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Nine northeastern states from Maryland to Maine sell power plant carbon dioxide emission allowances in quarterly auctions, reducing the number of allowances over time, and the allowance cost is added to electric bills.  A new study from the Caesar Rodney Institute titled “A Review of the Regional Greenhouse Gas Initiative”, finds there were no added emissions reductions, or associated health benefits from the cap and trade program.  Spending of program revenue on energy efficiency, wind and solar power, and low income fuel assistance had minimal impact.

The allowance costs added to already high regional electric bills, and the combined pricing impact resulted in a 13 percent drop in goods production and a 35 percent drop in the production of energy intensive goods.  Comparison states increased goods production by 15 percent.  The regional program shifted jobs to other states.  A national emissions tax would shift jobs to other countries.  A better policy to reduce emissions is to eliminate carbon dioxide emission taxes and regulation, and encourage innovation.

The nearly decade-old Regional Greenhouse Gas Initiative (RGGI) was always meant to be a model for a national program to reduce power plant carbon dioxide emissions.  The EPA explicitly cited it in this fashion in its now-stayed Clean Power Plan.  The program is often called a “cap and trade” program, but its effect is the same as a direct tax or fee on emissions.  That is because RGGI allowance costs are passed on from electric generators to electric distribution companies to electric consumers.

Most emissions reductions track lower generation from coal-fired power plants.  Coal’s decline began with dramatically falling natural gas prices beginning in 2009, and was accelerated by restrictive EPA regulations beginning in 2012.  Many older, smaller power plants were shut down rather than invest in expensive filtration equipment that would be needed to meet new standards. Lower natural gas prices indirectly influenced the decisions to close down the coal-fired generation.  We can parse the relative impact of these two forces and find, both nationally and in the RGGI states, EPA regulations impacted 28% of coal’s decline with 72% directly due to lower natural gas prices.

RGGI revenue expenditures had a marginal impact.  Between 2007 and 2015 low income utility bill assistance from RGGI revenue added only about $5 a year net to an existing federal program.  Grants for wind and solar power only accounted for about 1% of all the wind and solar power added by the RGGI states.   Over the same time period non-RGGI comparison states saw a 20% greater increase in energy efficiency.

New power plant construction in RGGI states didn’t keep up with closings leading to a doubling of electricity imports to 17% between 2007 and 2015.  Importing more power results in effectively exporting carbon dioxide emissions accounting for almost a fifth of the RGGI state emissions reductions.  A similar national loss of power plants could lead to electricity outages.

The United States has already reduced emissions more than the rest of the world since 2005 through innovative natural gas drilling techniques.  Emissions are down 12 percent in 2015 from the 2005 base year, about twice the rate of other developed countries, while emissions are up 45 percent in the rest of the developing world according to the European Commission in their report “CO2 time series 1990 – 2015 per region/country”.  We have many other opportunities to invest in innovation, such as, improved solar photovoltaic cells, more efficient batteries, small modular nuclear reactors, or nascent technologies that use fossil fuels without emitting carbon dioxide.

So, RGGI states exported carbon dioxide emissions and jobs.  It is one thing to export well-paying manufacturing jobs from one state with poor energy policies to another with better policies.  There is quite a more profound impact on the U.S. economy from exporting those jobs to countries with even worse emissions.  That is what a national cap and trade, or tax policy on carbon dioxide emissions would do.  The regional example has failed to show emission reductions, and there is little to show for several billion dollars in expenditures of RGGI tax revenue.  What do you know, the RGGI experiment did work as a national example of what not to do!  The RGGI states are thinking about extending the program for ten more years.  Perhaps they should kill it instead.

Link to full working paper: https://www.cato.org/publications/working-paper/review-regional-green-gas-initiative

-by Mr. Stevenson is director of the Caesar Rodney Institute center for Energy Competitiveness, and author of the Cato Institute working paper “A Review of the Regional Greenhouse Gas Initiative”

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It’s worth noting that to take our next step forward we actually have to go “back to the future”, back to 1995 and the inception of the “Bold” plan.  When we combine that concept with some of the more recent specific systemic change recommendations (like the Memorandum of Understanding for priority schools increasing local control), our path forward becomes clearer.  Local control with appropriately prepared CEOs (formerly known as principals) working with teachers and parents is essential for any significant improvement in education.  The Brookings Institution said that, to improve education, the power cords from school boards and bureaucracies to the school buildings had to be cut.  This isn’t because of incompetent administrators but because the current system cannot get the job done.  We no longer use horses to travel and transport goods, not because there is anything wrong with horses but because compared to the other various means of available transportation we would all be better off if the horses were put out to pasture.

