October 2004 • Volume 14, Issue 10
Living Liberty
What will you tell your children? by Marsha Richards
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here was probably never much chance that the Seattle School Board would decide not to endorse Initiative 884 (the billion-dollar education tax-increase proposal). After all, the district stands to gain millions if the measure passes in November. But I drove up to make a presentation at their recent public forum anyway, and I’m glad I did. The forum included two ten-minute presentations (a pointcounterpoint made by sponsors of I-884 and EFF) followed by an hour of Q&A and public comments. There were very few questions, but plenty of comments. Of the sixteen individuals who stood to speak, thirteen urged the Board to endorse the initiative. Two of the “dissenting” three were EFF members Lloyd Gardner and Stefan Sharkansky, who made eloquent and thoughtful points in favor of true education reform and responsible tax policies.
October, 2004 Stefan, who founded and contributes to a Seattle “blog” (website commentary) called Sound Politics (www.soundpolitics.com), was recently asked by a reader if there was any recourse against a multi-million-dollar Seattle levy increase that passed September 14. His response is one we should all take to heart: Recourse? As Thomas Jefferson once said: ‘The price of freedom is eternal vigilance. . . . What is the recourse to kleptocracy by a tiny fraction of the population? Get out there and work harder to maintain your freedom: educate yourself about the issues, talk to your friends and neighbors, write letters to the editors, donate your time and money to candidates and political committees that you believe in. Freedom isn’t free. But it’s a better deal than an ever-expanding rapacious and underperforming government.
As each speaker took the “. . . WE CAN RESTORE AND ADVANCE THE PRINCIPLES WE HOLD DEAR. BUT ONLY podium and made selfIF WE MAKE THE NECESSARY SACRIFICES JUST AS SOMEONE ELSE DID FOR US.” introductions, I took notes. The final vote of the Seattle School Board was five to one in I noticed an interesting pattern: Ten of the thirteen “pro” comments were made by people who are likely paid to come to favor of endorsing the billion-dollar education tax, with one such events and lobby for money. They represented special interest abstention. An editor at the Seattle Post-Intelligencer later credited EFF and its supporters for the abstaining and dissenting votes. groups that stand to gain by this tax increase. The other three, including two young students, were affiliated with the League of While it isn’t likely we would have convinced the others that true education reform will come by changing instead of expanding Education Voters, the group sponsoring the measure. the current system, who can really say for sure? What might have It wasn’t so much surprising as it was a reminder: Those of us happened if the steady stream of public faces had been brave who value individual liberty and limited, effective government defenders of liberty and true education reform, rather than have quite a fight on our hands. Our opponents are, by and beneficiaries of larger government? What will happen when we large, people who believe it is their duty to ensure an expanded make that case to other concerned citizens, parents and lawmakers? role for government. Furthermore, their salaries depend on it. This expansion will claim and redistribute a larger share of our The fact is, we can restore and advance the principles we hold salaries, regardless of whether or not the new or enlarged programs dear. But only if we make the necessary sacrifices just as someone else did for us. Failing to do so is tantamount to telling our achieve their stated purposes. children and grandchildren that liberty was something they might Lloyd Gardner and Stefan Sharkansky were not paid to be at the have enjoyed. meeting. They sacrificed valuable personal time to become informed, attend the event, and make their voices heard. They If you’d like to be involved in EFF’s education reform efforts, please contact Marsha Richards at (360) 956-3482 or mrichards@effwa.org. understand that the cost of failing to do so is even higher.
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Living Liberty
A publication of the Evergreen Freedom Foundation
Letter from Lynn
by Lynn Harsh
How much wood could a woodchuck chuck...? “
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don’t know? What’s a woodchuck?” It was the wrong answer according to my second grade teacher.
