The sober realization is that socialism is still challenging freedom — even with the irrefutable mountain of evidence of its abject failure and toll on humans everywhere it has been tried. Thanks to John Locke, we have a roadmap for freedom and opportunity that any of us can follow.

Socialism has crippled nations and impoverished their citizens. The evidence is clear.  Yet despite this, lots of people in the United States, United Kingdom, and Europe want more of it. A recent survey of adults from the American Culture and Faith Institute found that four out of every 10 adults in America prefer socialism to capitalism. A 2016 Gallup poll found 35 percent of Americans viewed socialism favorably. Among voters younger than 30, that number was an eye-opening 55 percent. The Democratic Socialists of America, the largest Marxist organization since World War II, has 25,000 members — up from just 8,000 members in 2015, when it endorsed Bernie Sanders for president. The DSA has chapters in 49 states. As free-market capitalists and advocates for liberty, it’s clear we have work to do. 

The Legatum Institute, a London think tank, recently published a research report and poll finding widespread public support in the U.K. for renationalizing railroads, banks, and utilities. In the report, Legatum’s Matthew Elliott wrote this sobering summary: “We find that on almost every issue, the public tends to favor non-free-market ideals rather than those of the free market. Instead of an unregulated economy, the public favors regulation. Instead of companies striving for profit above all else, they want businesses to make less profit and be more socially responsible. The capitalism ‘brand’ is in crisis. It is seen as greedy, selfish, and corrupt.”  

The 35-year-old pro-free-market consensus among the U.K.’s three major political parties appears to have collapsed. Labour Party leader Jeremy Corbyn has called repeatedly for higher taxes, more regulation, and re-nationalization of major industry.  

In response to Corbyn, former Labour Prime Minister Tony Blair has warned his party against reverting to policies that failed so miserably. Few voters seem to know — or care —about the paralyzing malaise that Margaret Thatcher so completely reversed with her free-market policies in the late 1970s and 1980s. The ideological battle had seemed at an end when Blair rejected Labour’s historical program of socialism in the 1990s.  

But memories are short. In 2017, Blair warned Labour, “I wouldn’t want to win on an old-fashioned leftist platform. Even if I thought it was the route to victory, I wouldn’t take it.” Understanding the dangerous and ill-founded allure of socialism, Blair went on to caution, “Anyone who supports Corbyn in their heart needs to have a heart transplant!” Blair’s admonition, coupled with Corbyn’s strong support among young voters, recalled Winston Churchill’s famous quote: “If you are not a liberal at age 20, you have no heart; if you’re not a conservative by age 30, you have no head.”  

As the data above indicate, this is not a European phenomenon. Consider the surprising candidacy of Sanders in 2016. A generation ago, it would have been the kiss of death for any American politician — no matter how liberal — to have been called a “socialist.” A liberal like Hubert Humphrey spent a lifetime vehemently denying he was a socialist. Suddenly, an elderly senator from the backwoods of New England mounted a viable national campaign as a self-proclaimed socialist. His support was especially strong among young voters. But there are older citizens and leaders throughout the world who should know better. 

Pope Francis recently joined a chorus of voices hostile to free markets and capitalism. In a speech at the Chartreux Institute, he warned a group of global finance students not to “blindly obey the invisible hand of the market” but rather to become “promoters and defenders of a growth in equality.” How sad and embarrassing that the dominant Western voice of Christianity is blind to the very mechanism that has proved to be the best way to lift humans from poverty and reduce inequality all over the world. 

In his famous treatise, The Wealth of Nations, Adam Smith showed us that government doesn’t need to attempt to manufacture a central plan to accomplish the greatest value to all because individuals, who are pursuing personal gain, will accomplish this on their own. In essence, Smith correctly viewed the “invisible hand” (individuals responding to market signals and pursuing mutually beneficial voluntary exchanges) as a powerful mechanism to provide benefits to the whole of society. Today, in our free-market system, the only way a person can create great wealth is to provide valuable products and services for which millions of people are willing to pay voluntarily.  

Thanks to John Locke and his brilliant ideas of a system of private property rights, which were codified in our Constitution and Bill of Rights, Americans have the equal opportunity to pursue their own interests and passions and to enjoy the fruits of such pursuit. This pursuit, rather than being a source of inequality, neglect, and exploitation as people like Corbyn, Pope Francis, and Sanders would have us believe, actually facilitates more common good, moral action, equality, opportunity, and prosperity than any economic or cultural system ever tried in the history of the world.  

