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The FDA's Weak New Drug Quality Office

Roger Bate - January 26, 2015

After more than two years of deliberation, the FDA has finally launched a new Office of Pharmaceutical Quality to standardize, centralize, and improve the agency's efforts to safeguard America's supply of medicines.

It is a real pity, then, that the new office is crippled from the beginning. There are no plans to publicize the data collected, so physicians and patients will remain in the dark, unsure of the true quality of the medicines they prescribe or ingest. The new office merely amounts to bureaucracy as usual, just under another name.

I hope I'm wrong. But the fact is that FDA has presided over lapse after lapse on drug quality in the past decade, opaque to the public, hostile to critics in the medical community, lacking access to combat the biggest offenders -- namely Indian pharmaceutical companies -- and firewalled from any real consequences for its failures.

Less than two years ago, Ranbaxy Laboratories, one of the largest Indian generic-drug manufacturers, pled guilty to seven felonies for deliberately masking the production and sale of substandard medicines and paid a record $500 million fine. In the time since, another half-dozen Indian companies have admitted major problems with processes and data quality and numerous product withdrawals.

In 2014, Dr. Reddy's Laboratories, the largest Indian drug manufacturer, recalled 13,500 bottles of a blood-pressure drug due to problems with pill solubility. Wockhardt, another leader Indian manufacturer, recalled 110,000 bottles of the same blood-pressure medicine for the same reason. Bloomberg News revealed that a lab technician at an Indian research facility run by Sun Pharma deleted negative testing data for a major drug line. The medicine was ultimately cleared and sent to America.

FDA inspections did uncover some of these problems -- but the agency was initially alerted to the worst of them by whistleblowers. Worse still, the agency has ignored many efforts by credible whistleblowers to sound the alarm on certain FDA-approved medicines. For example, medications that have a time-delay mechanism (such as the antidepressant budeprion) or a narrow therapeutic window (such as the transplant medication cyclosporin) can pass current FDA standards and still not work properly.

Joe Graedon of the People's Pharmacy website and radio show has been receiving complaints about these types of medications for years; antidepressants that don't stop people feeling suicidal are just the most common. But the FDA has largely ignored his appeals for transparency measures that would put more of this information in the hands of doctors and patients.

Under current rules, medications can be considered interchangeable (bioequivalent) by FDA if they range from 80 percent to 125 percent of the active ingredient availability of the innovator product. But for many medications, this range is simply too wide, especially if one is switched from one generic at the low end of the range to another at the high end. Narrowing the allowable range probably makes sense for the most sensitive drugs, and this is what Graedon wants. But as a start, the FDA could simply publish the bioequivalence data that all companies have to file with the agency. These data are not proprietary in any business sense, but publication would allow physicians to advise at-risk patients to not take certain products. To be fair, these data are not always easy to interpret, but surely physicians have the right to know them and to advise patients accordingly.

Right now most patients, and probably most physicians, don't even think about which generic medicine to choose. The substitution is typically automatic or at the discretion of a pharmacist. My team's ongoing research of the cholesterol-lowering medication atorvastatin (the generic of brand Lipitor) has found that in many pharmacies, patients are routinely bounced from one product to another, with the patient none the wiser.

For cardiologist Harry Lever, of the Cleveland Clinic, this is a problem. Dr. Lever routinely argues with insurers and pharmacists to ensure his patients get better medication, usually asking them to allow his patients to choose generic medications that are not manufactured in India. Most patients are not lucky enough to have Dr. Lever as their physician.

If we make quality data publicly available, physicians and patients could make better-informed decisions about their health. But, alas, that would undermine the FDA's facade, which is that all of the generic products it approves are identical. On numerous occasions Dr. Janet Woodcock, the key FDA official overseeing the new office, has said that she believes the public would not benefit from having access to drug-quality information.

Nonsense. When it comes to quality data on the medicines that we all consume, transparency should be a right. If FDA could ensure no defective products were on sale in US then its paternalism might be justified, but that is simply not the case.

Roger Bate is an adjunct fellow at the American Enterprise Institute and the author of Phake: The Deadly World of Falsified and Substandard Medicine.

Tools for Transparency in Copyright Law

Molly Schwartz - January 23, 2015

Over the span of one week in October 2014, Google received requests to remove more than 11 million URLs from its search engine due to copyright-infringement claims.

Enshrined in Article One of the U.S. Constitution, the purpose of copyright is to provide incentives for innovation by creating financial rewards for new creations. But in the more than two centuries since the Constitution was written, we have witnessed radical evolution in the methods of creation and the rise of lucrative industries that profit from the commodification of creative works.

The result has been a complex and sometimes dizzying web of copyright rules, unevenly and erratically enforced, particularly in the digital realm. For the average Internet user, it can be difficult to discover what materials are in the public domain, and which can be freely accessed and reused. When does fair use apply? What material has been removed from the Internet and on what legal grounds?

Luckily, the same technologies that complicate copyright law also provide us new methods for collecting, analyzing, understanding, and distributing data about how our world operates, both in terms of copyright enforcement and beyond. APIs and Twitterbots continuously scrape information sources and deliver real-time updates, such as every time a congressional staffer edits a Wikipedia page.

By collecting and publishing data about takedown requests, digital platforms like Google and Wikimedia are beginning to provide insight into the ways that rights holders are enforcing copyright law. The reports showcase aggregate trends on how much content is being removed over time and which copyright owners are requesting the most takedowns.

The details reveal some of the unusual and, in some cases, unfair ways that concerned parties try to apply intellectual-property law. Wondering why you've had difficulties finding recipes for "Derby Pie"? Kern's Kitchen trademarked the name and has litigated tirelessly to make sure sites do not post recipes using that name without permission.

The Chilling Effects clearinghouse functions as a searchable archive of requests to remove purportedly copyrighted information from the Internet, most of them made under the Digital Millennium Copyright Act. Though a popular tool for researchers, advocacy groups, journalists, and interested individuals, the project has been criticized as a tool for pirates as well, as the takedown notices contain links to the allegedly offending content -- and it recently removed its individual notice pages from search-engine results. The decision was met with harsh criticism from online news publications TechDirt and TorrentFreak, prompting Chilling Effects to issue an explanation:

Given increased public attention on the project, the wide variety of notices and types of claims that we catalog, and the sheer number of notices included in Chilling Effects database, we decided to take the interim step of de-indexing the site's individual notice pages from search engines' search results. Now that we have taken this step, we are hard at work building new tools and workflows that will allow us to better achieve the balance we are constantly seeking to strike between our dual missions of transparency and educating the public (on the one hand) and the strongly-felt concerns of those who send takedown notices (on the other).

That workflow overload attests to the growing appetite for transparency reporting mechanisms. Increased public awareness about how copyright laws are enforced has spurred activism by those who want to develop reasonable copyright solutions for today's information environment. Transparency sites have changed the game by drawing public scrutiny to information that certain parties have tried to suppress, in accordance with a phenomenon known affectionately as the Streisand effect.

Copyright law does not exist in a vacuum, and transparency mechanisms let us all be part of the debate. Increased access to creative works has the potential to foster new creativity and economic growth. Transparency reporting is just one tool in an ongoing process to reform copyright law to strike a fair balance between the right to freedom of expression and the right of copyright owners to receive compensation for their work.

Molly Schwartz is a senior fellow with the R Street Institute.

SCOTUS's New Race Case: Housing Discrimination

Nikole Hannah-Jones, ProPublica - January 21, 2015

This week, the U.S. Supreme Court will take up one of the most important civil rights cases of the last decade. If you've never heard of Texas Department of Housing and Community Affairs v. The Inclusive Communities Project, you have company. The issue of housing segregation has never captivated the nation's attention like affirmative action or voting rights.

But today, two days after the Martin Luther King Jr. holiday, the court will hear arguments in the Texas case that many fear could gut the Fair Housing Act, the landmark 1968 law that was passed just days after King's assassination.