If we don’t take the time and effort to first, fundamentally change the education system, then any seemingly beneficial attempts to improve things can have disastrous results.  Consider the current discussion about reducing the number of school districts in the state.  New York City and Los Angeles have only one school district each while the much smaller student population of the state of Delaware has nineteen.

Several elected officials have opposed the reduction of the number of school districts because of the significant increase in operating expenses they say would result due to the “leveling up” effect of teacher salary scales.  To support their contention, the officials refer to a 2002 study conducted in response to House Resolution 54.  That study only considered Kent and Sussex Counties and the conclusion was that consolidating into only one district in each county would increase operational expenses by 7.2 million dollars!  How could that be?

Without the “Bold” power shift of placing operational decision making in the hands of local building professionals, many functions would continue to be duplicated (and triplicated) at the district and state levels along with excess administration and support personnel.  The study used the existing state funding formula which was based on student enrollment.  The result was that, since student enrollment remained the same, literally everyone who was displaced by reducing the number of districts to one in each county was rehired by the single but much larger county districts.  There were no district cost reductions to offset the salary scale increases!  Reduced building operation expenses were ignored as were the possibilities of renting or selling office space or facilities.  Some legislators today still rely on the flawed conclusions of that study.

Our action plan over the next three to five years should have the goal of improving all public schools.  CEOs (formerly principals) will complete a professional administrative leadership program (a manual, The Art of Administration, has already been prepared) along with a mentoring component and an emphasis on developing a strong school culture.  As schools qualify for local control, they will have autonomy from any District or Delaware Department of Education requirements not mandated by state or federal law.  As more schools qualify for local operational control, the administrative responsibilities of district school boards and bureaucracies will be greatly diminished while parental contact with education decision makers is increased.  This now prepares the foundation for district reductions.

The expanded responsibilities of the CEOs include: 1) The authority to hire and dismiss all staff; 2) All programming inputs including but not limited to school calendar, school schedule, curriculum, instructional practices and methodology, program emphasis, textbooks and technology; 3) Marketing, long-range planning and continuous improvement efforts; 4) Support services including transportation, food, and maintenance; 5) Budget preparation, implementation, and expenditure control.  Surplus operating funds will be retained by the school for future use.

District school boards will have the following responsibilities relative to the operation of the local schools: 1) Hiring and performance evaluations of CEOs; 2) Approval of proposed annual budgets and major capital proposals; 3) Review of appeals of CEO decisions; 4) Operational support in areas such as legal, financial, personnel, facilities, marketing, etc. as requested by CEOs; 5) Facilitation of intra and inter district meetings of CEOs as requested by them.

It’s time to stop rearranging the deck chairs on the Titanic and settling for incremental improvements.  It’s time to address the gash below the water line.  It’s time to be “Bold”.

-by Ron Russo, Senior Fellow, CRI Center for Education Excellence

     Founding President, Charter School of Wilmington

     Former Principal, St. Mark’s High School

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When the conversation turns to improving student learning, most people focus on curriculum, technology, evaluations, methodology, etc.  These and other items are critical to the teaching portion of student learning.  They certainly affect the outcomes of a school’s efforts.  But the 1995 systemic change plan (supported by the Governor, the Delaware Department of Education, and the business community) was unique and its interest was completely different.  Teaching focuses on “what” has to be done in the school building.  Education focuses on “how” the system will operate in order to get the “learning job” done.

Charter schools were not to be the sole answer to Delaware’s educational woes.  They were to be the mechanism for changing the existing school system which was perceived as an economic liability for the state.  The purpose of charter schools as stated in the law itself was to “…improve public education overall…”  It was to accomplish this goal by using a few charter schools to pilot the local control concept along with exploring new ways to improve student learning.  Using the charter school experience as a model, all traditional public schools were to be changed.  Implementing the local control concept meant that parents were closer than ever to the decision makers for their children’s education.  It meant that schools would be customized and not standardized.

