One reason we have Medicaid is because most Americans believe insurance coverage is necessary to obtain health care. The ACA reinforces this bias by penalizing employers who do not offer insurance and fining individuals who do not obtain insurance. While there is a place for third-party insurance in health care, employer-based insurance, in particular, has almost completely undermined the U.S. health care market by training Americans not to approach health care with a consumer mentality that balances price against quality.

Hospital pricing is nontransparent. Health care pricing, in general, is nontransparent because insurance companies (along with Medicaid and Medicare) are the largest purchasers of health care. Most individual consumers simply do not care how much their health care costs because their insurance provider is paying the bill. Those few who do pay out-of-pocket are often charged exorbitant prices, with one recent study finding charges more than 10 times the amount allowed by Medicare, with “a markup of more than 1,000 percent for the same medical services.” “Because it is difficult for patients to compare prices, market forces fail to constrain hospital charges,” conclude the authors.

Fixing health care will require creating a market that incentivizes quality care at a lower price. Lawmakers should promote policies that encourage consumers to pay cash for health care, or to at least begin to ask about price. Three policy reforms, in particular, can unleash the power of pricing in health care: Large Health Care Savings Accounts (HSAs); direct primary and surgical care; and comparative shopping incentives.

An HSA is a tax-advantaged medical savings account that, under federal law, must be paired with a high-deductible health insurance policy. Because HSA holders have high deductibles, they tend to pay cash for minor services. If HSA contribution limits were higher, more consumers could use their HSA to pay for major medical procedures. While Mississippi can’t increase the federal limit, it can increase its own. Much like Singapore, federal policymakers could also create subsidized HSAs as an alternative to Medicaid.

State lawmakers should also incentivize direct surgical care. In 2015, Mississippi became one of the first states to protect the contractual right of physicians to provide direct primary care, also known as “concierge care.” Concierge care patients pay a monthly fee to a physician in exchange for a predefined set of benefits, such as unlimited doctor visits. The next step is to expand the direct payment model to surgical care, as is being done at the Surgery Center of Oklahoma. At least one public health plan (Oklahoma County) and numerous private employers are bypassing the traditional insurance model and partnering with the center, which bills itself as a “free-market loving, price displaying, state-of-the-art facility.” The center lists on its website all-inclusive prices for hundreds of procedures, attracting customers from around the world. It does not accept insurance. The center’s prices are about 1/6 that charged for comparable procedures at local nonprofit hospitals and lower than what Medicare or Medicaid would pay.

Finally, even people with traditional insurance can be encouraged to comparison shop. Some states have experimented with mandatory pricing transparency without much success. The missing element is to provide an incentive for consumers to actually shop around. New Hampshire is seeing success by using an app that enables state employees to compare health care pricing. If an employee elects to use a less expensive provider, he gets to keep some of the savings. The rest accrues to the state. In three years, the New Hampshire State Employee Health Plan has saved $12 million, with $1 million going back to shoppers. In 2017, Maine also instituted incentivized shopping for small-group health plans.

The reforms described above would benefit all consumers by using the power of pricing to deliver affordable, quality care.

This is an excerpt from Medicaid: A Government Monopoly That Hurts the Poor by Jameson Taylor. It was published in Promoting Prosperity in Mississippi.

Human nature is prone to look at the short-term, rather than plan for the long-term. We try to stop immediate pain without considering the pain we — or worse, our children — will face later.

This is perhaps the most challenging task for government officials who want to do what is right and best for their constituents, their state, and their country. It goes to the core of what it means to be a statesman—a steward of the foundation of freedom. So many ideas that sound good and will help people in the short run actually do harm in the long run.

One of the most devastating examples of unintended consequences is our welfare system. By “welfare” we mean any program in which the government takes money from one person (the taxpayer) and gives it to another person who has not earned it. This could be given to the recipient directly, by check or debit card, or indirectly, by having the government pay for products or services on their behalf.

There is no doubt that many people have had their immediate needs met by government welfare programs. The impetus for those programs was a genuine concern for those whose need for food and medical care were not being met. Families, neighbors, churches, and communities worked hard to help each other meet those needs, but still there were some people and some needs that fell through the cracks. As a result, there developed a prevailing notion that the government needed to step in to fill those cracks, or at least create a “safety net” underneath them. It all sounded so good, and there were real needs that were met.

