How can Ohio support preventative care?

From a health care perspective, I am a fairly young and healthy member of the system. My standard interaction with doctors is an annual visit in January where I find out I’m a little vitamin D deficient.

I am surprised, however, that year after year I end up with a bill for hundreds of dollars from my health care provider, Mount Carmel. Despite the Affordable Care Act’s requirement that all health insurance plans in the United States cover a preventative care visit each year, I still end up with “extra” fees tacked on to my visit.

“New patient processing.” Fees for blood work. All these seem to be an essential part of preventative care, but the health care system claims they are additional services past preventative care and my insurance companies consistently agree with them.

In a poll released last month by the American Cancer Society, a majority of Ohioans say a candidate’s position on access to affordable, comprehensive health coverage is very important for their decisions to vote.

You would think focusing on preventative and primary care would be a priority for a country struggling with keeping health care costs low. Preventative and primary care is cheaper than dealing with complications of diseases down the road. And in a state like Ohio where residents get one of the worst “bang for their buck” health care outcomes for how much they spend, you would think it would be particularly important.

While a lot of health care policy is decided at the federal level, states also have significant latitude in deciding health policy. Medicaid spending, which makes up a significant portion of state spending, gives the state a significant lever for influencing health care markets in the state.

A number of states have been using their authority to influence the provision of primary care for residents. In 2022, the Oklahoma State Legislature enacted legislation to require Medicaid managed care companies to spend at least 11% of their medical expenditures on primary care. This mandate creates an incentive for companies to shift spending from expensive treatment to more affordable prevention.

Other states have taken exploratory first steps to reform beyond the Medicaid sphere. In 2022, Nebraska enacted legislation to create a council to study the rate of primary care spending in the state and make recommendations about an appropriate level of spending in the state and steps toward achieving this goal.

Other states are working with private research firms to study ways to improve primary care for residents. In 2022, Virginia enacted legislation to contract with a private research firm to study the financing, quality, and delivery of primary care to Virginians.

Other states are paving the way for better primary and preventative care for their residents, which will lead to both better outcomes and lower costs for patients. While I don’t know the relative effectiveness of these policies, I do know one thing. I can keep coming back for preventative care visits year after year and spending on bills I shouldn’t have to pay. But for someone at the federal poverty level, the bill I got hit with is half a paycheck. She has a lot more reason to skip next year’s appointment. And next year’s appointment might be the important one.

This commentary first appeared in the Ohio Capital Journal.

Rent supports or eviction moratorium: which works better?

Last month, I wrote a blog post about how a strong safety net and temporary assistance can provide strong returns on investment to an economy. One of the examples I brought up was the COVID-19 eviction moratorium, which essentially acted as temporary rent assistance for low-income people. 

Evictions are a major issue in the housing market, especially in low-income neighborhoods, where they can lead to social and economic instability. There is a lot of research on the effects of evictions, but there has been very little policy analysis done on potential solutions. A new working paper aims to address this gap by creating an economic model of evictions to explore what the impacts of these potential policies might be. 

One of the key findings of the study is that evictions are inherently suboptimal from a social welfare perspective. In the competitive equilibrium, evictions occur when landlords, facing the risk of non-payment, decide to terminate a rental agreement rather than negotiate a lower rent. However, a benevolent social planner—who is focused on maximizing overall welfare—would not evict tenants who could potentially continue to contribute positively to the rental market. The social planner would allow these tenants to remain housed, recognizing that evictions result in significant negative externalities that impact not only the evicted families but also the broader community.

The study highlights how the current market dynamics lead to lower housing quality and supply for renters facing high eviction risk. This is because landlords anticipate lower future profits from units with high eviction probabilities and respond by reducing investment in these properties. The resulting lower-quality housing further exacerbates inequality and reduces overall welfare.

To address these inefficiencies, the researchers evaluate two types of policies: eviction restrictions and rent support. While eviction restrictions can reduce the number of evictions, they also lead to unintended consequences. For instance, severe restrictions can discourage landlords from investing in housing quality or even from providing rental units in the first place, leading to a reduction in overall housing supply. 