"This case has as broad of a reach as anything the court has decided in the last 10 years," said Myron Orfield, director of the Institute on Metropolitan Opportunity at the University of Minnesota Law School, because housing segregation is the foundation of racial inequality in the United States.

The case concerns whether the Fair Housing Act, which sought to end the longstanding segregation of America's neighborhoods, should be read to only bar intentional discrimination. For four decades, federal courts have held that the law should be interpreted more broadly, ruling again and again that if the policies of governmental agencies, banks or private real estate companies unjustifiably perpetuate segregation, regardless of their intent, they could be found in violation of the Fair Housing Act.

All 11 of the federal circuit courts that have considered the question have seen it that way. As well, the U.S. Department of Housing and Urban Development, the agency charged with administering the act, issued a regulation enshrining the principle in 2013.

The nation's highest court does not typically intervene in cases unless there's been disagreement in the lower courts. But this court has been determined to have its say on the housing issue and the legal theory that has come to be known as "disparate impact." The Texas case marks the third effort in as many years by the current justices to consider the intent and reach of the housing act. The other two cases were withdrawn or settled in deals reached before oral arguments, as fair housing advocates feared they would lose before the Roberts Court.

"It is unusual for the Court to agree to hear a case when the law is clearly settled. It's even more unusual to agree to hear the issue three years in a row," said Ian Haney López, a University of California, Berkeley law professor.

The Texas case involves a nonprofit organization that works to promote integrated communities and the Texas state housing authority. The nonprofit, Inclusive Communities, showed that nearly all the affordable housing tax credits approved by the Texas housing agency had been assigned to Dallas' black neighborhoods and almost none of it to white neighborhoods. A federal judge did not find intentional discrimination on the part of Texas officials, but held that the outcome unacceptably increased housing segregation and that the housing agency could have taken steps to ensure that affordable housing units were allotted more equally.

Texas appealed the ruling, raising the stakes when it decided to challenge whether the Fair Housing Act allowed such "disparate impact" rulings at all.

For many, the Supreme Court's persistence signals a determination to install intentional discrimination alone as the standard for such cases. The Roberts Court is considered by a host of scholars and others to be the most conservative since the 1930s, and so such an outcome would be consistent with its more narrow interpretations of laws governing voting rights and school segregation.

"Those who care about eradicating housing discrimination have to be very concerned about the Supreme Court taking this case," said Erwin Chemerinsky, dean of the University of California School of Law, where he is a constitutional scholar.

Elizabeth Julian, president of the Inclusive Communities Project and the former Assistant Secretary of Fair Housing and Equal Opportunity at HUD, is among those who are worried.

"Reversing essentially four decades of case law would send a message that is very concerning," Julian said.

A few generations ago, most housing discrimination was overt. Banks openly refused to lend to black homebuyers. Public housing officials used to announce that certain developments were for white residents, others for Latinos. But the nature of housing segregation has evolved over the years, and the fight against it has had to change as well. Today, banks may well charge higher loan rates in certain communities, but they can also insist it has nothing to do with those neighborhoods being black or Latino. Local planning boards can concede that most affordable housing efforts have been placed in black neighborhoods, but maintain that it was not by malicious design.

The theory of disparate impact, then, has often been the only tool to address ongoing housing discrimination. Landlords or lenders who implement policies or practices that disproportionately impact racial minorities can be found in violation of civil rights law if they cannot justify those practices – even if no one can show they acted out of racial animus.

The U.S. Department of Justice has used disparate impact to win record settlements from banks that charged higher rates to black and Latino borrowers with similar credit histories as white borrowers, but could not justify the practice.

A fair housing group used disparate impact to topple a "blood relative" ordinance passed by nearly all-white St. Bernard's Parish in the wake of Hurricane Katrina. The ordinance barred homeowners from renting to anyone who was not kin. Civil rights lawyers were convinced officials passed this law to keep out black renters, but could not prove racist motivations. But when St. Bernard's Parish could not come up with a plausible justification for the ordinance, a court struck it down.

This tool, for the first time, is in real jeopardy.

The Supreme Court has been weakening many civil rights protections for decades. The Rehnquist Court, for instance, was known for getting the courts out of the business of addressing racial inequities. But the Roberts Court has gone a critical step further, severely curbing efforts undertaken by Congress and the executive branch to address our nation's long history of discrimination.

In 2007, the Roberts Court came down against two school districts that were trying to maintain gains in integration. In 2009, the court ended the attempts of New Haven, Conn., officials to ensure that the city's promotion practices were fair after no black firemen passed a promotion exam, saying the efforts discriminated against white firefighters. In 2013, it held that a key provision of the Voting Rights Act intended to address the disenfranchisement of black voters had expired. And last year, it upheld Michigan voter-approved ban on affirmative action.

"The Supreme Court is newly aggressive in the area of race," said Haney López. It is targeting efforts by other branches of society to remedy segregation and is striking them down."

Strikingly, if it ultimately rules against Inclusive Communities, in under a decade the Roberts Court will have limited pivotal protections in each of the three landmark civil rights laws passed in the 1960s: the 1964 Civil Rights Act, the 1965 Voting Rights Act and the 1968 Fair Housing Act.

The Court's aggressive tack has been welcomed by conservative groups, who believe the 14th Amendment of the Constitution, intended to ensure former slaves equality under the law, requires strict legal colorblindness.

The Pacific Legal Foundation, an advocacy organization that promotes individual rights, has long looked forward to a showdown over the Fair Housing Act. It filed an amicus brief in support of the Texas housing agency.

Ralph Kasarda, a lawyer at the Pacific Legal Foundation, said that disparate impact puts an unfair burden on landlords, lenders and local governments.

He gives this example. A landlord requires a certain credit score for renters in order to ensure that they will pay their rent. For a host of societal reasons, African Americans and Latinos tend to have lower credit scores. The landlord could find himself defending against a fair housing suit for a race-neutral policy.

"The problem that I have is imposing liability on someone for doing something without any intent to harm someone," Kasarda said.

Of course, even under the legal theory of disparate impact, legitimate business practices that can be justified do not violate the law even if they lead to different results among different racial groups.

But the Pacific Legal Foundation's chief gripe is race consciousness itself.

In order for Texas housing officials to ensure they were allotting subsidized housing in a racially balanced way, they would have had to take into account the racial makeup of the communities where the housing was to go. Kasarda and others argue that race-conscious policies designed to help racial minorities are no better than those designed to harm them.

"You have the case where a government or organization might resort to race-based decisions to avoid disparate impact," he said. "The Pacific Legal Foundation believes that is unconstitutional."

Julian, of Inclusive Communities, doesn't buy the conservative argument. The Fair Housing Act was designed to address the effects of racial segregation, she said.

"It doesn't require getting into the hearts and minds of people and motives of individuals because at the end of the day the motives don't matter. It's the perpetuation of segregation that is the harm," Julian said.

She offered an analogy: Say a driver is texting and hits someone with her car and puts them in the hospital.

"The fact that you did not mean to is beside the point," Julian said. "No, you didn't mean to hit them, but you are going to be held accountable because you engaged in behavior that you knew could cause harm, and you did it anyway."

The end of disparate impact policies and cases, she argued, would severely hamper advocates' ability to go after systemic housing discrimination in a nation where the segregation of black Americans has barely budged in many cities and where it is growing for Latinos. "It would be taken as a greenlight to say you can do anything you want, as long as you do not have the offending email."

This piece originally appeared at ProPublica, where Nikole Hannah-Jones is a reporter. For more about the fate of the country's fair housing efforts, read Nikole Hannah-Jones' story about how the government betrayed a landmark civil rights lawProPublica is a Pulitzer Prize-winning investigative newsroom. Sign up for their newsletter.

Once, Same-Sex Couples Couldn't Wed; Now, Some Employers Say They Must

Julie Appleby, KHN - January 21, 2015

Until recently, same-sex couples could not legally marry. Now, some are finding they must wed if they want to keep their partner's job-based health insurance and other benefits.

With same-sex marriage now legal in 35 states and the District of Columbia, some employers that formerly covered domestic partners say they will require marriage licenses for workers who want those perks.

