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The Lighthouse®

The Lighthouse® is the weekly email newsletter of the Independent Institute.
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Volume 14, Issue 21: May 22, 2012

  1. Why Medicaid Should Be More Like Food Stamps
  2. California’s Debt Crisis Warrants Serious Reforms
  3. Georgia Immigration Law Backfires
  4. Defense Secretary to Air Force Spin Meisters: You’re Grounded!
  5. New Blog Posts

1) Why Medicaid Should Be More Like Food Stamps

The approximately 50 million low-income people on Medicaid often face a daunting challenge: finding a doctor who will see them. How bad is the problem? In Massachusetts, for example, only 53 percent of internists and 62 percent of family physicians accept MassHealth (Massachusetts Medicaid), and only 43 percent of internists and 56 percent of family physicians will accept patients enrolled in Commonwealth Choice (state-subsidized health plans). But as Independent Institute Research Fellow John C. Goodman explains, there is a simple remedy to this problem: allow poverty-level families to add their own money to pay for healthcare.

That’s how food stamps work. The Supplemental Nutrition Assistance Program (SNAP) permits its 50 million or so enrollees to add their own money to their food stamps and thereby enables them to purchase almost anything from almost any supermarket in the United States. But families enrolled in Medicaid and the Children’s Health Insurance Program are forbidden from “adding on” the way they can with food stamps.

Lifting this prohibition would greatly expand access to healthcare services, Goodman argues. Consider the case of an allergy sufferer in Dallas, Texas. The Medicaid fee for an allergy exam is $31.23 to $34.62, whereas the price at MinuteClinic is $79 to $89. If Medicare were set up like food stamps, the enrollee would be able to add money to the value of their healthcare voucher and become a customer of MinuteClinic. “If low-income families were allowed to add from $30 to $50 of their own money to the Medicaid rate,” Goodman writes, “in one fell swoop we could make high-quality, very accessible primary care available to millions of people.”

What Food Stamps Teach Us about Health Care, by John C. Goodman (5/11/12)

Priceless: Curing the Healthcare Crisis, by John C. Goodman


2) California’s Debt Crisis Warrants Serious Reforms

Governor Jerry Brown hopes to tackle California’s huge budget deficit with a mix of spending cuts and tax hikes. Unfortunately, the spending cuts are not sufficient, and the tax hikes would make it harder for businesses to grow during a time of economic uncertainty. A more serious approach is necessary because the Golden State’s fiscal woes have been long in the making, as Independent Institute Research Editor Anthony Gregory explains in his latest piece for the Huffington Post.

Brown’s predecessor, Gov. Arnold Schwarzenegger, came to office in 2003 on the promise that he would throw away the state’s credit cards so that politicians would never, ever spend more money than they take in. Unfortunately, he left taxpayers with $50 billion in additional state borrowing to pay for. Among the most egregious culprits have been generous state-employee pensions and a fast-growing prison system. If Brown were to aggressively target these spending items—and also sell off the state’s enormous inventory of real estate—he would significantly improve the state’s fiscal outlook and also improve the economic climate, Gregory suggests.

“Brown once before defied conventional wisdom, undoing some of the mess left behind by a film actor-turned-Republican governor who spoke about the dangers of big government while expanding it all the same,” Gregory writes. “Brown can do it again. His budget cuts show he’s somewhat serious, but he must radically challenge establishment habits if the state of California is to remain golden for long.”

The Golden State Gone Broke, by Anthony Gregory (The Huffington Post, 5/18/12)

The Property Tax Panacea, by Anthony Gregory (The Beacon, 5/15/12)

California’s Budget Woes, by Randall Holcombe (The Beacon, 5/12/12)


3) Georgia Immigration Law Backfires

“Be careful what you wish for,” an old adage begins. In the case of Georgia, that means fewer illegal immigrants are around to harvest nature’s bounty. Last year, the Peach State passed HB 87, which makes it harder for businesses to hire illegal immigrants, even though a labor shortage in agriculture led to an estimated $140 million in losses. Thanks to the new law, this year we can expect the labor shortage to be even worse, explains Independent Institute Senior Fellow Benjamin Powell.