Mrs. Ross wasn’t amused. I hadn’t heard her directive to repeat the phrase as quickly as possible, and she didn’t know I was being reared by a father who was adamant about me understanding the question before proffering an answer. My “punishment” was to give an oral report about woodchucks to the entire class. But that punishment paled in comparison to what I got when Mrs. Ross found my portrait of her, in which she resembled the wood-gnawing rodent I had come to know. Hmmm. I learned a lot that year (in addition to, “if you can’t draw something nice about someone, don’t draw at all”). I learned that people repeat things as facts that are just not so. I discovered during recess that none of my classmates knew exactly what a woodchuck was, but it didn’t slow them down a bit in describing what it must be. Some of the worst pronouncements of this type precede an election. Listen to the current debates and television commercials. Note how many times candidates tell us about a crisis or a problem they intend to solve if elected— a problem whose genesis they have improperly identified in the first place. In one of her commercials, for example, Senator Murray pounds her fist into her palm and earnestly tells us she is tired of policies that allow high-paying American jobs to be exported overseas. Meanwhile, Murray continues to vote for increased taxes and regulatory burdens on business—a penchant that has forced many companies to take their land, labor and capital investments elsewhere. She
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protects an under-performing education system that has not produced enough qualified employees for American employers. I don’t doubt Murray’s sorrow over the loss of high-wage jobs, but she apparently doesn’t understand the economic and educational dynamics that create such a loss. So why would anyone who is truly concerned about jobs vote for her? Senator Kerry’s commercials are similar. Recently I heard portions of a Kerry speech where he maintained that proportional taxation is unfair. Progressive taxation is the proper way, he said, because “the rich” should pay a larger percentage of their income in taxes. But “the rich” are the job-creators, and when tax policies become punitive, these job-creators lose incentive to create American jobs. They move their risktaking, entrepreneurial skills elsewhere. In our state, too many Republicans and Democrats are trying to outdo each other when it comes to funding education, even though many of them are on record agreeing that a lack of money isn’t the problem. And there’s a certain congressional campaign I’m going to watch carefully, because I have yet to figure out what the Republican believes he should do as a congressman. Being nice and having good hair isn’t enough.
voting for people who have a track record of correctly defining a problem before crafting a solution; who refuse to tear down opponents with unfair accusations; whose word is their bond, regardless of election-year pressure. Those people not only need our vote, they need a good word and financial support. Lots of well-meaning people run for office, but too few are intelligent, well-rounded and principled. They turn everything into a “crisis,” the root of which they apparently do not understand, but which they alone feel qualified to fix. This is our own fault. We chew people up and spit them out when they don’t tickle our ears with what we want to hear—when they don’t promise to give us more stuff. But we can fix this problem. That’s the really good news. We know you do not have time to research every issue and to hold government officials accountable for doing their jobs well. We will help with that. But nothing we do is a
The people we elect today build the governing framework for our children and grandchildren. We need to be very careful when casting our ballot. Letter continued on page 11 I thoroughly enjoy
October 2004 • Volume 14, Issue 10
Q
uote
of the month
“...if we wish to preserve a free society, it is essential that we recognize that the desirability of a particular object is not sufficient justification for the use of coercion.” — Austrian Economist F.A. Hayek
Evergreen Freedom Foundation PO Box 552 Olympia, WA 98507 (360) 956-3482 Fax (360) 352-1874 info@effwa.org • www.effwa.org Living Liberty is a publication of the Evergreen Freedom Foundation.
Editors: Lynn Harsh Marsha Richards
Publisher: Joel Sorrell
Living Liberty
Contents 4 The results are in The importance of ending government dependency seems to have been lost on political parties, but not on the American people. As the research has shown, welfare reform is an issue that touches the day-to-day lives of many families, and successful reforms are making a positive difference.
6 Paycheck Protection report Our Teacher Paycheck Protection staff has been busy these last few months! Here is a snapshot of the major events.
7 More money is not the answer Washington’s higher education system is faltering. Students are graduating from high school and applying for college in record numbers, and some overcrowded universities have begun turning away applicants. The Higher Education Coordinating Board has forecasted the need for at least 33,000 additional slots in public institutions by 2010. Contrary to assertions of university officials, neither a decline in state funding nor a sudden influx of students is to blame. The key conflicts are worth examining.
8 Health Care Town Hall Employers and consumers interested in learning more about the emerging options in health insurance called Consumer-Directed Health Plans met on September 15th , in Vancouver, Washington, where the Evergreen Freedom Foundation and the Cascade Policy Institute co-sponsored a health care forum.
9 Canadian Single-Payer Health Care John Kerry, Ted Kennedy, Hillary Clinton and other fans of a single-payer health care system need to read the Fraser Institute’s recently published Critical Issues Bulletin titled “2004 Report: How Good is Canadian Health Care?”
10The two Washingtons Where is Vice-Presidential candidate Sen. John Edwards when you need him? If ever a case could be made for two Americas, to which the Senator often makes reference, it can be found right here in Washington state.
EFF’s mission is to advance individual liberty, personal responsibility, and limited and accountable government. Nothing in this publication should be construed as an attempt to aid or hinder the passage of any legislation.
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Living Liberty
A publication of the Evergreen Freedom Foundation
THE RESULTS ARE IN: STATE WELFARE REFORMS ARE MAKING A DIFFERENCE by Booker Stallworth
o say that welfare reform is a good thing is about as controversial today as saying the Soviet Union was the Evil Empire. But when reforms at the national level passed in the mid1990s, they were not so universally praised. It took Congress several attempts before President Clinton finally signed the bill into law in 1996. Doomsday naysayers predicted increases in crime and violence, starving children, and the end of civilization and compassion as we then knew it.