"We're bringing our benefits in line, making them consistent with what we do for everyone else," said Ray McConville, a spokesman for Verizon, which notified non-union employees in July that domestic partners in states where same-sex marriage is legal must wed if they want to qualify for such benefits.

Employers making the changes say that since couples now have the legal right to marry, they no longer need to provide an alternative. Such rule changes could also apply to opposite-sex partners covered under domestic partner arrangements.

"The biggest question is: Will companies get rid of benefit programs for unmarried partners?" said Todd Solomon, a partner at McDermott Will & Emery in Chicago.

It is legal for employers to set eligibility requirements for the benefits they offer workers and their families -- although some states, such as California, bar employers from excluding same-sex partners from benefits. But some benefit consultants and advocacy groups say there are legal, financial and other reasons why couples may not want to marry.

Requiring marriage licenses is "a little bossy" and feels like "it's not a voluntary choice at that point," said Jennifer Pizer, senior counsel at Lambda Legal, an organization advocating for gay, lesbian and transgender people.

About two-thirds of Fortune 500 companies offer domestic partner benefits, but only a minority is changing the rules to require tying the knot, said Deena Fidas, director of the workplace equality program at the advocacy group Human Rights Campaign.

Because same-sex marriage isn't legal in all states, "many employers operating in multiple states ... are retaining their partner benefit structures," said Fidas.

Most companies making the changes, including Verizon, are doing so only in those states where same-sex couples can get married. And most give workers some time to do it.

"We gave them a year and a quarter to get married," said Jim Redmond, spokesman for Excellus BlueCross BlueShield, which made the change for employees shortly after New York allowed same-sex unions.

Employers that offer domestic partner benefits -- for both same-sex and opposite-sex partners -- generally allow couples in committed relationships to qualify for health and other benefits upon providing documents, such as financial statements, wills, rental agreements or mortgages, proving they are responsible for each other financially.

Such benefits were particularly important before the federal health law barred insurers from rejecting people with pre-existing medical conditions.

"We had clients over the years who were living with HIV … the only health insurance they had, or had hope of getting was their partner's, through a job," said Daniel Bruner, director of legal services at the Whitman-Walker Health clinic in Washington DC. "Now folks have more health insurance options."

After the Supreme Court ruled the federal Defense of Marriage Act unconstitutional in 2013, the portion of the health insurance premium paid by employers on behalf of the same-sex spouse was no longer taxable under federal rules, although state taxes often applied where such marriages were not legal. When state marriage laws change, so do those tax rules.

In Arizona, Dena Sidmore and her wife, Cherilyn Walley are saving more than $300 a month in taxes on the health insurance from Walley's state job, which covers them both. The savings came after the state's same-sex marriage bar was thrown out by the courts in October.

They didn't marry for benefits. They already had coverage under domestic partner requirements affecting Arizona state workers. They simply wanted to be married. Indeed, they tied the knot in September 2013, after driving all night to Santa Fe, N.M., where same-sex marriage was legal.

"It was lovely," Sidmore said of the ceremony at the courthouse. But for her, the real change came when Arizona's bar on same-sex marriage was overturned by the courts. She remembers thinking: "This is real. It's not just a piece of paper."

After the courts lifted the same-sex marriage ban, Arizona dropped its domestic partner program. State workers had until the end of last year to marry if they wanted to keep a partner on benefits.

Sidmore has no objection to employers requiring a marriage license for benefits because "spousal benefits require marriage," although she thinks there should be exceptions for older residents who might face the loss of pensions or other financial complications if they remarry.

Benefit experts recommend that employers consider what it might mean for workers if benefits are linked to marital status — especially those that operate in states where same-sex marriage is not legal.

While some couples, like Sidmore and Walley, may be willing to travel to tie the knot, others may not want to, or may be unable to afford it. Additionally, some workers may fear if they marry, then move or get transferred to a state where same-sex marriage is barred, they would face discrimination.

Joe Incorvati, a managing director at KPMG in New Jersey, married his partner, Chuck, in 2013 when it became an option. "We'd been together for 38 years, so it just seemed natural," he said.

KPMG offers domestic partner benefits and does not require employees to be married for eligibility. While he's comfortable in New Jersey, Incorvati said it could be a problem if his company wanted to transfer him to a state where same sex marriage is not legal.

Even though his work benefits would remain the same, "Would I have the same rights as in New Jersey?" Incorvati asked. "The answer may be no."

The piece originally appeared at Kaiser Health News (KHN), a nonprofit national health policy news service, where Julie Appleby is a senior reporter. | @Julie_Appleby

Ohio's Energy Efficiency Fiasco

Robert Michaels - January 21, 2015

Winter is here, and Americans are coping with more than just the cold -- many are dealing with a yearly spike in their energy bills. As rational consumers, they can be trusted to make efficient choices, and they benefit from doing so. Unfortunately, misguided policies often get in the way. Take, for example, Ohio's recent attempt to reduce energy use.

According to my research, a 2008 law drove utility bills in the state higher -- even as the law's energy-efficiency goals were in doubt. As of late last year, most energy-industry reports indicated that SB 221 was on track, but the evidence said otherwise. Accordingly, at the beginning of 2015, SB 221 was suspended for two years pending evaluation of its effects by an independent panel.

If it desires, the state will restore the law's efficiency requirements when the evaluation is finished. Before doing so, lawmakers should carefully note the key problems with the legislation as it was written and implemented.

Under SB 221, the Public Utilities Commission of Ohio (PUCO) must enforce an "Energy Efficiency Resource Standard" on Ohio's utility companies (municipal and cooperative systems are exempt). By 2022, utilities are required to facilitate a 22 percent reduction in energy use.

To accomplish this, they can spend up to 3 percent of their annual revenue on efficiency programs such as rebates on energy-efficient appliances, tune-ups of HVAC systems, or energy-efficient light-bulb subsidies, and then recover what they spend through customers' bills. To date, Ohio customers have paid more than $1 billion.

Aside from light-bulb subsidies (which cannot be tied to specific consumers and are addressed below), few of these programs are affecting very many consumers. In April 2013, for example, only 2 percent of FirstEnergy's business customers participated in its efficiency programs, leaving the remaining 98 percent to shoulder the costs. Only 7 percent of its residential users benefited from programs aimed at them.

Energy efficiency is important, and advocates of the law might argue that it's worth the billion-dollar public expense. They started with high hopes that innovative programs would benefit Ohio and the nation. But, expensive or not, the law doesn't appear to be working.

Utilities have complied largely by subsidizing retail sales of energy-efficient light bulbs. In 2012, lighting programs accounted for 83 percent of Dayton Power and Light's alleged energy savings, a lower percentage than some other utilities. Among the company's residential customers, lighting was 88 percent of the total.

Here's the catch: Most of those energy-efficient bulbs would have been purchased with or without SB 221. If you buy a subsidized bulb but would have paid full price, the industry calls you a "free-rider." Most other states account for free-riders in their measurement; Ohio does not. (A few years ago, PUCO, with the backing of utilities, ruled that free-riding is a form of saving, claiming that "gross" rather than "net" effects are what matters.) California calculates that about 70 percent of bulb buyers free-ride, and there is no reason to assume that Ohio is much different. It's clear that the great bulk of Ohio ratepayers' $1 billion has wound up in the pockets of free-riders.

If SB 221 is reinstated in its original form, these problems will become bigger, and quickly. PUCO rules require each utility to retain a consultant for its program. In 2013, most of their reports found the same thing: Opportunities for additional efficiency are rapidly diminishing. Dayton Power and Light's consultant reports that cost-effective programs are likely to run out before it achieves half of the law's required 2022 savings. The American Council for an Energy Efficient Economy acknowledges a need to devise new programs.

No one wants to break one of the biggest secrets in Ohio: Its energy-savings figures thus far are grossly in error, and opportunities to make up for it look scarce. The future belongs to the energy-efficient, but Ohio will never get there until its policymakers understand the difference between free-riding and true efficiency.