To appreciate the seriousness of the local control issue, consider the overview of the charter school legislation prepared in 1995 by Michael Ferguson, State Superintendent of Public Schools and co-author of the Charter School Law.  He clearly described the transfer of decision-making power away from school boards and district bureaucracies and placing it with the local schools.  Excerpts from that document include: “Reliance on bureaucratic decisions would be a thing of the past.”  “…empower local communities further with additional decision-making authority.”  “…try new approaches to learning without bureaucratic restrictions.”  “…empower local communities to try new, unique solutions to problems that are facing their own schools.”  “Teachers…can minimize the bureaucracies that perhaps once stifled their creativity.”  “Parents and teachers are less restricted by decisions made at a district or state level, so they can focus their teaching methods, curriculum, and other policies around the needs of their particular students.”  In describing this shift of power to the state’s first charter school president, Ferguson said, “Except for federal laws and laws regarding health and safety you are free to do whatever you want but you have to be willing to accept responsibility for your actions.”

What would this “Bold” change look like?  Most current principals will require a transition period as cadres of building principals are prepared, mentored, and converted from traditional principals to CEOs (Chief Education Officers).  As individual schools wait for the conversion process they will operate as they currently do.  This will permit the transition to be as seamless as possible and provide for controlled growth.  The Caesar Rodney Institute is working on a draft piece of legislation to define the new responsibilities of the CEOs and the supportive and oversight responsibilities of district boards.  It is modeled after the Memorandum of Understanding designed by the state and intended to significantly improve the state’s lowest performing schools through local control.  It should be noted that it contains the statement that, “The School shall have autonomy from any District or Delaware Department of Education requirements not mandated by state or federal law.”  As suggested by the US Department of Education, evaluations must be based on performance and not compliance.

The benefit of the “Bold” shift surfaced at the 2014 Rodel Foundation April Education Event.  Andreas Scheleicher, a member of Rodel’s International Advisory Group, presented data to show that a school’s performance would be enhanced by giving the school greater autonomy coupled with involving teachers in the decision-making process (distributive leadership).  Any other significant changes to the existing bureaucratic school system must be preceded by a “Bold” power shift as the fundamental “first step”.  Discussions on the topic of reducing the number of school districts is a good example of the horrible erroneous conclusions that arise when this “first step” systemic change is ignored.  New York City and Los Angeles have one school district each while the much smaller Delaware has nineteen.  Should that number be reduced?

The importance of this first “Bold” step for other educational improvements will be covered when we consider the discussion on district reductions.  We will conclude with where we go from here in part 3, the next (first) step.

-by Ron Russo, Senior Fellow, CRI Center for Education Excellence

     Founding President, Charter School of Wilmington

     Former Principal, St. Mark’s High School

 

 

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You don’t have to have school-age children or grandchildren to have an interest in Delaware’s public schools.  If you live or work in Delaware you have a great stake in the changes to the state’s public school system because education reform is all about Delaware’s economy.  It’s about attracting business and retaining business.  It’s about property values and taxes.  It’s about reducing crime rates, creating jobs, and population shifts (do you know anyone who moved to get into a different school district or, perhaps, moved across the state line?)

Let’s be clear about the difference between teaching and education.  Teaching is a profession with a special relationship between teachers and students.  This is similar to the legal and medical professions with their relationships between attorneys and clients, as well as, between doctors and patients.  Education, on the other hand, is a business like a law firm or a hospital.  It is the structure or system within which our schools operate to benefit our children and our communities.  It provides support and oversight for the teaching professionals who were hired to use their knowledge and talents to “get the teaching job done” and who are situated close to parents in the school buildings.  If anyone says to you “It’s all about the kids”, know that they are talking about teaching in the local schools, not education.

As a basic principle of business, is it better to have centralized, distant, decision makers calling the “operational shots” or would it be more productive and efficient to have decisions made at a local level by professionally prepared individuals who actually deal with situations daily?  For public education that question was answered in 1995 when the decision was made to move toward a more locally-controlled educational system.  It was a decision supported by the Governor, Delaware’s Department of Public Instruction (now Department of Education), and a business consortium (DuPont, Bell Atlantic, Hercules, Delmarva Power, Zeneca, and Christiana Care).  The existing public school “system” was seen as a liability.  The time for “tweaking” was over and the time for “Bold” action had arrived.

