Bluegrass Beacon: Hit drug program’s PAUSE button

BluegrassBeaconLogoEditor’s note: The Bluegrass Beacon is a weekly syndicated statewide newspaper column posted on the Bluegrass Institute website after being released to and published by newspapers statewide.

The 340B program was created by Congress in 1992 to provide life-saving medicine to poor and uninsured Americans by forcing pharmaceutical manufacturers wanting their drugs covered by Medicaid and Medicare to sell them at discounted rates of up to 50 percent to hospitals willing to serve vulnerable patients.

However, Washington has failed to provide needed oversight to ensure that facilities signing up for 340B are, in fact, serving the poor and investing reimbursed funds – per lawmakers’ intent – into charitable care.

Wealthy Duke University hospital generated 340B profits worth nearly $500 million during a recent three-year stretch though fewer than 5 percent of its patients during that period were charity cases.

Participation in 340B by some Kentucky hospitals also raises questions.

Why, for example, are drug manufacturers forced to offer these huge discounts to Norton Healthcare, which raked in $1.5 billion in revenues in 2014 yet whose charity cases comprised less than 1 percent of its patients?

The Medical Center of Bowling Green reported $285 million in revenues that same year but still participates in 340B even though its charity cases added up to less than 0.5 percent of its patients.

An industry study last year found more than a third of 340B hospitals report charity-care levels of less than 1 percent of all inpatient costs while 22 percent of participating hospitals provide 80 percent of all care received by the program’s vulnerable patients.

The Trump administration is addressing some of the misguided incentives by slashing reimbursement rates for 340B drug purchases.

Hospitals previously acquired drugs from manufacturers at up to half the cost then turned around and received reimbursement from Medicare at a rate of 6 percent above their average national sale price, pocketing the difference with the expectation being that the surplus funds would be used to serve disadvantaged patients.

However, with the evidence mounting that poor patients aren’t reaping most of those benefits, the Trump administration is cutting reimbursements rates by nearly 29 percent, placing them at nearly 23 percent below the average national sale price.

Seema Verma, administrator of the Centers for Medicare and Medicaid Services, assures these cuts will save Medicare beneficiaries, who are required to pay 20 percent of Medicare’s reimbursement rate for their medicines, $320 million in 2018 and “will better, and more appropriately, reflect the resources and acquisition costs that these hospitals incur” in obtaining 340B drugs.

Congress can bolster this effort by passing the Protecting Access for the Underserved and Safety-Net Entities (PAUSE) Act, which places a two-year moratorium on new hospitals and their outpatient locations participating in 340B.

Hospitals to this point have been incentivized to purchase existing physician-owned or community-based clinics, or open new outpatient centers primarily in wealthier areas where they can use their 340B status to purchase drugs at discounted rates, sell them at full price to patients at these off-site centers who usually carry traditional commercial insurance and pocket the difference.

An Inspector General’s review found that during one quarter in 2013, hospitals paid $737 per treatment for a 340B-covered drug to treat bladder cancer yet Medicare beneficiaries were billed $831 per treatment, 13 percent more than the drug cost. Plus, Medicare reimbursed the hospitals at the healthy rate of $3,325 per treatment. It all added up to hospitals collecting a total of $3,419 above their cost of acquiring the drug.

This loophole may be legal but must be closed.

PAUSE requires hospitals who want to continue participating in the safety-net program to report their charity-care rates and the insurance status of patients receiving 340B prescriptions.

Slashing reimbursement rates and pausing growth is the right prescription for repurposing the 340B program so that it fulfills its original mission.

In fact, such an approach wouldn’t be a bad idea to adapt as a process for reviewing all welfare programs.

Jim Waters is president and CEO of the Bluegrass Institute for Public Policy Solutions, Kentucky’s free-market think tank. Reach him at jwaters@freedomkentucky.com and @bipps on Twitter.

Bluegrass Beacon: Applying the Yellow Pages test to utility ownership

BluegrassBeaconLogoEditor’s note: The Bluegrass Beacon is a weekly syndicated statewide newspaper column posted on the Bluegrass Institute website after being released to and published by newspapers statewide.

Considering Frankfort will soon be forced to pass a painful budget, it might be helpful for legislators to apply the Yellow Pages test, an analogy that, for the older set, hearkens back to giant paper phone books landing on your front porch containing listings for businesses by categories.