On the other hand, rent support—where the government provides financial assistance to cover the rent of unemployed tenants—emerges as a more effective policy. Unlike eviction restrictions, rent support directly addresses the issue of non-payment without discouraging landlords from participating in the rental market or reducing their investment in property quality. The model shows that rent support can potentially eliminate evictions and even increase the supply of housing, as it provides landlords with guaranteed income during periods of tenant unemployment. Additionally, because rent support raises overall housing quality, it can have positive spillover effects on renters who are not directly at risk of eviction but who benefit from a more stable and well-maintained rental market.

The researchers also demonstrate that, in times of crisis, such as during the COVID-19 pandemic, temporary eviction moratoriums can raise welfare by preventing a sharp rise in evictions when job-finding rates are low and unemployment is high. However, even in such situations, the introduction of rent support alongside eviction moratoriums can better ensure that both housing stability and supply are maintained.

The model presented in this research provides compelling evidence that rent assistance is a more effective public policy than eviction moratoriums in both normal economic conditions and times of crisis. Rent support not only prevents the immediate social costs associated with evictions but also promotes a healthier and more equitable rental market by maintaining housing quality and supply. Policymakers aiming to reduce evictions and enhance overall welfare should prioritize policies that provide direct rent assistance to those facing temporary financial hardship, ensuring both tenant stability and a robust housing market.

What are “wraparound services?”

One program that I have heard coming up in the social services sector over the past few years is a suite of interventions called “wraparound services.”

The basic concept of "wraparound services" is to provide seemingly unrelated services to someone who needs help with a specific issue. For example, providing employment and housing assistance to someone who seeks out behavioral health services.

Wraparound services can be a range of different services including case management, counseling, crisis management, education, family support, psychiatric care, health care, legal services, recreational therapy, long-term care, group therapy, and transportation.

When I first heard about “wraparound services,” I was admittedly skeptical about the approach. The kind of wide-eyed excitement they aroused in people I heard talking about them smacked of a snake-oil intervention. All in all, they felt like a firehose approach to social problems: if we throw enough interventions at someone, something is going to stick and we are going to help them improve their lot in life.

I also was skeptical because I hadn’t heard of any evaluation of these interventions. It seems like a lot of the faith in the “wraparound approach” was built on faith in the current social services system. The idea is that we have the right programs in place to help people, we just need to get the right people connected with the right programs and they will see improvement. I hadn’t seen any evidence that this is indeed the problem with our social system and I was skeptical of that logic model. 

I needed to see more evidence.

A working paper published by the National Bureau of Economic Research this month finally gives some credence to the claims of wraparound programs. Researchers from the Rochester Institute of Technology and the University of Notre Dame conducted a randomized controlled trial of a wraparound program.

Participants were randomly assigned to intensive wraparound services provided flexibly and intensively over a number of years. Participants designed their own goals and then were supported by these programs.

The topline finding of the researchers was that participants in the program were employed at rates ten percentage points higher than control group members after a year of receiving services and that the effects persisted past the conclusion of the program. The researchers did not find evidence that wraparound services helped participants achieve other goals besides employment, though, even when participants had identified non-employment goals as their primary goals.

What does this tell us about the program? The first thing I take away from this study is that wraparound programs are effective on one dimension. A ten percentage-point increase in labor force participation rate is a big deal. For context, if the state of Delaware, which is 39th in the country in labor force participation rate, had a 10 percentage point increase in labor force participation, it would tie North Dakota for the highest labor force participation rate in the country.

The second thing I take from this is that the impact of wraparound programs is limited. This is not a panacea of a program that is able to solve every aspect of social life for those who are struggling. It will help them improve their chances of employment, though.

This finding does lead to a clear question: why wraparound at all at this point? If wraparound programs are just a good jobs program, why provide all the other services? Why don’t we cut our costs by funding all these superfluous programs and focus on what is actually helping people?

One of the findings from the researchers helps explain a problem with this approach. In their research, they found some evidence that participation in the wraparound program increased hopefulness and agency among participants. The researchers hypothesize that it is the hopefulness and agency that caused the increase in employment. So some of the wraparound services, in particular counseling, might be what is driving the employment effect.

I am happy to see there is some evidence that wraparound services are working. I also think these programs need to be evaluated and ineffective pieces of them need to be trimmed back. The goal of social services is to make sure that people get the support they need to thrive, and resources spent on programs that don’t do that are resources that are withheld from programs that do. More research will help us further cut through the noise of a program like this.

