, to education policies that valorize blue collar work, to laws permitting greater worker control over the means of production.

The wheels come off when Cass turns to his signature policy proposal: Wage subsidies. Given the social benefits of work, a subsidy that tops-up the wages for low-skill workers on every paycheck, paid for by defunding existing welfare programs, has a certain internal logic. But upon closer examination, wage subsidies belong to the same class of neoliberal “competitiveness” policies that Cass is otherwise consistent in decrying. At scale, they would take the U.S. comparative advantage farther down the low road of cheap, abundant labor, expand the kind of unproductive service sector jobs working class men supposedly hate, and hold back any chance of re-industrialization.

Inspiration from Germany’s Christian-Democratic model of a “social market economy” can be found throughout the book. Yet when Germany itself introduced a version of wage subsidies under Chancellor Schröder in the early 2000s, it was widely — and correctly — identified as a departure from the older inclusive-growth model. Indeed, labor productivity has largely stagnated in Germany in the years since, contributing to a sharp rise in wage inequality that culminated in the enactment of a national minimum wage in 2015, thus supplanting the model of labor-negotiated minimum wages that Cass claims to admire. Schröder was in many ways the German counterpart to Blair in Britain and Clinton in the U.S. — a center-left, “Third Way” liberal who pushed globalization — and thus an odd example for Cass to follow. However, whether Germany is actually the inspiration in this case is impossible to tell because, in a glaring omission, their experience with wage subsidies receives no discussion at all.

Instead, Cass argues that a U.S. wage subsidy would offset “subsidies given to foreign producers” and help communities “lacking the ability to export.” Granted, the German export manufacturing sector boomed after enacting wage restraint, but for reasons that America will never be able to replicate. In essence, Germany used wage subsidies and related labor market reforms to perform what economists call an internal devaluation, reducing their effective exchange rate with other Eurozone countries to artificially boost their current account surplus. This strategy won’t work for American exporters so long as the value of the U.S. dollar is free to appreciate in response to increased demand, even if it might help somewhat for dollar-pegged territories like Puerto Rico. Thus while a neutral industrial policy is surely preferable to discrete inducements for companies like Foxxconn to relocate stateside, say, Cass offers the wrong means to that end, distracted by superficially pro-work symbolism.

The same can be said about Cass’s disgust for payroll taxes. Employer-side payroll taxes superficially raise hiring costs, yet the low elasticity of labor means most of the burden really falls on workers. This makes payroll taxes more similar to broad based consumption taxes than costly labor regulation. As such, countries with stronger domestic manufacturing employment and more compressed wage distributions tend to rely heavily on payroll or value-added taxes. In Germany’s case, the payroll tax burden alone is roughly the size of payroll and income taxes in the US combined. Once again, Cass is tricked by semantic symbolism into supporting an even more progressive tax system, the kind typically found by necessity in countries without a strong middle class.

Internal Contradictions

Don’t get me wrong. Expanding and modernizing the Earned Income Tax Credit, the closest thing America has to a wage subsidy, is a great idea that may even pay for itself. Yet prioritizing something

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Ed Dolan and Chris Pope Debate the Future of Health Care Reform

Exit polls from the recent midterm election suggest over 40 percent of voters held health care as the top issue facing the country. Yet after a unified Republican government tried and failed to repeal and replace the Affordable Care Act, the conservative vision for health care reform remains something of an open question.

Here at the Niskanen Center, senior fellow Ed Dolan has been beating the drum for the reform path known as Universal Catastrophic Coverage (UCC) for more than two years. But not everyone agrees. That’s why we invited Chris Pope, a senior fellow of the Manhattan Institute and formidable conservative health care policy thinker, to join Ed Dolan in a debate.

Be it resolved:

Universal catastrophic coverage is a reasonable path to universal and affordable health care.

PRO — Ed Dolan

People have many basic needs, including food, shelter, education, and access to health care, which, if unsatisfied, can make our treasured rights to life, liberty, and pursuit of happiness meaningless. Of these, health care poses unique problems for public policy.

To understand why, imagine a society in which no one’s resources fall below the poverty level. Regardless of whether those resources come from a state-sponsored universal basic income or from some combination of work, family support, and private charity, I argue that such a society could adequately meet needs for food, shelter, and so on but not health care.

There are two reasons for that. One is the highly skewed distribution of the demand for health care services. In the United States, the healthiest half of the population account for just 3 percent of services consumed, while the sickest 5 percent account for 50 percent. For comparison, if the need for food were distributed similarly, half the population would need just 120 calories in their daily diet (one small potato), while the hungriest 5 percent would starve on anything less than 20,000 calories (35 Big Macs). For the top 5 percent, health care consumption exceeds the national median income.

The second reason health care is unique is its uninsurability. To be commercially insurable, a risk must be unpredictable and an actuarially fair premium must be affordable to the insured. Because of pre-existing conditions and advances in genetic testing, health risks are highly predictable. As a result, for many risk-prone individuals, actuarially fair premiums can exceed income.

The combination of skewed need for services and uninsurability means there is no simple market mechanism that would give everyone access to health care. That leaves us either with a nation of medical haves and have-nots, or a major role for government.

CON — Chris Pope

I agree that healthcare needs cannot be met in the same way as those for food and shelter – but for a different reason. The basic need for food and shelter is straightforwardly satiable, whereas that for healthcare services no longer is. That is a consequence of medical progress and fundamentally a good thing.

While it might have been possible a century ago to provide pretty much all that medicine could do through a universal publicly-financed benefit, in a world of heart transplants, immunotherapies, and knee replacements this is no longer the case.

Private financing provides the best reward for innovation and efficiency, and should be employed to the greatest extent possible. Most of healthcare is insurable, and privately-financed health insurance does, in fact, cover most Americans and bear the majority of healthcare costs. Although healthcare spending in any particular year is of course concentrated in the minority of people who get very sick, this is not the same people every year. Most of us will be in that group at some stage of our lives.