The digital version has picked up where the printed version left off in helping connect customers with companies.

Plus, it still serves as an effective analogy to press the point: if you can find a service offered by the private sector, why should government step in and attempt to offer such services which, in most cases, compete with private providers?

An area that repeatedly fails the Yellow Pages test but is continually championed by voices on both the political left and right is the concept of municipal broadband.

When a federal court ruled in 2016 that high-speed internet service can and should be defined as a utility, it essentially claimed that, like water and heat, people need high-speed internet connections to survive.

Even if such an assertion were true, is government the best entity to provide that service?

It’s one thing for government to make sure services are provided; it’s something altogether different to claim it’s the best provider and deliverer of those services.

We see that playing out with the state-owned Kentucky Wired boondoggle, which – compliments of the Beshear administration – purports to build a 3,400 square-mile high speed broadband highway around the entire commonwealth.

The project is behind schedule, over cost and badly managed.

That Kentucky Wired is a failure should be as obvious as the fact that too many politicians have a hard time honoring their wedding vows these days while cavorting in the various political cesspools of Frankfort and Washington.

The free-market fact is: government isn’t good at building broadband.

Private-sector providers, on the other hand, have proven their competence and success in doing so.

Sure, history attests that government markets seldom work, whether it’s federally run healthcare, socialist nations like Venezuela or the United States Senate Cafeteria, which lost so much money that the entire operation was privatized a few years ago.

And sure, the proliferation of government-owned networks has resulted in local governments mired in debt, increased taxpayer burdens and even outright failure of the networks themselves.

But if it’s a “utility,” doesn’t that instinctively mean: government does it better?

A flow of evidence, including some involving water utilities in Kentucky, suggests otherwise.

Lexington voters in 2006 rejected by a whopping 61 percent to 39 percent the local government’s attempt to use eminent domain to condemn Kentucky American Water, a private company providing water to more than 300,000 customers.

Fast forward to 2013 in the small community of Millersburg near Lexington with its population of under 800.

Mining equipment manufacturer Joy Global – Millersburg’s largest employer and a company that had served as a mainstay of employment since the 1950s – closed five years into the Obama administration’s disastrous war on coal, laying off 150 employees.

One year later, Millersburg no longer had enough of a tax base to fund its water service.

That’s when the private Kentucky American Water company stepped forward to take over water service for the struggling community.

The agreement not only yielded a stronger, sustainable financial posture for Millersburg, but it allowed the community to refocus its resources in ways that helped it recover from the devastation of losing Joy Global.

The lesson for those seeking to build a government-funded statewide broadband network and tangle up small communities with the financial burden of cost – as Kentucky Wired does – can be found in the Yellow Pages test: if the private sector can do the job, let it.

Jim Waters is president and CEO of the Bluegrass Institute for Public Policy Solutions, Kentucky’s free-market think tank. He can be reached at jwaters@freedomkentucky.com and @bipps on Twitter.

Bluegrass Institute News Release – Hear, hear: Congressional conservatives must oppose FDA’s unhealthy proposal

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For Immediate Release:  Tuesday, June 6, 2017                                                    

(LEXINGTON, Ky.) – Kentuckians know to be nervous when it comes to large and stealth power grabs by the federal government and its out-of-control regulatory regime, particularly that of the Food and Drug Administration (FDA).

Such is the case with the Over the Counter Hearing Aid Act of 2016 co-sponsored by Sens. Elizabeth Warren, D-Mass., and Charles Grassley, R-Iowa, the House version of which likely will be considered in Washington this week.

Fortunately, U.S. Rep. Brett Guthrie, R-Bowling Green, who serves on the House Energy and Commerce Committee, which will hear the bill, must push back against yet another federal takeover of an important health-care sector: hearing loss.

The FDA seeks the power to slap new regulations on over-the-counter hearing aids and pre-empt state hearing-aid laws, leaving Kentucky powerless to create hearing policies that benefit its own citizens and instead turning over more of our healthcare decisions to the federal government.

Supporters of the measure incorrectly claim the bill will increase consumer access to hearing aids, ignoring the fact that over-the-counter devices known as personal sound amplification products (PSAPs) already are available for purchase simply by logging on to Amazon or going to your local Best Buy – all without the federal government’s meddling.