Is abating radon worth it?

Earlier today, the US Department of Housing and Urban Development announced that the Bridgeport, Connecticut and Dayton, Ohio public housing authorities would receive $1.1 million in grants to help reduce radon exposure in homes. Radon is a radioactive gas that can be found in the soil underneath homes, and can increase the risk of cancer for people exposed to it. 

These funds will allow the two housing authorities to test public housing units for radon exposure, and if detected enable them to mitigate the negative effects. The press release claims that they expect this to protect 1,700 low-income families from radon exposure. 

From an efficiency lens, we should probably expect this to have a net positive effect on society. $1.1 million is a small price to pay for something that could potentially prevent people from getting cancer. 

Doing some back of the envelope math, if we use a Value of Statistical Life of $11 million, then this would need to reduce the risk of death for individuals in the impacted families by only 0.00003% to break even. That assumes that there are roughly 2.5 people per affected family. 

Given how likely this is to return a positive value for society, it could be beneficial for more local governments to pursue similar programs. A more expansive strategy could amplify the benefits by ensuring that low-income families in other cities also have access to testing and mitigation services. 

From an equity perspective, this proposal should have a positive impact. It is a bit more difficult to know for certain though, because low-income families do not necessarily have higher exposure to radon than higher-income families. Instead, we might expect an increase in equity to result from the fact that low-income families have fewer resources to dedicate to treatment in the long run, should the exposure result in negative health outcomes. 

While this funding announcement is a positive development, some key details could help better assess the policy’s potential impact. Clarity on how the $1.1 million will be distributed between testing and mitigation is essential. If most of the funds are used for testing, there might be insufficient resources to effectively mitigate radon in all affected homes. A more detailed breakdown would provide confidence that the program will successfully reduce radon exposure and protect families.

The timeline for the rollout and completion of the program is another missing piece of information. Knowing when testing and mitigation efforts will begin and end would allow communities to better understand when they will see improvements. Establishing clear benchmarks and deadlines could also help in evaluating the program’s effectiveness.

Finally, details on how the success of this initiative will be measured are crucial. Plans for follow-up testing and long-term monitoring would ensure that initial mitigation efforts are sustained and effective. A well-defined evaluation strategy would not only strengthen the current program but also provide valuable data for expanding such efforts to other regions in the future. 

Public policy that finds cost effective ways to improve public health are always good. Though more research would be needed to fully understand what the impacts of this proposal might be, this is a positive step toward protecting public health for low-income families. 

What are the consequences of property tax relief?

Last month, Ohio state Rep. Thomas Patton introduced a bill to freeze property taxes for low- and middle-income households.

The bill specifies that property taxes shall be frozen if the home is occupied by someone making $75,000 or less (a little over 110% of the statewide median household income) and the person living in the home is enrolled in Medicaid or Medicare.

This practically means that the property tax benefit would apply to people who are homeowners who are low-income or middle-income and elderly.

This sort of tax benefit would be helpful for some low-income people and elderly people who own homes. Housing prices in Ohio have doubled over the past decade, which is likely leading to higher property tax costs for homeowners across the state to go with it.

There are a couple of considerations worth taking into account when looking at a policy like this, though.

First, where will we be losing revenues if this policy is put into place? According to the Ohio Department of Taxation, about two-thirds of property taxes in Ohio go to school funding. This means about two-thirds of the savings would be paid for with lower spending on K-12 schools.

This could have uneven geographic impacts as well. It may not have as significant of an impact in communities with more people on Medicare, which would mostly be retirees. But school districts that have more low-income homeowners would see a disproportionate impact to school revenues. This would further limit resources to schools with high rates of low-income homeowners living in their districts.

Another consideration for this policy is who would be left out? According to a Federal Reserve Bank of Minneapolis article from earlier this year, more low-income Americans own their homes now than ever before. Despite this upward trend, a majority of bottom-quintile Americans still do not own their homes.

This impacts retirement-age people as well. While a majority of retirement-age people in Ohio own their homes, about 27% of retirement-age people are still renters according to Census Bureau surveys. This means substantial numbers of low-income people and retirees are renters.