In 2011, farmers were about 40 percent short of the number of farm hands they needed to harvest crops, according to a study from the University of Georgia. Some might think that a reduction in immigrant farm labor would be made up by an increase in less-skilled native workers eager to toil in the field, but this doesn’t happen. One reason is that farm workers are more skilled than you might expect. Farm workers are paid by volume and skilled ones typically earn $15 to $20 per hour. Making it harder to employ them simply makes food more expensive.

If Geogians are worried about the cost of providing public services to illegal immigrants, they are advised to deal with that problem by implementing policies that avoid chasing away badly needed workers, Powell advises. “Georgia’s immigration law is a blunt instrument that is doing unnecessary harm to immigrants and native Georgians alike, making everyone poorer,” he writes. “Both Georgia, and any other state that’s considering a similar law, should reconsider.”

The Law of Unintended Consequences: Georgia’s Immigration Law Backfires, by Benjamin Powell (Forbes, 5/17/12)

Why Is Immigration Illegal Anyway?, by Benjamin Powell and Art Carden (Birmingham News, 11/20/11)


4) Defense Secretary to Air Force Spin Meisters: You’re Grounded!

Last week’s Lighthouse characterized the Pentagon’s stance on America’s air combat capabilities as an exercise in denial and deception. Since then, there has been a new development, one that adds nuance to the story by pitting the Pentagon brass against the Air Force’s public-relations squad. The controversy involves the safety of the F-22 fighter jet, as Independent Institute Research Fellow Winslow T. Wheeler explains.

After two network television reports publicized claims that the F-22’s oxygen system jeopardizes pilot safety, the Air Force went into full combat mode. It insisted that pilot error, and not equipment malfunction, was the cause of a fatal crash in 2010. It also refused to disclose how it would treat two pilots who temporarily refused to fly the jet out of safety concerns—and who took their story to CBS’s 60 Minutes. The Air Force’s perfidy didn’t stop there. It also perpetuated its low-balling of the cost of the F-22. It cited the jet’s “flyaway cost” of $142 million each, rather than its full cost, estimated by the Government Accountability Office to be more than $411 million.

But even the Pentagon brass had balked at the Air Force spin campaign. Last Tuesday, Defense Secretary Leon Panetta grounded the F-22. With the huge amount of public attention about the jet’s problems generated by TV reports, the civilian leadership believes it’s time to distance itself from the Air Force’s high-flying malarkey.

F-22 in a Dogfight as Panetta Crimps Its Flight Envelope, by Winslow T. Wheeler (Time Magazine Battleland Blog, 5/16/12)

Promoting Air Power: The Influence of the U.S. Air Force on the Creation of the National Security State, by Arlene Lazarowitz (The Independent Review, Spring 2005)


5) New Blog Posts

From The Beacon:

JPMorgan’s $2 Billion Loss: A Case for Regulation?
Randall Holcombe (5/21/12)

Even Worse Than Democracy
Anthony Gregory (5/18/12)

Krugman’s Mythology of U.S. Banking History
Carl Close (5/15/12)

The Property Tax Panacea
Anthony Gregory (5/15/2012)

From MyGovCost News & Blog:

50 Years of Changes in Government Spending
Craig Eyermann (5/21/12)

Three Ideas from Europe for Controlling Government Spending
Craig Eyermann (5/19/12)

Trickle-Down Taxation
John C. Goodman (5/17/12)

Reason for Slow Recovery: Bad Government
John C. Goodman (5/16/12)

Hail Emperor Reich
Burt Abrams (5/15/12)

The Impotence of Stimulus Spending
Craig Eyermann (5/15/12)

You can find the Independent Institute’s Spanish-language blog here.


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