On Tuesday, September 13, two of the country’s most distinguished and interesting proponents of individual liberty will be in Chicago to help The Heartland Institute celebrate its twenty-first anniversary. They are Dr. Caroline Hoxby, professor of economics at Harvard University and a leading expert on school choice, and Dr. Jay Lehr, an internationally renowned motivational speaker, scientist, author, and science director for The Heartland Institute. Ticket and table reservation information can be found at http://www.heartland.org/Benefit2005/welcome.cfm.
Restoring Freedom at Home
The theme of this year’s benefit is “Restoring Freedom at Home.” It was inspired by President George W. Bush’s Second Inaugural Address, delivered on January 21, 2005. The speech included these memorable lines:
“From the viewpoint of centuries, the questions that come to us are narrowed and few. Did our generation advance the cause of freedom? And did our character bring credit to that cause? These questions that judge us also unite us, because Americans of every party and background, Americans by choice and by birth, are bound to one another in the cause of freedom.”
Later in his speech the president said, “America has need of idealism and courage, because we have essential work at home–the unfinished work of American Freedom.”
So how goes the cause of freedom at home? Surprisingly perhaps, the news is good. In this issue of The Heartlander I report on freedom’s progress in three areas: school choice, health care, and environmental protection. Next month I’ll tackle tax and budget issues, lawsuit abuse, and the digital economy.
School Choice
Reforming public schools could rescue America from many of its worst social and economic problems. By improving schools and empowering parents, school choice addresses at their roots the problems of poverty, economic illiteracy, crime, and the decline of American competitiveness.
The most powerful tool we have to reform schools is school choice: allowing parents to choose the schools their children attend, whether public or private, thereby requiring schools to compete for the tax dollars raised to fund public education. Vouchers, and to a lesser degree tax credits, are the means to expand school choice.
The campaign to adopt school choice programs into law is moving ahead, albeit at a slow pace. According to a June 30 report by the Alliance for School Choice, “school choice bills passed 15 legislative houses in 10 states this year. Four states–Arizona, Florida, Ohio, and Utah–enacted new or expanded school choice programs and Arizona, Minnesota, and Pennsylvania are still in serious legislative play. This year, more than 84,000 children in targeted programs exercised the power of school choice. Next year the number of scholarships available is projected to increase by 25 percent to more than 105,000.”
On July 7, Pennsylvania voted to expand its tax credit program. The movement also sustained several narrow losses: Arizona, Missouri, South Carolina, and Texas all had real possibilities of passing significant school choice legislation but fell short at the end of the race.
Charter schools continue to increase in number and enrollment; the Children’s Scholarship Fund currently benefits some 23,000 children (and 67,000 since it was cofounded by the late John Walton in 1998); and the for-profit education sector is growing at a rapid rate. Edison Schools, for example, now runs more than 1,000 K-12 schools enrolling 250,000 students in 20 states. Virtual schools and homeschooling are growing at double-digit rates.
The campaign for school choice will never end, since interest groups will always use their political power to attempt to limit competition and choice. But I am convinced progress will come faster now that we’ve achieved state-wide vouchers in key states.
Health Care
The financing and delivery of health care is another arena where over-reliance on government and restrictions on individual choice pose a threat to freedom at home. The Heartland Institute is helping elected officials adopt policies that empower consumers by making private insurance less expensive and more portable and that put patients in charge of a greater portion of their health care spending. This is consumer-directed health care, or CDHC.
By far the biggest victory for CDHC occurred in 2003, when Medical Savings Accounts became permanent and available to everyone. Now called Health Savings Accounts (HSAs), these plans combine high-deductible, low-premium insurance policies with individually owned and managed tax-sheltered savings accounts. Employers who provide HSA plans deposit the premium savings in their employees’ accounts. HSAs put consumers directly in charge of a larger portion of their health care spending.
The number of HSAs is exploding, with some experts predicting there will be 20 million accounts by the end of 2006. The people who are opening these accounts tend to have modest incomes, and between 33 percent and 40 percent were previously uninsured. Early reports suggest unnecessary health care spending is indeed falling and providers are adjusting to their newly price-conscious patients.
The thrust of legislation in Washington DC is to expand eligibility for HSAs and increase their tax benefits, so even more unemployed, self-employed, and low-income families can participate in the CDHC revolution. For example, bills are pending to provide refundable tax credits for purchasing individual health insurance, so people don’t have to wait until the end of the tax year to receive a credit.
There is also good news on the prescription drug front.
The prescription drug benefit for seniors created by the Medicare Modernization Act is correctly criticized as a massive expansion of an entitlement program–a step backwards in the cause of freedom. But it also represents three steps forward for the CDHC movement.