But this is fine because renters don’t pay property taxes, right? Wrong: renters pay property taxes because the people who own their homes pay property taxes. Just like how retailers can pass on part of their sales taxes to consumers and how importers can pass on part of the cost of tariffs to those who buy their products, landlords pass on the cost of property taxes to renters. So renters are burdened with property taxes but would not receive any relief under this sort of proposal.

Is there a better way to do property tax relief?

One way would be to target relief to low-income people and retirees without the stipulation of homeownership. Just provide a tax credit with the stipulation of Medicaid or Medicare enrollment. This would relieve tax burdens and make sure that relief gets to everyone who is burdened by property taxes.

It would not, however, provide a solution to the problem that lowering property taxes means lowering support for schools and likely hurting student achievement. This would need to be fixed through another revenue stream if policymakers did not want to accept this tradeoff for property tax relief.

This commentary first appeared in the Ohio Capital Journal.

Ohio economists: exempting tips from taxes will help higher-income tipped workers

In a survey released this morning by Scioto Analysis, 11 of 16 economists agreed that exempting tips from state income tax would significantly improve wellbeing for tipped workers. This comes after Representative Jay Edwards introduced a bill that would exempt tips from income tax in Ohio, and both President Trump and Vice President Harris announced that exempting tips from income tax would be part of their agendas if elected president. 

Bob Gitter from Ohio Wesleyan who agreed with the statement qualified his response by saying “low-income tipped workers are not paying much, if any, income tax. The benefits will be for higher income tipped workers, e.g. servers at higher priced restaurants.” This highlights a common concern with this policy, the fact that many workers who rely on tips do not end up paying much if any income tax. 

Similarly, Curtis Reynolds from Kent State commented about how this might create some negative incentives for employers “... I am not sure that this will really help at all.  Some tips may not be declared on taxes in the first place (so exempting them does not help) and this may just slow wage growth if employers view this as an increase in total compensation.”

Additionally, 11 of 16 economists disagreed that exempting tips from income tax would lift more people out of poverty than raising the tipped minimum wage to the non-tipped minimum wage. As Will Georgic from Ohio Wesleyan wrote “The number of tipped workers in Ohio who are both in poverty and pay income taxes is vanishingly small. Exempting tips from income taxes will do very little to pull people out of poverty. Roughly doubling the tipped minimum wage to coincide with the overall statewide minimum wage will be much more effective at reducing poverty in a partial equilibrium sense. However, the ultimate effect will depend on how much of this increase in labor costs for employers is passed on to consumers and on the own-price elasticity of services provided by tipped workers.”

The Ohio Economic Experts Panel is a panel of over 40 Ohio Economists from over 30 Ohio higher educational institutions conducted by Scioto Analysis. The goal of the Ohio Economic Experts Panel is to promote better policy outcomes by providing policymakers, policy influencers, and the public with the informed opinions of Ohio’s leading economists. Individual responses to all surveys can be found here. 

Is a strong safety net good for the economy?

When I was in grad school, I did a project with an advocacy group that helped people who were faced with evictions. They were interested in studying the effects of the COVID-19 eviction moratorium.

The moratorium was in effect temporary housing assistance for people who could not pay their rent. It still allowed for some evictions in situations where tenants either used the property for illegal activities or severely damaged the property, but overall the policy acted as temporary housing assistance for hundreds of thousands of people across the country.

The question we were looking to uncover was how much evictions rose after the moratorium was lifted. If they were higher than pre-pandemic levels, we thought that might be because the moratorium just delayed their eviction for a short time rather than actually reducing eviction rates. 

If eviction rates returned to pre-pandemic levels, we suspected that it would be because this temporary assistance helped get people back on their feet, and avoid future eviction. 

Unfortunately, we didn't come to a decisive conclusion. I was working on this project in the Fall of 2022, and there just wasn’t enough data yet to be sure either way. At first glance though, it seemed like there was not going to be a significant rise in evictions. 

The real question that at the heart of this project that I wasn’t able to answer is how far temporary assistance can go. If you give someone rent money for one month, does that enable them to find a way to pay themselves the next?

In January of this year, researchers helped answer this question. In a paper written by researchers at Notre Dame university and the Census Bureau, they explain how emergency financial assistance appears to help increase earnings for some individuals. 

