QUOTE OF THE DAY

Washington Post: Will higher taxes on the rich derail California’s economic comeback?

If there’s anyplace in the country where rising tax rates should choke off an economic recovery, it’s California. On top of the federal tax hikes that kicked in last month, the state has just raised income taxes on its wealthiest residents to the highest levels in the nation, a move that conservatives warn will drive millionaires and their companies to other states, taking jobs and growth with them.

The increases come as California’s economy continues a remarkable turnaround. A year ago, the state was a mess, with double-digit unemployment, a bottoming-out housing market and scary budget deficits. Now, hiring is up faster than the national average, and the housing market is regaining strength. Even the state budget is back in the black.

What happens to the economy here over the next year will be a case study for policymakers in Washington, who are paralyzed by similar questions of taxation and growth. The early indications, in California, point toward an outcome you might not expect.

The tax increases approved in November are a big reason the state isn’t staring down another huge budget shortfall or the prospect of issuing IOUs to fill it. They include bumping up the sales tax slightly and raising the top income tax rate to 13.3 percent, which is four percentage points higher than the District of Columbia’s and more than double the rate in Virginia or Maryland.

Reuters: The future of free-market healthcare

Over nearly a century, progressives have pressed for a national, single-payer healthcare system. When it comes to health reform, what have conservatives stood for?

For far too long, conservatives have failed to coalesce around a long-term vision of what a free-market healthcare system should look like. Republican attention to healthcare, in turn, has only arisen sporadically, in response to Democratic initiatives.

Obamacare is the logical byproduct of this conservative policy neglect. President Barack Obama’s re-election was a strategic victory for his signature healthcare law. Once the bulk of the program begins to be implemented in 2014 — especially its trillions of dollars in new health-insurance subsidies — it will become politically impossible to repeal. And as the baby boomers retire and Obamacare is fully operational, government health spending will reach unsustainable levels.

The great irony of Obama’s triumph, however, is that it can pave the way for Republicans to adopt a comprehensive, market-oriented healthcare agenda.  The market-oriented prescription drug program in Medicare has controlled the growth of government health spending. Similarly, conservatives can use Obamacare’s important concession to the private sector — its establishment of subsidized insurance marketplaces — as a vehicle for broader entitlement reforms.

While most Americans view their healthcare system as “free-market,” Switzerland actually has the most market-oriented healthcare system in the West. It translates into universal coverage and low entitlement costs. Swiss government entities spent about 3.5 percent of gross domestic product on healthcare in 2010, compared to 8.5 percent in the United States. That’s a difference of more than $5 trillion over 10 years: real money, especially relative to our $16 trillion debt.

AEI: How disruptive innovation can slowly fix US health care — if government lets it

I’m a big, big fan of the book The Innovator’s Prescription: A Disruptive Solution for Health Care by Clayton Christensen, Jerome Grossman, and Jason Hwang. As such, I am always on the lookout for manifestations of  ”disruptive innovation” in the health care sector. Like what, exactly? Well, in a WSJ op-ed yesterday, Christensen focuses on two in particular:

Going beyond current licensing, consider changing many anticompetitive regulations and licensure statutes that practitioners have used to protect their guilds. An example can be found in states like California that have revised statutes to enable highly trained nurses to substitute for anesthesiologists to administer anesthesia for some types of procedures.

Make fuller use of technology to enable more scalable and customized ways to manage patient populations. These include home care with patient self-monitoring of blood pressure and other indexes, and far more widespread use of “telehealth,” where, for example, photos of a skin condition could be uploaded to a physician. Some leading U.S. hospitals have created such outreach tools that let them deliver care to Europe. Yet they can’t offer this same benefit in adjacent states because of U.S. regulation.