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Since enactment, however, welfare rolls have decreased by more than half—from more than 4.4 million to just over 2 million families (levels not seen since 1970)—and the 1996 law has received uncommon praise from across the political spectrum. Employment rates of single mothers with children younger than age 6 are 13 percentage points higher than during the previous decade, and nearly 3 million fewer children are in poverty today due to the increase in earning by their single mothers as a result of moving from welfare to work. Using provisions of the law that encourage innovation, many states attempted to promote greater self-reliance among welfare-dependent families by tying benefits to continued schooling, training, and work, and by limiting the amount of time recipients may receive benefits. Under the law, states truly became “laboratories of democracy.” The successes of these laboratories and their experiments have been put under the microscope in a series of research projects nationwide. So, to all the naysayers: “The results are in.”
WASHINGTON STATE One of these laboratories is here in Washington where, in 1997, the state launched its welfare-to-work program called WorkFirst. The WorkFirst study group—formed of researchers from the University of Washington, Washington State University and the state Department of Social and
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Health Services—examined the effects of welfare reform in Washington on employment and welfare recipients’ opinions about the WorkFirst program. The results were published in three recently released reports. Based on more than 3,100 interviews drawn from individuals on the welfare rolls in March 1999, October 2000 and October 2001, the studies found, in part: • The number of families on welfare in Washington dropped 41 percent since WorkFirst began, from nearly 97,000 in 1997 to less than 58,000 in April 2004. More than 140,000 parents left welfare and stayed off. • Parents who received welfare in 2001 and participated in WorkFirst activities were more likely to be employed and had higher wages than those who did not participate. • The average wage for families on assistance, including those not working, ranged from $500 to $700 per quarter, while those who left welfare for work or other reasons earned higher wages—about $2,000—during the same period. Nearly 70 percent of respondents had a positive impression of WorkFirst. Furthermore, the studies found that about two-thirds of current and former welfare recipients believe Washington’s WorkFirst program helps promote self-sufficiency, and an equal number said their quality of life had improved during the year prior to the survey. The substantial criticism of the WorkFirst program comes from an American Institute for Full Employment study that demonstrates that Washington reforms have not gone far enough compared with other states.
POOR URBAN AREAS Washington was not alone in reforming welfare. Anticipating that the law would have a negative impact on poorer urban areas, MDRC, a social policy research Continued on next page
October 2004 • Volume 14, Issue 10
group, launched a study to examine welfare reform, its implementation and its effects in four major cities. MDRC has released reports on Cleveland, Philadelphia and Miami, and will publish a report on Los Angeles early next year. The results to date are telling.
“Many critics of welfare reform feared that restrictions on welfare benefits would devastate poor communities, but an analysis of social and economic indicators in Miami-Dade from 1992 through 2001 does not support this conclusion. Both countywide and in the poorest neighborhoods, there were substantial declines in the teen birthrate, infant deaths, child abuse and neglect, and violent crime. Property crime declined slightly.”
Living Liberty
a decrease in the number of new divorces. According to the research team: “Welfare reform may have increased the number of hours married women would have had to work had they divorced, thereby discouraging divorce.” Among single moms, the researchers concluded that welfare reform’s work requirements may have led to increased earnings and higher levels of economic independence.
According to the Miami report, MiamiDade County implemented and strictly enforced the most stringent reform program. What is clear from the research is that it also had the most dramatic results. The researchers’ key findings were, in part:
The MDRC study of welfare reform in Philadelphia found similar results.
• Florida’s welfare reform went well beyond federal law by imposing a strict time limit and by cutting off all cash assistance when recipients failed to
According to researchers, even with only modest reforms and “lenient” implementation, a survey of welfare mothers living in Philadelphia’s poorest
survey interviewed women in 1998 and again in 2001. By the second interviews, most respondents reported they had exited welfare, started working, and increased their income.
A team composed of researchers from the RAND Corporation, the University of Maryland, University of California-Davis, and the Federal Reserve Bank of Atlanta used national statistics data for marriages and divorces between 1989 and 2000 to examine the impact of various national and state welfare reforms.
The importance of ending government dependency seems to have been lost on political parties, but not on the American people. As the research has shown, welfare reform is an issue that touches the dayto-day lives of many families, and successful reforms are making a positive difference.
While there was little change in the number of new marriages, researchers did find that welfare reform is associated with
Booker Stallworth is the communications director and a welfare policy analyst for the EFF.
CONCLUSION Welfare reform is making a difference in people’s lives, giving many a feeling of selfworth and achievement that has been absent in some families for generations.