Many people, organizations, and other efforts (Rodel Foundation, Race to the Top, Vision 2025, etc.) have been working earnestly to improve student performance and we are seeing “upticks” in scores but is that enough?  USA TODAY on 7/18/17 ran a front page article on rising graduation rates.  The nation has hit a new high of 83% while, at the same time, SAT scores have dropped over 20 points.  The article concludes that students haven’t learned more but, rather, high school grades have been inflated.

There’s a new way of looking at an old problem.  Delaware’s public school system has been operating under a “horse and buggy” model of administration while a new system of local control and accountability was on the horizon.  A few charter schools were to pilot the new system and the lessons learned were to be used to change the traditional public schools.  Large numbers of charter schools were not the intended answer to Delaware’s education problems.  In the August 2015 issue of Delaware Today magazine it was stated that, “Charters proliferated in a way never intended or anticipated.”  A few charters were to be the change models for all traditional public schools.  Dr. Gary Miron, Executive Director of Western Michigan University’s Evaluation Center, conducted a three-year study of Delaware’s charter schools (2004 to 2007).  He was quoted by the Brookings Institution as saying, “Charter schools weren’t meant to duplicate the traditional schools.  They were going to be a lever for change…”

Why didn’t Delaware’s outdated education system change?  Well, everyone involved in the change effort was no longer around.  The Governor became our Senator, the State Superintendent who co-authored the Charter School Law passed away, and the consortium businesses were significantly transformed.  All six CEOs left their positions and several of the companies experienced major changes.  Bell Atlantic became Verizon, Hercules was taken over by Ashland, and Zeneca merged with Astra. The change agent (charter schools) was taken over by the very system it was supposed to change!

More specifics of the proposed reform effort will be presented in Part 2, the Bold Plan.

-by Ron Russo, Senior Fellow, CRI Center for Education Excellence

     Founding President, Charter School of Wilmington

     Former Principal, St. Mark’s High School

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Culture is defined as a set of beliefs that unites a group.  It is a common mind-set that influences the manner of thinking, behaving, and working in a particular organization.  While teaching is a profession, education is a business and, like any business, it will, deliberately or unintentionally, operate within its own business culture.  When the culture focuses all personnel, efforts, and resources on a common goal, the chances for success are greatly enhanced and the need for numerous school districts is reduced.

In a school when a positive, productive culture is established it permeates every aspect of the operation.  It affects the expectations and demeanor of teachers, parents, and students as well as, the selection of curricula, pedagogy, etc.  It provides the environment within which administrators create visions, interact with others, model behaviors, and make operational decisions (employment, curriculum, scheduling, finances, etc.).  Creating a school culture of success is the primary responsibility of one person, the school’s principal, i.e., the Chief Education Officer (CEO).

Just as school boards and bureaucrats must be more supportive and less directive of schools, THE ART OF ADMINISTRATION is intended to provide suggestions (not answers) for building administrators that will stretch their thinking for solutions to concerns they are or will be facing.  While these principles of decision making (which is the essence of administration) are appropriate for all schools, their application will result in a wide variety of schools due to differences in community goals, parental input, resources, as well as, the educational focus of a specific school.

A culture of high expectations leads to positive thinking that results in self-fulfilling prophecies.  It is assertive in that it concentrates on achieving success and not on avoiding failure.  It is practical and acknowledges that not all decisions will produce home runs but, in some situations, a bunt single will get the job done.

Creating a new culture is a systemic change that will influence every facet of the education process in a school.  Discipline becomes a positive effort to internalize proper behavior and not just to enforce rules.  Parents are the primary customers of education and their greatest contribution can be quite simple.  Teachers need to be recognized as the single most important factor to educational improvement.  Good financial management is critical for all businesses and schools are no exception.  Calendars, schedules, textbooks, courses, technology, etc. are like pieces on a chess board.  They are variables that administrators can maneuver within the culture to achieve success (checkmate!).  Delaware’s nonpublic schools have used a similar model successfully since before the founding of America.

