Risk aversion and the failure of reform

This is going to be a long year for advocates of clean government and property tax reform in New Jersey. The trajectory, beginning with the four joint legislative panels and continuing through the opening salvo in the legislative wars this week, has been to water down proposals to protect vocal constuencies and avoid conflict.

Municipal consolidation went from a base-closing type commission that would put a list of mergers before the Legislature, who would the have the final say, to a commission that essentially would offer an advisory opinion, leaving the final say to the towns themselves — dooming any chance of significantly reducing the number of towns in the state.

And now prohibitions on dual-office holding,the proposed comptroller and significant changes in the state pension have been watered down to the point where they may have been made inconsequential. The Star-Ledger today writes that opposition from affected groups — Hudson County legislators (nine of whom hold more than one office), county and municipal prosecutors and municipal and school officials — were the impetus for the weaker reforms.

State Sen. Nicholas Scutari (D-Union), who is chairman of the special legislative committee that recommended the pension reforms, pretty much summed of the failures when he told the Ledger that

the slim menu of reforms still in the bill will do little to cut government costs or rein in property taxes.

“I just don’t think this serves any legitimate public purpose,” he said. “It’s almost a slap in the face to the committee’s hard work.”

Scutari said that as lawmakers remove certain affected groups from the reform bill they make it more difficult to impose reforms on anyone else.

“Why is one group out and one group in?” he asked. “They have a real good point. It’s not fair.”

It’s failures like this that have convinced me that, my earlier trepidations aside, legislators can no longer be trusted to fix the state’s tax system. It’s time for a constitutiona convention to deal with the problem.

South Brunswick Post, The Cranbury Press
The Blog of South Brunswick

Email me at grassroots at comcast dot net.

The doctor and the marketplace

The Washington Post today editorializes on the Democrats’ plan to allow the federal government to negotiate drug prices for Medicare — a logical move, even if there maybe some flaws in the specific legislation on the table.

The Post, however, see it quite differently, preferring to continue with a purely market-driven approach.

Not only are the Democrats too optimistic about government negotiation; they are also too pessimistic about the current system in which private insurers administering Medicare drug benefits do the price bargaining. These private insurers stand to profit if they can secure discounts and cut premiums and thus attract more customers: Witness the fact that the average monthly premium has fallen since the program began a year ago. Private insurers can do this precisely because they are free to establish formularies, but market discipline ensures that these lists are not unappealingly narrow. The insurers need to keep customers.

The New York Times, while disagreeing with the Post and supporting the measure, makes the same — though not as explicit — defense of market-based healthcare.

The bill also does not require the secretary to negotiate prices for all 4,400 drugs used by beneficiaries. A smart secretary could simply determine which prices paid by the plans seemed most out of line with the prices paid by other purchasers and then negotiate only on those drugs. The private plans are explicitly allowed to negotiate even lower prices if they can. This sort of flexibility should pose no threat to the free market. It is time for the Medicare drug program to work harder for its beneficiaries without worrying so much about the pharmaceutical companies.

This is an overly narrow approach that takes each element of the nation’s healthcare crisis and attempts to treat it independently, which is the basic flaw in the Democrats’ current approach, as well.

We’ve been living with market-based healthcare for a long time and it is pretty clear that it doesn’t work particulary well. Yes, some Americans have access to a level of treatment and an array of technologies unavailable to many outside of the country. But too many of us lack access to decent, affordable healthcare — I’m talking about the basic stuff. And too many of us face the uncertainty of access in the future because much of our coverage is provided through employers who may opt to either cut back on what they provide or cut back on payroll, leaving workers not only without jobs but without health coverage, as well (Cobra coverage is expensive and runs out after a while).

Our first priority should be ensuring that everyone has access to general practioners — this, I believe, can only be done via a single-payer system (it doesn’t necessarily have to be on the Canadian model).

The drug-price debate should be looked at in this larger context.

South Brunswick Post, The Cranbury Press
The Blog of South Brunswick

Email me at grassroots at comcast dot net.

Resistence to reinvention

The first parts of our Reinventing Govrernment series (here and here in Thursday’s Post and here and here in the Press) prove my basic point about reform in New Jersey. Everyone is for it, unless they have to change.

Consider this quote from Jamesburg Mayor Tony LaMantia:

“The state’s been dealing with it for years, and where are we at now? The proof is in the way things are.”

But the mayor (and most of the local officials we spoke with) is opposed to many of the changes being proposed, believing that towns understand how to save money better than the state. There is no proof of that — or of the converse — but it goes to show that making the kind of changes necessary to fix the system will be a long, difficult haul.

South Brunswick Post, The Cranbury Press
The Blog of South Brunswick

Email me at grassroots at comcast dot net.