The vast majority of people are therefore able to afford to purchase actuarially-priced health insurance before they get sick. The minority that is not are best dealt with discretely, through the provision of targeted benefits as we currently do through Medicare, Medicaid, and the exchange (insofar as it is becoming a well-focused high-risk pool).

There is only so much money you can raise from taxpayers to fund healthcare (public assistance ranges from 6.4 percent of GDP in Spain to 9.0 percent in France; USA spends 8.3 percent). Yet, because America targets its public funds on those who are unable to provide for themselves, it serves to supplement rather than supplant private healthcare spending, which is worth a further 8.9 percent of U.S. GDP, compared to 2.6 percent in Spain and 2.5 percent in France.

Non-universality of benefits is therefore essential to expanding access to better quality care.

ED: First, let me say briefly, I am not as comfortable as you with phrases like “most is insurable” and “vast majority.” Kaiser Family Foundation estimates that 27 percent of nonelderly have a declinable pre-existing condition. NIHCM data (cited earlier) show substantial persistence of high spending by several measures, e.g., only a quarter of those in top half of spending migrate to bottom half each year. Not to mention the fear of developing a chronic condition, job lock for those in employer plans, and so on. In short, insurability is not a small problem; it is THE problem.

But I would rather focus where we agree, namely, that public health care spending should be targeted on those who need it, and should supplement rather than supplant private spending. My preferred way to accomplish that is through universal catastrophic coverage, or UCC (brief outline here, details here).

UCC would pay for coverage in full for the poor, and would impose income-based deductibles on the rest. For example, a family with income of (say) $25,000 or less would have no deductible in its UCC; one with income of $75,000 would have a deductible of $5,000 (a little less than under an ACA silver plan), and one with income of $400,000 would have a hefty deductible of $37,500. High-income families might consider supplemental insurance to help with deductible costs, for which premiums would be modest since they would be covered by UCC for catastrophic events.

I also agree that there is only so much you should try to squeeze out of taxpayers. A RAND study calculates that the cost of a well-designed UCC plan would not be greater than what the government now spends on Medicaid, Medicare, ACA, VA, and deductibility of employer sponsored insurance. No new taxes!

CP: I think we agree that a two-tier system is inevitable and desirable, but disagree on how the tiers should be designed to interact.

Currently, public and private revenues each fund about half of healthcare spending. I would prefer to better focus public spending on the uninsurable, to reduce crowd-out of private spending. The UCC proposal would push in the opposite direction – greatly increasing the crowd-out of private spending by public funds.

The UCC would yield a financing system similar to France. The basic tier would be similar to the French “CMU complémentaire”, and supplemental insurance would be similar to the “mutuelles,” which fill in cost-sharing and allow individuals to receive treatment from hospitals and physicians that do not accept public fees as full payment.

It would therefore be fair to imagine that this reform would yield a similar degree of crowd-out of private funds that is seen in France: even if public spending were increased from 8.3 to 9.0 percent of GDP, private spending would likely fall from 8.9 percent towards the 2.5 percent in France. As a result, the healthcare sector could contract by 5.7 percent of GDP – a cut of over 30 percent or around $1 trillion!

Would that mostly serve to cut costs or to reduce access to care? Healthcare is a labor-intensive industry. The average primary care physician in France earned $96,000 in 2011, relative to $186,000 in the United States. A move towards collective bargaining usually tends to push labor costs up, not down. It’s possible that, by suppressing private demand for healthcare services, shifting towards the French system could reduce the demand for medical labor and therefore costs – but any such cost reduction would only happen as a result of greatly reduced care delivery.

ED: Yes, UCC, like the systems of France, the Netherlands, and other OECD countries, would offer full first-dollar coverage only to people with low incomes. There, people with middle- and higher incomes face significant personal contributions through deductibles and copays, or through premiums for optional supplemental insurance to cover what the basic tier does not. I see that as a feature of those systems, and of UCC, not a bug.

It is true that by ensuring that non-poor consumers have “skin in the game,” UCC deductibles might make them more careful health care shoppers. That would be all to the good, as far as I am concerned. However, empirical studies of the effects of high-deductible insurance show an impact on demand orders of magnitude smaller than 5.7 percent of GDP, and only a small impact on quality of care, via neglect of needed services due to cost.

To the extent that high-income consumers decided to manage their deductibles with supplemental insurance, the impact on total private spending would be further muted. However, I would point out that might not be everyone’s first choice. Other middle-and high-income consumers would probably handle their UCC deductibles through health savings accounts or simply by paying cash, as many people do for home and auto repairs.

Finally, I would add that any health care reform should include a full range of cost-saving measures, such as increased price transparency, reduction of administrative fragmentation, moves toward bundled payments, reduction of barriers to competition, and malpractice reform. However, those measures would impact both the public and private components of health care spending without having much effect on the balance between the two.

Finally, let me add that the public/private balance under UCC could be fine-tuned by tweaking parameters like the low-income cutoff and the deductible percentage (see here).

CP: The crowd-out of private spending would likely be enormous. According to the MEPS survey, 43% of healthcare spending is on people who use more than $35,000, an additional 11% is by “middle income” individuals spending $5,000-$35,000, and another 18% is by poor or low income individuals spending under $35,000. So around 72% of existing healthcare costs would be assumed by the government under the proposed arrangement – with additional covered expenditures likely being induced for individuals whose premiums and cost-sharing are eliminated.

Deductibles are a bad cost-sharing design, which tends to yield skimping on care rather than better shopping. As most expenditures are beyond catastrophic thresholds (single hospital admissions often cost over $50,000), deductibles would do little to reduce costs and waste. Deductibles are upside-down versions of effective reference-pricing approaches, which pay first-dollar for cheapest providers, but not costlier alternatives. Having the government pay all costs beyond the catastrophic threshold would also eliminate the benefits of managed care, which has generated 25% savings through Medicare Advantage. The chronically ill, who hit their deductible year-after-year, would face an enormous bill – and likely be excluded from the purchase of supplemental insurance due to pre-existing conditions!

