Plan4Oregon

Will The Public Option Lower My Health Insurance Premium?

Thu, 29 Oct 2009 02:11:59 +0000

A large part of the country believes that the public option is only hope to reduce health care costs. A public option is basically a government run health insurance company. Basically, the debate is whether the government should go into health care insurance business. So, we are going to discuss how this public option is supposed to work, and if it could reduce health care prices.

The Theory of the Public Option

The first thing to realize is that the public option is different than European health care. European health care works on what is called a single payer system. In a European system, the government pays all health care costs for everyone. A public option looks and works like a private insurance company with some important differences.

How would a public option reduce health insurances costs? Public option supporters point to administrative costs. Medicaid runs very low administrative costs compared to private companies. The government could then provide a low-cost option because it has lower administrative costs. Private insurance would need to innovate to stay in business with a low cost alternative. So, would it work?

Price Fixing; Not Competition

The reason why the public option won’t work is because people don’t understand how competition works. Medicare doesn’t negotiate its lower costs. It sets reimbursement rates. Basically, it sets the price. In a place like Oregon, the Medicare reimbursement rate doesn’t cover the cost of the actual procedure. The impact is that unpaid additional costs from Medicare patients gets passed onto private insurance.

The problem for the government is you can’t regulate savings. The savings in competitive markets doesn’t come from regulation. The price savings comes from innovation and hard work. One company learns how to provide the service better than the next company. Google is a great example of this at work. When I was in college, Google was run out of a garage. Google began to provide its search engine service better than every other company. Look to see where it is now.

The public option would allow the government to set prices. When the government can set prices, they can artificially lower the price in the market. Private companies may not be able achieve the price. For example, Washington may want heart transplants done for less than $15,000, but that price just isn’t realistic. This is the same principle as rent-control in a big city. If you can find an apartment, you are very happy, but a majority of people have trouble finding apartments

Any health reform bill with the public option protects the government from lawsuits for price-fixing. Since Theodore Roosevelt, the US has broken up companies for exactly this type of behavior. We know that price-fixing is bad for competition and the consumer. Standard Oil, AT&T, and Microsoft were all investigated for this behavior. These companies have been investigated for both lowering and raising prices. If the public option was a privately run company, the Justice Department would take the company to court, and people may go to jail. If it isn’t okay for a private company, why would it be okay for the US government?

Choices are always better than a Choice.

The public option doesn’t address the lack of insurance companies in the market. Competition needs to have companies in the market competing. Currently, insurance companies can’t sell their policies across state lines. As an Oregonian, you can’t purchase a South Carolinian health plan. The company in South Carolina would need to create a new pool in Oregon. The plan would very expensive until enough people joined to spread the costs around It will be tough for the public option to drive down prices if there is very few people to compete against. Additionally, would it really be fair to allow the public option to be sold across state lines, but private insurance not to be sold across state lines?

Could the Public Option cost jobs?

I want to use Pacific Source as an example to show the impact of the public option on a local level. According to their LinkedIn site, they have 375 employees. Since the public option relies on unfair competition, a company like Pacific Source can expect to struggle to stay in business. In this climate of economic hardship, a public option means the loss of jobs for small town insurers.

Conclusion

Democrats want to lower health care costs, and they understand the hardship that health care costs are causing people. But, the belief in the public option has made them blind to the economic realities of the market place. You simply can’t drive down health care prices without letting more firms into the market. Don’t give people the choice of the public option. Give them choices between competing insurance companies, and let’s see what happens.

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Leiken vs. Defazio: Who Represents Oregon’s Interests?

Sean VanGordon — Tue, 20 Oct 2009 23:45:39 +0000

Conventional wisdom doesn’t always apply for college football or politics. People re-learn this every fall. As a thought experiment, why don’t we look at the 4th Congressional District race. I want to look at the Fourth Congressional District, and ask, “Who would best represent our interests in Washington?”

Peter Defazio

After thirteen terms in Congress, Rep. Defazio may have lost the fire to represent us. He hasn’t even officially announced if he is running for the 4th Congressional District. For months, he has been calculating the risk of losing if he runs for Governor. Nothing great ever was accomplished by the timid or the indecisive. I like my political leaders willing to take political risks.

A few years ago, I learned that Springfield hired a congressional lobbyist, and I assume other cities in the Fourth District have them as well. I was shocked. I was under the impression we elected congressmen to lobby for our communities. After a quarter century, is it possible that Defazio is more in touch with the beltway than with Southwestern Oregon? Maybe, we need elect someone to Congress that would lobby for his or her constituents. Hiring a lobbyist is expensive and lobbyists don’t vote in Congress.

The Fourth Congressional District spans the political spectrum. It’s tough for any leader to represent all of its citizens. Ask yourself, what has Peter Defazio done to grow the economy? What has he done for the fishing communities and timber communities? I admit he has landed a lot of federal aid for these areas, but aid is a safety net. We need jobs.

Rep. Defazio has the seniority that gives him a powerful position on the House Transportation Committee. While that is a benefit to Rep. Defazio, it hasn’t changed the over 12% unemployment in the district and it hasn’t fixed our crumbling infrastructure.

Sid Leiken

Sid Leiken is the three term Mayor of Springfield. For the record, he has officially filed for the Fourth Congressional District. Irregardless of if Defazio decides to run, Leiken is committed and passionate about improving conditions in Oregon. Personally, I like his innovative streak. It always seems like he wants to raise his hand when it comes to trying new things. He reminds me of a boss I used to have. Every time that I came to this boss, and told him I couldn’t get something done. He would give me a suggestion, and send me back to try it again. The important thing was that he wouldn’t accept “no” for an answer.

As a mayor from Southern Oregon, Leiken has been in the trenches. He is better placed to be an advocate for local business and local communities. He understands the daily battles that cities go through to keep the library open and the lights on. Leiken understands that there needs to be a balance in the management of public lands. This means that you manage lands to reduce fire danger, create jobs, and protect lands for future Oregonians. Leiken represents a shift to the political middle on these issues which will create jobs and ensure that all voices on the issue are heard. This isn’t about how much money he can shake down from Washington for us. It is about how he can influence policy that will promote job creation.