A generation ago, Thatcher’s dismissal of socialism was well-known and generally accepted: “The problem with socialism is that eventually you run out of other people’s money.”  

The 20th century is littered with the failures of socialism. Millions have been either thrust into poverty or held captive to poverty by socialistic governments. As economist Thomas Sowell wrote, “Socialism in general has a record of failure so blatant that only an intellectual could ignore or evade it.” China, Russia, Zimbabwe, India, Argentina, etc., have all flirted with socialism with uniformly disastrous results. The latest economic disaster is Venezuela. President Trump’s analysis is right on the mark: “The problem in Venezuela is not that socialism has been poorly implemented, but that socialism has been faithfully implemented.”

But do young people understand what Trump is saying? For those of us old enough to have witnessed the many failures of socialism or to have read about them, the words of Ronald Reagan ring true. “Freedom is never more than one generation away from extinction,” the 40th president said. “We didn’t pass it to our children in the bloodstream. It must be fought for, protected, and handed on for them to do the same.”

Somehow the next generation has to grasp the wisdom of Churchill’s warning: “Socialism is the philosophy of failure, the creed of ignorance, and the gospel of envy.” Hopefully the U.S. — and every other nation — can heed the brilliant teachings of Adam Smith and John Locke and the overwhelming evidence of history without having to experience the painful failures of socialism firsthand.

This column appeared in FEE on January 7, 2018. 

Lotteries tend to be popular with the public because they conjure up dreams of easy money and the good life. Indeed, Mississippi voters approved the concept of a state lottery in 1992 when they repealed a constitutional ban on lotteries. That same year, Mississippi’s first dockside casino opened. While many forms of gambling are now legal in Mississippi, state law still prohibits the operation of a lottery and the in-state purchase of lottery tickets. 

In evaluating whether Mississippi should legalize the lottery, lawmakers should realize, first and foremost, that the lottery is a kind of tax – and that, in particular, it is a regressive, or unfair, tax that has negative social impacts.

The Lottery is a New Tax

The primary purpose of a state-monopolized lottery is to generate revenue for the state. This reality is not well understood. There are essentially two types of lotteries: those operated by private vendors; and those controlled by government. Because private lotteries have historically been plagued by corrupt practices (and not infrequently government-run lotteries as well), states have sought to control their own lotteries.

Currently, all but a handful of states have state-controlled lottery monopolies. These monopolies are unique insofar as they are not “natural monopolies.” Road building, sewerage provision, and until recently, mail delivery, are examples of natural monopolies typically presumed to be properly controlled by government. In the case of the lottery no overriding financial or logistical reason justifies a government monopoly.

The state’s monopoly over the lottery allows it to charge a price for the lottery ticket that is well above what a private lottery might charge. This excess charge is essentially a tax. The tax is around 27 percent, but it varies in every state. This 27 percent surcharge is what in gambling parlance is called “the vig.” It’s what “the House” gets regardless of the outcome. In the case of the lottery, the House is the state – and it has a big edge. After the government gets its take, the rest of the money generated by the lottery will go toward winnings and administration. Then, the actual winner has to pay state and federal income taxes on top of that.

It might seem strange to think of the lottery as a tax. The Tax Foundation explains:

Lottery revenue meets all three tests for defining a tax. Current U.S. Supreme Court Justice Stephen Breyer laid out the criteria for defining a tax when he decided the San Juan Cellular case for the First Circuit Court of Appeals in 1992. Breyer argued that a judge should consider who imposes the assessment, who pays the assessment, and what the revenue is spent on.

In the case of a lottery, the Mississippi legislature would be imposing the assessment – just like any other tax, as opposed to a targeted fee imposed by a state agency. Likewise, lottery ticket buyers represent “a broad swath of the public,” rather than a “narrow group that benefits from a particular government service.” In its application, the lottery thus functions like a tax, rather than a fine or fee. Finally, lottery revenue is generally fungible, or at least spent on a “broadly defined benefit.” In short, the lottery meets all three legal tests for defining a tax.