Although Medicare covers 76% of its beneficiaries’ healthcare costs, according to the MCBS survey, 91% of its beneficiaries with incomes over $50,000 in 2011 had some form of supplemental insurance. Supplemental coverage would also inflate costs for taxpayers – potentially by a further 27% as we’ve seen with Medigap. The UCC’s proposed catastrophic benefit design would also have a perverse incentive that Part D’s drug benefit has experienced: supplemental insurers would have an incentive to arrange “rebate” deals with providers to inflate costs and get to the catastrophic threshold artificially early.

There would also likely be a substantial cost from the adverse labor market impact from the incentives to work less to qualify for better subsidies and to avoid the higher taxes.

ED: Your calculations suggest that my illustrative UCC formula ($25,000 low-income threshold and a 10 percent deductible rate) would put 75 percent of all health care costs in the catastrophic category, to be paid by government. I am willing to accept those numbers for the sake of discussion, and to agree that a UCC plan should aim for roughly the 50/50 public/private division of health care spending we have now. I see three ways to do that.

1. Tweak the UCC formula. As I explain in my long piece on affordability, the 25/10 formula is just a simplified illustration. Instead, say, put the low-income threshold at 135 percent of FPL, add some copays to increase maximum out-of-pocket costs to 15 percent of eligible income, and if needed, add a modest income-based premium. Based on the RAND study, that would get us to 50/50 and would still meet my criteria of universality and affordability.
2. Control costs. Deductibles should not be the main tool, just one among many. As I said in my last segment, use a full range of cost control measures. By all means include reference pricing and measures to counter gaming of the system by providers through rebates or other gimmicks to push spending up into the catastrophic range. Throw in all your favorites. Cost control is hard, but we can learn from other countries that manage somehow to do a better job than we do. If we can cut a couple of points off total expenditures, then we could ease up on some of the UCC parameters like the low-income threshold and still hold the government share to 50/50.
3. Give up on the goals of universality and affordability. But I don’t want to do that and I don’t think we have to.

CP: It might be helpful to evaluate the merit of the UCC by comparing it piecemeal with the status quo.

Firstly, it would a big increase in taxes and out-of-pocket costs for higher-income individuals currently enrolled in Medicare and Employer-Sponsored Insurance. There might be a case for that, though I doubt it would be worth the political fight.

The lower tier would be pretty similar to the status quo on Medicaid, though would redress the inequality in resources between states. That would be a good idea, but would be politically difficult, as last year’s Graham-Cassidy effort found.

The middle tier seems similar in its structure of subsidies to that currently on the exchange, but would essentially overturn recent deregulatory reforms by the Trump administration. Although it is good to have a safety-net of subsidized coverage available to low-income individuals and those with pre-existing conditions, people should be allowed to purchase cheaper unsubsidized coverage if they prefer it.

Why not let people enjoy the savings from purchasing cheaper unsubsidized plans? The UCC implicitly mandates the purchase of very comprehensive insurance – especially for those with even modest incomes. A comprehensive benefit package, without preferred networks or gatekeeping of costly specialty providers, but with a high deductible, seems like the worst of both worlds from the point of view of efficiency. This is likely to cause the cost of the medical delivery system to increase, as Medicare has<span style="font-

from nicholemhearn digest https://niskanencenter.org/blog/ed-dolan-chris-pope-health-care-reform/

Interpreting the 2018 Election

What are the implications of the 2018 election results? Julia Azari and Rachel Bitecofer are two political scientists who followed it closely and know how it compares to prior cycles. Azari is an election analyst and party scholar who finds that politicians claim electoral mandates for action based on the results of elections. We talk about early interpretations of 2018 as a referendum on Trump and why we simplify election results with stories. Bitecofer is an election analyst and a forecaster of the 2018 election who finds that demographics and partisanship are now destiny. We talk about why negative partisanship makes election results easier to foresee as partisans choose clear sides but shift turnout.

Studies: “Delivering the People’s Message” and “The Unprecedented 2016 Presidential Election”
Interviews: Julia Azari, Marquette University and Rachel Bitecofer, Christopher Newport University

Transcript

Transcript coming 11/21. 

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The Myth of the Unskilled Diversity Visa Immigrant

This piece originally appeared in RealClearPolicy on October 30, 2018.

Earlier this month, the State Department began accepting entries into the annual Diversity Visa lottery. Meanwhile, President Trump is travelling across the country, promising to end the program at rally after rally, claiming it brings the “worst of the worst.”

That claim is patently false. The Diversity Visa program offers people from countries with low immigration to the United States the chance to participate in the American dream legally. But this program is not merely justified by American altruism. By bringing skilled immigrants who contribute positively to the American economy, raise the productivity of native-born workers, and are likely to integrate well into American society, the program greatly benefits Americans.

The widespread myth of the unskilled Diversity Visa holder is exactly that: a myth. The average Diversity Visa participant is better educated than the average native-born American adult or the average immigrant adult in general. The median diversity-based immigrant has a bachelor’s degree while both the median non-diversity immigrant and the median native adult have only a high school diploma. Diversity Visa holders also speak better English and are less likely to be unemployed than other immigrants.

Participation in the Diversity Visa requires a high school diploma or work experience generally requiring at least a bachelor’s degree. And beyond the legal requirements, participation requires the means to pay application fees, travel to a US embassy or consulate to interview as part of the rigorous background check, and to buy plane tickets to get to the United States. In some countries, the costs can quickly add up to more than what most people in that country make in a year. The result of this is that while it may be a lottery, the Diversity Visa program implicitly selects for skills.