Conclusion

I wrote this because of an article that appeared in the Register Guard about fund raising activity by both campaigns. It pointed out that conventional wisdom said that Leiken’s campaign would lose because they didn’t raise enough in one quarter in 2009. A single finance report doesn’t make a campaign, and a single finance report doesn’t change that Sid Leiken is the best person to represent our interests in Washington. Now, I need to go to his website to donate some money to help prove conventional wisdom wrong…

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Rethink Government

Sean VanGordon — Wed, 14 Oct 2009 05:42:58 +0000

In the last session, the Oregon State Legislature raised taxes and fees by $1.6 billion. The tax increase paid for a 7% increase in state spending from the previous biennium At the budget’s current growth rate, Oregon will have a $100 billion budget within 20 years. The tax increases are bad for Oregonians, but the real crime is the failure in leadership that would allow a budget to grow at three times the rate of inflation. Spending has grown so fast that Oregon’s recession prone economy can’t grow fast enough to keep paying for it. At these levels, state spending is currently unsustainable. We need to change how the state does business. We need to rethink government.

Budgetary Reform

Pass the Education Budget First: Currently, education is one of the state’s biggest expenditures. School Boards around the state need a complete budget from the state to be able to plan their budgets. In a bad year, schools may re-do budgets multiple times because the state doesn’t pass the budget in a timely manner. We need to show that schools are a priority. I would support Sen. Atkinson’s call to pass the education budget first.

Put the Budget on-line: The state should put its entire budget and the monthly expenses on-line. We should promote transparency by showing Oregonians how their money is spent. A transparent, on-line budget makes waste and inefficiencies easier to find.

Define Terms: We should define how the legislature uses the terms “budget shortfall” and “budget deficit”. In 2009, the legislature often spoke of a shortfall when the budget rose by 9% from the previous biennium. State politicians often use shortfall to refer to the difference between what the budget is and what we would like it to be. It should refer to the difference between tax income to the state and the previous budget. This prevents the legislature from misusing “shortfall” to justify increases taxes and fees that are being used for additional spending.

Change the Starting Line: Currently, the budget starts with what is called the Effective Budget Level. The Budget Office estimates the level of spending required to do the same activities as the last budget. In 2009, the EBL was 13% higher than the previous budget. Why can’t we start the conversation with the previous budget? Or, simply give an inflation adjusted number? We can’t start the conversation 13% higher than the previous budget and remain fiscally disciplined.

Structural Reform

Hire a State Treasurer: The Oregon State Treasurer is responsible for managing most of the financial investments of the state. He manages issuing State Bonds, the Public Employee Retirement System (PERS), and College Savings accounts. Campaigns for State Treasurer are focused on political issues not financial issues. Candidates aren’t required to have basic financial skills.

We can change the system to allow for the state to hire a Treasurer. Under this reform, the Governor would appoint a State Treasurer that would be confirmed by the legislature. Oregon’s State Treasurer will have the financial skills to manage our assets. A Treasurer, who is an employee, is also more immediately accountable for poor performance.

Reform the Per Diem expenses for the State Legislature: Under Oregon Law, the members of the state legislature receive a per diem or a daily allowance for expenses while the legislature is in session. All legislators receive the same per diem regardless of if they are from Hermiston or Salem. For legislators that live close to Salem, the fixed per diem acts as additional pay because they stay at home during the session and so they don’t use all of their per diem allowance. Legislators that live away from Salem aren’t reimbursed at higher rate to pay for the additional expense that the distance provides. To deal with this, politicians are able to reimburse those expenses from their campaign PAC funds. This provides a situation where politicians may benefit directly from campaign donations without oversight.

The state needs to address a couple of things. First, the state needs to reimburse expenses by forcing legislators to turn in receipts. If we replace the per diem allowance with expense reimbursement, we would only pay money to legislators to reimburse expenses. Second, the state should ban the use of PAC money to purchase gifts for state legislative committees or to reimburse expenses not related to campaigning. If the state pays expenses fairly, then there is no need to allow PAC money to pay legislators for expenses. Third, an expense reimbursement plan can easily be monitored and approved by the caucus leaders. By using the leaders, we can provide common sense, practical application while balancing privacy concerns.

Create an appointed State Clerk Position: Currently, the Secretary of State monitors and enforces election law in this state. It is one of many duties that is performed under the office. The secretary of state is a partisan election with four year terms. In practice, this means the person we elect to referee the elections process is a member of one of the teams. The Mariners wouldn’t let one of the Yankees be the umpire when they came to town. Elected officials should work together to hire an unbiased umpire when it comes to enforcing election rules. We would be crazy not to.

If you’re going to change a Measure, send it back to the voters: Good leaders make decisions that build confidence among followers. Oregonians have always complained about the amount of changes that their legislators make to measures that are passed by the voters. No one has ever said that measures passed by voters are 100% error free. A lot of legislation passed by Salem or the voters has unintended consequences. This is an opportunity for the legislature to build trust. If they need to make a change to a voter-approved measure, they should refer it back to the people. They should go back to their boss. Explain the problem. Explain how you want to address it. Argue how your ideas better fit with their intentions. Show your leadership skills by being humble.

The 72-Hour Rule: Borrow from Rep. Walden’s petition to Congress. Provide a 72-hour waiting period to allow people to read the bill. I don’t think this is a huge issue in Salem, but it is in Washington.

Call special elections to fill empty seats: Under Oregon law, empty seats in the legislature are filled by appointment. The process requires that members of the same party replace the departing legislator. The goal is to not alter the balance of power.

In practice, legislators retire or resign prior to their term of office ending. This allows their replacement to be chosen, and keeps the seat from being open during the next election cycle. Incumbents have a much higher change of winning than their opponents. This practice keeps the number of truly open seats down to a minimum. Neither party wants to risk seats when there is a built in way to protect them.