Robert Michaels, a professor of economics at California State University, Fullerton, is author of "Ohio's Energy Resource Standard: Where are the Real Savings?", a recent study published by the Mercatus Center at George Mason University.

Reforming Obamacare: Start With the Young

Earl L. Grinols - January 20, 2015

After the lofty promises that led to passage of the Patient Protection and Affordable Care Act, young people are waking up to how much the law targets them with higher costs. Yes, those lucky enough to be covered on their parents' health plans can postpone the consequences until they are 26. But for the rest, the situation is grim: Young people face disproportionately high costs to pay for coverage and a crushing burden of taxes that could impede their future prosperity.

Young people 20-35 constitute about 20 percent of America's population, but they represent 46 percent of the uninsured -- and, according to an analysis by Manhattan Institute scholar Avik Roy and colleagues, a 25-year-old male living in California and earning just $29,000 a year pays more than $1,140 more per year for health insurance due to the ACA. More broadly, the study analyzed the situation for childless, unmarried young men and found that "more than 90 percent of the subsidy-eligible population would face higher premium costs under Obamacare, even when you take the subsidies into account."

Let's look at the interests of young people realistically. Buying health insurance is not a priority for most young adults precisely because they are young and healthy. They have many pressing demands on their resources in furthering their educations, paying off student loans, raising families, and perhaps buying a home or starting a new business. We need to give young people the freedom to use more of their money as they choose.

There is a better path. Imagine a world in which young Americans are truly free to make their own health-care decisions. They are free to choose their own health insurance and buy it through less expensive competitive national markets. They can voluntarily join groups to buy the health insurance that best suits their needs. And they are guaranteed coverage at fair prices.

This health-insurance market would also give people a choice in the design of their health-insurance policies, prohibit denial of coverage by participating insurance companies, and allow young people to keep the coverage they now have or select a different policy from competing plans. But insurers would not be forced to discriminate against young adults, as they are in Obamacare, which requires insurers to charge the young at least a third as much as the old. And since we are envisioning all this happening in a real market, it would be feasible for insurers to profit by offering this insurance to young people.

Can this be done? Yes. To illustrate, let's start with a simplified case in which every young adult born in 1992 is free to select a comprehensive health-insurance policy to cover all non-elective medical procedures. They are able to select each January from competing plans on a health-insurance exchange.

The policies are personal and portable and likely have a deductible, co-insurance payments, and an annual out-of-pocket limit. Young people who decide to participate in any given plan pay the same premiums as anyone else in the Class of 1992 who made the same choice.

Companies can agree to postpone some or all of the premium payments for those who currently couldn't afford them. Arrangements even can be made for Americans to help the needy pay premiums through voluntary check-off boxes on their federal income-tax returns.

As time passes, the Class of 1992 continues to pay the same premiums as others of their age who choose the same insurance, and are guaranteed that they can have continuing coverage at these prices.

Insurance companies collect the premiums and process the claims. If they choose to, the companies participate in a national reinsurance pool that helps to even out their risk by sharing it. This "insurance for insurance companies" promotes a profitable environment for the insurance providers. That is, if one company's 1992-born group spends more (or less) on health care in a given year than the national average for this group, then it receives payment from the pool (or makes a payment into the pool).

Health-care providers are required to post their prices. Insurers keep costs down and service quality high because they compete across state lines for customers who are now much better informed and more engaged in their health-care choices. Deductibles and coinsurance create the incentive for consumers to care about costs. Information about volume of services provided can also be listed, plus other quality information. Competition among health-care providers forces their prices to be honest and low.

In some cases, a young person may be on a company health-care plan. A freedom-of-choice provision for the young lets them use as they choose whatever health-care dollars are available to them -- whether through employer contributions, private charity, or government subsidies. Our 22-year-old may keep whatever insurance he (or she) has, but he also has the option of taking the employer contributions devoted to his health benefits to buy insurance. If he saves money by buying from a nationally competitive company, he keeps the difference tax-free.

An important detail involves keeping our 1992-born Americans continuously insured. Penalties for lapsed coverage and open-enrollment periods are among the tools to accomplish this. Others are available.

The reality could be even better than this simplified description: Pools could be created for each age and gender grouping, coverage for elective medical procedures for those who want them could be made available by policy riders, policyholders could be allowed to select from a range of policy options involving deductibles, and the young could be allowed to choose the best for themselves of these options, with the resulting policies priced actuarially fairly.

The ability to buy insurance and to continue one's insurance without regard to preexisting conditions would be made a reality for young adults through the reinsurance feature and inducements to continuous coverage. As time passed, the arrangements just described could be extended with adjustments (such as high-risk pools) for groups involving those over the age of 35.

When good economics, good politics, and justice merge, we should pay attention. This is more than an adjustment at the margin; it is a transformative idea for our youth. And it is doable. It would totally reform Obamacare, put the young on the side of their true defenders, and start the process of forcing the rest of the insurance market and health entitlements to actuarial fairness and genuine competition.

As we look for new and better solutions, it would be good to start with the young.

Earl L. Grinols teaches in the Robbins Institute for Health Policy and Leadership, Baylor University, and is co-author of Health Care for Us All (Cambridge University Press, 2009).

One More Reason College Is So Expensive

Thomas K. Lindsay - January 19, 2015

Those familiar with the 1978 campus comedy Animal House will recall the line from John Belushi's character, Bluto, who, on learning that he would soon be expelled from the university, lamented, "Seven years of college down the drain!"

Today, the laugh may be on us -- or more precisely, on college students, their parents, and the taxpayers who help fund higher education. Why? Because "four-year college" today takes most students significantly longer than four years, raising still higher the cost of higher education.

As the college-bound public becomes more desperate over tuition hyperinflation and the concomitant ballooning of student-loan debt, it needs also to become more aware of this additional obstacle to college affordability. Accounts in the media recently have begun to call attention to this dynamic -- and to college students' relative obliviousness to the toll taken on their financial futures by failing to graduate in four years.

UCLA's Higher Education Research Institute conducted a national survey of college freshmen, finding that nearly nine out of ten believe that they will complete their bachelor's degrees in four years. But the odds against this are formidable. According to U.S. Department of Education statistics, today, fewer than half of all students succeed in graduating in four years. Worse, even after six years in college, roughly 45 percent of students still have failed to complete their degrees. Every semester adds to a student's total college bill -- and, for a growing number, to the student-loan debt they will acquire in the process. Delayed graduation also carries an opportunity cost: Every extra semester spent in college is another half-year of lost earnings.

According to one report, citing data compiled by Complete College America, "the average added cost of just one extra year at a four-year public university is $63,718 in tuition, fees, books, and living expenses, plus lost wages each of those many students could have been earning had they finished on time." The report also cites a study by Campaign for College Opportunity, which, looking at higher-education costs in California, calculates that "the average student at a California State University campus who takes six years instead of four to earn a bachelor's degree will spend an additional $58,000 and earn $52,900 less over their lifetimes than a student who graduates on time, for a total loss of $110,900."

Why do students saddle themselves with these additional expenses? A number of factors are at play. First, too many students, though intent on graduating in four years, nonetheless fail to register for a sufficient number of course each semester. The average bachelor's degree consists of roughly 120 credit hours, which means that, to graduate in four years, a student must take, on average, 15 hours a semester, every semester, for four years.

Such rudimentary calculations would seem easily to fall within the capacity of those who qualify to attend a four-year college, but, according to a story citing the findings of the education-consulting group HCM Strategists, roughly half of today's students fail to make this calculation -- or, if they make it, fail to act on it. HCM surveyed freshmen in Indiana and California who had indicated that they intended to graduate in four years. HCM discovered that only half of these students had signed up for the number of courses needed to reach their goal.

This failure to take the requisite number of courses points to the second factor explaining why students fail to graduate to graduate in four years -- faulty advising. As someone who taught in universities in the 1980s and '90s, I can testify that part of this failure owes to the fact that, at too many institutions today, full-time tenured and tenure-track professors do less student advising than they did in the past, if they do any at all.