Now, it is reasonable to argue that we could do better. Sure, you might say, Diversity Visa immigrants are above average in our current system, but under a merit-based system, we could select for skills directly rather than just implicitly. But only selecting on the basis of skills underestimates the spillover benefits of immigrant diversity and leaves many of those benefits on the table. There are three other key ways that the Diversity Visa program helps Americans: a more diverse immigrant flow means a larger pool of high-skilled talent to choose from, a more productive American economy, and an immigrant population more likely to integrate successfully.

To the first point, the Diversity Visa program helps make the United States more attractive to high-skilled temporary workers from around the world. We would expect that high-skilled workers are more willing and likely to work where there are larger communities from their own country. And when we look at the data, more Diversity Visas being awarded to a country in one year is associated with more H-1B visas (those given to high-skilled workers) awarded to workers from that country the following year. We should bear in mind that this effect might be even larger if most H-1Bs were not subject to a cap that turns the temporary worker program into a zero-sum completion for a mostly fixed number of visas. In any case, the positive and statistically significant effect shows how selecting for diversity can help the United States tap into new sources of talent.

Secondly, the Diversity Visa program helps the United States capture some of the economic gains to be had from a more diverse immigrant population. There is alarge empirical literature looking at the effects of immigrant diversity on economic performance. Overwhelmingly, the literature concludes that on net, more diversity among the countries of birth of the immigrant population causes higher nativewages, more jobs, higher productivity, more innovation, and more growth. One of the most recent studies on the matter shows the positive effect of diversity is not limited to the top end of the income distribution, but that the gains from diversity are shared as much by low-wage natives as higher-wage ones. The takeaway is that lawmakers looking to capitalize on the economic benefits of immigration should be interested in tools that make immigration flows more diverse.

And finally, a more diverse immigrant population means better immigrant assimilation and integration. Immigrants who arrive to find large communities in the United States from their home countries have fewer interactions with natives, are more likely to live in enclaves, and feel less pressure to assimilate. The Diversity Visa, on the other hand, selects for immigrants from countries from which the United States admits low numbers of immigrants, ensuring greater assimilation pressure.

Simply put, ending the Diversity Visa would choke off a skilled flow of immigrants, narrow the application pool of high-skilled temporary workers, and homogenize immigration flows — all to our cultural and economic detriment.

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Against Privacy Fundamentalism in the United States

“CALLER ID POSES INVASION OF PRIVACY” blared the headline of a 1990 op-ed in the Chicago Tribune by law professor Jeffrey M. Shaman. In the piece, Professor Shaman argued that the newfangled technology for displaying phone numbers of incoming calls “may have disastrous consequences,” including deterring people “from calling crisis centers that deal with suicide, rape, child abuse or AIDS for fear of having their identities revealed.” He also warned that “psychiatrists, doctors, social workers and lawyers will not be able to return emergency calls from home… Victims of domestic violence will not be able to call spouses or their children…People will be discouraged from making anonymous calls to the police to report crime.”

Civil libertarians and privacy advocates also sounded the alarm about the dangers of knowing the phone numbers of incoming calls. Deborah Ellis, the legal director for the American Civil Liberties Union (ACLU) of New Jersey, said “banks and other lenders could use the service to discriminate against callers from poor areas.”Others questioned the motives behind the companies deploying the new technology. Marc Rotenberg, then-director of the Computer Professionals for Social Responsibility, said, “This is a case of a company that has a great deal of personal information making money exploiting the sale of that information without the consent of the phone subscriber. Three years ago if a phone company employee had talked about selling someone’s phone number to a business, they would have been fired.”

The apocalypse was nigh, and the fifth Horseman was… Caller ID.

None of these worries came to pass, of course. Telephone systems added the ability to block Caller ID on a per-call basis by dialing *67 before the phone number, heading off most of the potential privacy harms. As for the greedy telephone companies, it is now common for phone contracts to bundle Caller ID into the standard service price at no additional cost.

Many new technologies go through this “privacy panic cycle” (e.g., RFID tags, cameras, loyalty cards). It often begins with advocacy groups — such as the Electronic Privacy Information Center (EPIC), the Center for Democracy & Technology (CDT), Access Now, and others — feeding the natural tendency of media outlets to exaggerate the risks associated with a new technology because audiences love negative news (“if it bleeds, it leads”). As the frenzy escalates, headlines start to declare that the sky is falling. Then, despite the Chicken Little omens, fears begin to diminish over time as reality sets in. The cycle ends — not with a bang, but a whimper — as consumer appreciation of the new technology or service proves the deciding factor in its ultimate widespread adoption.

Privacy Fundamentalism Is a Moral Panic

Sources: Privacy indexes: a survey of Westin’s studies; Choice Architecture and Smartphone Privacy: There’s A Price for That; and Would a privacy fundamentalist sell their DNA for $1000 … if nothing bad happened as a result? The Westin categories, behavioral intentions, and consequences

“Privacy” is not a term that anyone uses in a negative way. Like money or liberty, it is good by definition; more is better, less is worse. But humans have a multiplicity of values and differing hierarchies — more privacy is not always better when it comes at the expense of another good. That’s what makes privacy scholar Alan Westin’s privacy segmentation index (PSI), which categorizes people’s privacy attitudes as “pragmatists,” “fundamentalists,” or “unconcerned” a useful tool in peering through the often-hysterical nature of the public debate surrounding privacy.

Contrary to the popular narrative, most Americans do not place a high value on their privacy for non-sensitive information, such as purchasing habits or online browsing histories. (However, people do value keeping sensitive information such as health or financial records private.) In surveys over the last few decades, about 50 to 65 percent of Americans are privacy pragmatists, meaning they continually evaluate the trade-offs associated with sharing private information, and make decisions on a case-by-case basis. To be clear, this does not mean they’re all reading the legalese in privacy policies — they simply use heuristics to make disclosure decisions.