The state should begin to hold special elections to replace departing members. We should give voters a choice though elections when their representatives retire instead of letting parties stack the deck. Elections cost money. However, if we take away the political advantage to resigning prior to elections being held, then I bet most people will retire at the next scheduled election.

Conclusion

The list above is by no means a complete list. It is a starting point for the conversation about genuine political reform at this stage. We all have discussions about reform. Lists like this start with friends and neighbors in bars, over dinner, and at football games. We need to bring these lists to the legislature. The 2010 election is a call to action. Our state cannot continue to do what we have always done. We simply won’t survive.

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Recession Proofing Oregon’s Economy

Fri, 07 Aug 2009 04:22:15 +0000

Our unemployment is historically higher than the national average. Currently, Oregon’s unemployment is the third highest in the nation. The problem of unemployment has plagued Oregon since I have been the job market. Is Oregon just unlucky? Is it a curse? Is it us?

One answer is that Oregon’s economy happens to rely on industries that are heavily impacted by recessions. That, is not our fault. It is just how our economy is. However, the impact of these economic downturns is multiplied by the state’s poor leadership and understanding of how economics works. When it comes to the health of the economy, the state government looks for quick fixes to make it look like the government is doing something.

We can’t control the economy. But, we can impact it. For the 1 in 10 unemployed Oregonians, this is the issue for 2010. Our survival as a state depends on us building an economy that can consistently deliver jobs. To understand our economic problems, we are going to discuss why recessions hit Oregon so hard. Then, we are going to discuss opportunities to put Oregonians back to work.

Why do Recessions Impact Oregon so hard?

Manufacturing, tourism, and agriculture all make up major portions of Oregon’s economy. They are all heavily impacted by recessions. I want to discuss manufacturing and agriculture in depth. Tourism doesn’t need an in-depth look because it is impacted by people taking less vacations because of job losses.

Manufacturing

Manufacturing goods are impacted by the ups and downs of the economy. Luxury items made in Oregon like RVs and boats have been severely impacted. Both items require financing to purchase. When the credit crunch began, these were very easy items for people to do without. Second, Oregon’s size is a manufacturing drawback. It limits the area that goods can be made cheaply. We build things along the major transportation corridors to Washington and California to reduce the costs to ship them. So, our manufacturing base won’t be expanded outside that small area.

Agriculture

I divide agriculture into food production and natural resources. The food producing activities are pretty recessions proof. A family of four will cut a lot of other expenses prior to cutting wheat or beef out of their budget. Wine, cheeses, and beers however can be impacted by job losses because people don’t need them.

By natural resources, I mean fishing, timber, and hunting. Natural resources are impacted because of prices and environmental regulation. In a shrinking economy, demand for raw materials is less which translates into dropping prices for Oregon’s natural resources. Additionally, Oregon has never found the middle ground between environmental regulation and job creation. We need to manage natural resources for the benefit of all Oregonians over all time. I am planning on writing another post on how to balance economics and the environment. Getting that right is critical to our future.

Policies that Create Jobs for Oregonians:

In order to control our economic situation. The state government needs to follow policies that either bring business to Oregon or provide incentives to Oregonians and their businesses. Below, though not a complete list, are just a few ideas to provide incentives to get Oregon out of this economic disaster.

Protect our competitive advantage: Currently, our economy depends on us being able to make goods at a relatively cheap rate. Oregon can’t keep firms here by force of law. We have to create a business friendly environment to keep firms. We have to protect the companies that we have.
Nurses: We have known about the nursing shortage for years. The Oregon University System needs to be building capacity in the programs that are high demand like nursing. If we can get more Oregonians through the schools, we know that we have jobs available for them. In this case, we are talking about an industry that is recession proof.
Liquified Natural Gas: The LNG proposals are set to bring jobs to Oregon. Some of the gas will be transported through Oregon to other markets. This is a complicated issue, but how do we get to yes? How do we address the concerns of people involved? Energy is an area that is relatively recession proof.
Manage our forests: We need to be able to manage forests. If we could cut trees, we could eliminate the Secure Rural Schools Act that has held our counties hostage for a decade. The expiration of Secure Rural Schools Act represents an impending catastrophe. We have spent hundreds of hours and thousands of dollars lobbying the federal government for a handout. Oregon has the talent and work ethic to be self-sufficient. We just need to be given the opportunity. If we are allowed to manage our forests, we could reduce the fire hazard that threatens to put thousands of tons of carbon in the air. Most importantly, we could protect our healthy trees from devastating pests like the bark beetle.
Reduce the capital gains tax: Oregon has the second highest capital gains tax in the country. Capital gains taxes the money that is made from stocks and investments. However, small business requires access to affordable capital to invest in growing their business. We want to promote Oregonians to invest and keep that money in Oregon. If we can’t reduce the tax rate, then maybe we allow Oregonians to keep the first $5,000-$10,000 of their capital gains tax free. Investing in Oregon is an investment in our future.

Here are additional ideas: Invest in the Port of Coos Bay; Partner with local credit unions to provide micro-credit; invest in fiberoptic lines for rural Oregon to be laid during road projects; make it easier for returning vets to get certifications in Oregon; lease government-owned, dark fiber optic to private industries; promote biomass solutions like Seneca Mills in Eugene; address issues with Eastern Oregon resorts; follow the Main Street Incentive Plan that promotes investment; and by no means is that all that can be done.

The point of this list isn’t that we need to do everything on it. There are some politically sensitive issues. The point is we can do something about this economic mess. We shouldn’t just sit ideally by waiting for jobs to just happen. We’re Oregonians. This economy works for us. We should start acting that way.

Conclusion

In the last decade, the economic growth in Oregon has hidden our poor economic policy. The state government didn’t have to make tough policy decisions when people had jobs. The lesson to be learned is we have to use the rich years to invest in Oregon’s future and prepare for the next downturn. But most importantly, we need political compromises on economic issues so that we create policy that is consistent. We are in tough economic straights in Oregon. But, don’t let anyone tell you there is nothing we can do about it.