The significant role played by culture in a successful business operation can be seen in a speech delivered at the Delaware State Chamber of Commerce dinner in 2012 by Marvin N. “Skip” Schoenhals, chair of Vision 2015 and WSFS Bank, who credited the improvement at WSFS over a fifteen year period to a change in the bank’s culture.  He also said public education had to do the same thing.  For a more detailed description of creating a school culture of success read, THE ART OF ADMINISTRATION.

 

-by Ron Russo

      Senior Fellow, Caesar Rodney Institute

     Founding President, Charter School of Wilmington

     Former Principal, St. Mark’s High School

 

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The reaction from many corners to President Trump’s decision to exit the Paris climate agreement was remarkably overstated and pessimistic. The Paris agreement is voluntary in implementation and miniscule in its impact; the temperature impact of the US commitment in the Paris accord is estimated to be only three hundredths of a degree. While climate alarmists see setbacks for carbon emissions limits as leading to imminent ruinous global warming, I have a different view:

The Paris agreement is a charade that solves nothing, while man-made global warming is on its way to being a solved issue no matter what the UN and diplomats agree to.

The truth is hard to find when hyperbole and groupthink abound. The truth is that you never get the truth via politicized agenda-driven ‘science’. Politically-appointed bodies are poor drivers and diviners of real science, which requires a marketplace of ideas rather than the blinders of political conformity. Climate skeptics have been shamed as treasonable dissenters rather than reasonable questioners; this too destroys rational debate. UN diplomatic agreements driven by self-interested parties is far from real problem-solving.

The measured impact of manmade carbon emissions has been mild so far. The temperature rise in the last 70 years has been inly 0.12C per decade. The temperature impact of atmospheric carbon dioxide is based on the logarithm of the increase in CO2 concentration in the atmosphere; that ratio is not accelerating. If the next 3 decades are like the past 7 decades, temperature rise will be no more than 0.36C additional by 2050.

Why is this important? Fear-mongering claims rest upon accelerating changes and ‘imminent’ threats that require action ‘now!’ Yet real temperature trends and other records (such as the 2-3 mm slow increase in sea level), show that changes thus far are mild, slow and long-term. The temperature rise in the last 20 years is less than half what models have predicted.

Technology is moving much faster than the climate. Consider: 20 years ago, the climate was only 0.15C cooler, barely different. But the internet was 50 times smaller, we didn’t have the smart phone, drones, social media or deep learning AI; wind turbines were 5x more expensive, solar 20x more expensive and LEDs 50x more expensive; we also had less efficient engines and fracking for oil and gas didn’t exist like it does now. Within another 30 years, frontiers will be opened we can only imagine now.

These improvements will happen with or without great concern over CO2 emissions, as non-emitting technologies improve and leapfrog fossil fuels. For example, solar power generation has been improving by 7% per year; if this rate continues, solar technologies will be among the cheapest forms of power generation. Gas and oil will still compete, but efficiency will make every gallon and MMBTU go farther, so a larger economy can prosper on lower carbon emissions. Next-generation nuclear technology could also deliver abundant economic power at zero emissions.

In the end, global warming is not a crisis, because technology will solve any challenge at a faster rate than it can become a serious problem.

The real crisis is failure in leadership and imagination. Imaginative leadership would let economically-driven market-based energy technology evolve us to a post-carbon future.

The failure of imagination to let market-based technology lead results in nanny-state non-solutions to non-problems. This path of making CO2 the enemy creates regulations, burdens, and job killing mandates. And to the extent treaty commitments are voluntary, they become empty promises, like new year’s resolutions that are quickly forgotten. The bottom line is that the Paris accord did virtually nothing to meaningful address climate change.

The shame of making CO2 the bugaboo is that more CO2 in the atmosphere has meant greener deserts, and a slightly warmer and wetter world with more CO2 is not bad for plant life, crop yields, or humankind. Predicted harms based on models have not come to pass because the models have overstated impacts and sensitivities. And suppressing the positive side of the CO2 story has distorted policy in a direction that’s not in anyone’s best interest.