First, the drug benefit removes the financial penalty the previous system imposed on people who chose drug therapies over surgery, an absurdity that costs the nation many billions of dollars a year in unnecessary medical expenses and lost productivity. Second, it concentrates taxpayer support on people with very low incomes or with very high drug expenses, the two groups already getting free or significantly discounted drugs. And third, it prohibits direct negotiation between government and drug companies over prices, which otherwise would have led inevitably to price controls.
Medicaid is a third arena where freedom is making gains. After disastrous experiments by many states with increasing regulation on private insurers and expanding eligibility for Medicaid as a kind of back-door route to health care socialism, taxpayers and policymakers have reached a budgetary dead end. The programs are simply unaffordable and incredibly wasteful.
Governors are being elected who promised to end expensive and ineffective Medicaid schemes and implement more market-based approaches. Tennessee, which went further than any other state in expanding its Medicaid program, is dramatically contracting it. Florida and South Carolina have set the pace for market-based reforms. The megatrends in Medicaid reform these days are consumer choice and privatization of program administration and service delivery.
In short, we’re winning this battle, both at an intellectual level and at the political level. Calls for “national health insurance” are growing more dim and politically unpopular. And once 20 million people have their own health savings accounts, such socialism may finally become politically impossible.
Like the campaign for school choice, the campaign for CDHC will never be won once and for all. But key victories in recent years have changed the underlying political dynamics of the debate, making it more difficult for the other side to get traction with voters.
Environment
The past few years have seen a string of victories for free-market environmentalism and defeats for the anti-market alarmists who claim to speak for the environmental movement. So severe have been the setbacks that two members of the alarmist camp circulated an essay last September titled “The Death of Environmentalism.”
The U.S. has remained firm in opposing the Kyoto Protocol, the global warming treaty that would have devastated the U.S. economy without having any measurable effect on global temperatures. The U.S. Senate soundly rejected “Kyoto-lite” legislation proposed by Senators McCain and Lieberman. The European countries that signed Kyoto have little or no chance of meeting their emission reduction targets by 2010, as they had pledged to do, and are now experiencing the high energy costs and resulting economic damage long predicted by the treaty’s critics.
A joint statement by the leaders of the Group of Eight (G8) major industrialized nations following a summit meeting in July was another big victory for advocates of more research and market-based approaches to climate change, rather than the precipitous and costly command-and-control policies required by the Kyoto Protocol.
Meanwhile, the scientific debate continues to favor realists who predict very modest warming in the future (about 1 degree Celsius over the next century) with generally benign effects on mankind and the environment. Research that is central to the alarmists’ case–a depiction of the historical record of global temperatures called the “hockey stick” because it purports to show unprecedented warming in the last decades of the twentieth century–has been largely discredited by scientists and economists challenging its author’s assumptions and methodology.
Free-market ideas are advancing in other areas of environmental debate as well. For example, the Environmental Protection Agency has returned to its pre-Clinton interpretation of New Source Review, a set of regulations requiring manufacturers and power generators to install new emissions control devices on existing facilities when repairing or upgrading them. The policy will benefit consumers as well as the environment.
Facing defeat in the political arena, some radical environmentalists have resorted to violence, torching new housing and car dealerships and attempting to sabotage agricultural experiments and electric power towers. In post 9-11 America, such tactics are widely condemned and–finally!–are being vigorously prosecuted by federal authorities. Each incident further reduces the credibility of alarmist environmentalists.
As the name suggests, free-market environmentalists support environmental protection in ways that preserve economic freedom. There is no trade-off between a clean and safe environment and economic growth, because the most effective ways to protect the environment rely on individual freedom and the prosperity it makes possible.
In this important arena, freedom is winning.
We Help Make It Possible
The Heartland Institute is part of a growing movement of people and organizations that are making these victories for freedom at home possible. Our policy studies and books, written by leading experts, have explained and contributed new ideas to the movements for school choice, consumer-directed health care, and free-market environmentalism.
Our four monthly public policy newspapers–Budget & Tax News, Environment & Climate News, Health Care News, and School Reform News–are sent to every state and national elected official in the country and some 8,400 city and county elected officials. Our efforts have changed public policies around the country. Telephone surveys show 84 percent of state legislators read one or more of our publications and nearly half (47 percent) say we changed their opinion or led to a change in public policy.
In addition to monthly publications, Heartland hosts events, publishes books, distributes opinion-editorials and letters to media, and supports a team of senior fellows available to address virtually every major public policy issue of the day.
Our ability to do these things depends on our donors. Heartland does not solicit or accept government funds, and it does not conduct contract research. Your financial support makes it all possible.
If you are not already a Heartland member or donor, I hope you’ll use the reply envelope inside this Heartlander to join us today. Or use the form on page 6 to reserve tickets or a table at our 21st Anniversary Benefit Dinner on September 13. We truly need your support to continue to fight for freedom here at home.
I hope to see you on September 13!