“This isn’t the first exposure Kentuckians have had to unhealthy FDA policy,” said Jim Waters, president and CEO of the Bluegrass Institute for Public Policy Solutions, Kentucky’s first and only free-market think tank. “Amish farmer Sam Girod right now sits in a Lexington jail cell facing the possibility of a 48-year prison sentence, courtesy of FDA thugs who bullied their way to a felony conviction against the father of 12 simply for producing skin salves made from chickweed and bloodroot, which the government agency accused him of using to turn wild and edible weeds into a potent drug.”

“The FDA has become deaf to its mission of informing and protecting citizens and increasingly opposes our freedoms,” Waters added. “This ill-advised legislation seeks to regulate PSAPs as hearing aids, eliminating the important role doctors play in diagnosing and treating hearing loss along with driving up the costs of current over-the-counter products.”

PSAPs are used for recreational purposes like hunting or birdwatching. They simply amplify noise.

Hearing aids, on the other hand, which are available after a screening, diagnosis and prescription from an audiologist, are highly customized to treat a patient’s unique and complex hearing-loss situation.

Not only will this bill’s regulations fail to improve health outcomes, they likely will have unintended consequences, including regulating PSPAPs used for hunting – all of which raises unnecessary questions about whether the FDA will be open to the availability of hunting aids, a fact which resulted in the Gun Owners of America coming out in opposition to this bill last week.

When Guthrie voted along with his fellow conservatives to repeal the Obamacare monstrosity, the congressman described his vote this way: “We have a historic opportunity to reverse Obamacare’s dangerous course and give power back to the states, patients, and doctors.”

Hear, hear.

It’s time yet again for Guthrie and others who believe in the principles of limited government and individual liberty to rise to the occasion and provide the backstop to this foolhardy regulatory legislation.

For more information or comment, please contact Jim Waters at jwaters@freedomkentucky.com, 859.444.5630 ext. 102 (office) or 270.320.4376 (cell).

 

 

 

 

Bluegrass Beacon – Government broadband: Money pit or silver bullet?

BluegrassBeaconLogoThe City of Pikeville recently raised its restaurant tax by a full percentage point just to finance a government-owned broadband network.

If history is any guide – and it usually is – this tax increase won’t be the only one city officials will claim they need to keep a municipal broadband network functioning.

While local politicians keep trying to find ways to add to taxpayers’ tabs, they will never be able to raise taxes fast – or high – enough to pay for such pork-laden boondoggles.

Just ask taxpayers in the 11 cities in Utah which in 2002 got together to build a $500 million regional broadband system called (no joke) UTOPIA.

Here we are, 15 years later and the network still isn’t complete, has barely a quarter of the subscribers it promised to attract and runs a multimillion-dollar deficit annually.

UTOPIA cities trying to make government-owned broadband work have turned more tricks than Houdini attempting an underwater escape, including raising property taxes and increasing utility fees to cover yearly shortfalls.

It hasn’t worked.

Now, local officials are stuck with the failing network after unsuccessful attempts to sell it.

Other cities, including Marietta, Georgia, Provo, Utah, and Groton, Connecticut, managed to shimmy their way out of failing municipal-network deals but lost millions of dollars in the process.

Still, getting out was a wise move – even at a loss.

If you remember the 1986 movie “The Money Pit,” you know what I’m talking about when I claim that government-owned broadband networks would make Tom Hanks and Shelley Long cry, too.

Revenues are rarely enough to cover these projects’ operating costs; fiber networks require constant upkeep and upgrades to stay on the cutting edge and attractive to subscribers.

Like Pikeville, the cities of Marietta, Provo and Groton counted on municipal broadband to bring new jobs and investment to town.

However, studies from New York Law School’s Advanced Communications Law and Policy Institute, George Mason University’s Mercatus Center and Phoenix Center for Advanced Legal and Economic Public Policy Studies all conclude: at best, these networks are a wash economically.

Not only is there no conclusive evidence that such municipal networks reduce unemployment rates or attract new business, but they actually deter investment by telecommunications companies forced to compete on such an unlevel – and thus unfair – playing field.