The following statements by lottery proponents confirm this conclusion:

“The Legislature is not passing any revenue (tax increase). That (lottery revenue) is money available for education – should be spent on education.” – Mississippi Attorney General Jim Hood

“When you’re looking at some of the challenges that we’re having and you see a revenue bill that would generate somewhere between 50 and 60 million dollars – just an estimate – I think that's something that needs to be taken seriously by the members of both the House and the Senate.” – Mississippi Governor Phil Bryant

“I think it should go to education. But in as much as when we earmark money, sometimes we take that money from that department, so with that in mind, the best thing would be to just put it in the general fund.” – State Rep. Alyce Clarke

In summary, the lottery is a “revenue bill” that will be passed with the intention of generating money for the General Fund, or at least, for a broadly defined purpose, such as education. In other words, it meets the legal definition of a tax.

Lottery proponents often balk at defining the lottery as a tax, asserting that buying a lottery ticket is voluntary. Because the state would hold a monopoly over the lottery, however, the tax is not voluntary at all. In order to purchase a lottery ticket, consumers must pay the lottery tax. True, participating in the lottery is not mandatory, but neither is purchasing a car, earning income, or doing all manner of things that are taxed. As long as the primary purpose of the lottery is to generate revenue, and as long as a significant portion of lottery profits are collected as revenue, the lottery is a tax.

Under Mississippi’s joint legislative rules (rule 18), all bills generally related to revenue must be accorded a 3/5 vote by the legislature. Because the lottery is a tax (and, at a minimum, related to raising revenue) any bill that would create a state-controlled lottery must pass by a 3/5 vote in the Mississippi legislature. Otherwise, the lottery will be challenged in state court.

Because the lottery is a tax, its fiscal impact must also be evaluated in light of other forms of taxation. While all taxes influence behavior in some way, economists generally agree taxes should have low compliance costs, be fairly applied and minimize negative social impacts.

The Lottery is a Bad Tax

In comparison to other taxes, the lottery is particularly bad policy. To begin with, the lottery is an inefficient tax with high administrative costs. Observes economist Dr. Roy Cordato: “To raise a dollar’s worth of state revenue through a lottery could cost anywhere from 20 to over 50 times more than it would cost to raise the same dollar through other forms of taxation.” These administrative costs are thought to range between 15 percent and 20 percent and go toward advertising and paying retailers who sell lottery tickets.

In addition, the lottery is an unfair, or “regressive” tax. Generally speaking, “a regressive tax imposes a greater burden (relative to resources) on the poor than on the rich.”

In 2015, Americans spent $73 billion on lottery tickets. That’s about $630 for every household in the United States. It’s also about the same amount spent on the SNAP (Food Stamps) program annually. According to the Associated Press, Americans spend more on the lottery than on “movies, video games, books, music and sports tickets combined.” 

Every American household, however, is not spending $630 on the lottery. Generally, the poorest one-third of Americans buy more than half of all lottery tickets. Even the North American Association of State and Provincial Lotteries, an industry association group, acknowledges 25 percent of lottery players earn less than $25,000 annually.

A report from Harvard’s Shorenstein Center on Media, Politics and Public Policy reviews some of the academic literature demonstrating the regressivity of the lottery tax:

A 2012 report in the Journal of Gambling Studies finds that “those in the lowest fifth in terms of socioeconomic status (SES) had the ‘highest rate of lottery gambling (61%) and the highest mean level of days gambled in the past year (26.1 days).’”

A 2011 study, also in the Journal of Gambling Studies, concludes the “poor are still the leading patron of the lottery.”

A 2010 report in the Journal of Community Psychology observes that “lottery outlets are often clustered in neighborhoods with large numbers of minorities, who are at greatest risk for developing gambling addictions.”

Likewise, a 2009 survey commissioned by the South Carolina lottery found that those earning less than $40,000 a year constitute the majority of lottery players, even though they make up less than one-third of the state’s population. Another 10-year study that looked at lottery sales data in 39 states found “a strong and positive relationship between sales and poverty rates” (but not a similar relation between poverty and movie ticket sales, movies being an alternative form of inexpensive entertainment). The authors, however, conclude that “the poor are relatively more likely to see the lottery as a financial investment, and relatively less likely to play for entertainment.” Similarly, other research suggests lottery ticket purchases are financed by forgoing basic necessities. Generally, the breakdown is a 3 percent reduction of spending on food; and a 7 percent reduction on rent and other items.