However, the long-term negative impact of those programs is immense. By targeting financial assistance to low-income women with children, the programs contributed to the perception that husbands and fathers were no longer needed, at least financially. By devaluing marriage as the starting point for raising children, they helped launch an alarming escalation in the number of children born to unmarried mothers, resulting in single-parent families and, ultimately, entire neighborhoods where children would never see an intact marriage.

Because children in single-parent homes are highly likely to live in poverty, it’s clear that the very system designed to help the poverty-stricken has in many ways led to more poverty, not only financially but relationally. That system also helped create an atmosphere of “entitlement,” the idea that “merely by being alive one is owed costly things at other people’s expense,” as one writer put it.

The welfare mentality extends to people who would give to meet the needs of the poor, if they didn’t think the government was taking care of them. In other words, the more government steps in, the more private individuals and organizations step out. This results in new pressure for government to fill that new void, creating a perpetual cycle of more government provision and fewer relationships that would provide accountability, emotional support, and spiritual support. Before government programs were so widely available, that type of additional support accompanied personal assistance - because it was personal assistance from one person to another, not help from a bureaucracy. The problem with government programs (and now some non-government programs) is that they help people while they are in their poverty, when the real need is to lead them out of poverty.

This is an excerpt from Governing By Principle, MCPP’s ten principles to guide public policy. 

While we tend to think of our wealth in dollars, true wealth has nothing to do with paper money itself. Total wealth in a society is not a fixed pie waiting to be divided among us. Wealth, instead, is constantly being created by each of us; the ‘economic pie’ grows each day. Wealth is created through both production and exchange. An example will help to illustrate.

Suppose that two neighbors trade a bushel of hay for a load of wood. Both are now better off; after all, they were only willing to trade with each other because each wanted what the other person had more than what they traded away. Both have become wealthier in every sense of the word even though no new money has been printed, nor existing money passed around.

On an everyday basis, money only represents wealth to people because it measures the quantity of these trades—or purchases—we can undertake when we exchange money that we earn from producing at our jobs for the goods and services produced by others. A man on a deserted island with $1 million is very poor indeed without anything to purchase with the money. On the other hand, a man deserted on an island with no money, but a group of other people, will be much wealthier because of his ability to produce and exchange with others—even in the absence of paper money on the island.

Taking the example further, suppose a group of island castaways decided that half of them should dig holes and the other half should fill them in. After a full-day’s work, they would have nothing to show for this effort; nothing was produced. Holes were dug and filled again. No wealth was created, even though people worked very hard.

Wealth would be created if instead half the tribe collected coconuts and the other half fished. Now they would have dinner. Suppose one castaway invents a new tool that increases the number of fish she can catch. This invention would further increase wealth; there is more food at the dinner table. In fact, the new tool might increase productivity so much that only half as many castaways are needed fishing, and the extra castaways are free to labor at a new task such as building a shelter, further increasing wealth. As these examples illustrate, there is a close link between prosperity, or ‘wealth,’ and the quantity, quality, and value (or usefulness) of the output produced. Prosperous places—those with high levels of income and wealth—become that way by producing large quantities of valuable goods and services.

One difference between this castaway analogy and our daily economic lives, however, is that we might anticipate the castaways sharing the fruits of their labor, for example, splitting the fish caught that day. In a large and advanced economy it no longer works this way. Instead, each of us gets paid in dollars, or money income, for what we produce at our jobs. We then go to stores and exchange that money for the goods and services produced by others at their jobs.

The amount of income we earn is determined by both the prices people are willing to pay us for what we are producing and how many units of it we can produce. For individuals, states, and nations, income is determined by the value of output. A worker with a backhoe will be more productive than a worker with a shovel and will earn more as a result. An entrepreneur producing apple pies will be more prosperous than one producing mud pies because people place a higher value on apple pies (and thus are willing to pay more for them).

This logic leads to one obvious, and simple, litmus test that can be used to decide if a suggested new policy or law is good, or bad, for the Mississippi economy—does it increase, or decrease, the net amount or value of output (of goods and services) produced in the state. Regulations, such as those adopted in some European nations for example, which restrict the workweek to 35 hours clearly result in reduced output, and reduced standards of living as a result. For a tax-funded government program, this principle must be applied by looking at the net change in output—that is, one must properly account for the reduced output caused by the taxes or other resources necessary to fund the policy.