In some cases, these advising functions have been transferred from the faculty to "professional advising offices." Although this move is intended to free up faculty time in order to allow professors to devote more effort to research, students have suffered as a result. Professors know better what the strengths and weaknesses of their advisees are, know better which professors and which programs are stronger and weaker, and, by virtue of their training, have a deeper understanding of which courses contribute best to a meaningful college experience. Doubtless such praise may overestimate the talents and motivation of some professors while underestimating those of professional advisers, but, as a former academic as well as a parent of four college students, I've experienced how deficient "professional academic advisers" can be.

Another factor explaining students' failure to graduate in four years has nothing to do with their intelligence or motivation, and everything to do with the failure of our colleges and universities to keep up their end of the bargain. At too many schools, even students who are willing and able to take the needed 15 hours a semester cannot do so, because the courses required for graduation are not offered with sufficient regularity to make a four-year stint possible.

"State budget cuts" are sometimes cited by universities as the cause for the dearth of course offerings, but this argument does not wash here in my home state of Texas. Statistics compiled by the Texas Higher Education Coordinating Board demonstrate that, from 2000 to 2010, state funding for public higher education did in fact decline -- 15.9 percent on an inflation-adjusted, per-full-time-pupil basis. However, during the same period, public-university fees and tuition collected increased 76.1 percent. In Texas, at least, the whole truth behind the "state-budget-cuts-made-us-do-it" half-truth is that there has been a mild decrease in state funding accompanied by a comparatively wild increase in university spending. Apparently, not enough of this spending is being used to ensure that a sufficient number of courses is offered each year to allow students to graduate on time. Those outside Texas would be well advised to investigate whether this scenario applies to their states also.

If justice delayed is justice denied, a bachelor's degree delayed is a bachelor's degree made more expensive. Students and their parents need to get the message, and universities need to devote more effort to making the "four-year degree" a practical reality once again.

Thomas K. Lindsay directs the Center for Higher Education at the Texas Public Policy Foundation and is editor of He was deputy chairman of the National Endowment for the Humanities under George W. Bush. He recently published Investigating American Democracy with Gary D. Glenn (Oxford University Press).

Robert VerBruggen - January 18, 2015

President Obama wants to make community college free for everyone who can maintain a 2.5 GPA. Naturally, there's been some debate over when programs like this should be universal instead of targeted toward the poor.

But just how rich are community college kids anyway? This is hardly a cross-section of the general population: Many Americans don't pursue higher ed at all (a fifth of us don't graduate high school on time, and a third of high-school grads don't enroll in college the next fall), and 60 percent of those who enroll go to four-year schools.

Here are some numbers from a 2011-12 survey, which I pulled from the National Center for Education Statistics. For comparison, in 2012 the poverty line for a family of four was about $23,000, the median household income was just above $51,000, and the median income for a family of four was around $75,000

Two-year schools do have a higher concentration of poorer students, but there are plenty of middle-class and even wealthy kids there too. 42 percent of public two-year students come from parents who earn at least $65,000.

The NCES also has numbers relevant to that 2.5 GPA requirement:


Also worth noting: Obama's plan could change these numbers, for example by making community college an easier choice for kids who are too poor -- or too unmotivated -- to enroll today, or by giving students (and schools) an incentive to keep GPAs above 2.5.

Robert VerBruggen is editor of RealClearPolicy. Twitter: @RAVerBruggen

Public-Sector Union Fixes for the States

Trey Kovacs - January 16, 2015

As states begin their new legislative sessions, lawmakers have many opportunities ensure that government works toward the benefit of the public, not the benefit of special interests like government-employee unions.

While labor law is not usually a top concern for the average citizen, it is key to controlling wasteful spending. In many states, government-employee unions -- which are private parties -- benefit immensely at taxpayer expense. Below are a few modest reforms that state legislatures should consider this year to ensure tax dollars are well spent.

Greater transparency is the first step toward making government more accountable to the public. While every state has some kind of law requiring that the public's business be performed in the open, these laws normally do not apply to collective-bargaining negotiations between the government and unions. In fact, the majority of states have little to no law relating to transparency in public-sector collective-bargaining sessions, according to a recent Goldwater Institute report.

As a result, most government collective-bargaining agreements are finalized in closed-door meetings. Taxpayers and the media should be able to attend collective-bargaining negotiations to ensure that the public's interest is being represented.

Moreover, open government is a political winner. For instance, last year, a Colorado ballot measure that proposed to open collective-bargaining negotiations at public schools passed with 70 percent of the vote. Other states should follow the Centennial State's lead.

Opening public-sector collective-bargaining negotiations to the public would bring attention to the wasteful provisions that unions frequently win, some of which should be banned outright. One such provision is union release time, during which public employees perform union business -- like contract negotiations, lobbying, attending union meetings, and defending members at disciplinary hearings -- while on the clock at taxpayer expense.

Release time is no more than a taxpayer-funded subsidy to government unions, with taxpayers receiving nothing in return. For example, the New Jersey State Commission of Investigation surveyed a number of state and local agencies and municipalities and found that, between 2006 and 2011, union release time cost New Jersey taxpayers more than $30 million. It also found that in a "recent one-year period, a limited survey found 88 government employees on full-time union leave at a total cost to taxpayers of more than $7 million." State lawmakers should pass legislation to end this abusive practice.

Automatic dues deduction is another provision that uses public resources to the exclusive benefit of government unions. Most state and local governments allow contract arrangements in which public employers collect dues payments -- including political contributions -- directly from employees' paychecks. Legislators should require unions to use their own resources to collect dues and political payments from their members.

Finally, state labor laws should require unions to stand for reelection every few years. The vast majority of public employees never had the chance to vote for the union that represents them, according to research by the Heritage Foundation. In general, once a government union organizes a public employer, it remains the exclusive representative of the workforce in perpetuity.

For example, in 1974 Florida enacted a law allowing collective bargaining in the public sector. "By 1975 the state's 10 largest school districts had unionized," notes Heritage analyst James Sherk. "Just 1 percent of current teachers were on the job in 1975. Fully 99 percent of the teachers in Florida's largest school districts had no choice about being represented by their union."

Only one state, Wisconsin, now requires union-recertification elections, as result of Governor Scott Walker's labor reforms. This newfound worker choice has been well-received by public employees in the Badger state. In 2013, the first year Wisconsin held union-recertification elections, 16,977 public employees voted against union representation, which amounted to government workers rejecting 81 unions.

Lawmakers in other states can adopt similar measures to protect worker choice. Regular elections would ensure the majority of union workers are represented by the union of their choice.

Freedom of association is a basic building block of democracy. State lawmakers owe it to their constituents to enact laws that provide public employees worker choice and ensure that the tax dollars financing public employment are well spent.

Trey Kovacs is a policy analyst at the Competitive Enterprise Institute.

Do USB Cables Need Regulation?

Eli Lehrer - January 15, 2015

Frequent travelers know the pain of being out on the road without the correct charging plugs for their phones and other electronic devices, just as parents know the difficulties of lacking the right cord to power up a child's video-game system or tablet.

In prototypically European fashion, the European Union's bureaucrats in Brussels have promised to address problems like these by regulatory decree. Under pending rules, all portable electronics sold in the 28-nation EU region must, by January 2017, use the "micro-USB" connector that's already the dominant standard for most smartphones, e-readers, and other devices.

The U.S. shouldn't follow suit -- but not for the reasons free-marketeers typically offer when arguing against regulation.

In some ways, the EU's plan appears inoffensive. Standardized connections likely will have some cost efficiencies, at least in the short term, both for device makers and for consumers. Free-market advocates are wont to point to the proliferation of "job-killing regulations," but it's hard to identify anyone likely to lose a job because of a rule like this.