Again, all this is to say that the lottery is a regressive tax disproportionately paid by low-income people.

In terms of tax policy, it’s also helpful to consider what kind of behavior a lottery tax encourages or discourages. The real question here is whether a state lottery would encourage more gambling or whether it would merely capture gambling that is already occurring via other lotteries in neighboring states.

The answer is complex. Clearly, Mississippi is hoping to both capture a market that exists (and is being diverted to other states) and also develop a new market. The strongest argument for a state lottery is that the state is losing lottery tax revenue to other states when Mississippi residents buy lottery tickets in other states. Interestingly enough, the two states immune to this dynamic – Alaska and Hawaii – do not have state lotteries.

Clearly, for many Mississippi residents, travelling to another state to buy a lottery ticket constitutes an investment of time and money – what economists call an “opportunity cost.” Some evidence suggests that, all things being equal, large jackpots are necessary to attract middle-class and out-of-state customers to buy out-of-state lottery tickets. When the jackpot is high enough, people will drive to another state to buy a lottery ticket. These same customers are more likely to play the lottery as a form of entertainment.

By contrast, low-income players disproportionately favor scratch-off (instant win) lottery cards; and the largest segment of lottery revenue (as high as 80 percent) comes from scratch-off games. For this reason, scratch-off cards represent the worst, and most regressive, form of lottery taxation. While the state is likely “losing” some revenue to players who cross the border to play scratch-offs, the spontaneous nature of such play suggests the loss is minimal. No doubt, a legalized lottery will see targeted advertising aimed at creating new players for these games. As in other states, much of this advertising will appear in low-income neighborhoods. As in other states, every year will see new marketing plans aimed at attracting new players. As in other states, new and more games will be developed with the hope of increasing frequency of play. In order to keep generating revenue from the lottery tax, the government will become the foremost proponent of gambling in Mississippi.

Some readers will note that this brief is silent about the ethics of a lottery. From an economic perspective, a lottery is destructive because it is a nonproductive activity. As stated above, the lottery, at best, is a form of entertainment; at worst, it is encouraging poor financial decisions by those who can least afford to gamble away their resources. In terms of tax policy, the lottery constitutes a high new tax with a regressive impact on the majority of players.

The HOPE Act restores the 1990s welfare-to-work reforms that “ended welfare as we know it,” to use Bill Clinton’s phrase. These policies were gutted by the Obama administration as a backdoor way to expand welfare and to expand Obamacare.

In passing HB 1090, Mississippi has again become a leader in welfare reform, just as we led the way nationally with Gov. Kirk Fordice’s “Work First” reforms. According to an independent review of the law, it moves “Mississippi to the forefront of states in overall benefits integrity and the move from reliance on benefit programs to employment.”

Here are 10 reforms the HOPE Act accomplishes:

It gets people back to work … By requiring childless, able-bodied adults to get back to work or obtain training or attend school to keep receiving SNAP (food stamps).

It removes millionaires from food stamps … by restoring federal income and asset tests. (These are the welfare-to-work reforms from the 1990s.)

It tracks out-of-state welfare spending ... to stop welfare fraud and abuse (think: ATMs in the Walt Disney World area).

It verifies immigration status … to remove illegal aliens using stolen social security numbers to illegally access welfare (under federal law, illegal aliens are ineligible for welfare, but no one’s been checking).

It verifies residency … to make sure people in other states are not fraudulently taking advantage of Mississippi welfare programs.

It helps state employees … by giving them real-time data they can use to verify eligibility, eliminating duplicative and inefficient procedures.

It saves Mississippi – and federal – taxpayers millions a year … by removing fraudsters and identity thieves from our welfare rolls as soon as we discover their presence.

It makes sure welfare benefits are properly used … by banning EBT card usage at ATMs in liquor stores, strip clubs, casinos, theme parks and other questionable locations.

It requires state agencies to work together and to share eligibility data … so that people can’t conceal vital information that would illegally increase benefits.

It saves state money by drawing down federal funding … to help pay for cutting-edge fraud prevention measures – while also saving federal funding otherwise wasted on fraudulent Medicaid and welfare enrollment.