These researchers exploit variation in the availability of emergency resources in order to compare similar families that receive assistance to those that do not. They found no evidence to suggest that families that receive assistance decrease their labor supply, in effect replacing income from working with emergency assistance dollars. Instead, they found that for the lowest earners, this emergency assistance can lead to increases in employment and earnings. 

This result has extremely important policy implications. Short-term financial emergencies can have severe consequences. Things like homelessness and unemployment have long-lasting effects that the public sector ends up paying the bill for. If we can use short-term assistance to help get people back on their feet, then we not only improve conditions for struggling people in the short-term, but we can also avoid much more costly problems down the road. 

This new research helps highlight the fact that when there is a strong social safety net, we can improve long-run outcomes for people facing short-term struggles. This paper demonstrates that people who use emergency assistance do not begin to rely on it and use it as a replacement for their own income. Instead, we find that people who receive emergency assistance use it as a springboard to propel themselves into a more stable financial situation.

How does poverty impact health?

A Columbus Dispatch article released last weekend presented data from the Centers for Disease Control and Prevention on life expectancy for people living across Ohio.

One of the findings of the journalist was that the lowest-life-expectancy neighborhood in all of Ohio was located on the west side of Columbus. This neighborhood, which is approximately in the “south Franklinton” area, has a life expectancy of only 60 years.

This was poignant for me particularly because this neighborhood is directly adjacent to the neighborhood I live in. Just across the river in Columbus’s Brewery District, the life expectancy is 80 years. That is higher than even than the state average life expectancy of 78 years.

So this means that being born on my side of the river versus the other side of the river is worth 20 more years of life on average–a 34% increase in life expectancy.

What is driving this steep difference in life expectancies between one side of the river and the other? Something inescapable about this story is poverty. In south Franklinton, the Census Bureau estimates the poverty rate is about 62%--an astounding number. That means over half of the population of the neighborhood is living in poverty.

In the Brewery District? The estimated poverty rate is only 8%--low for Franklin County, low for Ohio, low for the United States. This means someone living in south Franklinton is 8 times as likely to live in poverty as someone living in the Brewery District.

This situation touches on a larger theme covered in a recent working paper published by the National Bureau of Economic Research. In this paper, researchers from the University of California, Los Angeles, Northwestern University, and New York University discuss the state of the research on the connection between poverty and health. They talk about how poverty and health are associated not only between countries, but within countries as well.

One conclusion these researchers come to is that it is not income that drives poor health, but rather poverty. They find that life expectancy at age 40 and the share of middle-age adults reporting that they are in good health, have a health difficulty, or experience depression all improve as people gain more income but flatten at higher levels of income.

This fits a pattern we see throughout many economic phenomena: the pattern of diminishing marginal returns. An additional $10,000 of income will improve the health of members of a household that makes $30,000 of income much more than it will improve the health of members of a household making $250,000 of income.

Another conclusion they come to is that income is not the only factor driving health outcomes for people in poverty. They note that across different geographies, life expectancy is steady for the wealthy, but varies for the poor. This suggests geographic factors may be at play in impacting health outcomes for people with less resources.

We do have public policies that can lead to better health outcomes for people in poverty, though. The authors of the paper mention the research around cash transfers, early childhood education, and health care provision. Poverty is a risk factor for poor health, but tackling both poverty and poor health is something fully within the grasp of public policy. Well-designed public policy can stop a river from having a 20-year impact on people’s lives.

Why are teachers paid so little?

When you first take an introductory microeconomics class, you learn all about the basic theory of supply and demand. You learn that in a competitive market, prices are determined by both how easy something is to supply and how valuable it is to the people consuming it. 

You also learn that the same basic rules apply to the labor market. This is the justification that is given when the question is inevitably asked “why do people with more important jobs not make more money?” 

The answer to this question has always been that prices in the labor market (wages) are not just a factor of the job itself, but of how easy it is to find employees in those jobs. That is why even though grocery store cashiers got labeled as “essential workers” during the pandemic, they still often are among the lowest paid employees in the state. 