Prior to the welfare reform achieved in 1996, states suc“Welfare reform is making a difference in people’s lives, giving measured cess by the nummany a feeling of self-worth and achievement that has been absent ber of people on welfare they in some families for generations.” could “assist.” Now, success is measured in the number of people working and comply with work requirements or neighborhoods suggested that “over time, learning new skills, and who are lifted out more worked and fewer received welfare, of poverty and dependence. other rules. while household incomes increased.” • “After 1996, there was a sudden and Welfare reform was one of the major significant increase both in the Researchers concluded their key findings accomplishments of the 1990s, but the percentage of welfare recipients who by stating: “This study’s findings are historic 1996 law expired in 2002 and is became employed and in the duration consistent with an earlier Urban Change now operating under a temporary of their employment.” The report report on Cleveland, and they counter the extension. The Personal Responsibility credits the county’s heavy reliance on notion that welfare reform leads to service and Individual Development for financial penalties to enforce work retrenchment and a worsening of Everyone (PRIDE) Act would extend for families and these life changing reforms. However, rules, along with the state’s policy to allow conditions welfare recipients to keep more of their neighborhoods.” politics-as-usual has taken root in the benefits when they went to work. IMPACTS OF REFORMS ON Senate, causing the bill to stall. As of this • Over time, welfare recipients’ DIVORCE AND SELF-WORTH newsletter printing, it appears Congress will not take any permanent action until employment and economic AMONG SINGLE MOMS after the fall elections. circumstances generally improved. One
• Despite numerous difficulties, “women often felt that even a bad job was better than a welfare system that they felt was punitive and disorganized.” • Neighborhood conditions remained stable or improved. The report states:
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Living Liberty
A publication of the Evergreen Freedom Foundation
Paycheck Protection Report
for the union, much like the Evergreen Freedom Foundation has in Washington state.
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EFF files complaint against Washington State Labor Council with the AG and the IRS
ur Teacher Paycheck Protection staff has been busy these last few months! Following is a snapshot of the major events.
Barrier to Learning magazine We published an expose of the National Education Association and distributed it to hundreds of legislators and media around the country. NEA officials felt compelled to respond. Instead of addressing any of the major charges we levied against them, they attacked EFF staff and the many teachers who courageously wrote their stories for the publication. Because the union’s criticism was so shallow, the media did not pick up the story, as we would have preferred. We are encouraged, however, by the many lawmakers who are shocked by what they have read about NEA’s underhanded tactics.
EFF files petition to stop union officials from punishing those who disagree with union politics Each year around contract bargaining time, we are contacted by teachers who decline union membership, but who still must pay the union-calculated fee for workplace representation— typically between $500 and $800. These teachers tell us that local union presidents are not letting them vote on the contract or calendar simply because they are not paying the additional amount for Union political activities. The Public Employment Relations Commission (PERC) has jurisdiction over unfair labor practices and union elections for more than 150,000 public employees. It addresses union obligations to those who pay agency fees for workplace representation. So, on August 25, 2004, four public employees and the Evergreen Freedom Foundation formally petitioned the state to adopt a rule assuring that all workers in a bargaining unit are given equal access to decisions made about their contract. Several teachers attempted a similar effort earlier this summer, but were disregarded by PERC, so we prepared a more comprehensive petition on their behalf. PERC conducted a hearing on September 27, 2004, to consider our petition.
EFF initiates replication action with many other state organizations Ending the union stranglehold over public education will require other states to experience successes like we have had. Fifty-two organizations in 28 states have asked us to help them initiate some level of action against the teacher union. Of course, we are carefully prioritizing what we do, since not all the requests are of equal importance. It is a badge of honor for us when NEA affiliates in other states issue warnings to its members that a particular group in that state is starting to cause problems
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The Washington State Labor Council (WSLC) is the state affiliate of the AFL-CIO. It spends hundreds of thousands of dollars to influence elections, promote candidates and sponsor initiatives. For example, the WSLC organized what its officials call “the largest single-day election mobilization in the union movement’s history.” On September 2, 2004, while President Bush accepted the Republican nomination, WSLC officers, staff and union members went door-to-door with WSLC materials to discuss their opposition to President Bush and Washington state Republican gubernatorial candidate Dino Rossi. WSLC President Rick Bender even urged affiliated unions to close their offices early so staff could participate in the effort. EFF has compiled over 300 pages of documentation that prove the WSLC exists to influence elections. Yet, each year, the Washington State Labor Council tells the Internal Revenue Service that it spends ZERO on expenditures “intended to influence the selection, nomination, election, or appointment of anyone to a Federal, state, or local public office.” So, on September 1, 2004, we filed a complaint with the state attorney general’s office, listing multiple violations of campaign finance laws. Our “Citizen’s Action” complaint gives Attorney General Christine Gregoire 45 days to take action or allow EFF to file a lawsuit against the labor council on behalf of citizens. On September 2, 2004, we filed a complaint to notify the IRS that the Washington State Labor Council is misreporting and thereby avoiding taxes on investment income. We met with the Public Disclosure Commission on September 15 to answer questions about our complaint, and the PDC indicated it is earnestly investigating our charges. We have been able to publish a staff editorial, and The Columbian editorial board ran a very favorable article on our efforts to ensure election transparency. Several other newspaper articles have been written about the complaint at this time. AFL-CIO President John Sweeney once said that “[t]ransparency, accountability, and full and accurate disclosure should be the central goals of financial regulation.” We intend to hold him to those words.
