Reviewing the Bidding on Health Care “Reform”


Carl Graham

As ideas turn into proposals with Senator Max Baucus’s “Chairman’s Mark,” now is a good time to review the bidding on how well current congressional health care reform plans address their stated goals of increasing access and decreasing costs.  We’ve all been inundated with data lately, so let’s just step back and take a common sense look at the main proposals:

Single-payer system: Turns out most Americans don’t want nationalized health care with the government deciding who gets treated, for what, and at what price; at least not now.  So to kick the can down the road we have…

The Public Option: Government becomes an insurance company to “keep it fair,” but nobody could really explain how they would provide cheaper insurance without killing the private sector.  And what’s the point if the government insurance isn’t cheaper?  So we next had…

Co-ops:  Except that there already are co-ops and there’s nothing stopping more from being created tomorrow.  But wait, this one is better because it will start with billions of taxpayer dollars, receive billions more in taxpayer subsidies, and be run by government appointees.  Or was that the Public Option?  Whoa, just what’s the difference between these two?  Turns out pretty much nothing, which leads us to…

Exchanges: Gee, if only there were some magical technology that would link people with insurers and allow them to compare rates, evaluate terms, and buy policies with just the click of a few buttons.  We could call it the “internet.”  But insurance is very complicated and people make mistakes. So let’s protect them by having government decide which insurance companies can be included and by dictating what they must cover, what they can charge, and what products (like health savings accounts, for example) they can make available.   But wait, if companies have to offer pretty much the same thing at the same price, isn’t that like the Public Option or Co-op, which means there’s not much difference between that and government-run plans?  Hmm, how about if we try…

Mandates: If only everybody had to buy insurance then we’d all share the costs, from each according to his ability and to each according to his needs.  Big insurance and health industry companies love mandates because they effectively lock out competition and lock in profits, which explains why Senator Baucus has received nearly $3 million in campaign contributions from them, according to  But do mandates hold down prices? Massachusetts reached a 97% coverage rate through mandates of various types and has subsequently seen their health care costs rise as much as 42% faster than the national average.1 They’re expected to rise another 10% in 2010, compared to 5%-7% nationally.2 Hmm, so much for mandates controlling costs.

And mandates kill jobs.  If employers are forced to either insure or pay a fine on their low wage employees, how much incentive do they have to retain those employees or hire more?  Low wage earners are the people most easily replaced through outsourcing and mechanization, and the ones who will be most hurt by mandates.

And finally, since the government decides what coverage satisfies the mandate, they effectively control the market, as we saw with exchanges.  Say goodbye to your Health Savings Account, limited coverage, or any other option that lets you control your premium and deductible.  Say hello to paying for mandatory coverage on every ailment, drug, treatment, provider, and everything else with a good Washington lobby and a congressman’s ear.

All of these options kill jobs, explode the deficit, and inevitably lead to a government-run system as private players are squeezed out of the marketplace.  And government programs typically don’t reduce costs or improve services, especially once they achieve a monopoly.

Rather than overhaul one-sixth of the economy with a risky and inevitably wasteful government takeover, let’s do some simple things that promise measurable results and broad bipartisan support.  We can increase competition by allowing people to buy insurance across state lines.  We can reform tort laws to reduce wasteful defensive medicine.  We can provide tax credits and vouchers to individuals rather than companies to provide a safety net and give them a personal stake in controlling costs.  We can reward healthy lifestyles.  These are just a few ideas that address the real problems of cost and access without making a naked power grab.  Why not give some of them a try before committing ourselves and our children to massive debt and complete government control over our health and well being?


1 Cathy Schoen, Jennifer L. Nicholson, and Sheila D. Rustgi, “Paying the Price: How Health Insurance Premiums Are Eating Up Middle-Class Incomes,” The Commonwealth Fund, August 2009, p. 8, Data%20Brief/2009/Aug/1313_Schoen_paying_the_price_db_v3_resorted_tables.pdf,  in Cannon, Michael F, “All the President’s Mandates: Compulsory Health Insurance Is a Government Takeover,” CATO Institute, September 23, 2009.

2 Robert Weisman, “Health Costs to Rise Again,” Boston Globe, September 16, 2009,



746 Words

Contact MPI President Carl Graham at 406.219.0508, or email

The Montana Policy is an, independent, nonprofit, nonpartisan policy research center based in Bozeman.  It provides analysis and information to encourage individual freedom, personal responsibility, and market oriented policy solutions in Montana.