One of Adam Smith’s insights in his previously mentioned 1776 book, An Inquiry into the Nature and Causes of the Wealth of Nations, is that labor productivity, the main determinant of wage rates, is increased through specialization and the division of labor. When labor is divided into specific tasks, like workers in an assembly-line, they can produce more as a group than could have been produced individually. The same holds true when individuals specialize across different occupations and industries.

However, according to Smith, our ability to specialize, thereby increasing our productivity and enhancing our wages, depends on the size or ‘extent’ of the market to which we sell. When consumer markets are larger in size, smaller specialized stores can survive that could not have survived in a smaller marketplace. Oxford’s population, for example, is able to support two general purpose pet stores, each carrying a broad line of products. In a place like Jackson, however, a dozen or more such stores can flourish, with a greater extent of specialization, some focusing on saltwater fish, while others may focus on birds and other reptiles. Increasing the size of the markets to which Mississippi’s goods and services sell could increase wealth by allowing Mississippians to specialize more specifically in areas where they do best.

Population growth in metropolitan areas would be one way of increasing market size. But another way to increase market size is to enact policy reform that better enables the businesses in Mississippi to sell and compete in larger national and global marketplaces and expand their customer base. To compete in these markets Mississippi businesses need to be on a level playing field with their competitors. Mississippi’s taxes and regulations are a competitive disadvantage to firms located in the state. The higher prices Mississippi businesses must charge for their products greatly limits the markets in which they can compete. If these tax and regulatory costs could be reduced through policy reform, firms could offer more competitive pricing, increasing their market shares and the extent of their markets. This would allow both the businesses themselves, and their workers, to become more specialized and earn higher incomes as a result.

In addition to specialization and the division of labor, capital investment also increases labor productivity. Higher levels of education (more ‘human capital’) and better machinery, buildings, and tools to work with (more ‘physical capital’) can help our citizens produce more output and generate more income. Recent capital investments in the auto industry provide a good example of this. Modern robotics and automation allow workers to position, spin, and move the parts they are assembling much more easily and quickly. With this new capital equipment workers are more productive and earn higher wages as a result.

But new factories, better machinery, and equipment are expensive. They require large investments in assets and property. In Mississippi, taxes (such as property taxes on capital equipment), regulations, and lawsuits decrease the return from capital investment and thereby lower the inflow of capital into the state. And Mississippi has among the highest property taxes in the nation on a representative manufacturing facility’s equipment and machinery. This results in Mississippi’s workers being less productive—and earning less as a result.

The income a state produces from its output depends not only on how much is produced (which can be expanded through specialization, division of labor, and capital investment), but also on the price per unit, or value, of the goods and services produced. A company trying to sell mud pies will generate less income than one producing apple pies. Income can be increased not only by increasing labor productivity, but also by raising the value per unit—or ‘value added’—of Mississippi labor.

However, the answer to the question of which specific uses of Mississippi’s resources create the most value, and thus income, is not obvious. In fact, the answer is so complex that it is not something any one person or group of people knows, not even a group of expert economic planners. It is an answer that must be discovered by individuals in the private sector through the decentralized process of entrepreneurship, a process of private trial and error. This is the topic of our next section.

Before moving on, however, let us complete our discussion of the process of wealth creation started above. As we pointed out, in a real-world economy things work a bit differently than in the castaway example because we must first earn income by producing goods and services. Only then do we use that income to acquire the goods and services produced by others. The ability to turn our income into prosperity and wealth through exchange is the second important part of this process.

As consumers, we turn income into wealth through the acquisition of goods and services like food, clothing, shelter, and recreation. In our shopping, we search out and negotiate with potential sellers from around the globe. We spend time and effort on this search because maximizing the value we get from our limited budgets makes us wealthier. Finding a product we want to buy at a lower price increases our wealth because we now have more money to spend on other things.

This is the reason why restrictions on the ability of citizens to freely engage in trade with people from other geographic areas through tariffs, quotas, taxes, and other restrictions, destroy wealth. Individuals cannot generate as much value and happiness from their limited incomes. Not only are there fewer options to select among, but also the taxes and regulations make things more costly for us to purchase, reducing our ability to stretch our budgets and turn our income into wealth. This is one reason to avoid adopting policies that interfere with, tax, or restrict Internet purchases.