EFF files PDC complaint against WEA related to Referendum 55 The Washington Education Association (WEA) has spent nearly $200,000 from its general fund to support Referendum 55. It is Paycheck Protection continued on page 9
October 2004 • Volume 14, Issue 10
Living Liberty
More money is not the answer to the higher education crunch by Cole Nevins and Lynn Harsh
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ashington’s higher education system is faltering. Students are graduating from high school and applying for college in record numbers, and some overcrowded universities have begun turning away applicants. The Higher Education Coordinating Board has forecasted the need for at least 33,000 additional slots in public institutions by 2010. Contrary to assertions of university officials, neither a decline in state funding nor a sudden influx of students is to blame. The key conflicts are worth examining. Currently, higher education funds are paying for 57 percent of first-year community college students to take remedial (high school-level) courses before moving on to college-level work (most of whom are recent high school graduates). In addition to costing money, this practice takes up slots. Another 15 percent of community college students are enrolled as Basic Skills students, roughly half of whom are taking middle and high school level classes in pursuit of an Adult Basic Skills certification or a GED. Unfortunately, less than half of all Basic Skills students remain in the program more than one quarter. With few exceptions, the fact that so many high school graduates must take remedial coursework in college is an indictment of our K-12 system. Taxpayers are double-charged: first for high school course work leading to a diploma, and second for remedial high school course work students still must take in college.
Even after entering the university system, students cannot be certain of a quality education. Close to 37 percent drop out altogether. Those who stay often take the long road to graduation. Roughly 30 percent of freshmen actually graduate in four years, and only 62 percent of students graduate within six years. (A dismally low 28 percent enrolled in four-year programs graduate in four years.) Lax admissions standards are partly to blame. Studies show that Washington universities that admit freshmen from the bottom half of their graduating class suffer from proportionally lower graduation rates. While the current crisis in higher education has alerted some to fact that a problem exists, too many people see more money as the only answer. Handing out $400 million more in taxpayer money, however, isn’t going to make our universities more efficient and accountable in graduating students. Rather, it will simply allow even more students to languish in the unchanged system. Lawmakers should be alarmed about the sharply declining productivity in higher education and require a lot more tightening up before they consider handing out more money and charging students ever-increasing tuition rates. Cole Nevins was a summer Research Assistant at the Evergreen Freedom Foundation and is a student at Gonzaga University. Lynn Harsh is the foundation’s Executive Director and Senior Education Analyst.
Public Records: The way it should be by Sarah Carrico EFF makes full use of Washington’s Public Disclosure Act (PDA): requesting documents and publications from direct sources so we can produce the best research and analysis of what goes on with taxpayer dollars in Washington state. This summer, EFF submitted a public records request to Governor Locke’s office. We asked for: the number of trade missions made by Governor Locke since he took office; the purpose and destination of each trade mission; the number of people in attendance; and the total cost of each mission. Not only did Governor Locke’s Administrative Services Manager, Leslie Frank provide us with the information we requested, we were also given information on the impacts of each trade mission in a surprisingly clear and well-constructed format. This should not be a surprising response from state government, but it is. Unfortunately, EFF’s records requests are typically met
with recalcitrance, avoidance, and displeasure. The process should go like this: a formal request is made to the proper agency, said agency acknowledges the request. Unless the request necessitates additional time, a response is sent within five days. If the agency encounters a problem fulfilling the request, someone from the agency notifies the requestor. Contrast this with what happened in the 7E7 debacle. Our original PDA request regarding the Boeing 7E7 deal led to countless months of finger-pointing frustration with the Department of Community Trade and Economic Development, the governor’s office, and the attorney general. We’re now in court to obtain public records a Superior Court judge said we, at EFF, do not have the right to access through normal channels. The results garnered in the trade mission’s records request to Governor Locke’s office are a much-needed breath of fresh air for many of us here at EFF. This is a thank you we would like to make more often.