Source: Pew Research Center

Roughly 10 percent of Americans are privacy unconcerned, which Westin quipped as willing to “give you any information you want about their family, their lifestyle, their travel plans, and so forth” for a 5-cent discount. In one experiment, the vast majority of participants were willing to reveal their monthly income to a video rental store in exchange for a one euro discount on a DVD (without the discount, about half still shared this private information in exchange for no benefit). A different study found that most subjects would happily sell their personal information for just 25 cents, and almost all of them waived their right to shield their information.

The remaining 25 to 35 percent of Americans are privacy fundamentalists — those with an ideological commitment to privacy, claiming they would never trade their privacy for economic benefits (even if they often do in practice). This group also wants stronger privacy laws to prevent companies from acquiring anyone’s personal information.

In 2001 testimony before the House Committee on Energy and Commerce, Westin summarized his catalog of research and direct experience with dozens of national privacy surveys going back to 1979 by saying:

American consumers, by large majorities, want all the benefits and opportunities of a consumer service society and of a market-driven social system… We know that a majority of the American public does not favor the European Union style of omnibus national privacy legislation and a national privacy regulatory agency, but when it comes to sensitive information such as financial information or health information, overwhelming majorities are looking to legislative protections to set the rules and the standards for that kind of activity.

According to more recent surveys, not much has changed in the intervening years. As the charts below show, privacy concerns in the United States have, if anything, decreased over time.

Source: National Telecommunications and Information Administration

Source: National Telecommunications and Information Administration

A recent paper in the Journal of Economic Literature summarized the theoretical and empirical research on the economics of privacy, concluding:

Extracting economic value from data and protecting privacy do not need to be antithetical goals. The economic literature we have examined clearly suggests that the extent to which personal information should be protected or shared to maximize individual or societal welfare is not a one-size-fits-all problem: the optimal balancing of privacy and disclosure is very much context-dependent, and it changes from scenario to scenario. [emphasis added]

In the past, privacy fundamentalists and advocacy organizations have relied on the media and our natural predilections to focus on the negative to push a misleading narrative that does a great disservice to evidence-based policy debates. Now, in the ongoing debate over passing prescriptive baseline privacy regulations, they have a powerful new ally: Big Tech.

Big Tech Bootleggers and Privacy Baptists

In 1983, Bruce Yandel, the executive director of the Federal Trade Commission (FTC), wrote an article in which he coined the term “bootleggers and Baptists” to describe regulations that are supported by a coalition with both virtuous and venal interests. In his canonical example, he observed that bootleggers supported laws prohibiting the sale of alcohol on Sundays because they were good for business; Baptists, on the other hand, were in favor of the same laws for moral or religious reasons. This kind of diverse coalition can prove very effective in passing and maintaining welfare-reducing regulations.

When European Commissioner Věra Jourová traveled to Silicon Valley last year to meet with American tech firms, including Google and Facebook, she expected to hear grumbling about the General Data Protection Regulation (GDPR), the European Union’s new baseline privacy law. Instead, she said, “They were more relaxed, and I became more nervous. They have the money, an army of lawyers, an army of technicians and so on.” Compliance with GDPR would not be a problem for Big Tech.

During a recent Senate hearing, Keith Enright, Google’s chief privacy officer, gave a clue as to why that’s the case. He estimated that the company spent “hundreds of years of human time” to comply with the new privacy rules.  The Global Fortune 500 will spend an estimated $7.8 billion in compliance costs for GDPR.  While these are significant costs to Big Tech, they also represent regulatory barriers to entry for small- and medium-sized enterprises trying to become the next Facebook or Apple.

Big Tech has entered into a “bootleggers and Baptists” coalition with privacy fundamentalist groups to support new omnibus regulations in the United States. Last month, the Information Technology Industry Council — the lobbying group for, among others, Apple, Amazon, Google, Facebook, and Microsoft —  released its policy framework which was “inspired” by GDPR and sought to “create alignment with the privacy protections of other privacy regimes across the globe.”  In a keynote speech two days later in Brussels, Apple CEO Tim Cook said, “We should celebrate the transformative work of the European institutions tasked with the successful implementation of the GDPR … It is time for the rest of the world, including my home country, to follow your lead.” At the same conference, Facebook’s chief privacy officer said the company would “unequivocally” support an American version of GDPR.

From the perspective of multinational incumbent technology firms, this is the rational position to take on privacy regulation. Since the European market is large and regulatory compliance costs are fixed, it is often more efficient for global corporations to comply with European regulations everywhere than it would be to meet the local regulatory minimum in each market. This phenomenon where Europe becomes the de facto global regulator via market mechanisms is known as the “Brussels effect.” (When this occurs domestically, it’s known as the “California effect”). Incumbents lobbying to spread de jure GDPR-style regulations to other countries is an obvious strategy to prevent would-be rivals from entering the market.

Regulation is among the most effective ways of raising a rival’s cost. Indeed, economists Avi Goldfarb and Catherine Tucker found that smaller and more general websites were hit the hardest in the wake of European privacy regulation in the late 2000s. Evidence from the first six months of GDPR show that Google and Facebook have been winners relative to smaller competitors:

Source: Cliqz

The United States Is Not the Wild West of Privacy

Some have claimed that the United States is the “Wild West of privacy.” This is a curious position considering “<a href="https://fedsoc.org/commentary/publications/the-gdpr-what-it-really-d

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The Case for Expanding Community Sponsorship of Refugees

Today, the United States refugee resettlement program lingers in a more precarious position than ever before. Less than 23,000 refugees were resettled in fiscal year 2018, and the fiscal year 2019 refugee ceiling is set for 30,000—the lowest ceiling in the history of the program.

Not only does the lower ceiling impact the sheer quantity of refugees that we resettle in the United States, but it impacts the fiscal health of the nine voluntary agencies that have been resettling refugee for over forty years.  Resettlement offices have been closing nationwide as the total number of refugee arrivals contracts to record lows.