Our well-being is the result of both production and exchange. Becoming more prosperous can be accomplished by increasing the amount of wealth created in the state through: (1) increasing in the quantity, quality, and value of goods and services the state’s citizens produce, and (2) increasing the number and value of the voluntary exchanges the state’s citizens make, both with other Mississippians and with people from around the world.

Policy reform that lowers taxes and regulations can help achieve these goals because it results in: (1) increased specialization of labor and increased capital investment—increasing labor productivity and wages; (2) increased ability of residents and businesses to buy and sell with individuals from across the state, nation, and globe; and (3) more private sector entrepreneurship that allows the decentralized decisions of workers and business owners—rather than government planning—to help search out and identify the ever-changing bundle of goods and services that creates the most value and income for Mississippi.

This is an excerpt from Why Capitalism Works by Russell S. Sobel and J. Brandon Bolen. It was published in Promoting Prosperity in Mississippi.

Mississippi Center for Public Policy recently signed on to a national letter urging the United States Department of Education to rescind a “Dear Colleague” letter from the Obama administration regarding school discipline.

This letter warned school districts that received federal funding against disparate outcomes in the implementation of their school discipline policies.

“As attorneys in the conservative movement, we believe that the suspension ‘Dear Colleague’ letter is not only poor public policy – studies have shown it has a negative impact on academic performance – but also an illegal exercise of federal administrative power and an unjustified intrusion into state and local matters," the letter said.

You can read the full letter below. 

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The Mississippi Justice Institute (MJI) won its second Open Meetings Act case in two years in Lauderdale County Chancery court on Friday. The case was filed on behalf of Tommy Williams, a Lauderdale County resident, who challenged the Lauderdale County Board of Supervisors for violating open meetings laws. The Lauderdale Supervisors dropped their appeal on Friday, meaning the ruling that they held illegal, closed-door meetings to make decisions about borrowing money through bonds is final.

“This is an important win that should send a message around Mississippi: don’t violate the ethics and open government laws, or responsible citizens and the Mississippi Justice Institute will stand up for their rights and challenge you,” said MJI Director Shadrack White.

Meridian attorney Stephen Wilson and White represented Williams in the case, Thomas E. Williams v. Lauderdale County Board of Supervisors. Williams blew the whistle when Lauderdale Supervisors purposefully met in small groups to avoid creating a quorum. By not creating a quorum at any one meeting, Supervisors believed they could avoid the requirements in the Open Meetings Act that said those meetings had to be open to the public.

“Mississippians deserve transparent government. Citizens have the right to see, in flesh and blood, how their leaders make decisions,” said White. “This case reaffirms that principle.”

“MJI was successful in this case thanks to Tommy’s courage and thanks to a strong precedent set in a previous MJI case on the Open Meetings Act,” added White. Last year, MJI won an Open Meetings Act case involving the City of Columbus at the Mississippi Supreme Court. The case set a critical precedent that politicians cannot hold small meetings for the purpose of sidestepping open meetings laws.

“Meridian attorney Stephen Wilson is a brilliant lawyer and also deserves a great deal of credit for driving this case to completion,” said White.

The Open Meetings Act states that all official public meetings of a government body where a quorum is present should be open to the public, with only a few exceptions. Now courts have bolstered the law with two rulings that say politicians may not pre-arrange smaller meetings with the intent to avoid the requirements of the Open Meetings Act.

The Lauderdale Chancery Court’s ruling upholds an initial ruling by the Mississippi Ethics Commission in this case. “The Ethics Commission should be commended as well here,” said White. “They did excellent work uncovering the facts of this case and upholding transparent government.”

In its two year history, MJI has built a track record of success, particularly in transparency and ethics laws cases. MJI has also sued Jackson over its onerous regulations on new taxi businesses, has successfully defended the rights of Mississippi charter school parents in a landmark constitutional case, and has filed a complaint challenging Natchez’s violation of transparency laws.

Every nine seconds a student in America drops out of school, often rendering that young adult unemployable and relegating him or her to a life with few opportunities and necessary skills. This has a real cost not just for one individual, but for his or her family and every taxpayer in the country.