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Living Liberty
A publication of the Evergreen Freedom Foundation
Hymes noted that the legislature would have to deal with this.
Evergreen Freedom Foundation and
Hymes reviewed Health Savings Accounts (HSAs), which became available under federal law this past year. HSAs give health insurance consumers a new option besides HMO/managed care or traditional PPO-type plans. HSAs combine tax-favored health coverage, retirement planning and the building of personal savings in one product.
the Cascade Policy Institute cosponsor a Health Care Town Hall for Consumers
Lastly, Hymes shared proposed model legislation to further promote affordable, consumer-directed health insurance.
HEALTH CARE TOWN HALL
VANCOUVER
Employers and consumers interested in learning more about the emerging options in health insurance called ConsumerDirected Health Plans met on September 15th , in Vancouver, Washington, where the Evergreen Freedom Foundation and the Cascade Policy Institute co-sponsored a health care forum. The informational meeting gave attendees a look at a new federal law that puts health consumers in the driver’s seat and gives them opportunities for health insurance that did not exist a year ago. This is hopeful news for consumers and employers facing double-digit premium hikes.
The panel of speakers included Cheryl Hymes, Manager of EFF’s Health Care Research Center, Kurt Weber, Vice President of Cascade Policy Institute in Portland, Oregon and David MacDonald, D.O., President of Liberty Health Group in Edmonds, Washington. Kurt Weber spoke on the crucial role of the consumer in a healthy market. Noting that real quality innovation and pricing efficiencies only happen when consumers play a lead role. Weber also noted the difference between true insurance and prepaid benefits. More people are moving away from first-dollar coverage for every medical event, because it is financially unsustainable. Consumer directed plans, such as Health Savings Accounts or Health Reimbursement Arrangements,
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make the distinction between catastrophic and routine care. They provide financial protection for the catastrophic, major medical events, and restore consumer
The keynote speaker was Dr. David MacDonald who discussed how the current health care system will adjust as more consumers embrace Health Savings Accounts. Price disclosure by doctors and hospitals is one example. With consumer directed health plans, consumers want to know prices for non-emergency services ahead of time.
EFF WILL CONTINUE TO SPONSOR I N F O R M AT I O N A L T OW N H A L L S L I K E T H I S A L L A C RO S S T H E S TAT E . control over financial resources spent on routine, minor medical care. Weber noted that he had chosen a high-deductible policy. Cheryl Hymes explained how government has increased insurance costs. Washington state, for example, mandates 47 benefits on all insurance plans sold here. This results in higher premiums and less flexibility in benefit choices. Between 1993 and 2001, politicians forced a 50 percent increase in mandated benefits on every health plan in Washington. Milliman and Robertson, an actuarial firm, reports average annual premiums are increased 30 percent due to 12 of the most common mandates. Government mandates are less of an issue with consumer directed plans, since the consumer decides what medical services they want to pursue. Currently, Washington consumers are stuck with routine care mandates on catastrophic high-deductible plans used with Health Savings Accounts, which keep those premiums higher than they need to be.
Dr. MacDonald compared two types of consumer directed health plans: Health Savings Accounts and Health Reimbursement Arrangements. MacDonald cited two studies by Aetna and Assurant Health where medical inflation has been lowered with consumer-directed health plans and noted that this is consistent with his experiences with employer groups and patients. According to MacDonald, 77 percent of those purchasing HSAs are families with children, and 70 percent are over age 40. Dr. MacDonald also reviewed two real-life employer case studies, one with an HSA and one with an HRA. EFF will continue to sponsor informational Town Halls like this all across the state. Let us know if you have employer/employee groups who would be interested in learning about the new options for health care coverage. E-mail EFF at chymes@effwa.org
October 2004 • Volume 14, Issue 10
Living Liberty
CANADIAN SINGLE-PAYER HEALTH CARE SYSTEM: by Cheryl Hymes
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ohn Kerry, Ted Kennedy, Hillary Clinton and other fans of a singlepayer health care system need to read the Fraser Institute’s recently published Critical Issues Bulletin titled “2004 Report: How Good is Canadian Health Care?” If they do, they will be confronted with the truth: Canada’s monopolistic, taxpayerfunded, government-run health care system is crumbling. This report should leave absolutely no doubt in anyone’s mind that the U.S. does not want to copy Canada’s health care system. The Fraser Institute, located in Vancouver, British Columbia, recently published the results of a study authored by Nadeem Esmail and Michael Walker examining twelve indicators of access to health care and health outcomes. The 28 industrialized nations studied are all members of the Organization for Economic Co-operation and Development (OECD), which defines itself as “countries sharing a commitment to democratic government and the market economy.” When it comes to health care expenditures as a percentage of GDP, Canada ranks highest of the 28 industrialized OECD nations included in the survey. Canadian taxpayers are not getting a very good deal for this expenditure. Canada ranks in the bottom half of the nations in the study when it comes to life expectancy. Twenty-seven percent of Canadians reported waiting four months or