Montana Policy Institute

67 W Kagy Blvd, Ste. B






Cap and Trade

Cap and Trade

By Rep. Bob Lake


There’s little doubt that the Waxman-Markey cap and trade bill will have a negative impact on our economy. Economists on both sides of the issue agree that it will, the question they’re debating is by what degree. It’s amazing to me that in one of the economically-weakest points in our country’s history, Congress would be contemplating passing legislation that all agree would make things worse.

The experts are projecting losses to our GDP and job growth and at the same time higher prices for consumers for gasoline, electricity, and consumer goods. The double-whammy of declines in jobs and higher prices for consumers can only serve to make our economic situation worse and slow our recovery.

What are the impacts we can expect here in Montana? Considering that our second-biggest industry in much of the state is energy-production and our largest industry, agriculture, depends on significant energy inputs, it could be disastrous.

As I’ve been watching this proposals’ progress, which will now be considered by the US Senate, one of the things I’ve been contemplating is what impact it could have on our state tax revenues. Most people recognize that in recent years we’ve been in a relatively rosy budgetary situation, with at one point having a 1.4 billion budget surplus.

A large factor in our growth has been a healthy influx of tax revenues from the increased oil and gas activity in eastern Montana. We’ve had increases directly from the oil and gas severance taxes and property taxes but also indirectly in the form of income taxes from all the new, high-paying jobs in the oil fields of Eastern Montana. Our state also has significant revenues from coal production (though not nearly what the state of Wyoming realizes).

I fear that a lot of those tax revenues will dry up in very short order under a cap and trade scenario.

A bigger challenge we face is that the influx of tax revenue we’ve had in recent years has fueled an unprecedented growth in state government. The new funding that has been added to state government during the good times now become ongoing obligations we somehow need to fund in future years. That leaves two options: increase taxes to offset a reduction in energy-related taxes or start cutting government services.

If we increase taxes, we’re turning that double-whammy (reduced job growth and higher consumer prices) into a triple-whammy by adding a potential increased tax burden on homeowners or income taxpayers. If we reduce services the needy will suffer and the triple turns into a quad.

As for agriculture our #1 industry, cap and trade is going to hit small producers (which make up the vast majority of Montana operators) inordinately hard. Most ag businesses have very little opportunity to pass on their increased energy input costs on to consumers. Cap and trade will make fuel, fertilizer, and feed costs all increase at the mercy of the market. Inevitably, we will all be forced to pay more for our food because of these higher costs.

We all know the thin margins most ag operations already operate on. Cap and trade could be the proverbial straw that breaks the camels’ back for a lot of family farms and ranches.

Don’t get me wrong, there are benefit’s to reducing our nation’s carbon emissions. Reducing those emissions comes with a cost, and right now Montana is in a position to be hit harder than most other states based on the current legislation already passed by the House and on its way to the Senate.

There are other options available. I urge Senator Baucus and Senator Tester to work to develop a better bill that will actually improve conditions in Montana. The Waxman-Markey bill certainly does not.


Let the Death Tax Die

By MPI CEO Carl Graham and Dick Patten


Six family-owned companies from across the state were just awarded the 2009 Montana Family Business Awards. Honored for their commitment to “service, family values and diversification to satisfy the needs of their markets, often in challenging situations,” the owners of these family businesses have much to celebrate.

Why? They, along with the tens of thousands of other Montana family business owners and farmers, have sacrificed much to build a successful enterprise that can reinvest in new jobs and expanded opportunities in the community.

Unfortunately, in the end, all their hard work might be for naught if their businesses have to be sold to pay estate taxes.

The federal government requires the payment of estate taxes within nine months after the business owner’s death, demanding a large percentage of the combined value of all family and business assets, including the house, car, savings accounts, retirement accounts, business equipment, inventory, buildings, land and more.

Family business owners often have most of what they own tied up in buildings, equipment, inventory and other “hard assets,” so their families are forced to sell off large portions of the business, if not the entire company, to satisfy the IRS.

It’s not as if these people haven’t paid their taxes every year. They have, and probably more than their fair share. But they have to make one final payment at death to be free from Uncle Sam, at least until the next generation of the family – if they’re able to keep the business alive – passes on.

Contrary to popular myth, the estate tax rarely impacts the super rich. Rather, a disproportionate amount of estate tax filers come from the ranks of family business owners and family farmers.

According to the Joint Economic Committee of Congress, between 1995-2005, estate taxes were paid by more than 37,000 “closely-held businesses,” 24,000 family farms, 50,000 limited-partnerships and nearly 28,000 “other” non-corporate businesses, such as sole proprietorships.

Currently, such business owners face an estate tax rate of 45 percent, with the first $3.5 million exempt. This is likely to change later this year, when Congress revisits the tax again in an effort to prevent the rate from going to zero next year and jumping to 55 percent in 2011, which would happen under current law.