Consider this: High school dropouts are nearly three times more likely to be unemployed than college graduates. Additionally, among those who are employed, they will earn, on average, about $8,000 a year less than high school graduates and $26,500 less than college graduates.

Additionally, two-thirds of the prison population in state, local, and federal prisons are made up of high school dropouts. The nation could save as much as $18.5 billion in annual crime-related costs if the high school male graduation rate increased by just five percent. If the number of dropouts was cut in half, the nation could save $7.3 billion annually in Medicaid savings, $12 billion in heart disease-related savings, $11.9 billion in obesity-related savings, $6.4 billion in alcoholism-related savings, and $8.9 billion in smoking-related savings.

On the other hand, increasing the graduation rate to 90 percent for one year would create more than 65,000 new jobs and boost the economy by nearly $11 billion. And the graduation rate has been increasing over the past several years. Both Mississippi and the United States saw record high four-year graduation rates for the 2014-2015 school year of 78 and 83 percent, respectively.

But what does this mean? More people are graduating from high school, but is the United States lowering the bar rather than improving academic performance? The Organization for Economic Co-Operation and Development recently reported that American students ranked 25th out of 72 countries when tested on topics in science. A Pew Research study found that American students ranked 38th out of 71 countries when tested in math, reading, and science.

The National Assessment of Educational Progress, or NAEP, which bills itself as the nation’s report card, found that only 40 percent of fourth-graders, 33 percent of eighth-graders, and 25 percent of 12th-graders are “proficient” or “advanced” in math.

Mississippi has seen some recent progress as it was the only state in the nation to show significant increases in both 4th grade math and reading in 2015 on the NAEP, which arguably offers the best apples-to-apples comparison for student performance across the country. However, Mississippi still generally falls among the bottom five states in all measures as the state performed significantly lower than the National public average in 4th and 8th grade math and science.

In fact, Education Week’s Quality Counts report rated Mississippi as having the worst education system in the country, ranking it 51st in educational quality in 2014; even putting Washington, D.C. ahead of the Magnolia State. It is clear that something is not working and dramatic improvements need to be made. Indeed, the United States has much work to do to catch up with the rest of the world, and Mississippi has much work to do to catch up with the United States.

Is Money The Issue?

When the debate about education woes arises, a large contingent is guaranteed to make one, popular argument: District schools need more money. Many claim that lack of funding is the root of all problems and if schools had more money the results would follow. Yet Mississippi and the United States have been throwing more money at the problem for more than four decades.

In Mississippi, more than 50 cents for every dollar collected in the state’s general fund is spent on public education. In 2015, the state spent over $9,700 per student when including state, local, and federal dollars. This is an uptick from around $8,000 just a few years prior and is part of a larger trend. Adjusted for inflation, spending on education in Mississippi has increased by 54 percent since 1992. This large increase occurred while student enrollment decreased by 3 percent and teacher salaries increased by only 2 percent.

Similar increases have occurred nationwide. Going back to 1970, inflation-adjusted spending on education has increased by 192 percent. However, the scores for 17-year-olds on the Long-Term Trend NAEP Assessments have remained flat. A 2016 report from the United States Department of Education showed that a School Improvement Grants (SIG) program over the past decade pumped $7 billion into education with zero impact on student achievement.

Designed to help failing schools, the SIG provided no academic gains for the students it was intended to help, and failing schools that received multi-year grants ended with results that were no better than similar schools that did not participate in the program. Only the federal government can spend $7 billion with nothing to show for their effort. The country is spending considerably more while showing little in the way of academic progress.

Mississippi Center for Public Policy President & CEO Jon Pritchett announced today that Brett Kittredge has been named the new Director of Marketing & Communications for MCPP.

In this new position, Kittredge will oversee all media relations and marketing and communications needs for the office.

“We’re building not only a powerful policy and justice organization here, but also a media content shop where the leveraging of digital and traditional media is essential,” Jon said. “Brett has demonstrated that he has the strategic understanding and the tactical skills to allow us to communicate and market our ideas across the state and nation. We’re delighted to add another smart, dedicated conservative to our team.”

Kittredge previously served as Director of Communications for Empower Mississippi. Prior to that, he served in similar roles for the Mississippi Republican Party and the Office of the State Auditor.