No firm in its right mind wants to compete with a municipal network with government benefactors standing by to raise taxes to bail it out during tough times, which is what Pikeville residents will be asked to do when its project can’t make ends meet.

The bills will keep increasing; a higher restaurant tax now, increased utility fees – like what was proposed to pay for Utah’s UTOPIA – later.

Advocates who want this municipal system cite Chattanooga, Tennessee’s government network as an example Pikeville should emulate.

Experts from the New York law school mentioned above took an in-depth look at Chattanooga’s network and admitted the system is making some money but only because of a unique set of factors that cities like Pikeville can’t even come close to replicating.

Chief among them is that the federal government supplied more than $100 million from the 2009 stimulus scheme to finance that city’s system, which was more than twice the city’s entire fiscal 2016 budget.

And $100 million was just the federal government’s share of the network’s $390 million price tag.

There’s no question Pikeville and all of eastern Kentucky struggle to attract new businesses and investment.

But success in these endeavors will require innovative leadership and approaches – not shiny new toys.

There are no easy answers with this exception: municipal broadband isn’t a silver bullet.

Jim Waters is president of the Bluegrass Institute for Public Policy Solutions, Kentucky’s free-market think tank. Read previous columns at www.bipps.org. He can be reached at jwaters@freedomkentucky.com and @bipps on Twitter.

 

Bluegrass Beacon: A Shakespearean take on an Amish farmer’s tragedy

BluegrassBeaconLogoTo try, or not to try, that is the question: 
Whether ‘tis nobler in the mind to suffer  
The slings and arrows of FDA noncompliance

Is this how Shakespeare might have rendered a current version of “Hamlet” were he writing in these days of out-of-control government agencies, including perhaps the most McCarthy-like of them all: the Food and Drug Administration?

In the case of Sam Girod, an Amish farmer in Bath County, the FDA suffered him not – nor the labels on his herb-rendered skin salves, for that matter.

It all started a few years ago when Girod ambitiously claimed in labeling and promotional materials that his ointments concocted with chickweed and bloodroot could cure skin cancers along with less-serious ailments.

Girod agreed to remove “skin cancer” from the label and call the product “Chickweed Healing Salve.”

The FDA wasn’t satisfied.

They now objected to “healing” in its name, so he renamed the ointment “Chickweed Salve.”

But the agency’s regulatory brutes wouldn’t be content until they made an example out of Girod.

The FDA bullied its way to a felony conviction against this simple Amish farmer who’s now staring at a possible 48-year prison sentence when he’s sentenced in June – all for such scary activity as misbranding labels and the fact that his farm was “an establishment not registered with the Food and Drug Administration” and on arbitrary charges of “impeding” a federal investigation.

I doubt Farmer Sam will be contemplating Shakespeare’s writings while finishing out his life behind bars. And it certainly doesn’t seem like the FDA, judge and prosecutors in this case will be feeling the “oppressor’s wrong” or “the insolence of office” anytime soon, as Will might have observed.

In fact, they might even be assembling a new SWAT team to save future Kentuckians from the perils of Amish farmers’ skin salves.

Plenty of avenues exist to resolve these types of cases without such harsh tactics.

Customers could have returned Farmer Sam’s products, boycotted his business or even sued him for financial damages if they believed he defrauded them.

Even the fact that Girod twice relabeled his ointment wasn’t enough to satisfy the zealotry of the FDA and a small-town court obsessed with carrying out its skin-salve witch hunt.

Wouldn’t it have been cheaper for the town just to burn poor Farmer Sam at the stake like in Shakespeare’s day?

“Aye, there’s the rub,” as Will writes in “Hamlet.”

If Sam were forced to “shuffle off his mortal coil,” what political lesson of intimidation would exist to warn other Amish farmers, raw-milk producers, farm-to-table hosts and every producer of natural remedies and herbal cures found on shelves in all sorts of establishments – from the shelves of Walmart to your local holistic grocery store?

Producers of these natural products should all prepare ultimately to feel the slap of the heavy-handed FDA enforcement regime.  

But what happens in a few years after a lifetime of “the thousand natural shocks that flesh is heir to” when the judge, his prosecutors and FDA tyrants along with their enablers – and perhaps even the jurors who took only four hours to condemn an Amish father of 12 – find themselves with an odd spot on their hand that stubbornly persists and won’t go away?