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Fees: The Zero Calorie Tax Substitute

Sean VanGordon — Tue, 14 Jul 2009 22:30:07 +0000

Oregonians pay for their state and local governments with either taxes or fees. So, what is the difference between the two? According to dictionary.com, fees are paid for a privilege like admission to a movie, and taxes are what the government charges for specific facilities. Basically, you pay fees for services like driver licenses. Taxes cover the general functions of government like roads.

Under Oregon law, there are a lot more restrictions on taxes than there are on fees. It requires a 3/5 majority to raise taxes in the Oregon legislature. Property taxes are limited to a 3% raise per year. Taxes tend to be the bigger political issue because they represent a larger sum of money than fees. Taxes are simply a bigger political hot topic. On the other hand, there are no restrictions on how fees are managed.Isn’t it odd that one revenue source for the state is restrictive and the other is not?

It makes no sense that fees have no real restrictions on them. Because we restrict taxes but not fees, the government is going to look to fees to help close shortfalls. I don’t want the government looking to fees to close shortfalls. I want them to work to improve efficiency and reduce waste.

Fees are an issue of access

You tax the behavior that you want less of. This is one of the rules of economics that government tax policy is built on. When it comes to behavior, fees work just like taxes. If the fee is expensive, then we change behavior. There are numerous examples of this in practice. Last year, the legislature proposed putting GPS units on cars. The goal was to reduce total trips by making driving more expensive. Take a look at the Oregon University System. As tuition and fees increase, our universities have a harder time keeping people in school because of the rising costs.

So, I have shown an example of how fees impact behavior. Let’s take the argument a little bit further, and tie in the tax protections described above. First, Oregonians have a lot of protections from tax increases, but almost no protections against fee increases. As the state tries to balance the budget, this can create unintended consequences. As fees go up to balance the budget, Oregonians are priced out of their rights as citizens. Talk to a college student that struggles to pay higher tuition. This happens every day. Second, fees aren’t progressive like taxes. Low and middle income people are going to be the first not to use these privileges of society. The point is that the government looks to fees to raise money, but doesn’t consider that raising fees keeps people from using those services.

Reform Fees to Improve State Efficiency

As a fiscal conservative, my goal is to improve government efficiency and reduce waste. If we close the fee loop hole, it will force the government to close budget shortfalls with innovation and efficiencies. So, what policies should we consider to reform fees in Oregon:

Require that increases in fees pass the legislature: Should fees be able to be raised by administrative rule in Salem? My opinion is that they shouldn’t. I want my State Representatives to have to vote for and approve fee increases.
Use an expiration date: Fees are often used to pay bonds to finance infrastructure improvements. We should put an expiration date on fees used in this way. When the bond is paid off, we should schedule fees to be reduced or eliminated.
Create categories to regulate fees: If we create categories of fees, we can apply additional restrictions to fees. For example, it might be appropriate to cap hunting or fishing licenses at a 3% annual growth rate. But, we might not want to put that restriction on local public works departments that need their city councils to approve raising rates and fees.
Use the internet to publish more information about the budget: For departments that use fees, it needs to be clear what these fees are being used for and how fees tie into the total budget for the department. It will force a partnership to be built between the state and its citizens.
Over communicate: We need to over communicate changes to the people that use these resources. We should be explaining to them how fees are changing and impacting the part of the government they access.

Conclusion

There is a broader lesson than reforming fees here. The State of Oregon has an opportunity to reset its relationship with Oregonians. The state needs to begin to treat citizens like customers. It needs to consider the experience that people have when they access the government. By keeping fees to a manageable level, we can keep people using the services that the state is supposed to provide.

We have protected ourselves from excessive tax increases. We have no protection from fee increases. This has given the state the wrong set of incentives. We have made it easier to raise fees than innovate and be creative. Innovation and fiscal responsibility was the point of the property tax revolution. The state needs to understand that it can’t afford to grow the budget year after year.

When the state budget is growing too fast, we can’t just switch to diet soda. We need to stop smoking, eat healthier, and exercise too. The state needs to work on providing the same services with less tax revenue. This is the same problem that every company in Oregon is facing right now, and it isn’t easy. It requires creativity and hard work. With the right elected leaders in place, Oregon can be the first state to succeed at this.

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Improving Citizen Involvement in State Government

admin — Sat, 20 Jun 2009 00:21:11 +0000

Voters are frustrated with how the government works. Talk to them one-on-one, and they will tell you that they feel powerless to change anything. They feel like their vote and opinion doesn’t matter. Ask a Republican or a Democrat what frustrates them. Republicans will say it is organized labor. Democrats will blame big businesses. The point is that Oregonians don’t feel like this is their state to control for a lot of reasons.

Historically, Oregon is a citizen run state. We have stayed away from a professional legislature. The initiative process in Oregon is well used. Even one of our state land use planning goals is for citizen involvement.

Oregonians need to reconcile our frustration with the state government with our culture of being a citizen government. As we go into 2010, candidates and voters should be discussing how our democracy works.

There are a lot of different issues that frustrate people about state government. In this post, I want to focus on the lack of competitive elections in Oregon politics or barriers to entry.

What is a barrier to entry?

In economics, a barrier to entry is anything that keeps businesses out of a market. They reduce competition because they prevent firms from entering the market. For example, look at a power company. Power plants are expensive to build. Power lines are expensive to assemble. It just wouldn’t make sense for two power companies to serve the same area.

In politics, barriers to entry work the same. They limit competition in a campaign, and limit choice. A barrier to entry is anything that keeps a state or local race from being competitive. So, lets go through some of the examples of barriers to entry.