Pretending to address real problems while not actually doing so often blocks real progress.  Thus, critics of President Trump’s decision to exit Paris accord may someday thank him for taking us out of the non-solution of nations making empty promises. Without regulation and phony promises from other nations as a crutch, those who view carbon emissions as a concern will see that the true path to a real solution is developing market-competitive non-emitting sources of energy and power. This will happen by 2050 at the latest, in time to avert long range concerns regarding CO2. Climate change solved!

-by Patrick McGuinness, CRI Advisory Council Member

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When we plan a home renovation or car repair, typically we call a few businesses who give us estimates either over the phone or in person. Sometimes these initial consultations are free, other times there is a charge, but at least we know what to expect. We understand that additional problems may be found and we expect to be consulted on any additional charges that may result. Why can’t we do this with a hip replacement? Or an ankle X-ray? Or any other non-emergency medical care?

The US General Accounting Office summarized the reasons listed by the healthcare industry.[1] Providers say they do not know the specifics of patients’ insurance plans, hence they cannot give estimates. Insurers say they do not know what services will be needed, hence they cannot give estimates.  Hospitals and surgery centers know their own charges (facility fees) but do not know what physicians (e.g. surgeons and anesthesiologists) charge, or what implants will cost, hence they cannot give estimates. So, although the construction and auto repair industries have surmounted these problems, the healthcare industry has not. What can the state do to promote changes in industry price practices?

Require providers to post self-pay (cash) prices for standard procedures. Require providers to give billing codes to insured patients for standard procedures.

Many visits are routine or predictable, e.g. strep tests, X-rays of sprains, etc. Providers may not know the specifics of each patient’s insurance coverage, deductibles, etc. but they do know the prices they charge uninsured and out-of-network patients. They also know the billing codes of standard procedures that are submitted to payers (insurers and Medicare).  With billing codes, patients can contact insurers directly to determine their out-of-pocket costs. In summary, patients need to know the self-pay (cash) prices, insurance plans that are accepted, and billing codes for the requested/likely procedures. Even if doctors are unsure what will ultimately be needed, at a minimum they should be able to quote a standard initial consultation cash price or billing code by phone or by website.

Require hospitals, surgery centers and/or doctors to give cost estimates for more complex, non-emergency procedures

 It may be argued that providing a price estimate for complicated procedures (such as surgeries) is impossible due to the intricacies of specific cases and the wide range of potential complications. There is also the problem of multiple providers (facilities, surgeon, anesthesiologist, etc.) However, there are institutions that manage to do just that. The Oklahoma City Surgery Center provides, on a website, prices for a variety of surgical procedures. These are for self-paying patients and explicitly exclude patients with insurance. The quotes are all inclusive for cases without complications (made very clear on the website). It would seem then that a local hospital/surgeon with the ability to consult directly with patients before surgery could, at the very least, provide a fairly accurate estimate. The existence and continued success of the Oklahoma Surgery Center proves that a health care provider can provide accurate cost estimates to their patients.

 What Other States Require

 Other states have taken steps to improve pricing practices in health care. Some states require hospitals/surgery centers/physician’s practices to post prices for common inpatient or outpatient procedures, sometimes with a breakdown between doctors’ and facilities’ fees (CA, IL, NH). A number of states (FL, MN, MA, CT) require hospitals and/or surgery centers to provide cost estimates upon request. Two states (TX, CT) require hospitals to provide cost estimates to patients who are uninsured or out-of-network, apparently regardless of request.[2] At least one (TX) requires that patients must be informed if services are from a provider that is out-of-network for that patient’s insurer.

Price/Cost Availability in Delaware

Currently no Delaware laws require health care providers to post prices, give cost estimates, or provide billing codes. Nor is there a requirement that providers list the plans that they accept. In an informal survey of the websites of major hospitals/hospital chains in Delaware, we discovered one that,  with sufficient persistence, yields a phone number to call for cost estimates. One website has a Consumer Guide but a login name and password are required. Two (with plenty of clicking around) reveal offers to make ‘arrangements’ but no dedicated phone number. One lists accepted insurance plans but no offer or phone number to make cost estimates. There is one standout: a southern Delaware facility posts both procedure prices and billing codes on its website.