Maybe they’ll be informed by a doctor: “it’s cancer.”

They’ll try chemo; it won’t work.

Maybe they’re given a devastating sentence that the little skin spot could cost them their life.

Now they’d give anything to have access to a 100 percent natural chickweed salve produced by an Amish farmer who by then may have shuffled off his mortal coil and took his recipe – and their right to try it – with him.

Jim Waters is president of the Bluegrass Institute for Public Policy Solutions, Kentucky’s free-market think tank. Read previous columns at www.bipps.org. He can be reached at jwaters@freedomkentucky.com and @bipps on Twitter.

Bluegrass Beacon: Fearmongering fails with free-market reforms

BluegrassBeaconLogoEditor’s note: Senate Bill 10, which moves forward with properly deregulating the telecommunications industry in Kentucky passed the Senate 35-1 and the House of Representatives 75-13 and awaits Gov. Matt Bevin’s signature.

The political left’s preferred pattern is to consign conservatism to the wilderness with obituaries of its much-ballyhooed demise abounding, signaling: it’s time to bury all hope of returning to the constitutional republic our founders intended.

When that doesn’t work – like when disruptors of the status quo took over the Kentucky House in November and began resurrecting ideas about returning this commonwealth to a free-market economy and the Constitution for which it stands – the preferred tactic of the left also resurrects: fearmongering.

The scaremongering was on full display throughout Betsy DeVos’ confirmation process as Education Secretary.

Senators and celebrities alike, many of whom attended – and send their own kids to – elite private schools, predicted gloom, despair and agony for public schools because DeVos wants to give all parents the same opportunity to choose a better education for primarily at-risk students that these hypocritical school-choice opponents’ rich kids enjoy.

I was reminded why I quit watching Comedy Central when I saw actress Ilana Glazer’s tweet: “It’s heinous, the school system was already so broken – this is murdering it.”

“Avengers” director Joss Whedon claimed DeVos and her supporters “declared war on our children.”

Liberal senators responded with similar vitriol. Washington Sen. Patty Murray, a Democrat, called the Michigan philanthropist’s nomination “a slap in the face.”

But America’s had charter schools for a quarter-century yet Chicken Little isn’t showing up on Public Education Street.

In fact, the best research shows that once students attend charter schools for at least three consecutive years, they usually begin to academically outperform their peers in regular public schools.

There have been no reported sightings of C.L. on other streets, either.

It wasn’t that long ago, for instance, that the rhetoric of fear could be heard clanging up and down Telecom Reform Street claiming regulatory improvements passed by the legislature in 2015 would leave vulnerable Kentuckians in rural regions without basic phone service.

“They won’t even be able to call 911,” Chicken Little clucked.

I put a call into C.L. on my new LG phone – at least where I could locate a signal – asking him to find me a single Kentuckian who lost basic phone service because of the 2015 reforms.

“Well, at the very least,” clucked C.L. Fearmonger, “they will harm, not help, Kentuckians.”

Tell that to entrepreneurs in Louisville now able to start home-based businesses or to students doing major projects online who now have access to larger and faster residential gigabit service. With increased investment, similar access will soon be coming to other parts of Kentucky.

Yet while Kentucky’s telecommunications reforms in 2015 were a good start, three years is a lifetime in technology.

The commonwealth must follow the example of every other southern state by fully updating its telecom regulations.

Otherwise, we will continue losing out on very large investments by telecommunications companies less interested than ever in diverting resources toward maintaining old technology to satisfy rotary-dial regulations instead of building advanced, next-generation networks for all Kentuckians.

Other states, including neighboring Indiana and Tennessee, long ago eliminated onerous regulations like those that remain wrapped like anvils around the ankles of Kentucky’s progress.

This year’s legislative session can make history by removing the regulatory fetters and providing incentives to accelerate increased investment in Kentucky’s telecom infrastructure and making certain all Kentuckians – whatever their street – have access to the information superhighway.

Jim Waters is president of the Bluegrass Institute for Public Policy Solutions, Kentucky’s free-market think tank. Read his weekly Bluegrass Beacon column at www.bipps.org. He can be reached at jwaters@freedomkentucky.com and @bipps on Twitter.