Examples of Oregon’s Barriers to Entry

Pay: Holding a local or state elected position is time consuming. Local officials work unpaid because they are able to balance their professional and political jobs. If you are a state representative, you stand to earn a salary of about 25k/year. Ask a representative, and you will find out that their duties are full-time. The salary and the time commitment makes it tough to recruit citizens from the middle-class. They can’t afford to be a representative.
Information is hard to find: This is a big problem for local boards and commissions. Oregonians can’t find what local positions are open and what seats they are eligible for. In some cases, the county may not be sure of what local positions are open until near the filing date. Technology can and should help us here. The county elections office should be posting open positions on the internet in a way that allows potential candidates to search the list by their addresses.
Campaign Finance: ORESTAR is the computer software that the Secretary of State uses to manage campaign finance reporting. It is light years ahead of what they used in the past, but it comes with a 60-page user manual that is unclear. It is common for campaigns to make innocent mistakes in reporting. Salem needs to always be looking for how to improve reporting. It should be easy to use and easy to understand.
Politics is Personal: People want to know who they are voting for. We don’t vote on politics. We vote on our evaluation of a candidate’s personality. This brings a candidate’s family and personal friends into the election as references to his or her fitness for office. Some good people do not run because they want to protect their friends and families from scrutiny.
Our own expectations: We forget that we are the government. Oregonians are the government. Get involved. You don’t have to run for the state legislature, but you can get appointed to a committee or a local board. Under a citizen government, we should see a lot more people working on local boards and committees.

More Competition Improves Government

In the 1990’s, Oregonians passed a term limit law that eventually got overturned in court. Oregonians forget that the ballot should be the term limit. Incumbent lawmakers should feel challenged every election. Re-election should be hard for our leadership because competition brings out the best in people. A healthy opposition forces the party in power to work to keep themselves relevant to all Oregonians.

Conclusion

Talk to an apathetic voter sometime about why he or she does not participate. Often, they don’t vote because of a feeling of powerlessness or a lack of choices. For Oregon’s legacy of citizen involvement, this is a critical issue, which is not discussed during elections. One way to fight this type of apathy is by addressing barriers to entry. This sounds harder than it actually is. For citizens, you should ask yourself this question, “What keeps me from serving on an appointed board or committee?” For the state legislature, they need to address barriers to entry.

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Health Care: A Fiscal Conservative’s Perspective

Mon, 25 May 2009 00:52:06 +0000

When it comes to health care, the Republican Party is at a disadvantage. Health care has traditionally been a democratic issue. The Democratic Party has had the time to simplify their position into either “you have health care” or “you don’t”. It can be explained and understood in less than 15 seconds. Since the Republicans have come late to the health care debate, the discussion is framed by the democratic position. The Republicans get painted as a party of “no” because their ideas reject the pre-existing democratic framework. To Republicans, the issue is more complex than just whether you have health care or not. Republicans see the issue as how to provide stable, affordable health care.

Our problems can’t simply be fixed by shifting the cost of health care from the family to the state because we are the state. We can only solve these problems by understanding them and having the political will to make steady, small reforms to achieve the change we need. So, let’s ask the questions together. Why is health care expensive? Why can’t we just pay the state to fix it?

Is Health Care A Normal Insurance Market?

The biggest issue with the democratic position on health care is that it oversimplifies the problem. Health care is a complex issue, and we need to fully understand it prior to any policy change. So, why does the current health care market achieve such poor results?

First, health care insurance is not the only insurance that doesn’t work well. Insurance works best when it spreads large individual costs over a large pool of people. Take auto insurance for example. Most people purchase their auto insurance but never make a claim. In auto insurance, individual payouts are spread over a large group of people that don’t receive payouts. Health care insurance doesn’t fit this model. It is more like flood or earthquake insurance. When earthquakes happen, they are devastating to a community. Even for the people that carry insurance, the total payouts are greater than the amount paid into the pool. In health insurance, everyone pays in and also burdens the system at the same time. Since everyone uses it, it causes upward pressure on price. The entire health care market becomes unstable.

Insurance is designed to protect a person against major risk. Your auto policy protects you against wrecking your car, but it doesn’t cover everyday maintenance of your car. Health insurance protects is different because it protects you against both catastrophes and covers regular checkups.

Second, health care costs money, and it presents a moral question for our society. If anything, this makes the problem harder. A group of Oregonians believe that as a first world country, our citizens have a right to health care no matter what. But, we need to balance this optimism with the reality that health care has a price associated to it. Any health care reform that doesn’t address the structural problems with price will fail. Oregonians need to challenge health care reform that doesn’t address the structural price problems. We cannot afford the price of failed reforms.

Our current system of health care insurance creates upward pressure that causes prices to rise. Rising prices continue to force Oregon families off private health care. Health care is an unstable ship, and it will require an experienced hand not to over correct course.

Socialized Medicine Isn’t For Oregon

So, why can’t we just have the government pay for health care for everyone? Because conservatives have come late to the debate, the standard conservative answer of “Government doesn’t do anything well” shouldn’t get me off the hook here, so I am going to continue take this discussion further.

First, a socialized or single-payer model hides the true cost of health care. The cost that families struggle with now will just be moved to the state. Since we are the state, health care costs will get replaced by some sort of payroll tax. Even if the tax comes out of your paycheck, you still deserve to see the bill because a government run system has a real danger of hiding the true cost of health care. For all its problems, the current system has a certain amount of transparency to it. If costs are hidden, then there cannot be any accountability.

Second, price matters. On one hand, health care needs to have a stable price. But that is not all it needs. It still needs to have a price that requires people to write a check for it. A direct cost promotes ownership. Oregonians need to see that improving lifestyle choices can benefit their health and save them money. We want people to make responsible choices. Some sort of price helps keep non-emergency cases out of the emergency room. It keeps us from clogging up private practices with common colds. A price associated with care helps us maintain the balance between access and wasteful use.

Third, a socialized system is influenced directly by politics. Political influence causes feature creep. Feature creep is a term used in a computer programming project that describes features being tacked on, far past the planning stages, during the development process. Ask an acupuncturist, and state health care should cover alternative medicines. Ask nonsmoking activists, and state health care should cover smoking cessation. Ask a yoga instructor, and state health care should cover classes that promote living a healthy lifestyle. When you give control of health care to politicians, then you have additional pressure to add “needed” benefits which translate into higher costs.

Where Do We Go From Here?

