September 2004 PRI Ideas in Action
Policy Update and Monthly Impact Report

PRI continues to impact public policy in California, the nation, and abroad. The following is just a sample of PRI's recent contributions.

HEALTH CARE STUDIES KEY ISSUE: ELECTION DEBATE AND NEW PRI BOOK

Policy Briefing
Health care has emerged as the number one domestic policy issue during the presidential campaign. News of rising costs to businesses, steeply climbing Medicare premiums, a growing number of uninsured, and other critical issues have focused the media and the public’s attention on this issue. The solutions proposed by the two candidates could not differ more sharply.

President Bush is promoting policies that put consumers in charge rather than government. He is encouraging the use of Health Savings Accounts (which went into effect in January), Association Health Plans that would allow small businesses and associations to band together to form purchasing pools, litigation reform, deregulation and purchasing of insurance across state lines, and tax deductions for individuals for premiums and out-of-pocket expenses.

While Senator Kerry has tried to cast his program as one that provides greater choice and flexibility for consumers, the reality is clear – it’s big government on steroids. “KerryCare” is one of the most expensive proposals in the history of the federal government, at an estimated $1.5 trillion over 10 years. It would vastly expand Medicare and Medicaid, shift many of those with private coverage into a government-run plan, and subsidize large corporations.

Regardless of the outcome of the presidential election, government-run health care is an idea that is sure to stick around. Many lawmakers, and the media, see it as a panacea for what ails America’s health-care system. In reality, it’s a cure far worse than the disease.

PRI Perspective
In her new book, Miracle Cure: How to Solve America’s Health Care Crisis and Why Canada Isn’t the Answer, PRI president Sally Pipes explains why our health care system is broken and how it can be fixed. Endorsed by Milton Friedman, Steve Forbes, Regina Herzlinger, Chip Kahn, and other prominent experts, Miracle Cure has provoked tremendous interest among the media and lawmakers.

As our nation struggles to address critical healthcare issues – affordability, access, and quality – many experts, such as Senator Kerry, are looking to the Canadian single-payer model for a solution. But Ms. Pipes, a Canadian, explains why following this model would be disastrous for America.

Not only does the Canadian single-payer system fail to deliver low-cost access for all, it often increases pain and suffering through long waiting lines for care. Ms. Pipes points out that if President Clinton were a Canadian, he would have faced a median waiting time of six weeks from referral by a general practitioner to the time of his urgent heart bypass surgery. Fortunately, in the U.S. he was able to have surgery four days after his diagnosis.

Ms. Pipes provides practical solutions to give consumers greater control over their health-care spending and decisions. She advocates moving away from employer-provided health insurance and embracing options that put individuals in the driver’s seat. Her prescription is a compelling one – unleashing competition, encouraging innovation, lowering costs, and improving access.

PRI Impact

• September 28, Miracle Cure was released in Washington, DC, at a panel event at the Heritage Foundation. Events with the Galen Institute and Cato Institute followed, with the Cato event broadcast on C-SPAN. Then author Sally Pipes traveled to New York, Florida, Arizona, Missouri, Illinois, and Texas. In each state, Sally gave radio and television interviews, met with lawmakers and business leaders, and spoke at think tank events. She has met with more than 25 members of Congress, staffers, and state legislators.
• October 22, America’s most widely syndicated columnist Cal Thomas featured Miracle Cure in his column, which appears in more than 550 newspapers nationwide.
• Miracle Cure’s ranking on Amazon soared from 90,000 upon release to a listing of 1,400 just one month later.
• Sally has appeared on five television programs, including Fox News “The Big Story with John Gibson.”
• Sally has been interviewed on more than 37 radio shows, including NBC radio with Ron Insana, CBS radio with Jim Bohanan, and NPR’s “Democracy Now.” The interviews have been broadcast on more than 100 stations nationwide and have reached well over 10 million people.
• Sally met with the editorial boards of the Washington Times and Wall Street Journal. Following her meeting with the latter, her analysis and solutions were featured in a Wall Street Journal editorial.
• Additional print and online coverage has included the New York Sun, San Francisco Chronicle, National Post (Canada), Insight Magazine, Human Events, Foxnews.com, TechCentralStation, and Instapundit.com (one of the most popular policy blogs, with an average daily page view of 250,000).
• In September, Miracle Cure was instrumental in driving PRI’s website hits up by more than 60 percent over last year.

