I was a guest on Progressive Radio Network’s “Of Consuming Interest” on September 9th, where I spoke about my work at TPI on health information technology, high-skilled immigration, and tax administration.
In my conversation with radio host Jim Turner, I discussed links between health policy and technology. I outlined the effects innovation can have on costs—to raise or reduce them—and the importance of looking at evidence to make sure policies are on the right track. I also talked about how technology affects privacy, both broadly and more specifically with regard to electronic health records. Privacy is important for consumers but privacy is not free—there are tradeoffs that require striking a balance. For example, stringent privacy rules have slowed hospitals’ adoption of electronic records, resulting in higher infant mortality.
Jim Turner and I also talked about issues involving federal subsidies to health information technology. While such technologies have the potential to spur innovation, reduce costs, and improve patient care, the roughly $30 billion provided to health care providers to speed the adoption of electronic health records in the 2009 economic stimulus could result in substantial waste and unintended consequences, even slowing the adoption of electronic records. As I argued in published comments to proposed program rules, these subsidies may end up funding activities already underway rather than inducing new investment and innovation. They can also backfire with results opposite to their intent if complex rules and uncertainties about qualifying for payment increase investment risk.
Health information technologies were the subject of the Aspen Forum workshop session I organized on the Internet, social media, and drug advertising. Consumers need information because they are playing an increasingly active role in their health care, and they are increasingly turning to the Internet and social media. Advertising goes hand in hand with public information and studies show that the benefits of prescription drug advertising outweigh the costs. Indeed, restricting information about approved products results in the dissemination of inaccurate information and counterfeit products. In a recent opinion, the Supreme Court reaffirmed that drug advertising is protected speech under the constitution.
Turning to immigration and innovation, I said that although immigration is always controversial, especially when unemployment is high, most analysts agree that lifting our stringent caps on immigration by scientists and engineers would boost innovation, productivity, and economic growth. What is less well understood is that high-skilled immigrants pay substantially more in taxes than they receive in federal benefits and are a plus for the federal budget, as my study showed. In response to Jim’s question about immigrants potentially displacing American workers, I pointed out that immigrants with advanced degrees tend to be complementary with domestic workers rather than substituting for them, resulting in higher earnings and more investment. But high-skilled immigration policy has been held hostage to comprehensive immigration reform, which is highly controversial as it involves border control issues and the problem of undocumented aliens.
Innovation in computer technology has led many people to assume that having the government prepare individual tax returns would reduce tax compliance costs. But, a study I co-wrote with Prof. Joseph Cordes of George Washington University examined the evidence and concluded that implementing such a program is not advisable. Filers may not realize significant cost savings because checking a return for completeness and accuracy requires much of the same work as preparing a return. Advances in tax preparation software and other assistance have sharply reduced the cost of tax preparation, reducing the potential savings from return-free filing. Further, additional costs to employers and other payers of income would be large and would disproportionally burden small businesses—employers’ data reporting deadlines would have to be advanced to allow tax refunds to be timely, which people count on. A return-free system would also introduce problems regarding privacy, security, and taxpayers retaining liability for errors in government-prepared returns, which could pose a particular issue for low-income filers.
Please go to the Of Consuming Interest Website to hear the full interview.