As a bonus, the HOPE Act accomplishes all this by preserving existing benefits for those who are truly eligible, preserving the long-term integrity of our Medicaid and welfare programs.

When parents exercise their responsibility to orchestrate their children's education, some choose to educate their children at home, but most parents "hire" professional educators. They might hire private tutors, but usually they "hire" public or private schools. In either case, these educators are to assist with the child's education, and the parents should have the ability to choose a school that will accomplish that purpose without undermining their authority. And, if parents see that their children are not learning well, they should be able to choose a different school.

For parents who have enough money, this option already exists. If they are unhappy with the public school to which their child has been assigned, they can send their child to a private school, or they can move to a school district or attendance zone that will serve their children better.

But parents who don’t have enough money are often stuck with the school to which the government has assigned them, regardless of the quality of the school. Even under federal guidelines that require perennially poor schools to offer parents an option to transfer their children to another school within the district, it is not uncommon for the other schools to be just as poor as the ones the children would be leaving.

Most public education reform proposals deal with systemic changes, and there is no doubt the system needs to be changed. But the success or failure of systemic changes can only be determined after years of implementation and evaluation. When these attempts fail to produce more successful students (which has been the consistent record over the past forty years), new systemic changes are proposed which will take yet more years to implement and evaluate. And, of course, each new experiment demands more money from taxpayers than the ones before.

Why do we continue to sacrifice generations of students to these social experiments, hoping the next change will be the silver bullet for all children?

The losers are the children who cannot regain the years lost to these failed experiments. The communities where these children live also suffer, as do parents who are trapped in a system that won't allow them to choose better options for their children.

Our state long ago determined that there should be public schools funded by the taxpayers; we're not debating that here. We do, however, believe parents should have a considerable amount of control over how those tax funds are spent on their own children.

The solution is to allow more freedom for parents to choose—or even start—schools that best meet their children's needs. This can be accomplished in a variety of ways which will maintain (enhance, actually) the opportunities for all students, even in the public school realm.

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

When it comes to fixing the problems facing our state, government’s best strategy is often to get out of the way. That’s especially true when it comes to expanding internet access to rural areas.

Despite efforts by state and local governments to improve internet access, Mississippi ranks 49th in the U.S. for broadband coverage. This has officials in some communities looking for a government-subsidized solution: municipal broadband.

Numerous government internet projects all across America have already failed. Likewise, many municipalities considering such projects already have several internet providers available to them without government getting involved.

While Mississippi doesn’t need local governments using tax dollars to build needless boondoggles, it does need a way to expand internet service to those not currently served. The fastest and cheapest way to make that happen is through a project recently announced by Microsoft president Brad Smith.

The project utilizes unused television stations, known as “white spaces,” to create a sort of high-speed “Super Wi-Fi” broadband service that can connect Mississippi’s rural communities without running broadband infrastructure to remote areas. The only thing standing in the way of this dream becoming a reality is the Federal Communications Commission.

The agency must move forward with its proposal to set aside three currently unused TV frequencies in each market in order for white spaces internet coverage to operate. Once the FCC takes that step, companies can begin expanding high-speed internet coverage to every hillside and hollow in Mississippi — without the high costs and environmental impacts associated with laying miles of wires to build a broadband communications network.

Other countries are already testing white spaces internet. In Malawi, one of the least developed nations in Africa, private sector providers are preparing to use television white spaces to rapidly bring Wi-Fi to millions of people. India is also looking to pioneer the use of white spaces to bring broadband coverage to rural areas.

If places like Malawi and India can successfully use white spaces to expand internet coverage, the FCC should allow rural Mississippians to benefit from the same technology.

That same white spaces technology is another example of why local governments should avoid broadband boondoggles: government internet programs are too expensive, become outdated too quickly and fail to provide service to people who can’t already access the internet.

That didn’t prevent Biloxi from seeking state permission to set up their own broadband network last legislative session. The legislation (HB 1716) promised to bring “more accessible, affordable and ubiquitous Internet services to all businesses and residents within the city at broadband speeds of at least one gigabit.” The current FCC standard for broadband coverage is 25Mpbs. Biloxi community leaders were ambitiously seeking to establish a system offering speeds 40 times faster than that.