The conservative answer is to work to stabilize the price in the market. If we can stabilize the price, people will be able to afford access to medicine. Republicans believe you need to deal with the price issue in order to address moral questions that health care poses. While slower to implement, a republican solution will be better for Oregonians because it has staying power.

The republican solution deals with a stable price which reduces the burden on families over time. Here are some of the policy solutions from Republicans:

Reform Medicare: Oregon needs to continue to lobby the federal government for Medicare reform. Currently, Medicare pays claims on a fixed amount that they set. It doesn’t pay for the actual costs of the services. For example, if the hospital bills Medicare $75,000 for a knee replacement. Medicare may only pay $65,000. The additional $10,000 gets passed on to private insurance and families through higher prices. This is the biggest reason why private practices continue to drop Medicare patients.
Train more nurses: Lane Community College turns away four out of five qualified nursing students. Oregon faces a nursing shortage because the college system doesn’t have the capacity to train the nurses we need. If Oregon hospitals cannot meet their staffing needs, they will hire contractor nurses that are paid a premium wage. When you don’t have enough nurses, it increases prices for private insurance and families.The state needs to work with community colleges to increase capacity for teaching nurses. A nurse taught in our community will find a good paying job, help control health care costs and give Oregonians jobs in nursing that are currently being given to out-of-state contractors. For the state, money spent on training nurses has a return on investment.
Health care saving accounts: A health care savings account is much like a 401(k). It is taken, tax free, out of your paycheck, but instead of saving towards retirement, you can use it to pay health care bills. Oregonians that use health care savings accounts receive a 30% discount because the account is tax free.Currently, Oregonians that use these accounts lose any money that isn’t used at the end of the year. We should change this so that every Oregonian can roll over the unused money until the next year. The money is for Oregonians, and they should be allowed to use it to offset health care costs. Money saved in these types of accounts will help protect Oregonians against catastrophic health care bills by allowing them to create a safety net.
Electronic health records: This appeared in Governor Kulongoski’s Health Care Progress Report. It hasn’t been implemented yet. The Governor’s plan was to work with the health care industry to move people to electronic records. The estimated savings was $400 million in increased efficiency.

While I just noted some of the fiscal conservative policy ideas, there are many ideas for improving health care. For example, Sen. McCain wanted to let you purchase health care across state lines to give families more options. Members of the Republican State Caucus have proposed websites to allow families to shop for health plans across the states.

Conclusion

Health care is one of the most complicated issues facing Oregonians. It is great that people feel passionate about providing access to all Oregonians. However, having access is a symptom of the problem. Unstable price is the problem. We need to work on addressing the price issue. It isn’t sexy, but stabilizing price will help people.

The republican solution starts with price. Republicans aren’t the party of “no”. They have important, well thought out ideas to add to the health care debate. They are business leaders in our communities that we can rely on to build partnerships and promote health care innovation.

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A prescription for Oregon’s Chronic Unemployment

Tue, 12 May 2009 01:39:21 +0000

Oregonians need jobs. Oregon has one of the highest unemployment rates in the county. Imagine that we filled a room full of a hundred Oregonians that wanted to be employed. Of those Oregonians, thirteen of them would be unemployed. When we ask economists to diagnose the cause, they will point to manufacturing base, agricultural industry, natural resources, and the high number of people that are moving into this state. All of which are highly impacted by national recessions. That is why we live with the chronic disease of unemployment.

Recently, I watched a clip of the legislature in session. In the clip, Phil Barnhart (D-Eugene) voted against a bill that was guaranteed to create jobs. His reason was that the most important thing the legislature can do is to keep funding the state government. The sacrifice that the bill would require was simply too much. Rep Barnhart would prefer to keep the money and use the state government as the engine of economic growth.

Unfortunately, Oregonians don’t have the luxury to choose not to sacrifice when its gets too hard. When Governor Kulongoski and the state legislature choose to raise taxes and fees, they hurt the economic prosperity of everyone. Oregonians deserve better than that and the state government owes Oregonians a better government. Understanding unemployment is not enough. We need the political will to value jobs. Here is why fiscal conservatism is the answer Oregonians are looking for:

We are all in same life boat.

I heard a radio advertisement by a group that is supporting the plan to raise taxes on hospitals to fund health care reform. The ad says that hospitals pay their CEO’s millions, but claim to be unable to afford more taxes. The group is implying that hospitals are greedy, and rich CEOs are keeping Oregonians from having health care.

It is a perfect example of the philosophy that governs this state. Salem wants us to believe that we could have more education, jobs, and social benefits if “those rich people” paid for it. Are these unnamed rich people hiding so much money in their mattresses that it would employ 13% of this state’s workforce? If they are, it must be because they can afford a really big mattress.

There is no such thing as a free lunch. Everyone will end up paying these new taxes and fees at some point. Rich people and poor people pay the same amount of beer tax regardless of what beer they like. Increased taxes on corporations and small business always get passed onto customers or get offset by payroll reductions. We are in this economic mess together.

Not everyone likes bananas

A sixth grader asked me, “Why can’t we just go to the store and get what we need for free?” I was teaching a junior achievement class about global marketplaces at the time. At once, I went to my trusty props for the class which are bananas and chocolate. I handed her a bunch of bananas, and thanked her for coming into the store for the day.

I thought to myself what a great question; it illustrates a truth about government. If we rely on the government as an economic force, then they get to decide how resources are divided up in Oregon. The government doesn’t know the likes and dislikes of families. Let’s face facts, Governor Kulongoski doesn’t know if I like bananas or chocolate. Oregon families need to be the ones to decide the type and quantity of goods they buy. They need to be the economic force in this state. When we trust families, our economy doesn’t create things that people don’t want.

Equity through access.

A fiscally conservative government allows equal access to government services regardless of economic class. However when fees are raised, it will begin to price people out of participating in parts of society or using services. As hunting licenses get more expensive, it will be the lower and middle classes that choose not to hunt. As we continue to go down this road, a gap will begin to form between people that can afford to get licenses and people that can’t access those services but don’t qualify for benefits. Need another example; try talking to a college student of a middle class parent. You will find a family that makes too much for a PELL Grant, but makes too little to comfortably sending their child to college.