Former Kentucky Chief Justice comments on Trump’s Supreme Court nominee

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For Immediate Release: Tuesday, January 31, 2017

Contact: Jim Waters @ 859.444-5630 (office) 270.320.4376 (cell) 

(BOWLING GREEN, Ky.) — President Donald J. Trump’s decision to nominate Tenth Circuit Court of Appeals Judge Neil Gorsuch as the next Associate Justice of the Supreme Court is receiving high marks from legal experts in the commonwealth.

Former Kentucky Chief Justice Joseph Lambert said he was “very pleased” about the Gorsuch decision

“The selection of Judge Gorsuch is outstanding,” Lambert, who was a member of the state’s highest court for 22 years and as chief justice from 1998-2008, said in a statement to the Bluegrass Institute. “His entire career has been characterized by excellence. If any judge could replace Justice Scalia, this is the person.”

Gorsuch graduated with honors from Harvard Law School and Columbia University, and received his Doctorate in Philosophy from Oxford University. He was appointed by President George W. Bush to the Tenth Circuit in 2006 and clerked for current Justice Anthony Kennedy and former Justice Byron White.

“Based on his past rulings, it’s abundantly clear that Judge Gorsuch understands and accepts that the role of judges is to interpret the law, not impose personal policy preferences, priorities or ideologies on their fellow citizens,” Bluegrass Institute president Jim Waters said. “Considering the tremendous cost of Washington’s heavy bureaucratic hand on Kentucky coal miners and small businesses during the Obama administration and the fact that our state has one of the nation’s fastest growing incarceration rates, Kentuckians will appreciate Judge Gorsuch’s obvious distaste for policies that overregulate and over-criminalize.”

Judge Gorsuch’s intellectual seriousness and stellar qualifications make him the kind of jurist that everyone on both sides of the political aisle should support.

“His great respect for Congress, the Constitution and the rule of law have earned him an up-or-down vote,” Waters said. “As he has written, ‘statutes are a product of compromise’ and their text must be respected.”

For more information, please contact Jim Waters atjwaters@freedomkentucky.com, 859.444.5630 (office) or 270.320.4376 (cell).

Bluegrass Beacon — Regulating’s first rule: Help, don’t harm

BluegrassBeaconLogoAmericans of all political persuasions want safe working conditions, clean air and unpolluted water.

But reform is clearly needed when government begins to regulate for the sake of regulating, and when doing so harms – even endangers – those citizens it’s called to protect.

For example, while the Food and Drug Administration was created to help safeguard the food supply and ensure reasonable protocols for drug safety, it too often uses its regulatory power to shield monopolizing companies from competition, which can block the path to lifesaving generic drugs.

Competition, on the other hand, reduces costs and increases access to many groundbreaking drugs and medical miracles.

It’s been just the opposite with EpiPen, a lifesaving anti-allergic reaction device, the cost of which has risen from $60 a few years ago to now $600 for a pack of two, even though the epinephrine included in the EpiPen costs less than $10 to manufacture.

This price tag forces some to ask: “Are we going to pay the mortgage or ensure our kids have this life-saving drug available should they get stung by a bee or suffer some other potentially fatal allergic reaction?”

Drastic choices like this could be avoided if regulators remained true to the fact that their agencies were created to help, not harm.

U.S. Sen. Rand Paul in a speech on the United States Senate floor recently highlighted the Clean Water Act as an example of the morphing of well-intended regulations that protect against the discharge of pollutants in navigable streams into job-killing “monsters that emerged from the toxic swamp of big-government bureaucrats at the EPA.”

Paul pummeled courts and regulators who “came to decide that dirt was a pollutant and your backyard just might have nexus to a puddle which has a nexus to a ditch which was frequented by a migratory bird that might have flown from the ditch to the Great Lakes. Ergo, the EPA can now jail you for putting dirt on your own land.”

Such morphing is helped along by the lack of serious, consistent reevaluation of well-intentioned rules that originally served useful purposes but now are enforced only because they remain on the books.

Former Indiana Gov. Mitch Daniels, whose Reaganesque reforms led to a dramatic economic turnaround in the Hoosier State, required proposals for new regulations to demonstrate favorable benefit-to-cost ratios and sunset provisions allowing reevaluation of their continuing usefulness every few years.

Daniels also demanded agencies search for an existing rule that could be updated before creating a new rule.

