Thursday, November 01, 2007

Curving public education 

At the University of Wisconsin - La Crosse, a planned shift to a high tuition-high financial aid strategy was explicitly designed to increase diversity. After outcry from the state legislature, the plan has been dropped.

The university�s chancellor, Joseph Gow, said a quarter of the money raised by a $1,320 tuition increase over three years would have gone toward need-based financial aid. The other 75 percent would have paid to hire 130 faculty and staff members.

�Because we can bring in needier students, the hope was to increase diversity in the student body,� Mr. Gow said on Tuesday.

They still want to increase student aid, but now will only do so through state money. The differential tuition plan, though, is still on the table, though for much less than the original proposed tuition increase.

Differential tuition charges are common practice in Wisconsin and many other schools. They make sense to cover additional costs, or sometimes as a revenue generator from high-demand programs (business schools do this from time to time.) This model at UWLAX though looks more like the emergency room model: rack up high fees on the paying customers to cover the cost of the patients who come in without insurance. Is there anything wrong with this? Given the negative response from Wisconsin legislators, my guess is that cutting into the middle class subsidy that is public education didn't go over well with the constituents.

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Tuesday, July 24, 2007

How to make Minnesota grow faster 

Let Wisconsin go Sicko and pass this health care plan.
The legislation, part of the budget approved by the Democratic-controlled Senate, would provide health insurance to nearly everyone in the state. That would include the estimated 276,000 people - 38,000 of them children - who have been without coverage for more than a year.

It would be financed by a 9% to 12% tax on employer payrolls and a 4% tax on workers' wages.

In exchange, employers would be freed of the cost and hassle of providing health benefits to their employees. Instead, people would have their choice of health insurance plans overseen by a state authority.
The Wall Street Journal opines that this will cost them more than they realize.
Proponents use the familiar argument for national health care that this will save money (about $1.8 billion a year) through efficiency gains by eliminating the administrative costs of private insurance. And unions and some big businesses with rich union health plans are only too happy to dump these liabilities onto the government.

But those costs won't vanish; they'll merely shift to all taxpayers and businesses. Small employers that can't afford to provide insurance would see their employment costs rise by thousands of dollars per worker, while those that now provide a basic health insurance plan would have to pay $400 to $500 a year more per employee.

The plan is also openly hostile to market incentives that contain costs. Private companies are making modest progress in sweating out health-care inflation by making patients more cost-conscious through increased copayments, health savings accounts, and incentives for wellness. The Wisconsin program moves in the opposite direction: It reduces out-of-pocket copayments, bars money-saving HSA plans, and increases the number of mandated medical services covered under the plan.

So where will savings come from? Where they always do in any government plan: Rationing via price controls and, as costs rise, waiting periods and coverage restrictions. This is Michael Moore's medical dream state.
The plan has both an HMO and a fee-for-service component. The latter is needed for the areas where HMOs do not exist, such as southeastern Wisconsin. But who sets the rate? Even the proponents have no answer to this.

The plan has been rushed forward by the state's senate Democrats, who may not be serious about passing this but rather wanting to get health care on page one in Wisconsin during a slow news cycle. Still, it's not the kind of news they should want. Sean Hackbarth notes the WSJ editorial:
Company executives who read the editorial are putting notes in the backs of their minds to remind themselves not to bother moving to Wisconsin. That�s what happens when politicians threaten to almost double state taxes in an already high tax state. You almost wonder if State Senate Democrats are on the payrolls of Chambers of Commerce for Minnesota, Illinois, Iowa, and Michigan. Passing �Healthy Wisconsin� would be a boon for those states. All at Wisconsin�s expense.
Oh but Sean! Nobody ever moves because of taxes! They love your state. They'll gladly stay and have their wealth confiscated pay taxes.

China is moving towards capitalism, Wisconsin is running away.

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Friday, July 20, 2007

Unfair sales 

There is a relic of the Depression era in Wisconsin, called the Wisconsin Unfair Sales Act. Passed in 1930 it put a minimum on prices for goods and services in the state; you can't sell below cost. There are specific provisions for gasoline, however, which says you have to sell your gas at a markup over wholesale cost that can be 9.18%. In 2003 the Federal Trade Commission offered an opinion that this law is harming consumers by keeping prices high.
Unlike federal antitrust law, the Act protects individual competitors, not competition, and discourages pro-competitive price cutting. In particular, the Act subjects vendors to civil liability - including treble damages and a substantial fine per violation - for cutting prices even if there is no likelihood of harm to competition, and even if the vendors have no intent to engage in anticompetitive conduct.
If you need much more proof that it's protecting competitors, look at a position paper of the Wisconsin Grocers Association. they argue that minimum prices are good for consumers, without any explanation for why.

The Institute for Justice is now seeking to help Raj Bhandari, who is being fined $2,500 per gallon of gas he sells below cost. IJ is arguing that retailers like Bhandari are being denied their due process rights in two ways, first by singling out a good for disparate treatment (namely, gas) and second by blocking people engaging in a common commercial practice.

Our friend David Strom from the Taxpayers League will have Lee McGrath and Bob McNamara on their show, Taxpayers League Live, at 10am tomorrow to discuss the case. I suggest you tune in. If you are in Wisconsin, write to your legislators and get them to repeal this law. It would be a good example for us in Minnesota to follow, where there is also a minimum gas price law.

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Wednesday, February 14, 2007

Wisconsin goes in reverse 

The University of Wisconsin system has told its admissions officers that they may use race and income in decisions on who to admit to their schools to increase diversity.
The goal is to increase diversity among the system's 160,000 students, who are overwhelmingly white and increasingly well-off financially.

But Rep. Steve Nass, R-Whitewater, and others have questioned whether the policy complies with a state law that bans race-based tests in admissions. In a statement Thursday, Nass said the regents were ignoring the law and the will of the people.

"The unaccountable Board of Regents has chosen a confrontation with the taxpayers of this state regarding its politically correct admissions policy,'' said Nass, who chairs the Assembly Colleges and Universities committee.
This will be a court fight at some point. I doubt this makes a big difference at the Madison campus, but it will have some impact at other campuses. Perhaps it's an attempt to pick up students who might be dissuaded from Michigan schools by Prop 2.

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