Some in Congress want to increase the tax and lower the exemption, while others want to keep the status quo. Both sides justify their positions out of concern over losing federal revenues at a time when Washington needs every tax dollar available.

A report for the American Family Business Foundation by economist Stephen Entin, a former Treasury official, should give them pause. According to Entin, if revenues are their primary concern, the best thing Congress could do is eliminate the tax, not raise it.

That’s because a lower tax rate – indeed a tax rate of zero – would stimulate investment in family owned businesses and the creation of new jobs, both of which would generate increased federal, state and local tax revenues. As much as $23.3 billion annually, Entin estimates.

But there’s another – and perhaps more important – reason to repeal the estate tax: jobs.

Former Congressional Budget Office Director Douglas Holtz-Eakin has estimated that as many as 1.5 million new jobs could be added to the economy nationwide simply by repealing the federal estate tax.

The Montana Policy Institute has calculated that Montana would gain 5,952 of those 1.5 million jobs. That’s good news in a job market where Montana’s unemployment rate stands at 6.6 percent.

Repeal of the federal estate tax is certainly a more dependable and less costly way to stimulate the economy than other policies being considered by Washington.

A majority of Americans agree. According to a recent Opinion Research Corporation poll, Americans support repeal of the federal estate tax by a nearly two-to-one margin.

It should be a no-brainer. More family businesses and farms growing in size. More jobs. More tax revenues. Congress should repeal the unfair “death tax.” Doing so would not only be good for family business owners and farmers in Montana, but also good for the country.



Carl Graham is president of the Montana Policy Institute. Dick Patten is president of the American Family Business Foundation.



Contact MPI President Carl Graham at 406.219.0508, or email

The Montana Policy is an, independent, nonprofit, nonpartisan policy research center based in Bozeman. It provides analysis and information to encourage individual freedom, personal responsibility, and market oriented policy solutions in Montana.

Montana Policy Institute

67 W Kagy Blvd, Ste. B

Bozeman, MT 59715




New Angle on Ending Our Oil Dependency

This comes from an organization called Secure Our Fuels. I frankly don’t know much about them and am talking about their efforts here on the blog because I don’t have time to dig into their background or independently verify their numbers. They’re also running ads in Montana so they obviously have an agenda. And there’s absolutely nothing wrong with that so long as what they’re saying is truthful and fair, and we have no indication that it isn’t.

So with that namby pamby introduction, just what’s their point that’s worth talking about here? It’s mainly that Congress is looking at cutting off 90% Montana’s gasoline supply. Well, not cutting it off but making it come from someplace else and making it more expensive. I’m going to selectively cut and paste a little rather than trying to paraphrase or quote. The bold is mine. You can get the full text at their web site.

“New Campaign Seeks to Educate Montanans on Negative Impacts of a Nationwide Low Carbon Fuel Standard (LCFS)

“In any form, a Low-Carbon Fuel Standard would represent a major blow to America’s economic health and strategic position,” said CEA’s Michael Whatley, a leading expert on LCFS proposals. “That’s because the energy we import daily from friends like Canada would essentially be prohibited from crossing our border. If these abundant resources are cut off, our dependence on unstable regions of the world would skyrocket, and so would the price American consumers pay at the pump.

Added Whatley: “More than 90 percent of the oil Montana consumers depend on each day comes from Canada – energy that would be banned from crossing the U.S. border under an LCFS. As such, this campaign seeks to alert everyday Montanans about the serious implications of this policy, and enlist their support in ensuring it does not come to pass.”

So tell me again how we’re supposed to get off foreign oil (I don’t count Canada as foreign. They drink LaBatt’s for crying out loud)? What happens to people who are just getting by when their gas bills skyrocket? Where’s all that compassion for the little guy?
Just one more brick on the double-talk pile from people whose real agenda is to control how we live, what we buy, how we drive, what we pay, what we say, and everything else. They say they want to reduce our energy dependence, but what they really want to do is reduce our energy, no matter what the cost to our economy.

There is no credible evidence that “green” jobs will outnumber jobs lost if energy prices skyrocket, as they inevitably would under proposals like this and its cap and trade bretheren. If there’s a market for this stuff the private sector looking to line its own evil pockets will find and satisfy that market, and satisfly consumers and manage the resources behind it in the process. Anything else is just robbing from Peter to pay Paul, with special interests and Washington insiders deciding who’s Peter and who’s Paul.

They’re just so much smarter than us. If only we’d just sit back and not worry our pretty little heads about anything but paying our taxes life would be good. Well, it’d be good for the insiders and special interests making the rules. The rest of us can eat cake.