A government that is small can control its fees. When you control taxes and fees, you give people access to the economy. The economy can’t grow if Oregonians can’t afford the licenses to open businesses. We can’t enjoy movies if the gas tax is so high that transportation is unaffordable. Every dollar that is siphoned into the government can’t be invested to create jobs. If the economy is a pie, Salem wants to cut the pie a different way. Fiscal conservatives want to bake a bigger pie.

The state economy is not the national economy

For six months, we have watched economists on ever major news station. A majority of them are saying that we should rely on Keynesian economics to get the government going again. Keynesian economists believe that government investment and spending is the best way to grow the economy. We shouldn’t rely on this model in Oregon because the federal government can spend into deficits but the state is required to balance its budget by its constitution.

If we wanted to duplicate President Obama’s stimulus plan in Oregon, the state would actually have to find the funds to pay for it. Given that, Oregon is facing a 4 billion dollar budget shortfall; it would require the state raise taxes to pay for the investment plan. The only logical thing to do is to close the shortfall we have already with cuts to keep money in the economy.

Our house is in disorder

I was listening to a NPR education podcast that quoted the Superintendent of the Los Angeles Unified School District. He was talking about the shortfall in Los Angles. He blamed the decrease in revenue, decrease in enrollment, and an increase in the amount of services provided. He was describing a structural deficit in the school district.

In Oregon, we face a structural deficit as well. Funding for state programs is never stable. Yet, we continue to grow state government without addressing the fundamental problem of funding. The Governor seems content to wander aimlessly between revenue forecasts without addressing the basic cost structure of government. Governor- The Oregon State Government costs too much to run.

In a recession, Oregon businesses are faced with these same problems. If costs are too high, businesses need to change how they do business or die. Maybe, Oregon should change how it does business.

We need this type of bold leadership and innovation. Under bold leadership, we will question every cost. We will challenge department heads to reduce overtime, plan staffing better, and freeze wages. Under innovative leadership, we will look to improve processes and get more efficient. The state needs to perform its essential duties with less, and we can’t accept anything else. Those are the type of people that we need to find for Salem. Fiscal conservatives can provide this type of leadership.

Conclusion

Fiscal conservative philosophy represents a chance to build a true coalition in Salem. It is a philosophy that business leaders, independents, social conservatives, and moderate democrats can all sign up for.

Oregonians are resilient. Regardless of who is in power, we are going to beat this recession. But, we need to stop just accepting that Oregon will struggle with chronic unemployment, and have the political will to change course. Oregon needs to be rebuilt with economic prosperity as a foundation. It takes real leadership and discipline to harness Oregon’s innovation and economic potential. If you want real change in this state, you can depend on the fiscal conservatives to deliver.

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The variable mileage fee: another show by the one trick pony

admin — Tue, 21 Apr 2009 22:56:53 +0000

Do you think it matters that House Bill 2120 (the GPS vehicle mileage fee) is moving the state towards replacing the gas tax? I used to participate in policy debate in high school; it taught students that definitions and word choice can have a large impact on policy.

HB2120 uses a mileage fee because a tax requires 60% of the state legislature to approve it. Under HB2120, the Transportation Utility Commission (TUC) created by HB2120 can vary the fee without the legislature approving it. The gas tax has been controversial for years. Now, the Governor wants to raise the “tax” (I mean fee) by changing the rules not by changing people’s minds.

Besides generating more road funds, Governor Kulongoski is trying to use the fee to achieve several additional policy goals. First, he is trying to stabilize state road funding. Second, he wants Oregon to be able to raise and lower the fee to solve congestion. Third, he wants to be able to control green house emissions. Is a mileage fee going to realistically be able to achieve three separate policy goals when the gas tax was only able to achieve one? To answer that, I want to address each of his goals individually.

Can a mileage fee stabilize road funding?
Governor Kulongoski believes that the gas tax is outdated. Over the last ten years, gas revenues have been steadily decreasing. The reason is fuel economy improvements. When you use a hybrid car, you purchase less fuel to drive the same amount of miles. Thus, the state is receiving less money to maintain the roads.

Under a mileage fee, Oregonians would save less when they purchase hybrids and other fuel efficient cars. Basically, the Governor wants you to purchase the more expensive hybrid vehicles, but doesn’t want your family to save any money on gas.

On its own, the fee does stabilize funding. However, please keep in mind as you continue to read that the Governor can’t both claim to stabilize funding for roads, and to solve congestion by varying the funding.

Can a mileage fee reduce congestion?
Governor Kulongoski wants to use the variable mileage fee to reduce congestion on Oregon’s roads instead of building additional capacity. This is similar to what New York and London do with a congestion tax. During rush hour in Portland, it would be more expensive to drive your vehicle. By using this fee, we move our focus away from expanding capacity or improving efficiency. Their ultimate goal is to make it too expensive to drive. Expensive enough that you would rather use mass transit. We live in a relatively rural state. Our prosperity is linked to Oregonian’s ability to access affordable roads. But, the governor wants to deny working families’ access to Oregon’s highways because they won’t be able to afford it.

A variable fee has another serious issue when it comes to fixing congestion. Governor Kulongoski is depending on Oregonians changing their behavior based on the mileage fee. If the TUC thinks it is the wrong time for you to drive, then the Governor wants your trip to be as costly as possible. However, a fee that changes works against this goal. If the public doesn’t have good access to what the fee is at any given time or day, how can they make the best decision about when to drive? Under a gas tax, as opposed to a fee, the price to use the road is stable and predictable and therefore more likely to influence behavior. Will Oregonians make the time to look up the fee before deciding whether or not to drive?

Can a mileage fee reduce green house gases?
The Governor’s choice to give authority to the TUC to reduce green house emissions is simply an example of poor management. My last post was on cap and trade, and how we were going to administer greenhouse gases with an Environmental Quality Commission. Dividing up responsibility for the same task between two administrative commissions is a poor use of resources.