Indeed, many of the purported negative consequences of regulation just simply aren't borne out in the data. According to surveys by the U.S. Bureau of Labor Statistics, employers blame regulations for fewer than 1 percent of all layoffs. This suggests the rosy projections of economic growth often offered by partisans of regulatory relief should be taken with an enormous grain of salt; deregulation simply isn't likely to create a significant number of jobs in the short term.

Moreover, much of what the regulatory state does is actually to codify ground rules that evolved from common sense and the wisdom of voluntary market institutions. Abruptly dismantling regulatory bureaucracies without serious plans to replace their beneficial functions -- food safety, basic environmental protection, enforcement of civil rights -- would almost certainly do more harm than good.

Rather than a full-bore attack on the regulatory state writ large, free-market advocates are better served to focus on where regulatory proposals most often come up short -- particularly in lawmakers and regulators' inability to anticipate unintended consequences.

Take the European USB regulations: While the micro-USB would have seemed amazing even a decade ago, it's only an incremental improvement over what came before it. Other port designs, like the "lightning" connector that Apple uses for most of its devices, can provide slimmer port openings and faster data transfer. According to many technophiles, not-yet-widespread USB-Type C ports and "universal connectors" are better still.

Even if these technologies aren't really superior, there's little reason to think that the EU's chosen standard represents the very best way that humanity will ever devise to charge and communicate with mobile devices. Mandating it as the only standard will, at best, retard progress, as there would be little incentive to develop something better.

Some regulations destroy jobs, some degrade services, and nearly all cost someone money. But the real cost of regulation is often unmeasurable, as it comes from shutting out the creative advances we never knew we were missing.

Eli Lehrer is president and co-founder of the R Street Institute.

Maia Woluchem & Taz George - January 13, 2015

Policymakers count on a wide range of measures to gauge the state of the housing and mortgage markets, but when it comes to the availability of credit, are we as precise as we can be?

Given the many recent steps to increase access to mortgage lending, credit availability is at the center of housing finance policy discussions. But measuring access to credit is complicated. Traditional measures of credit availability, such as median credit scores or standard denial rates, are incomplete, unreliable, or lack historical accuracy. On January 6, the Urban Institute's Housing Finance Policy Center convened a panel of experts to discuss three promising new indices that provide a robust measurement of credit availability.

Three Ways to Better Measure Credit Availability

1. Mortgage Bankers Association's Mortgage Credit Availability Index. "This Index was developed out of frustration," Michael Fratantoni of the Mortgage Bankers Association (MBA) noted, speaking of his organization's Mortgage Credit Availability Index (MCAI). The MCAI relies on AllRegs Market Clarity Data to measure the quality and quantity of credit offered by wholesale lenders over time. More specifically, it measures the types and quantities of "loan programs," a blend of underwriting criteria and credit standards offered each month by nearly 100 of the largest mortgage investors, including Freddie Mac and Fannie Mae, the Federal Housing Administration, mortgage insurance companies, and other large, medium, and small investors. Indexed to March 2012, with complete data back to March 2011, and a sampling of data points back to 2004, the MCAI picks up changes in lender behavior in a timely manner in both the government and conventional markets. As a result, Fratantoni noted, one of the strengths of the MCAI is "you know how lenders are responding to policy."

2. CoreLogic's Housing Credit Index. Alternatively, the lender response can be measured by the size of the credit box, which CoreLogic's Housing Credit Index (HCI) estimates. The HCI measures variability in underwriting using a 5 percent sample of the CoreLogic Prime and Subprime Servicing database, or about 1.5 million first-lien originations. As Sam Khater of CoreLogic explained, the multidimensional metric, which is captured through a principal components analysis, traces the relative size of the credit box based on loans from about the top 30 servicers, capturing about 80 percent of the market outside of portfolio loans. The HCI is benchmarked to January 2000, and uses monthly data thereafter.

3. The Housing Finance Policy Center's Credit Availability Index. Recognizing the complexity of directly measuring the credit box, the Housing Finance Policy Center's Credit Availability Index (HCAI) instead measures the amount of anticipated default risk taken by the market at origination for any group of loans. The underlying concept, according to Wei Li of the Urban Institute, is that the market expands credit availability by taking more default risk, and vice versa. To determine the default risk of any set of home purchase loans, the HCAI compares the characteristics of the loans of interest against a database of historic loans divided into 360 buckets. Each loan of interest is assigned to one of the 360 buckets that vary by borrower characteristics (credit score, loan-to-value, debt-to-income ratio, income documentation) and loan risk, separating loans with and without risky features (less than 5 years to reset, interest-only loans, negatively amortizing loans).

The default risk of each of these buckets of loans under normal economic conditions equals the actual default rate of the same bucket of loans originated in 2001 and 2002. Similarly, its default risk under stressed economic conditions equals the actual default rate of the same bucket of loans originated in 2005 and 2006. HCAI for any vintage of loans equals the vintage's default risk under the normal condition weighted by 90 percent plus the vintage's default risk under the stressed condition weighted by 10 percent. By weighting both product risk and borrower risk, the HCAI allows an unexplored aspect of credit availability to be revealed: how much of the risk is caused by borrower characteristics and how much by product characteristics.

Immediate Policy Considerations
All three indices represent significant contributions to the problem of measuring credit availability, and each has important policy implications. Noted Fratantoni, with a quick look at the MCAI one can "point to… changes in lending patterns" in response to policy initiatives, such as when lenders pulled back on ARM programs in anticipation of the January 2015 implementation of the Consumer Financial Protection Bureau's Qualified Mortgage rule. Similarly, a graph of the HCAI over the last 17 years makes it clear that product risk, not borrower risk, fueled the housing crisis and that lenders today are only taking two-thirds of the borrower risk they consistently maintained in the pre-bubble and bubble years—a tremendous over-correction.

With further changes (a growing jumbo market, higher LTV programs, lower FHA premiums) on the horizon, these indices will allow us to more closely track the success of attempts to expand access to credit and widen the exceptionally tight credit box shown in all three indices—and to make course corrections with new and better information.

Maia Woluchem is a research assistant, and Taz George is a housing-policy researcher, at the Urban Institute. This piece originally appeared on the Urban Institute's MetroTrends blog.

Free Community College Is Already Here

Lewis M. Andrews - January 13, 2015

It is hardly a surprise that President Obama would propose an expensive new entitlement without specifying a way to pay for it. What is surprising is that the president would make such a policy, funded 75 percent by Washington in partnership with the states, the centerpiece of his State of the Union address without at least checking to see if something better was already being implemented.

In 2004, the Yankee Institute for Public Policy in Hartford, Conn. -- where I was executive director at the time -- decided to compare the full tuition at each of the state's community-college campuses with the per pupil cost for a single year of high school in the state's 169 towns. Discovering that a two-year associate's degree from a community college was actually cheaper than the senior year of high school -- and that the state's requirements for graduating from public school are easily met by the end of the junior year -- we made a simple proposal: Give any student who wishes to graduate from high school in three years a free community-college scholarship.

If gradually phased in, such a policy would be more than paid for by eliminating the public-school teaching positions no longer needed. Even when accounting for the fixed costs of keeping a high school's lights on (e.g., oil, insurance) the property owners who largely subsidize public education would get a tax reduction -- as much as $116 million across Connecticut in 2004, we calculated. And if done through attrition, no teacher would have to be let go. President Obama's plan, by contrast, would cost taxpayers $6 billion per year.

The Yankee Institute proposal has several other advantages over the president's:

• The amount of the community-college scholarship could be spent anywhere, even at the most elite colleges. While it would hardly cover the tuition at an Ivy League school, it could certainly make a difference for a student whose first-choice school didn't offer quite enough financial aid.

• The federal government would not have to intrude on states' traditional regulation of community colleges.

• Students bored with high school could get out early. As Bard College president Leon Botstein observed in his book Jefferson's Children, keeping young people in public school too long is a major social problem, responsible for needless instances of drug abuse and dangerous driving. Bard itself has a policy of admitting high-school students after they've completed their junior year.

• The president himself concedes that community-college scholarships should be earned, in his plan by maintaining a 2.5 GPA. What better and fairer way to earn a college scholarship than by saving your home school district the unnecessary cost of your senior year?