The same has also been said about teachers. Despite the fact that good teachers provide an extremely valuable service that everyone benefits from in the long run, the theory has been that it was easy to find teachers. Another reason that teachers are underpaid is that most of the benefits of teaching are externalities. The people who benefit from good teachers are children, while the people who pay for good teachers are taxpayers. 

Positive externalities will always exist with teaching, but now it is no longer true that teachers are easy to find. We are currently experiencing a  shortage of qualified teachers in most parts of the country. A policy brief from the Journal of Policy Analysis and Management by Jim Wyckoff from the University of Virginia looks at the teacher shortage in Virginia. He points to three major problems in the teaching workforce.

1. Teaching vacancies disproportionately affect a small number of schools. 20% of schools have 80% of the vacancies.

2. The schools that are most affected are the poorest schools, with the largest populations of BIPOC students. 

3. Shortages are more pronounced among specialist teachers. For example, in the 2022 Virginia data, 3% of all teaching positions were vacant, while 6% of special education teaching positions were vacant.

Clearly, it is no longer true that it is easy to find teachers. The labor market for teachers is currently experiencing a major shortage. The good thing is that shortages in markets are fairly straightforward to solve. You just need to increase wages. 

In his policy brief, Wyckoff also suggests that specialists who teach special education, math, and science should get an additional bonus of at least $5,000. Currently, most public school teachers get paid on a single schedule. That means that the only thing that determines wages is how long a teacher has been working. If we want to specifically address the shortage of specialist teachers, then we should be willing to pay them more. This bonus could also apply to teachers who choose to work in high poverty schools that are facing major shortages. 

Education is one of the most important public goods. Paying teachers more is an investment in the future, not just a cost today. It may be expensive in the short run, but once these students grow up they are going to be better prepared to participate in society. 

We know that education leads to so many positive outcomes for people who experience it. Paying teachers more is a rare policy that could potentially improve efficiency by correcting a market shortage, and equity by leveling the playing field when it comes to our education system. 

Can public policy cure loneliness?

In July, I ended my service as president of Gross National Happiness USA, an organization focused on changing the way we measure progress and success in the United States.

In the six years I have served on the board of the organization, I have learned a lot about the protective factors that contribute to high levels of subjective well-being among people. In layman’s terms, I have learned a lot about what research says makes people happy.

In our 2022 survey of happiness in the United States, far and away the most-mentioned contributor to happiness by people surveyed was “family.” A total of 45% of respondents mentioned family in their free response about contributors to happiness. The next most common was “health,” which 6% of respondents mentioned.

This is just another datapoint in a large body of research that underscores the key role of social connections in driving happiness among individuals.

This poses a problem for policymakers. As we consider the tools at the hand for policymakers, few are effective at building social connections between people. While governments like the UK are spurring new initiatives to tackle loneliness, initiatives in the U.S. to preserve marriages have not been successful so far.

My reading of the evidence is that there is hope on this dimension, though. While many of the initiatives that have failed before have focused on relationships between adults, there does seem to be evidence that relationships can be built early on for children.

I thought of this recently while reading about an evaluation of the long-term effects of a randomized controlled trial in Bogotá, Colombia. The program, Kangaroo Mother Care, is an intervention aimed at increasing skin-to-skin contact between preterm infants and their mothers. This specific evaluation showed that at age 22, infants who were randomly assigned to groups to receive this skin-to-skin contact had better socio-emotional skills than those who were not.

This follows some of the evidence we have on impacts of programs like home visiting, which give week-to-week counseling to expectant and new mothers. Giving parents tools to have positive interactions with their children can lead to long-term benefits for those children in the form of socioemotional development and eventually in test scores, criminal justice involvement, health, and earnings.

Other similar programs have been shown to have positive impacts on child development. A group of pediatricians and psychiatrists evaluated a program where therapists coached parents as they interacted with children, viewing their interaction through a one-way mirror and providing coaching through a radio earphone. The program was very effective at reducing cases of child abuse and neglect. Estimates by the Washington Institute for Public Policy found the program could have large impacts on future labor market earnings, criminal justice system savings, less spending on special education, and less PTSD.

Some public health researchers are saying now that we are in an epidemic of loneliness. We may yet find a “cure”--a killer public policy intervention to improve connections between adults today. But until then, we do have one tool to fight this problem: building relationships between parents and children.