EDUCATION STUDIES: KEY ISSUE – CALIFORNIA PERFORMANCE REVIEW
Policy Briefing
In his inaugural address, Governor Schwarzenegger said that a total reorganization of government operations was needed (in the governor’s words, he wanted to “blow up the boxes”). To effect this reorganization, the governor authorized an audit of state government operations called the California Performance Review (CPR). The CPR released its recommendations in August and the governor formed a commission to receive public input.

PRI Perspective
The CPR report contained a chapter dealing with education, and the K-12 section featured a number of recommendations that PRI has advocated in the past.

For example, the report recommends that state law be changed to allow local school districts greater flexibility to contract with private entities to provide non-instructional services. CPR also recommends that many required but unnecessary education reports be sunsetted. It recommends that categorical funds that are currently earmarked for specific purposes be block granted to local districts.

Further, because older children in kindergarten achieve at higher levels, children should be enrolled in kindergarten at a slightly older age than is currently required. All of these suggestions are sensible and should be supported.

PRI Impact

• September 23, Lance and Xiaochin attended the California Performance Review hearing on governmental re-organization held at UC Davis. Lance submitted written testimony outlining his analysis of the education recommendation in the report.
• September 29, Lance met with Sue Blake, legislative analyst with Governor Schwarzenegger’s Office of Planning and Research, to discuss a variety of state issues.
• September 30, Lance and Xiaochin met with California Charter School Association communications director Gary Larson to discuss PRI’s forthcoming study on best practices at high-performing charter schools.
• September 18, Governor Schwarzenegger vetoed AB 2832, which would have raised the state minimum wage. The California Restaurant Association credited Lance’s various articles on the negative economic consequences of the bill with having a large and important impact on the governor’s decision to veto it.
• September 13-14, Lance Izumi attended the California Community Colleges Board of Governors meeting in Sacramento and was nominated to be vice president of the Board. Election for officers is slated for the Board’s November meeting.
• September 9, Xiaochin Yan attended the CPR’s hearing on education issues held in Long Beach.

TECHNOLOGY STUDIES KEY ISSUE – TELECOMMUNICATIONS POLICY

Policy Briefing
The California Public Utilities Commission (CPUC) recently approved a below-cost wholesale rate that SBC can charge competing carriers to lease its network.

SBC estimates that it costs $29.92 to provide its network to other carriers, yet the PUC is only allowing the company to charge $16.53. As a result, SBC says it may now have to scale back.

PRI Perspective
The idea that wireline telecommunications providers have a monopoly is misleading, and any policy based on such an assumption harms innovation and consumers. We now live in a world where cable, satellite, DSL, and wireless all compete for the same customers, yet these providers are subject to different regulations, putting traditional telco providers at a disadvantage.

In California, the price for renting network elements (UNEs) is so low that CLECs (competitive local exchange carriers) have quit building their own facilities and are simply reselling the local phone company service, adding little to the competitive mix described above.

During the past 12 months, the FCC reports that the number of UNE-based lines has doubled. Meanwhile, telecommunications investment has declined 40 percent in the past two years, principally because low UNE prices make it impossible for the incumbent carriers like SBC to recover the cost of their investments.

This decline is bad for everyone, not only because it drags down the economy today, but also because this sort of investment is crucial for our future. Telecommunications and information technology investment accounts for 40 percent of the nation’s growth in total productivity and 68 percent of the accelerated growth in labor productivity. Hamstringing this area with harmful price caps lowers the chances of a robust economic recovery that could produce job growth in all sectors. And even with low UNE prices for competitors, customers aren’t benefiting.

PRI Impact

• September, Sonia Arrison’s columns in Tech News World tackled outsourcing and radio frequency identification (RFID) tags.
• September, Sonia’s article on telecom competition was published in the Heartland Institute’s IT Update.
• September 16, PRI’s tech advisory board met and welcomed new member Rob Reid.
• September 23, Sonia and Vince Vasquez attended a PUC hearing on UNE rates.
• September 20, Sonia sent a letter to all California Public Utilities Commissioners regarding an upcoming vote on price controls (UNE rates).
• September 22, Sonia’s letter to the editor, “Competition keeps phone rates low,” was published in the San Jose Mercury News.

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