• Early graduation lowers the need for new school construction in growing communities, which can be especially expensive in states with "highest prevailing wage" laws. These statutes require that workers on public building projects be paid far in excess of what they could reasonably charge in the open market.

• By reducing their high-school teaching staff, towns get better control over the growing problem of unaffordable public-employee pensions.

In late 2004, the Yankee Institute elaborated its proposal in a study titled "The Early Graduation Reward Plan." For a policy paper, it received an unusual amount of press attention, including a front-page story in President Obama's hometown paper, the Chicago Tribune. In less than three years Arizona, Texas, and Utah became the first states to adopt the policy. Today seven states have it.

An updated version of the paper ("Free College for High School Students") in 2007 had tables suggesting how much a community could actually save, depending on the percentage of its high-school seniors that qualified for the scholarships. While some might argue that early graduation scholarships deprive those seniors left behind of enough teachers to offer electives, the growing availability of quality high-school courses over the Internet would seem to solve that objection.

The fact is that free community college is a reality in many states. Add to this the fact that Florida, Idaho, and Minnesota encourage public-school students to complete their senior year with college-level courses at nearby institutions, and the tools the president thinks states need to make higher education more affordable are already available.

The question is not how to raise a new multi-billion-dollar federal subsidy for free community college. The real question is why the president, in a time when Washington needs to show it can spend wisely, wants more money to solve a problem that has already been solved.

Lewis M. Andrews was executive director of the Yankee Institute for Public Policy from 1999 to 2009 and is author of To Thine Own Self Be True: The Relationship Between Spiritual Values and Emotional Health (Doubleday).  

The 'Or Else!' Education Agenda

Jonathan Butcher - January 12, 2015

Any parent of a petulant child can recall when they told their little one to pick up his toys -- "or else!" Repeated power struggles teach parents that browbeating is a poor strategy. It is no better a strategy to use in leading a nation.

Consider the White House's proposed college ratings system. In its current form, which was spelled out late last month, the U.S. Department of Education will give universities a score based on criteria that include the number of students using Pell grants for tuition assistance, how much debt students accrue paying for school, and the extent to which schools enroll "disadvantaged students." The administration is resting the plan on the concept of affordability, with subjective components linking cost to the completion of a degree.

Like most of Washington's initiatives, the effort appears to be well-intentioned, since students are taking out sizable loans and college-completion rates are underwhelming. The average student taking out a loan graduates nearly $30,000 in debt, and fewer than 60 percent of students enrolled in four-year institutions finish in six years.

Yet the Wall Street Journal reports that President Obama intends to make federal funding contingent on a college's ranking. There is no empirical research to support the new rating criteria, which should make college-seekers pause before using the scores to compare schools. At the very least, the administration would benefit from more consensus on the idea, since the current chairmen of the U.S. House and Senate education committees called the ratings system arbitrary and "a fool's errand" in a press release last December.

Without reliable research and in the face of Republican opposition, the administration is telling thousands of colleges across the country that they should change their enrollment and instructional agendas, or else the generous hand that delivers taxpayer dollars -- $150 billion in student aid alone -- could be withdrawn.

This isn't the first time this administration has used the "or else" strategy in education. In 2010, Secretary of Education Arne Duncan told state leaders that the largest source of federal K-12 education funds would be contingent on whether states adopted what would later be known as the Common Core national standards. The standards were billed as a state-led initiative, which made Washington's keen interest in state adoption suspicious. To date, there is scant research on whether these standards help students succeed. In a brief analysis from March 2014, the Brookings Institution reported "no signs" that the standards have had any impact on student achievement so far.

The administration backed away from the proposal to attach federal money to a state's decision to adopt the standards. However, as recently as 2013, Duncan was pressuring California to adhere to new testing requirements aligned with the standards, or else the state would lose part of the state's $1.5 billion in federal funding. Old habits die hard.

Colleges have unique missions and different priorities, which is their prerogative. Yet the administration's ratings choose schools' priorities for them. The new ratings put the focus on getting students into college with no mention of a student's preparedness; helping students pay for college, regardless of how well they are doing with their studies; and making sure students graduate, again with a glaring lack of consideration for whether students are prepared for life after school.

The Education Department pledges to design a system that "works for everyone," which reveals a disconnection from reality. The list of federal ideas over the past 250 years that have worked for everyone is quite short. Students and universities should be free to make decisions in their best interests, since the administration has yet to muster evidence or build a consensus that they have students' or schools' best interests in mind.

Jonathan Butcher is education director at the Goldwater Institute and senior fellow with the Beacon Center.

Robert VerBruggen - January 9, 2015

Back in October, I went through the FBI's Supplementary Homicide Report (SHR) in search of racial bias in police killings. I found that the overall ratio of blacks to non-Hispanic whites shot by police was 0.82:1, which is high given that blacks are just 13 percent of the population -- but I also found a ratio of 1.5:1 among homicide offenders. My results were similar last month when I focused on data collected from big-city departments that, according to a Wall Street Journal report, actually seem to report police killings in a consistent fashion. In other words, there is no evidence in these data that police officers are targeting blacks for fatal violence; the disparity can be explained by the disparity in rates of serious violent crime.

Here I'd like to highlight two new reports that support my findings.

First, Kevin A. Hassett of the American Enterprise Institute conducted an analysis similar to mine, except that instead of homicide-offending data, he used overall violent-crime data drawn from the National Crime Victimization Survey. Here's the number of violent crimes committed by each group divided by the number of police killings of that group:


Here we have a closer call than we had with my data, but even this milder adjustment (the racial disparity in overall violent crime is less than the disparity in homicide offending) brings the police-killing data into focus, revealing little if any bias.

And today the Washington Post has a report about cases in which police officers are killed. As I wrote last week, this is a rare occurrence, so the numbers can lurch around from year to year -- but a big advantage of these data is that they focus on fatal confrontations with police instead of violent crimes more generally, which could make for a better comparison with data on people killed by police. Here's what the Post found:

There were 511 officers killed in felonious incidents and 540 offenders from 2004 to 2013, according to FBI reports. Among the total offenders, 52 percent were white, and 43 percent were black.

This suggests a black-to-white ratio of 0.83:1, which is a pinch higher than my killed-by-police ratio. Further, due to data limitations, Hispanics are not excluded from the white data, as they were in my analysis. ("Hispanic" is an ethnic category, while "white" and "black" are racial categories -- and they're not mutually exclusive -- so it's a tricky problem for government agencies.) In Census data, about 19 percent of whites are also classified as Hispanic, and the number is similar for whites identified as homicide offenders in the SHR. Making this adjustment brings the ratio up to about 1:1. (Remember, these numbers aren't adjusted for population size. Also, many departments don't report ethnicity data in the SHR, so Hispanics are undercounted there.)

Essentially, once you make any plausible attempt to adjust for violent-crime rates, the disparity in police killings disappears. This has now been shown with homicide data from the Supplementary Homicide Report, violent-crime statistics from the National Crime Victimization Survey, and cop-killer numbers from the FBI.

Robert VerBruggen is editor of RealClearPolicy. Twitter: @RAVerBruggen

Marijuana Policy in 2015: 8 Big Things to Watch

John Hudak, Brookings Institution - January 9, 2015

1. Oregon, Alaska Plan and Prepare for Legal Marijuana
In November 2014, Oregon and Alaska followed Washington and Colorado in legalizing recreational marijuana. While the right of Oregonians and Alaskans to grow marijuana at home begins early on, the commercial market and regulatory system will not begin for one to two years, due to the language in Ballot Measure 91 (OR) & Ballot Measure 2 (AK).

Each ballot measure requires the state to design and construct a commercial market within the bounds laid out in the voter-approved language. Each measure also charges the respective state legislatures and alcohol regulatory bodies to work together to design regulations governing legal marijuana. The latter is where the action will be in 2015. It will be important to watch what Oregon and Alaska decide in setting up rules to govern this new area of policy. These rules may well determine the success or failure of marijuana policy in each state, and the path taken will also offer insight into how states are learning from each other as this policy area expands.