It is critically important to preserve and improve the refugee resettlement infrastructure now, so that there is an adequate system in place to resettle refugees in America when the historical resettlement numbers are eventually restored. One strategy to maintain the infrastructure is tapping into private sector interest in supporting refugees that exists across the United States and launching community sponsorship programs that complement current efforts from the voluntary agencies and ensure their survival.

Expanding community sponsorship requires coordination between resettlement agencies nationwide, volunteers, and individuals and groups dedicated to helping refugees. The community sponsorship model is used throughout the world — most notably, in Canada — and within the United States very successfully, and primed to be used throughout America.

Last year, I had the pleasure of visiting a refugee resettlement group in New Haven, Connecticut called IRIS (Integrated Refugees and Immigrant Services). IRIS offers a unique community sponsorship program that resettles refugees primarily by relying on community groups, volunteers, and private sector funding. But sponsorship does not replace IRIS; it complements their efforts. Community sponsorship in New Haven engages local volunteers to resettle refugees as a community project, guided by experienced professionals at IRIS who provide the formal infrastructure and oversight. In 2017, more than 600 people were part of the leadership teams that worked to resettle refugees with IRIS, and hundreds more played smaller roles.

While in New Haven, I attended a sponsorship training session where new sponsorship groups participated in refugee resettlement boot camp. In a makeshift classroom with twenty Connecticutians, the day-long seminar explored the ins and outs of the resettlement experience. IRIS staffers presented different sessions on helping refugees find employment, learn English, and apply for green cards. There was significant discussion about managing group expectations, delineating roles in the sponsorship groups, and talking through solutions to common problems that arise.

Sponsorship groups are made up of at least 10 individuals that can raise between $4,000 to $10,000 to assist a newly arrived refugee family for about a year. IRIS requires a detailed application that all applicants must use to prove they can provide affordable housing; enroll children in school; provide families with access to public transportation options and to local healthcare providers; help refugees find entry-level jobs; and give information about places of worship. Sponsors are of all ages, but because of the high financial requirements for applicants, sponsors tend to skew older. Many sponsors also donate their time and knowledge by scheduling pick-ups for refugees from the airport, arranging receptions to welcome them to their new home, and introducing new refugees to family, friends, their new city, and the American way of life.

One of the benefits of community sponsorship of refugees—seen in the U.S., Canada, and other contexts—is improved outcomes for the refugees themselves. Sponsorship builds bridges between refugees and their new neighbors; it provides needed emotional support during the whirlwind experience of moving to a new country, and it promotes integration by expanding networks. In fact, studies show employment and language skills are improved by sponsorship..

When NPR’s Deborah Amos visited IRIS, she primarily spent time with sponsors post resettlement. She highlighted the story of a retired lawyer who helped one refugee family wade through legal requirements of the federal refugee resettlement program; of a semi-retired teacher who accompanied the family on medical checkups; and of a team leader who assigned tasks on a weekly base to both the core group and the larger pool of volunteers.

The result is more friendships, a wider community, more financial resources, and better overall assimilation into America. All of this occurs by leveraging the community to enhance experiences and does so without extra funds from the government.

But the benefits to community sponsorship are not one-sided. Community sponsorship alters the politics of refugee resettlement because it directly affects thousands of individual Americans who are willing to invest their time and money. As more Americans are touched by the experience of providing a new life to a family in need, the support for resettlement overall will rise, creating a new pro-refugee constituency that will be more vocal in their support for resettlement.

Across the globe — in Germany, Australia, Ireland, New Zealand, Brazil, Italy, the U.K., Argentina, Switzerland, and Spain — governments are recognizing that engaging civil society more directly and positively enhances their refugee resettlement apparatus. In fact, a new organization, the Global Sponsorship of Refugees Initiative (GSRI) was launched in 2016 to help governments craft programs to tap into goodwill towards refugees.

In Canada, more than 2 million people are engaged in sponsorship. About seven millions Canadians know someone involved in their private sponsorship program. In 40 years, Canada has privately resettled almost 300,000 refugees.

But in the U.S., we’re falling behind. Cash-strapped resettlement agencies are doing their best in the face of enormous financial challenges, but many do not have the resources necessary to stand up a reliable and safe program.  There is also understandable nervousness about exporting the responsibilities of resettlement professionals to volunteers. 

Compounding both issues is the administration’s intent to dismantle resettlement in America, despite well-documented national security and foreign policy imperatives calling for a robust refugee resettlement program.  

Community sponsorship is the type of program made for the U.S., which has a diverse population and a thriving philanthropic sector; we just need the framework to connect the donor community, refugee resettlement agencies, and the federal government. We know sponsorship works, and the innovation happening at IRIS is the perfect example of resettlement entrepreneurship that we should seek to scale up.

One community at a time can improve refugees outcomes and enhance advocacy. We can solidify support for tomorrow’s refugee program by engaging more Americans today, who can learn about refugees and who they are and be disabused of the misinformation about refugees and national security. Not everyone will sponsor refugees, but the more people who hear of a friend sponsoring is powerful, for more reason than one.

Leveraging the private sector and civil society to expand the impact of volunteers can transform a refugee family’s first year in America, putting them on track for success for years to come.

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Foreign Doctors Will Heal America—If Congress Lets Them

Americans identified healthcare as their top concern according to exit polls from last week’s midterm election. These results come as the country faces a growing doctor shortage—which could reach 121,300 by the year 2030. If lawmakers in the next Congress hope to alleviate the coming shortfall, they should make it easier for foreign-trained physicians to practice in the United States.

Foreign-trained doctors already fill crucial gaps in the U.S. healthcare system. Although they comprise just one-fourth of the U.S. physician workforce, they represent over half of the country’s geriatric specialists. With the number of Americans over age 65 expected to increase by 50 percent come 2030, the country will need thousands more eldercare professionals.