“I am excited for this opportunity,” Brett said. “MCPP has a proud history of advancing the ideals of liberty and freedom in Mississippi, and I am ready to build on that legacy and take our communications platforms to the next level and spread our message of real conservative ideas with policy makers, the media, and the public.”

Kittredge received his Bachelor’s Degree from the University of Mississippi and his Master’s Degree from Abilene Christian University.

Today the U.S. Supreme Court ruled in favor of the plaintiff in an important First Amendment case, Minnesota Voters Alliance v. Mansky. Mississippi Justice Institute Director Shadrack White partnered with other organizations from around the country to file an amicus brief in the case in favor of the plaintiff.

“This is an important victory for freedom of speech today,” said White. “Conservatives and libertarians should be ecstatic over the recent rulings coming out of our Supreme Court. It was a privilege to be able to file an argument in this case supporting the winning side.”

The Mansky case challenged a Minnesota law that barred apparel that had ideological messages on it in polling places. MJI and other organizations argued that the Minnesota law violated the First Amendment.

“Minnesota tried to argue that this case was about protecting voters in the voting booth, but Minnesota’s law was being enforced in a way that favored some ideologies over others. For example, Minnesota admitted that they would ban shirts from a polling place that had the words ‘Don’t Tread on Me’ or the text of the Second Amendment or ‘All Lives Matter,’ but they would allow shirts with a rainbow flag or shirts that said ‘Parkland Strong.’

“That sort of inconsistent enforcement is exactly why we have the First Amendment: to protect the right of a person to speak even if the government happens to disagree with you or when someone says they’re offended by it,” said White. “You should not be punished for wearing a conservative or libertarian message. Americans should be thankful that this Court takes freedom of speech seriously.”

Click here to read the amicus brief from MJI and its sister organizations.

The Tupelo city council is considering regulating food trucks in the city but not for reasons you may suspect.

It is not because the food trucks are unclean. It is not because they are unsafe. There hasn’t been any report of a massive wave of citizens becoming ill after enjoying a meal from a local food truck.

And the food trucks aren’t operating illegally. They still go through the same health and safety regulations of a traditional restaurant.

According to a recent article in The Northeast Mississippi Daily Journal, city leaders are looking to regulate food trucks as part of an effort to protect brick-and-mortar restaurants within the city limits.

Picking winners and losers

The food trucks are simply competition, and apparently the city of Tupelo is interested in favoring one type of industry over another.

We all agree that there are general standards than any business that is serving food must meet. That is already being done in Tupelo. No cities, however, should be in the business of saying you must be located a certain distance from an established restaurant. Or you can only have food trucks for certain special events or weekends.

City leaders should encourage food trucks. They should be proud that food trucks want to be in their city. A look around any growing or dynamic city across the country will show an emerging food truck sector. That should be celebrated, not overregulated.

This is about more than food trucks

We should be encouraging people to become entrepreneurs. To follow their passion. This extends beyond just food trucks and touches every area of our economy.

Too often government leaders just think about what already exists or what is already providing a tax revenue. And then we feel threatened if competition rises up. As anyone who has ever been part of the private sector will tell you, competition is a good thing. Businesses grow (or fail). And consumers win.

The reason taxis have fought Uber or Lyft is not because you or I can’t drive people to where they want to go. Picking someone up at the airport and driving them to a hotel is not some proprietary work that an untrained professional cannot do. Rather, it is monopoly one sector of an industry had. They lost that monopoly because, like all monopolies, innovation, risk taking, and customer service was absent from the taxi industry.

Rather than get better or more competitive, monopolies reach out to the government to protect them. We saw this when the ridesharing economy was born and expanded. We have seen it with the homesharing economy. We see it with food trucks. And I am certain we will see it in other areas of our economy in the future.

Unfortunately, as we have witnessed in almost every case, the government mindset has been to overregulate and protect what it is already there. To choose winners and losers.

That should not be the job of government. That should be the job of the individual citizens. Because if they don’t like what food trucks in Tupelo are providing, the market will decide who the winners and losers are. We don’t go to government websites to choose which restaurant or hotel we will visit. We go to peer review sites or apps.

Encouraging entrepreneurship and letting the market decide is the answer that Tupelo’s city council should be choosing. It works in cities all across America. And it will work in Tupelo if government leaders will just let the citizens decide for themselves.