Finally, and of particular note, Oregon will become the first state to legalize marijuana that shares a border with a state (WA) that has already approved legalization. Watching Oregon's commercial and regulatory choices will be crucial in understanding whether and to what extent states may strive for marijuana market advantages vis-à-vis bordering states. Decisions over taxation in Oregon suggest this may be part of the political, policy, and economic calculus.

2. Identifying the Next States to Legalize Marijuana
Compared with 2014, 2016 may be a more favorable political environment for states seeking to put legalization initiatives on the ballot, and 2015 will be extremely important for those efforts. Legalizing states (and even Florida for medical marijuana) have shown us that ballot initiatives are expensive, labor intensive, and require extensive planning on the part of supporters and opponents. Those seeking to advance the cause of legalization in 2016 will begin organizing the grassroots, planning signature drives, hiring staff, coordinating volunteers, drafting and circulating ballot language, and raising money.

2015 will show which states are serious about such efforts in 2016. It is widely expected that California will advance an initiative, and Florida may take another swing at approving medical marijuana, after having fallen just short of approval in 2014. Other states may well follow suit. As a result, to gain insight into who will push ballot initiatives, follow the money (and staff and volunteers and media campaigns) in 2015. Similarly, those seeking to oppose legalization efforts can be tipped off as to the states where similar efforts (fundraising, messaging, coordinating, staffing) will be necessary.

3. Cannabis Policy and State Legislative Action
In some states, the ballot initiative process is not as inviting for those seeking statewide change. As a result, the battleground for enacting items like the legalization of recreational or medical marijuana is not the ballot box, but the state legislature. As 2015 begins, it will be crucial to identify state legislative proposals involving marijuana policy and monitor their progress during the legislative sessions. Those efforts will involve recreational legalization, decriminalization, or medical legalization. Some states, like Tennessee, may consider relaxing bans on hemp production. Still, in other states, legislative proposals may seek to reaffirm or clarify legal bans on marijuana.

4. Cannabis and the Courts
In 2014, there were multiple, high-profile lawsuits surrounding marijuana policy which may play out in 2015. The one likely to be decided soon is Coats v. Dish Network, a Colorado case in which a Dish Network employee is challenging the legality of his firing for testing positive for marijuana, a product he used for medical purposes. In 2013, the Colorado Court of Appeals upheld the employer's right to fire the employee, and in late 2014, the Colorado Supreme Court heard oral arguments in the case. Their decision will likely settle the issue of employer-sponsored marijuana testing.

In addition, Nebraska and Oklahoma sued Colorado over that state's move to legalize marijuana, claiming that the state is violating federal law and causing a burden on bordering states. The lawsuit was filed directly in the US Supreme Court, as the Court has original jurisdiction over conflicts among the states. How the Supreme Court handles this filing will shed light on federal courts' willingness to engage this policy area at present and going forward.

5. Answers to Questions About D.C.'s Marijuana Policy
Like Oregon and Alaska, DC legalized marijuana on Election Day 2014. However, since Initiative 71 passed, many questions have been raised. As Philip Wallach and I discussed in November, Initiative 71 legalized homegrows for recreational marijuana, and (because of legal requirements around the initiative process in DC) left to the DC Council the charge of setting up a commercial market and regulatory system. Legislation to that effect was in the works, but was complicated by a rider attached to an Omnibus Appropriations bill passed by the US Congress in December. The rider, penned by Rep. Andy Harris (R-MD), sought to neuter Initiative 71 and prevent DC from legalizing marijuana.

However, the language of the rider is unclear, leaving many to argue that the move simply prevents the District from forming a commercial market and regulatory regime, while remaining silent on the right of DC residents to homegrow marijuana. Clarity about the future of marijuana policy in DC will almost surely be left to the federal courts. Legal challenges are certain to abound, and 2015 will be the year in which that process begins.

Additionally, under the District of Columbia Home Rule Act, the District must transmit Initiative 71 to Congress, where Congress has the opportunity to strike it down. If Congress does so, the issue will largely be settled; if they fail to do so, it further complicates the District's guidance on the issue. Congressional inaction would likely spur additional efforts for clarity from the courts.

6. Colorado and Washington (and Uruguay) Continue Legalization
The first two states to legalize recreational marijuana will continue their experiment in 2015. In Colorado, efforts to deal with issues around edibles, product testing, and homegrows will be on the agenda. In fact, a working group dealing with edibles sent a series of recommendations to the state legislature, after failing to agree on a unified set of suggestions. The new legislative session in Colorado wraps up in May, meaning we will be able to see action (or inaction) in the first few months of the year.

Washington, a state a bit slower out of the gate, will face questions about both the supply of marijuana to the market and tax rates, both of which seriously affect the price of legal marijuana. The policy challenge Washington faces is that legal weed could be too costly to lure consumers from the black market, and the manner in which the state deals with it will an important item to watch in 2015.

On the international front, Uruguay will continue to roll out its own implementation of legal marijuana. Thus far, there have been bumps in the road as the Latin American nation becomes the first country in the world to legalize, the country is working hard to ready a bureaucracy and a consumer base for the experiment. At the same time, Uruguay will continue to advance this policy area as newly-elected President Tabaré Vásquez returns to office in March, while taking a careful and skeptical approach to the roll out. The effectiveness of Uruguay's implementation and the patience of the new president for the process will be center stage in 2015.

7. Data, Data, Data
Any marijuana policy advocates -- supporters or opponents -- who make conclusive claims from a few data points live in a delusional world. The reality is that it is too early, there is not enough data, and the baselines by which several data are compared are imperfect.

Do data about usage, public health, public safety, traffic safety, crime, enforcement, etc., tell us anything? Absolutely. However, they are far from telling us the whole story. Instead, patience is key. 2015 (and subsequent years) will offer steady flows of data from Colorado and Washington, and eventually other states. Over time, we will have a better idea about the impact of legalized, recreational marijuana on key societal indicators.

So, don't buy a phony bill of goods about conclusions based on data thus far. Instead, wait to see what additional data tell us over time. A good New Year's resolution for marijuana policy watchers: take a deep breath (preferably of clean air) and think about data empirically, not emotionally.

8. Presidential Candidates and Cannabis
One certainty about 2015 is that it marks the start of the 2016 presidential campaign. As Democrats wait to hear about Hillary Clinton's decision, a slew of Republicans are lining up (quietly or otherwise) to succeed Barack Obama. The next president can have a substantial impact on marijuana policy in the United States. Right now, the experiments in Colorado and Washington continue to proceed, without federal government intervention because of an informal agreement between the Justice Department and the states. Such a policy could be reversed on January 20, 2017, with a new president with a different position on marijuana.

As dozens of states have approved medical marijuana, and now four states and DC have approved recreational marijuana, cannabis policy will absolutely be part of the 2016 conversation -- and that conversation will begin this year. What is so fascinating about marijuana policy is that, unlike most issues, it does not fall neatly along party lines. Some Democrats support it; some Democrats oppose it. Some Republicans support it; some Republicans oppose it. Thus far, prospective candidates have been tightlipped on the issue, with a few exceptions. Texas Governor Rick Perry has openly discussed decriminalization. Kentucky Senator Rand Paul has talked about a need for drug policy reform. Former Secretary of State Hillary Clinton has hinted that she is comfortable letting the states experiment as they have been.

Those considering a run for the White House have been able to remain mum or offer hints at their policy views on marijuana. However, as candidates declare, journalists begin looking for news hooks, voters start meeting those running, and debate moderators start peppering would-be presidents with questions, marijuana is sure to become a serious issue in a way that it has not in prior presidential campaigns. The next election will not simply be a discussion of whether a candidate has inhaled in the past, but about how a president will treat those who choose to inhale in the future.

John Hudak is a fellow in governance studies at the Brookings Institution's Center for Effective Public Management and managing editor of the FixGov blog, where this piece originally appeared.

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