Foreign-trained physicians also fill vacancies in primary care fields, representing one-third of the country’s pediatricians, family doctors, and internists. The Association of American Medical Colleges (AAMC) projects a significant shortfall in these roles, as U.S. doctors frequently turn them down for higher paying specialties. This leaves their foreign-trained counterparts well-positioned to pick up the slack.

According to the American Immigration Council, foreign-trained doctors are also more likely to work in impoverished areas. Half of them practice in locations where annual per capita income is less than $30,000. They also practice in areas with large numbers of African American and Hispanic residents—groups twice as likely to live in locations that lack primary care physicians. In Bronx County, New York, where over 80 percent of the population is either Hispanic or African American, three-fourths of physicians are foreign-trained.

Rural and rustbelt communities also depend on these physicians. In Youngstown, Ohio, where per capita income is less than $13,000 a year, 75 percent of doctors are foreign-trained. Sometimes they are the only ones practicing in a given area, and patients will travel long distances, occasionally missing days of work to see them.

Foreign-trained doctors’ willingness to practice in areas where they are most needed renders them a compelling healthcare solution, and there are several reforms the next Congress can pass to help America attract and retain even more medical talent.

1) Eliminate per-country green card caps

First, lawmakers should pass legislation that eliminates per-country limits for green cards. This 1920s policy restricts the number of green cards each country can receive in a given year. As a result, applicants from larger countries suffer immense backlogs, while smaller countries are allotted more green cards than there are applicants.  

Indians, who represent 21 percent of America’s foreign medical graduates, suffer the most egregious wait times. Applicants who are just now receiving their green cards have been waiting for around a decade, while Indians who apply today will wait a projected 151 years according to the Cato Institute’s David Bier.

This backlog is causing physicians like Dr. Raghuveer Kura to consider leaving. “I can’t wait another 10 years not knowing what my future will be in the U.S.,” he told CNN. Dr. Kura is the only kidney specialist in Poplar Bluff, Missouri, where nearly 3,000 patients rely on him for care. The rural town will likely struggle to replace Dr. Kura should he leave.  

2) Address duplicative training requirements  

Lawmakers should also expedite or remove duplicative training requirements for physicians from medically advanced countries. Aside from Canada, physicians from foreign countries must repeat their residency training in the United States. To earn a residency spot, many applicants spend years studying for exams and doing volunteer clinical work to obtain American recommendation letters.

These requirements ultimately influenced British-trained vascular surgeon Dr. Faris Alomran to move to France instead of the United States. “In the U.S. I would have had to do five years of general surgery and a two-year fellowship in vascular surgery to be a vascular surgeon,” he said.

U.S. lawmakers should consider a policy similar to Canada’s, which allows doctors to bypass post-graduate training requirements if they completed their residency in an approved country. These countries include the United Kingdom, Singapore, South Africa, and many others.

3) Reform the Conrad 30 J-1 Visa Waiver

The Conrad 30 Waiver exempts foreign medical graduates who completed their residency in the United States through the J-1 visa from having to return to their home country. To qualify to stay in the U.S., applicants must work in a medically underserved area for at least three years.

The program allows 1,500 physician slots, 30 per state. Many states have difficulty attracting applicants, as 500-700 slots are unfilled every year. A report by the Rural Health Research Center finds that these poor numbers are partially due to physician abuse and poor communication from employers as well as a general difficulty integrating with the surrounding community.  

But while some states struggle to meet their physician cap, others, like Connecticut, are receiving more applications than there are slots available as hospitals look to expand their staff.

There are numerous ways in which the Conrad 30 Program can be improved. Examples include expanding the number of physician slots, establishing consistent criteria across states for determining health shortages, and increasing local involvement with physicians. Lawmakers should also make the program permanent, so it no longer needs re-authorization from Congress.

Allowing more doctors to practice in the United States is a solution that members of both parties should find appealing. For Republicans, it’s an opportunity to simultaneously promote market-based healthcare and merit-based immigration. For the many Democrats who made healthcare the focal points of their campaigns, it’s an opportunity to deliver on their promises and improve healthcare access to the most vulnerable parts of America.

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Job: Poverty and Welfare Policy Analyst

The Niskanen Center’s Poverty and Welfare Policy program is seeking to hire a policy analyst with a strong data science background to assist in the development and evaluation of public policies that advance individual freedom and inclusive prosperity. This is a full-time position based in Washington D.C.

Ideal candidates will possess a background in statistics and data visualization, with demonstrated experience applying econometric techniques in R and/or Python. Sophistication with respect to contemporary debates in rural economic development, social welfare policy, and political science are highly valued, as well. Finally, we prize intellectual humility over ideological rigor, in accord with the motto “strong views, weakly held.”

This position will report to the poverty and welfare policy director.

Responsibilities

• Lead in the construction of a major new dataset and related data products for a project related to the revitalization of struggling regions across the United States.
• Conduct original public policy research, including data collection and analysis, review relevant literatures, formulate new ideas, and write policy briefs.
• Assist general program activities, including but not limited to event organization, legislative outreach and media engagement.
• Support data projects across other departments, time permitting.

Requirements

• A data science and visualization background shown through a portfolio of past work.
• A bachelor’s degree. Advanced degrees and certifications are a plus, but demonstrated skill and experience will be weighed above academic achievements.
• At least two years of experience in public policy or academic professional settings.
• Excellent writing ability.

Benefits

Competitive salary range, depending on qualifications and experience. Benefits include health and dental coverage, a flexible vacation policy, and professional development opportunities

About the Niskanen Center

The Niskanen Center is a nonpartisan 501(c)(3) think tank that works to promote an open society — a social order that is open to political, cultural, and social change — through active engagement in the war of ideas and direct engagement in the policymaking process. We develop policy proposals, mobilize other groups to support those proposals, promote those ideas to legislative and executive decision-makers, build short- and longer-term coalitions to facilitate joint action, initiate litigation to compel responses in defense of individual rights, and marshal the most convincing arguments and information in support of our agenda.