HIGH COSTS AND SHORTER LIFE EXPECTANCY more for non-emergency surgery for themselves or a family member. Forty-four percent of Canadians reported that it was somewhat difficult or extremely difficult to access a specialist when needed. The survey revealed that Canadians with low incomes are more likely to have difficulties seeing a specialist—the opposite of what single-payer advocates in the U.S. claim to want. When looking at accessibility to physicians and availability of medical technology, the Canadian study is also troubling. Canada ranks in the bottom half of the OECD nations in the number of physicians, MRI machines, CT scanners, and lithotriptors (ultrasound) per capita. In fact, Canada tied for last place when it came to the number of lithotriptors available (.4 machines per million Canadians). The Czech Republic, Turkey and Luxembourg each have more lithotriptors per capita than Canada—not exactly the nations that come to mind when one is need of emergency medical care. Canada is one of twelve OECD countries that rely exclusively on public hospitals. It is one of six countries that does not utilize cost sharing with consumers through copays or deductibles, with the exception of non-hospital pharmaceuticals. Survey authors Esmail and Walker noted: “Canada is the only country in the OECD that outlaws privately funded purchases of core services. Every other OECD country has some form of user-pay, private provision of health care.”
What has all of this “government-will-payfor-it” mentality done for Canadians? It has saddled our neighbors to the north with an expensive health care system that has not delivered acceptable levels of access or quality. It is noteworthy to include the stunning conclusion of the authors: The comparative evidence is that the Canadian health care model is inferior to others in place in the OECD. It produces inferior access to physicians and technology, produces longer waiting times, is less successful in preventing death from preventable causes, and costs more than any of the other systems that have comparable objectives. The models that produce superior results and cost less than Canada’s monopolistic, single-provider system have user fees; alternative, comprehensive, private insurance; and private hospitals. Canada should follow the example of these superior health care models. This report hardly paints the picture of affordability, access and quality that singlepayer fans in the U.S. want to make us believe exists in Canada. As the report authors themselves found, private health care and user “ownership” over health care choices is the key to more cost-effective and consumer-driven results. In that case, we had better run towards consumer directed health plans and health savings accounts as fast as we can.
Paycheck Protection continued from page 6 . . . one of the WEA’s top priorities this election cycle. In fact, WEA President Charles Hasse personally filed the referendum. Most of the expenditures up to this point were for signature gathering and getting R-55 on the ballot. We anticipate hundreds of thousands of dollars more will be spent on the public relations and media campaign to promote R-55. The WEA is now seeking a NO vote on the referendum, which means
charter schools are rejected. A YES vote will lift the ban on charter schools. State law prohibits the use of public facilities (including schools) for campaign purposes, but the WEA ignored this law and has distributed referendum petitions and materials to school district employees in all districts around the state using school mailboxes and email.
EFF has filed three complaints with the Public Disclosure Commission for incidents that occurred in two school districts, providing the PDC with examples of the materials distributed. We do not have space to tell you all the news. Please make sure to visit our website www.effwa.org for the latest!
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Living Liberty
A publication of the Evergreen Freedom Foundation
THE TWO WASHINGTONS: PUBLIC VERSUS PRIVATE EMPLOYMENT
by Michael Vernon and Jason Mercier here is Vice-Presidential candidate Sen. John Edwards when you need him? If ever a case could be made for two Americas, to which the Senator often refers, it can be found right here in Washington state.
W
sector wages are based mostly on the value of the services or goods consumers receive rather than the ability of an employer to obtain mandatory “contributions” from potential customers, as is the case with the government’s ability to tax.
Consider the difference in an individual’s potential earnings based on whether or not one works for government. Federal Bureau of Economic Analysis statistics show that working for Uncle Sam (or his cousins in state and local government) is an advantageous career choice. This fact is demonstrated when comparing the average wage of those in the public-sector with those in the private-sector.
Based on these facts, it is time to work toward one Washington, in which the private sector is able to flourish so that necessary tax revenue is available to fund the public sector’s payrolls. Continuing the existence of two Washingtons is an ongoing recipe for budget disaster. Michael Vernon is a research assistant for the Evergreen Freedom Foundation, an Olympia-based policy research organization dedicated to free market principles. Jason Mercier is a budget analyst for the Foundation.