Additional concerns
There are additional concerns with this bill related to the GPS unit. Obviously, the most important of these is the privacy issues that the Governor should be concerned about violating. Another issue is that the technology necessary to implement the mileage fee doesn’t currently exist. Who will pay for developing this technology? Also, how will it apply to out of state travelers? How will it apply to Oregonians traveling out of state?

In conclusion
In the last year, we have seen the Governor roll out a series of complex legislations. Each of these plans relies on the same formula: establish a new commission, charge new fees, add new administrative rules, and have the legislature give away its oversight and regulatory power. Oregon’s problems are complex, but implementing new bureaucracy doesn’t represent the solution. Governor Kulongoski is trying to fix our crumbling house by putting a heavier and heavier roof on it. I think he is addicted to bureaucracy. Governor, the first step is to admit you have a problem.

We need to address the structural problems that keep us from stable economic growth. We should be focusing on smaller, simpler solutions that will impact Oregonian’s lives.

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Is cap and trade right for Oregon?

admin — Mon, 06 Apr 2009 07:14:41 +0000

The Oregon Legislature has taken up Senate Bill 80, which would establish a cap and trade system in Oregon. Before we can talk about Senate Bill 80, I would like to spend time talking about what exactly cap and trade is. Do you understand how cap and trade works? If you do, then go ahead and skip to the issues with cap and trade section. If you don’t, I have included a brief explanation of cap and trade.

What is Cap and Trade?
Imagine Oregon has only two firms in its economy. Firm A is a high-tech manufacturing firm that produced 30 tons of carbon last year. Firm B is a coal fired power plant. The facility is older, and it produces 70 tons of a carbon per year. The government looks around, and sees the economy produces a total of 100 tons of carbon a year.

The government then decides that it wants to reduce the total carbon emissions by 10% or 10 tons a year. On January 1st, it issues credits to both firms that are 10% less than they received in the previous year. Firm A receives 27 credits and Firm B receives 63 credits. This is called the cap because the state is capping the total amount of carbon that is allowed to be produced.

The trade portion comes from the difference in the types of firms. Since Firm A is a high-tech firm, they can make investments in technology that would reduce their carbon output to 20 tons/year at a reasonable cost. This leaves them with 7 credits left over. Firm B is large enough, and old enough that pollution improvements are very expensive. Without improvements, Firm B is 7 credits short. Under a new cap and trade system, Firm B can purchase the 7 credits from Firm A in a newly created carbon market.

The goal of a cap and trade system is to reduce emissions at the cheapest total cost possible. In this example, Firm A was encouraged to become cleaner because it can profit by selling the unused credits to Firm B. Firm B is offered a cheaper solution than actually cleaning up its own mess.

This is model that the Europeans started with, but they recently moved away from this model because the market for carbon crashed. The model they are using now is one in which companies purchase the pollution credits directly from the government. This model isn’t really cap and trade. It really just asks companies to purchase permits. It is more like a carbon tax.

Issues with Cap and Trade
I want to go through a few issues, as I see them, with introducing cap and trade regulation in Oregon.

It would clean-up already clean industries: The results of cap and trade are for cleaner industries to improve their emissions level, and dirty industries to purchase credits. As a policy, it ignores efforts to improve emissions from the dirtiest industries. Shouldn’t we be passing a policy that promotes innovation, clean-up, or improvements in older buildings and businesses?
It would promote industries moving out of Oregon: What is to stop businesses in Portland from moving to Vancouver to avoid cap and trade? If you are a manufacturing company in Oregon, it may be more cost-effective to move out of state to some place that has a more friendly business environment.
More than just businesses can purchase carbon credits: When we create a carbon market, the market will not be limited to just businesses. For example, a global warming group could purchase carbon off this market to keep it from being used. Oregon businesses would then be competing for fewer credits than the state’s reduction goal.
Cap and trade requires financing: Look at the current economic conditions. Cap and trade requires that companies make improvements to factories, and vehicles. Is there enough financing available in the economy for even healthy companies?
It is complicated: There isn’t a widespread understanding of what cap and trade is, and how it works. If the average Oregonian doesn’t understand this, then we need to find a simpler policy. Complicated policy isn’t always the best policy.

Senate Bill 80: Oregon’s Cap and Trade Bill
Besides the above listed issues with a cap and trade system in general, SB 80 is worth discussing on its own. The basics are that SB 80 is directing the Oregon Environmental Quality Commission to write the rules for a cap and trade system by the end of 2010, and to report to the legislature in 2011. The goal for implementation is going to be July 2011.

Senate Bill 80 uses administrative rules to put in place the cap and trade system. Administrative rules are a lot easier to change than Oregon law. It means that the Environmental Quality Commission can make adjustments that affect our families and jobs, but we don’t get to elect anyone on that commission. If someone is going to make policy that causes me to lose my job, I want to have elected that person. When the economy needs leadership most, the legislature is giving its obligation to make laws to the Environmental Quality Commission.

The part of this that makes me the most uncomfortable is that the legislature is being asked to give up its rights without seeing anything. Currently, there are no rules for how cap and trade would work in Oregon. There is no economic impact study. Governor Kulongoski has simply asked the legislature to okay the idea of cap and trade without the how. It’s the equivalent of the legislature buying a house with the Governor’s promise that he will let them know what the price is at a later date. Look at the current economy, and you will see where this type of irresponsibility has gotten us.

Where do we go from here?
The leadership in Salem needs to realize that just because Europe uses cap and trade doesn’t mean we have to. I know that greenhouse gas reduction is important to a lot of people, but the legislature shouldn’t act so quickly as to be irresponsible. The legislature needs to table SB 80, and ask the Governor for a complete piece of legislation to approve. The legislature shouldn’t approve the idea of cap and trade. They should be demanding to see a complete set of regulations, the economic impact study, an evaluation of alternatives including a “do nothing” option, and a time line to implementation. The legislature needs to be approving what parts are going to be controlled by administrative rules and what is actually going be controlled by the legislature. The legislature could then hold hearings where Oregonians and businesses can comment specifically to the impact of this legislation.

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