Our commitment to an open society extends to our own organization. The Niskanen Center does not discriminate on the basis of race, color, religion, sex, sexual orientation, gender identity, national origin, veteran or disability status. To ensure the integrity of this aspect of our application process, submissions are initially screened by directors in a way that is stripped of potentially identifying information.

We currently plan to accept applications for this job until filled. However, we hope to have this position filled by Jan. 1, 2018. Candidates in whom we are interested will be contacted for telephone interviews within two weeks of applying. In-person interviews will be held in our D.C. office. To apply, please send a resume (Microsoft Word or PDF) with a cover letter pasted into the body of the email to shammond [at] niskanencenter [dot] org. Completed applications should include a short writing sample (less than 800 words) and an illustration of proficiency in data analysis and visualization in a readily accessible format.

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The American Health Care Act, not John McCain, Lost the House for the GOP

Writing in the Wall Street Journal, Jason Lewis claims that “The Republican Party lost its House majority on July 28, 2017, when Sen. John McCain ended the party’s seven-year quest to repeal Obamacare.” Up to then, he says, the Republican leadership had done “an admirable job herding cats,” culminating in the passage by the House (on their second try) of the American Health Care Act (AHCA). Then McCain blew it all in the Senate.

Nonsense. The cat-herders who wrote the AHCA were themselves to blame. From the beginning, the AHCA had no credibility in tackling the problem that ranks No. 1 in the health care concerns of voters: Guaranteeing affordable access to health care for the millions of Americans with pre-existing conditions.

Here is what really happened.

The AHCA’s promise of high-risk pools was a sham

Lewis claims that the AHCA would have covered the most difficult-to-insure with $138 billion worth or high-risk pools. Yes, in principle, high-risk pools are one potential way to protect people with pre-existing conditions. But if we understand the way they work, it is easy to see that the token version offered by the AHCA was never more than a sham.

Boosters of the AHCA talked up high-risk pools as if it would be easy to offer them to a small sliver of the population — just 5 or 10 percent — and let everyone else pay their own way. Unfortunately, given that the top 10 percent of individuals account for more than half of health care spending, it would not be easy at all.

In a study for the Commonwealth Foundation, Jean P. Hall of the University of Kansas calculates that the net cost to the federal budget of a fully-funded national high-risk pool would be $178 billion per year. That assumes the pools would cover 13.7 million people with chronic conditions, which is less than 5 percent of the population. Each of them would pay a premium of $7,000 per year and have average medical costs of $20,000 per year, requiring a subsidy of $13,000.

The AHCA never came close to providing that kind of money. The $138 billion that Lewis cites was not an annual figure, but rather, was spread over many years. In reality, the proposed Patient and State Stability Fund would have given states just $10 billion per year, plus a little start-up money, to experiment with high-risk pools if they wanted to. The law would also have allowed them to spend the money on other things, but even if they spent it all on high-risk pools, it would have come to just $728 a year for each of 13.7 million medically eligible individuals—or, enough to cover Hall’s estimated $13,000 per year average subsidy for fewer than 750,000 out of 13.7 million medically eligible candidates.

The AHCA and the death spiral

What did the AHCA have to offer to healthier people who are not qualified for the high-risk pools? Lewis says that it would have evened the playing field by offering refundable tax credits anyone could use to buy individual plans, and by expanding tax-deferred health savings accounts to help cover deductibles, copayments, and over-the-counter expenses. But more likely, it would instead have caused the ACA to enter a death spiral that was only narrowly averted by John McCain’s infamous thumbs-down.

Just how does this notorious “death spiral” work? Start with a basic truth: A private insurer can profitably offer health care coverage to a pool of customers only if it can find a premium that is low enough to be affordable, yet high enough to cover expected claims and administrative costs, with enough left over to keep shareholders happy. In order for that to happen, the pool of customers must contain enough healthy people to keep claims and premiums low.

If premiums are too high, healthy people begin to drop out and take their chances covering their own medical costs. Fewer healthy people in the pool raises the claims per member—a process that economists call adverse selection. Soon, premiums have to be raised further. That causes still more people to drop out until only the sickest people are left in the pool. At that point the insurers themselves pull out, and the death spiral is complete.

The AHCA did include features that would have tended to enlarge the pool of those seeking insurance in the individual market. One was a repeal of the mandate for larger employers to provide coverage, which would have pushed many workers into the individual market. In addition, rule changes would have made some low-income families or individuals ineligible for Medicare. On the face of it, a larger insurance pool would make the system more stable. However, that would be true only if the individuals who actually purchased individual policies after being displaced from employer coverage or Medicaid were of average or better health.

Instead, most of those who lost other coverage would have been of lower than average income. Medicaid was already limited to households below or just above the poverty line, and companies would have been more likely to stop healthcare coverage for their marginal employees than for their best workers. Lower income households not only tend to have more health problems, but are more likely to forego coverage unless they are very sick. As a result, the hoped-for enlargement and stabilization of the individual insurance pool would never have materialized.

John McCain deserves a reward from the GOP, not abuse

If Republicans were honest about the effect of McCain’s “Nay” on health care, they would be offering him a posthumous medal for distinguished service, not heaping on the abuse. If the AHCA had passed, millions would have lost insurance coverage. Instead of just talking about what the Republicans tried to, Democrats would then have been able to point to the effects a law they had actually passed. The blue wave that washed away the Republican house majority would then have been a tsunami. Not just the House, but the Senate would have been flipped for a generation.

I’ll give Lewis credit for one thing, though: he’s dead right when he writes that because the AHCA didn’t pass, we’ll never fully succeed in refuting the lies about it.

The post The American Health Care Act, not John McCain, Lost the House for the GOP appeared first on Niskanen Center.

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