In neighboring states, municipal broadband projects have failed spectacularly, leaving taxpayers on the hook for millions. Opelika, Alabama, for instance, has sunk $43 million into its city’s broadband network, shifting costs to electric ratepayers. Lafayette, Louisiana, has spent $160 million on its subsidized broadband network, at a cost of $9,750 per subscriber. Memphis lost more than $32 million on its network, which was later sold for a measly $11.5 million.

Government is already the largest employer in Mississippi, and it is already doing too much. Government needs to stay out of the broadband market, which is competitive and requires ongoing strategic investments in new technology to keep up. While high-speed internet can be a powerful economic catalyst for Mississippi communities, these same communities should avoid using scarce taxpayer resources to invest in technologies the private sector is better suited to provide.

Both the FCC and the Mississippi Legislature should get out of the way and let the marketplace bring affordable, high-quality internet service to Mississippi communities. Just because a problem exists, doesn’t mean government should try to solve it.

Jameson Taylor, Ph.D., is vice president for policy, Mississippi Center for Public Policy.

Unanimous Mississippi Supreme Court Decides Columbus Mayor and Council Violated Open Meetings Act

Mississippi Justice Institute calls first-of-its-kind decision a monumental victory
for open and transparent government for all Mississippians

(JACKSON, MISS) – Today, the Mississippi Supreme Court ruled that the Mayor and City Council of Columbus violated the Open Meetings Act when they previously met in prearranged, non-quorum size gatherings to discuss public business, intending to circumvent the Act. This is the first time the Supreme Court has ever addressed the issue of whether meetings of public officials in less than quorum numbers violate the Open Meetings Act. The Mississippi Justice Institute represented The Commercial Dispatch in the appeal.

"This is a huge win for the citizens of Mississippi and for open and accountable government," said Mike Hurst, Director of the Mississippi Justice Institute. "People are tired of backroom deals and secret agreements by government officials that affect their lives. The Supreme Court's opinion puts public officials and bureaucrats on notice – you cannot circumvent the law and do the people's business behind closed doors anymore. Today's decision is a monumental victory for transparency in government."

In 2014, the Columbus mayor scheduled multiple meetings with council members to discuss policy issues and determine matters involving economic development projects and renovation of city property. The meetings were not announced or open to the public. At the time, the mayor excluded a Commercial Dispatch reporter from some of these meetings. In December 2014, the Mississippi Ethics Commission held that the mayor and council violated the Open Meetings Act. The mayor and city council appealed the decision to the Lowndes County Chancery Court, which upheld the Ethics Commission's decision. The mayor and city council then appealed to the Mississippi Supreme Court.

The original complaint against the Mayor and City Council was filed by Nathan Gregory, who at the time was a reporter for The Commercial Dispatch, a Columbus newspaper. The Commercial Dispatch eventually replaced Gregory as a party in the case. The Mississippi Justice Institute represented The Commercial Dispatch in the appeal.

The Mississippi Supreme Court ruled, "The four pairs of subquorum gatherings, along with the fact that they were prearranged, nonsocial, and on the topic of public business, illustrated the City's intent to circumvent or avoid the requirements of the Act. The philosophy and spirit of the Act prohibit the City from intending and attempting to circumvent or avoid the requirements of the Act. Additionally, the plain language of Section 25-41-1 requires the subject gatherings to be open to the public. Thus, the City's failure to hold open gatherings violated the Act."

[The Ruling]

In concluding, the Supreme Court noted that, "Prearranged, nonsocial gatherings on public business that are held in subquorum groups with the intent to circumvent the Act are required to be open to the public under Section 25-41-1 of the Open Meetings Act. Thus, the trial court correctly found that the City violated the Open Meetings Act."

Peter Imes, General Manager of The Commercial Dispatch said, "The public should have access to its government's decision-making process, and this ruling upholds that idea. It's a win for open government."

Hurst concluded, "Whether raising taxes, spending taxpayer money or issuing regulations that affect people's lives and property, people want to know what their government is doing. This decision clearly tells government officials to follow the law and do public business in the open."

The Mississippi Justice Institute is also representing a local Meridian man against the Lauderdale County Board of Supervisors who have committed the same violations of the Open Meetings Act as found illegal in the present case by the Supreme Court. See http://www.msjustice.org/case/lauderdale-open-meetings-act/

The Mississippi Justice Institute was assisted in this appeal by Clay B. Baldwin, Esq. of the Baldwin Law Firm PLLC in Madison, Miss.