This approach could be helpful in Kentucky, where more than 3,500 of the 4,700 regulations in the regulatory code have never been reviewed.

Still, it’s rare for regulations – like taxes – to actually go away.

Instead, they swell to the point where the Competitive Enterprise Institute estimates it now costs each American household $15,000 annually just to comply with federal regulations.

Plus, state regulatory codes too often emulate Washington by mutating into ugly opponents of individual liberty and economic growth.

According to the Mercatus Center at George Mason University, while the U.S. Code of Federal Regulations grew from 71,000 pages in 1975 to 178,000 pages in 2015, the Kentucky Administrative Regulations Service (KARS), as it’s known, grew by a whopping 250 percent in the last four decades – from just four volumes in 1975 to currently 14 books.

The commonwealth’s regulatory code has become so large that it takes 367 hours – reading 40 hours a week at a rate of 300 words per minute for nine weeks – just to read it.

Large, increasingly complicated regulatory codes make it difficult for businesses and citizens to comply, which ultimately defeats any positive purpose of regulation by reducing compliance and incentives to improve safety while increasing uncertainty and frustration.

Jim Waters is president of the Bluegrass Institute; Kentucky’s free-market think tank. Reach him at jwaters@freedomkentucky.com. Read previously published columns at www.bipps.org.

Bluegrass Beacon – Overtime rules: Swan song in ‘fairness’ fiasco

BluegrassBeaconLogoWhen President Obama first proposed new overtime rules last year, comedian Jodi Miller joked that “aides say after six and a half years in office, Obama feels he hasn’t killed enough jobs.”

He also feels some abstract notion of “fairness” is more important than actual consequences.

This is obvious in most of his policies – from tax hikes to Obamacare to environmental directives – where, in all fairness (pun intended), this president’s delusional ideas about forced equality offer unfavorable, even devastating, outcomes.

Obama was asked by newsman Charlie Gibson during a presidential primary debate with Hillary Clinton when he first ran in 2008 why he favored raising the capital gains tax when doing so actually would result in less revenue.

“Well, Charlie,” he responded, “what I’ve said is that I would look at raising the capital gains tax (starts at 1:03:40 of the video) for purposes of fairness.”

So, does this make the actual consequence of a policy change irrelevant if some unrealistic notion of “fairness” is met?

Who cares if tens of thousands of coal miners are unemployed or health-care premiums skyrocket or young people lose out on opportunities because the employment ladder’s first rung being cut off?

After all, we have fairer EPA regulations, fairer health-care policies and a fairer minimum wage – even if they all wrap a fragile economy in a straight-jacket.

Obama’s swan song in this whole fairness fiasco is changing labor rules designed to go into effect Dec. 1 that will make millions of more salaried individuals eligible for overtime pay by raising the threshold from its current $23,660 annually to nearly $47,000 per year.

While the stated reason for this change is ensuring management-level professionals are properly compensated for their work, the Department of Labor concedes that only one-fifth of the 5 million workers who suddenly become eligible for overtime pay will actually see larger paychecks.

Instead, many more workers will likely be adversely harmed as retailers and small businesses, in particular, look for ways to cut costs and avoid lawsuits.

The Kentucky Chamber of Commerce warns the rules will cost commonwealth businesses nearly $20 million yearly and return 70,000 salaried workers to hourly pay. Nationally, they will cost businesses an estimated $600 million just to review and implement.

Workers will pay for 80 percent of those losses through cuts in their base wages, according to a recent report by Anthony Barkume, senior research economist at the Bureau of Labor Statistics’ Office of Compensation and Working Conditions.

Potential consequences extend far beyond these dollars and threaten to impose an outdated assembly-line approach on the whole smartphone work environment.

Technology joined with flexible scheduling makes it possible for greater achievements in the workplace, especially for the 20 million Americans who telecommute at least once a month.

These usually are among the most productive workers looking for new technology and tools that can help them successfully complete projects that don’t fit into a 40-hour, 9-to-5-time frame yet offer opportunities for promotion.

“It is hard to imagine a law intended for the workforce known to Henry Ford can serve the needs of a workplace shaped by the innovations of Bill Gates,” Michigan congressman Tim Walberg said. “Unfortunately, it is becoming increasingly clear that current federal labor standards have fallen short of the times.” But they’re fair, right?  They’re also unconstitutional, per a lawsuit filed by 21 states, including Kentucky.