Shorter: We need to get more productivity out of human capital through deregulation and technology — especially with the ACA increasing demand for medical services. So two news items today on those fronts. First, a Kaiser Health News story on the use of self-service computer kiosks at Wal-Mart where people can check and track their eyesight, weight, and blood pressure while ads run on a video screen. Pretty basic stuff, but the company behind the kiosks has big plans, as do competitors:

But SoloHealth’s backers do have larger plans. The Duluth, Ga.-based company aims to expand its kiosk offerings to teach people how to quit smoking, test whether they are at risk for diabetes and even enroll them in health coverage. Self-serve computer stations are also eyed as a way to help consumers figure out whether they need medications for conditions such as high cholesterol, under a proposal now before the FDA to make some prescription medications over the counter … The proposal is still under review. Rival firms are marketing similar technologies. Dublin-Ohio based HealthSpot has enclosed cubicles that allow patients to pay $59 to $79 for a video “visit” with a doctor. NowClinic online, a subsidiary of UnitedHealth Group, provides 10-minute video chats with physicians for $45.

Reason: Obama's Misguided Vision of Tax Reform

In her most recent report to Congress, National Taxpayer Advocate Nina Olson notes that "tax expenditures"—the exclusions, exemptions, deductions, and credits that make the Internal Revenue Code such a bloated, bewildering behemoth—total more than $1 trillion a year. She explains that she tries to avoid calling these provisions "loopholes" because that word has a pejorative connotation: "Policymakers use the term 'loophole' to describe a tax expenditure that they do not agree with…and use terms like 'incentives' or 'sound government policy' to describe tax expenditures that they like."

President Obama illustrated that tendency in last week's State of the Union address, condemning "tax loopholes" for "the well-off and the well-connected" while advocating "incentives" for companies that hire Americans who have been out of work for a long time. Although Obama called for "bipartisan, comprehensive tax reform," his main goal seems to be raising taxes by limiting certain deductions.

Meanwhile, Obama has been pushing new tax breaks for people who behave as he thinks they should by (for example) hiring veterans, going to college, investing in "green energy," driving electric cars, or making their homes more energy efficient. This is not the sort of reform we need, since it only compounds what Olson calls "the most serious problem facing taxpayers": the mind-boggling complexity of the 4-million-word tax code.

The tax code is so complicated, Olson reports, that individuals and businesses spend more than 6 billion hours a year complying with its filing requirements, which is equivalent to 3 million full-time workers. That cost totaled about $168 billion in 2010, or 15 cents for every tax dollar collected.

The tax code is so complicated that people have trouble figuring out what rate they are paying. Whatever it is, they're pretty sure others are paying less.

Reuters: Republican Florida Governor Backs Medicaid Expansion

Florida Governor Rick Scott backed a limited expansion of healthcare coverage for the poor on Wednesday, joining six other Republican governors who have agreed to the move under President Barack Obama's landmark reform law.

Scott, a vocal critic of the law known as Obamacare who had balked at expanding Medicaid, only agreed to the expansion after the federal government granted Florida a conditional waiver to privatize Medicaid statewide.

Scott said in a statement that he would only agree to the expansion for three years, however, while the federal government picks up all the costs.
"We will support a three year expansion of our Medicaid program under the new healthcare law, as long as the federal government meets their commitment to pay 100 percent of the cost during this time. This legislation would sunset after three years and need to be reauthorized," the statement said.

Scott's conditional endorsement of an expanded Medicaid program in Florida, a move that officials have said could add at least 1 million people to the state's Medicaid rolls, must still be approved by the Florida Legislature.

Yahoo! News: USPS to launch clothing line in 2014

Chanel. Dior. Armani. Vera Wang. U.S. Postal Service?

The cash-strapped Postal Service announced Tuesday that it has inked a licensing deal with an Ohio-based clothing company to produce a line of apparel dubbed “Rain Heat & Snow.” The attire aims to reach well beyond T-shirts and baseball caps to include “wearable electronics”—like jackets with iPod controls built into the sleeve, USPS spokesman Roy Betts explained to Yahoo News.

“If you like your iPod, you can plug it right into your jacket, regulate the volume and make your selections right on your sleeve,” Betts said in a phone interview. There will also be shirts that help wick off sweat, he said.

What about lingerie? Betts just laughed, so a racy line of USPS lacy unmentionables (perhaps dubbed "Saturday Deliveries"?) is probably not on its way.

"For now, it’s all-weather, all-season clothing for men, ranging from headgear, footwear, jackets, coats and shirts," Betts explained. But they hope to launch a line for women.

How will this help the financial bottom line at the post office, which recently announced it would halt Saturday deliveries?

CARTOON OF THE DAY