In 2002, the average private-sector wage in Washington State was $42,297, while the average government worker’s income was $48,719, an astonishing $6,422 difference. Even more striking, Earnings per job Private sector in Kitsap County (home to Bangor Naval base) the averState $42,297 age public sector salary in 2002 was $62,293 while the Kitsap (Bremerton) $27,428 average private-sector employee earned only $27,428, a Thurston (Olympia) $30,800 whopping difference of $34,865. The irony of this shocking difference is that while the public-sector is able to ensure its payrolls by virtue of compulsory taxation, the private sector in our state has been struggling to stay afloat in the midst of a tsunami of high taxes and regulations. Unlike the private-sector, public-sector wages are not established by the value placed on employees’ services by the public they serve. Public-sector wages are established without the checks and balances of the marketplace. Private-
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Government sector
Difference
$48,719
$6,422
$62,293
$34,865
$48,923
$18,123
Pierce (Tacoma)
$34,712
$50,928
$16,216
Spokane (Spokane)
$32,856
$46,687
$13,831
Yakima
$29,099
$41,748
$12,649
Benton (Richland)
$41,144
$52,349
$11, 205
Franklin
$31,081
$42,222
$11,141
Clark (Vancouver)
$35,541
$46,536
$10,995
Snohomish
$39,910
$47,498
$7,588
King (Seattle)
$54,930
$51,189
<$3,741>
US Average
$40,286
$47,365
$7,079
Source: U.S. Department of Commerce, Bureau of Economic Analysis for 2002
Yes, I want to invest in the Evergreen Freedom Foundation October 2004 • Volume 14, Issue 10
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Letter from Lynn continued from page 2 . . . substitute for you talking face-to-face with your own elected officials. And nothing can take the place of you and a handful of your neighbors and friends becoming ad-hoc policy experts for your lawmakers. If only 1,000 of the 3,500 good people who are EFF members will invest the equivalent of ten minutes a day, six days a week in focused citizenship (that’s four hours each month), we can shift the direction of several major polices within a couple of years. What do I mean by focused citizenship? Consider signing up for our Ten-Minute Citizen program. It will soon become part of what we call the EFF Community Action Network (CAN). We are laying groundwork for regional policy workshops and community meetings broken into specific interest areas: education (higher ed and K-12), budget, taxes, health care, and paycheck protection. Our Ten-Minute Citizens will hear from experts in those particular fields, with the focus being useful, well-rounded information that can be used by all of us in the policy-making arena. Believe it: as few as 1,000 well-informed citizens can make major policy changes. (Someday, when enough time has passed and
my hair is gray, I’ll tell you stories about how a relative handful of us shifted entire debates.) Truth, common sense, courtesy, unswerving persistence, and thick skin are powerful weapons in the battle we wage for the heart, soul and intellect of our country. While you’re thinking about becoming a Ten-Minute Citizen, watch those political ads and contemplate how nice it would be if enough of the electorate were well educated and motivated to be able to determine whether or not solutions proposed by candidates are for problems that really exist and whose roots have been properly identified. Think about the difference it would make if we voters not only knew what a “woodchuck” is and how much wood it could chuck, but also knew that allowing politicians to regulate its productivity and progressively tax the fruit of its labors is counterproductive. Woodchucks unite!
Become a Ten-Minute Citizen! Log on to effwa.org and click on the Ten-Minute Citizen link.
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A few upcoming events . . . Saturday, October 2 – Seattle Marsha Richards will participate in a forum at the Rainier Club on education reform. For more information, contact Marsha at 360-956-3482 or mrichards@effwa.org.
Tuesday, October 5 – Vancouver Bob will be in Vancouver meeting with EFF members and addressing the Woodland Chamber of Commerce.
Wednesday, October 6 – Seatac Fall 2004 Small Business Issue Forum on “Small Business Solutions for Health Care and Tort Reform” at the SeaTac Hilton from 7:30 - 9:30 AM. For more information or to RSVP, contact the Washington Policy Center at 206-937-9691 or wpc@washingtonpolicy.org .
Saturday, October 9 – Okanagan Co. Bob will be addressing the Okanagan County Farm Bureau Meeting on the topic of regulation and Washington’s business climate. For more information, contact Marie at 360-95603482 or mgiger@effwa.org.
Wednesday, October 13 – Tumwater Marsha Richards will be speaking at the Tumwater Rotary on I-884 and participating in the Mercer Island Reporter forum. For more information on either event, please contact Marsha at 360-9563482 or mrichards@effwa.org.
October 21 - 23 —Austin, Texas Several EFF staff will be attending the State Policy Network’s 12th Annual Meeting. This is one of the most important networking, informational and training events of the year for state-based, free-market public policy organizations.
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