The Mississippi Justice Institute is the legal arm of the Mississippi Center for Public Policy. It represents Mississippians whose state or federal Constitutional rights have been threatened by government actions. Mississippi Justice Institute is supported by voluntary, tax-deductible contributions. It receives no funds from government agencies for its operations. To learn more about MJI, visit www.msjustice.org.

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Over the past month The Clarion-Ledger has highlighted aspects of Medicaid that make the program feel indispensable, with Sam Hall proclaiming that anyone who questions Medicaid’s “valuable services to deserving people” is just plain ignorant. As someone who cares about improving health care for the poor and disabled, however, I find Medicaid’s poor health outcomes shocking. With flexibility from Washington and a focus on quality, states like Mississippi could provide better care for families in need.

It’s difficult to argue with heart-wrenching stories about how Medicaid is helping Mississippi families. For the price — $8 trillion over the next 10 years — one would hope advocates could find a few good stories. Not every Medicaid story has a happy ending, though. A University of Virginia study found that Medicaid patients are more likely to die than the uninsured, and far more likely to die than those with private insurance.

Another story we are not hearing is what the “gold-standard” Oregon Health Insurance Experiment found: that Medicaid recipients, compared to the uninsured, use a lot more health care services without experiencing improved physical health outcomes. The Oregon study also demonstrated that the primary beneficiaries of Medicaid are not patients but hospitals.

The worst thing about Medicaid is that it is crowding out innovative solutions that could deliver better care — not just more services. Breaking up this big-government Medicaid monopoly is going to require hard work from all of us. Here are three questions to start the conversation.

First: Does Medicaid provide good insurance for low-income families? 

As many as 50 percent of primary care physicians in Mississippi are not accepting new Medicaid patients, as compared to 7 percent not accepting new patients with private insurance. As mentioned, Medicaid patients also have, at best, the same health outcomes as the uninsured. Clearly, Medicaid is inferior insurance. State and federal policymakers should facilitate the development of better insurance products tailored to low-income customers.

Second: Is Medicaid a cost-effective way of reimbursing hospitals for uncompensated care? 

In spite of studies (and common sense) showing otherwise, hospitals claim they are losing money on Medicaid. Under federal law, hospital emergency rooms are prohibited from turning patients away. Medicaid is a pricey backdoor mechanism for funding this mandate. Tax credits might be part of the solution for private hospitals. In addition, nonprofit and public hospitals should offer more charity care — certainly far more than the tiny amount provided now under vague “community benefit” provisions.

Third: Is Medicaid the best way to help families facing extraordinary medical costs?

Prior to Obamacare, Mississippi had developed a high-risk insurance pool to help people with significant health care challenges. We need more creative thinking about risk pools (for instance, an income tax credit for donations to nonprofit-managed risk pools); and we need to focus on supply-side deregulation (encouraging telemed, expanding scope, and eliminating certificates of need) that will lower costs and unleash new medical technologies. These reforms are better than depending on a Medicaid program that will be sorely tempted to ration care to high-need populations even as it expands coverage to able-bodied childless adults, for which the Obamacare Medicaid expansion curiously offers a higher federal match.

Finally, I appreciate The Clarion-Ledger trying to inform readers about Medicaid, but I urge a good dose of old-journalism-school skepticism. When the director of Medicaid boasts that there is virtually no eligibility fraud, perhaps it would be helpful to note that other states are uncovering significant irregularities. Or when a Medicaid activist asserts that Congress’ repeal-and-replace bill is going to remove thousands of children from Medicaid, it would be appropriate to fact-check this number, or at least note that these children are going to go back on CHIP, a different insurance program run by the Division of Medicaid.   

I am confident we can all agree on the necessity for fresh thinking about health care. Instead of just thinking about it, though, I hope Congress gives states freedom to demonstrate how they can either radically improve upon Medicaid, or even better, develop targeted solutions aimed at helping the diverse populations Medicaid is currently failing. 

Jameson Taylor is vice president for policy at the Mississippi Center for Public Policy in Jackson. He can be reached at [email protected].