Gov. Matt Bevin called the proposed overtime rule “an unfunded mandate by the federal government” that not only would “force many private sector employers to lay off workers” but also “encroach upon the rights of individual states” by forcibly increasing state and local governments’ employment costs as many more public workers – including 1,600 state employees in Kentucky – become eligible for overtime pay.

“Enough already,” Bevin rightly concluded.

Jim Waters is president of the Bluegrass Institute; Kentucky’s free-market think tank. Reach him at jwaters@freedomkentucky.com. Read previously published columns at www.bipps.org.

Bluegrass Beacon – Medicaid reform: Compassionate or cruel?

BluegrassBeaconLogoAn example of how the British government in the 19th century used the magic of incentives to improve survival rates of prisoners transported on ships to Australia could offer clues about how to right Kentucky’s listing Medicaid program.

For years, barely half the Australian-bound prisoners survived these voyages.

Despite ardent appeals from church, humanitarian and government leaders imploring ship captains to improve conditions, survival rates failed to change.

Finally, social reformer Edwin Chadwick recommended offering different incentives by adjusting how ship captains were compensated.

Chadwick suggested that instead of paying captains a fee for each prisoner who walked onto their ships in England, they would be paid only for prisoners who walked off ships in Australia.

Changing the incentives for captains immediately and dramatically improved survival rates to more than 98 percent.

Captains now protected prisoners’ health and well-being by providing them with better food and hygiene during their passage, as well as reducing the number of inmates crowded into each ship.

Incentives achieved what even appeals from the clergy failed to accomplish.

The right kind of inducements also can bring about some dramatic improvements in Kentucky’s health-insurance policy.

Adding hundreds of thousands of Kentuckians to Medicaid by expanding eligibility resulted in dangerously overcrowding the commonwealth’s Obamacare ship.

Close to 30 percent of Kentucky’s entire population is now crammed into this tilting vessel.

Supporters of the government-run plan brag about and receive nationwide acclaim for building such a beautiful, shiny sparkling ship.

Yet stroll through the lower decks and you will find an overloaded vessel with humiliating conditions from which too many enrollees may never exit – unless incentives are changed.

Plus, as degrading as the conditions on those British ships were, the captains always knew their destination.

However, a major point of confusion concerning Kentucky’s Obamacare ship is its true terminus.

Not everyone agrees that the anchor of government dependency should be lifted, allowing this ship to sail into a harbor filled with opportunities for able-bodied adult Kentuckians to find decent jobs and earn a good living in order to achieve the kind of lifestyle that allows them to purchase their own health-insurance plans and receive care from doctors they choose.

Opponents of Gov. Matt Bevin’s Kentucky HEALTH plan – which seeks to improve the chances of most of the recent Medicaid enrollees reaching a destination of dignity by paying a small premium, getting treatment for an addiction, training for a job or volunteering in their community – seem wholly uninterested in allowing anyone off the ship.

They go to great lengths to avoid confronting their antagonism toward teaching fellow Kentuckians to fish instead of keeping them dependent on government fish.

They also often attempt to change the conversation altogether by focusing on groups that will experience little, if any, change should Washington approve the Bevin administration’s proposed reforms.

Absolutely nothing in Bevin’s plan would, for example, change benefits for children, pregnant women, the disabled or poor.

Still, a letter writer in western Kentucky thinks I’m “mean-spirited” and “lacking compassion” because I support incentives designed to get prisoners off the ship, out of a defeated and miserable lifestyle into a victorious, productive life.

How compassionate is it to adamantly oppose incentives that will keep Kentucky’s Medicaid ship from sinking by sailing into the harbor and unloading able-bodied adults crammed onto its decks, giving them the opportunity to move into a place where they can contribute greatly to our society and maybe even help others?

If the Obama administration wants to show true compassion, it not only will approve the Bevin administration’s waiver request to implement the HEALTH plan’s thoughtful and reasonable incentives, it will do so immediately and enthusiastically.

Jim Waters is president of the Bluegrass Institute; Kentucky’s free-market think tank. Reach him at jwaters@freedomkentucky.com. Read previously published columns at www.bipps.org.