In an admittedly unscientific survey of nine Delaware primary care, walk-in and urgent care clinic websites, none quote an initial consultation fee for self-payers. Only one offers to quote over the phone and also states that it is willing to provide cost estimates (only in person however). Several list accepted insurance plans.

Potential Problems

 In 2012 Massachusetts passed a law that required health care providers to give cost estimates within 2 business days upon request (effective 2014). However, a follow-up study reported that in a survey to obtain estimates for a routine CT scan, about half of the providers required multiple phone calls over multiple days (usually hospitals), and half provided estimates within a day (usually imaging or outpatient centers).[3] Moreover, the number of patient requests for cost estimates was typically low. However, given the persistence the researchers needed to get these estimates from so many providers, that is not surprising. With the spread of high-deductible insurance plans, health savings accounts and non-insurance, it is difficult to believe that patients do not need this information.

The solution to these problems is to model Delaware’s law, in part, after existing Delaware laws for other industries (e.g., Title 6 Ch 49A in particular 4908A). A hired contractor prior to service must provide an itemized list of costs to the customer before doing any work. The customer is entitled to this list by law, and the final price listed on this bill is the agreed upon price the customer will pay for the service provided. A similar approach to healthcare is a much more straightforward method for pricing when compared to informing the patient what the cost will be only after the procedure is done. Of course it may be unrealistic to suppose that a doctor can predict exactly what each patient will need before treatment, however it is not unreasonable to suppose that a fairly accurate estimate could be made. While, unlike the contractor, the healthcare provider should probably not be held to the quoted price, setting conditions requiring the final cost to be within some margin of error of that original estimate would alleviate much of the issue.[4] This policy, along with a posted initial consultation fee, would go a long way toward removing the fear many self-pay health care consumers have when going to the doctor, namely that they will end up being charged an amount massively greater than expected.

For insured patients, if providers find it too burdensome to find out what each individual patient’s insurance plan will cover, then as an alternative they should be required to provide billing codes for the initial consultation and any foreseeable procedures to patients who can then contact insurers directly.  Insurers should be required to provide a hotline or website so that patients can get quotes quickly. As in other states, patients should be informed whether any providers involved in their care are out-of-network. Finally, since insured patients are almost always are required to sign a statement accepting ultimate responsibility for bills not paid by insurance, a medical bill should be uncollectable unless this statement includes a specified price or maximum amount. Considering that the situation now is that patients can be surprised with prices quoted after the fact, this is a matter of simple justice.

 Conclusions

In a prior column we listed sources of market-wide health cost information, but this data is only useful for a very general estimate of what the final cost of care will be. Medical care providers typically disclose prices only after a procedure is completed, which can result in significant price discrepancies between what the patient may expect from market-wide price websites and the final bill. The practice of disclosing costs after the service is provided is almost unique to the medical community, and needs to be changed to allow consumers to accurately make decisions regarding their medical care.

Two problems have been identified here. One is the need to require providers and insurers to post their self-pay prices and/or the billing codes of standard procedures and consultations. The second is to make patients aware that they have a right to this information and to make it accessible to them. Unlike other states, Delaware should require providers give this information to patients or sign a statement that the patients waive their right to it. Other states require providers to give this information only upon request. Thus, patients remain unaware of it.

Consumer protection laws already exist in Delaware and other states for other industries. Given the evolution of the health care industry toward patient-directed care via high-deductibles, health savings accounts, self-payers and narrowing insurer networks, such laws are needed in health care. Other states have taken some steps toward this. Delaware should learn from their experience and act to fill this gap and promote health care price transparency.

-by Stacie Beck, Associate Professor of Economics, University of Delaware                  & CRI Advisory Council Member and by John Libert, CRI Summer Research Intern.

[1] HEALTH CARE PRICE TRANSPARENCY: Meaningful Price Information Is Difficult for Consumers to Obtain Prior to Receiving Care, GAO-11-791: Published: Sep 23, 2011. Publicly Released: Oct 24, 2011.

[2] National Conference of State Legislatures www.ncsl.org accessed June 21, 2017.

[3] Barbara Anthony “Mass Hospitals Weak on Price Transparency” Pioneer Institute Policy Brief, June 2015.

[4] There is a printable model agreement on the Healthcare Bluebook website.

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