National Center for Policy Analysis

The National Center for Policy Analysis (NCPA) is a nonprofit research organization dedicated to promoting “private alternatives to government regulation and control.” 

Established in 1983, the Dallas-based think tank proposes reforms in health care, Social Security, retirement pensions, environmental regulation, taxes, and education. When John C. Goodman founded NCPA, his goal was to make a name for the group by emphasizing issues that were not being addressed by other foundations and nonprofits. 

In that regard, NCPA has been quite successful. It is credited with creating and implementing Health Savings Accounts, one of the most innovative free-market-based health care reforms introduced during the last 30 years.  

Humble Beginnings to National Powerhouse 

NCPA established its first offices in a mostly abandoned building at the University of Dallas. During its first two years, Goodman waived his salary and paid expenses out of his own pocket. 

Today, NCPA reports a $7 million budget and 40 full-time employees. Its Board Chairman is Pete du Pont, the former Delaware Governor and 1988 presidential candidate.  

NCPA consistently attracts a significant amount of major media coverage. In 2009, NCPA staff were interviewed on CNBC’s “The Kudlow Report,” Fox News Channel’s “America’s Newsroom,” and “The CBS Evening News With Katie Couric.” Major print publications have published NCPA op-eds or quoted its staff including, The Wall Street Journal, the Chicago Tribune, The Dallas Morning News, The New Republic, and Forbes

Revolutionizing the Health Care Reform Debate 

Health Savings Accounts (HAS) address the most serious problem plaguing U.S. health care, a third-party payment system in which individuals don’t know the cost of the health care they purchase since they don’t pay for it directly.  

“Our health care system is dominated by large bureaucratic institutions, and individual patients have little control over the prices they pay or the quality of care they receive,” said Goodman in a February 1992 press statement. “We want to restore the patient as the principal buyer of health care and unleash an army of millions of informed shoppers into the medical marketplace.”

How HSAs work:

  • They are tax-exempt accounts in which individuals deposit funds to pay for medical expenses.
  • The accounts are usually partnered with a high-deductible plan to cover serious illness or injury once the deductible is met.
  • Individuals are free to use the HAS to pay for routine medical expenses.
  • Any portion of the HAS not spent can be rolled over to the next year, and upon retirement the individual is free to spend the money as he may wish. 

Millions of people are already enrolled in HSAs and are one of the most rapidly growing health insurance plans in the nation. Currently, the maximum contribution for individuals is $2,850 and $5,650 for families.

“Father of Health Savings Accounts” Wages Campaign 

John Goodman is credited with devising the idea of HSAs in 1983. Over the next 20 years, Goodman and the NCPA waged a battle to turn this radical concept into law. The Wall Street Journal calls Goodman the “Father of Health Savings Accounts.” 

In 1992, Goodman and Gerald Musgrave co-authored Patient Power: Solving America’s Health Care Crisis, which argued for Medical Savings Accounts (MSA). (From 1983 to 2003, the private account proposal was called a MSA.) The publisher reports that 300,000 copies are in print. 

Winning acceptance for HSAs proved an arduous task.  

“When I first took the idea to Congress in the early 1990s, only five congressmen wanted to be with me,” Goodman told Investor’s Business Daily in 2008. 

MSAs gradually took hold during the 1994 health care debate. More than 200 congressmen, seeking an alternative to President Clinton’s government interventionist plan, co-sponsored bills with MSA provisions.

In 1995, new House Speaker Newt Gingrich called MSAs the heart of his Congressional Medicare reform agenda. “MSAs are what I believe the most exciting health care innovations in modern times,” said Gingrich in a September 21, 1995 article in the Dallas Morning News

On August 21, 1996, President Clinton signed MSAs into law. Participation was supposed to include up to 750,000 taxpayers. 

However, by 1998 only 100,000 accounts had been opened. The problem was that the program was limited to the self-employed and employees at small businesses. As a result, major insurers were reluctant to enter so small a market.

HSAs Take Off 

HSAs became a viable health insurance alternative with the passage of the Medicare Modernization Act of 2003. Ironically, NCPA opposed the final bill because it also dramatically increased Medicare entitlement spending.  

The Health Opportunity Patient Empowerment Act of 2006 made HSAs more user-friendly by loosening the restrictions. According to America’s Health Insurance Plans (AHIP), the number of Americans enrolled in HSAs grew from 1 million in 2005 to more than 6.1 million in 2008. 

An April 2007 Modern Healthcare article summed up the new attitude to HSAs: “The voices of critics of consumer-directed health plans are fading into the background as such plans and their accompanying health savings accounts are enjoying strong growth.”

Expanding the Use of 401(k) Plans 

In 2006, NCPA played an important role in developing legislation enacted by Congress that expanded the use of 401(k) plans.

For years, NCPA worked with the Brookings Institution to advocate allowing employers to automatically enroll employees in a 401(k). Between 1981 and 2006, employee enrollment in 401(k) plans was voluntary. But large numbers of workers never signed up. 

Matt Moore, a NCPA senior policy analyst, would write that about one-third of workers typically didn’t take advantage of the 401(k) option. And only 47 percent of those under 29 elected to set up a plan. “But it pays to start sooner rather than later,” added Moore. “Automatic enrollment of new employees will help workers – especially younger workers – build a nest egg for retirement.” 

NCPA worked with congressional offices to develop a policy for automatic 401(k) enrollment to be included in pension reform legislation. In April 2006, NCPA conducted a briefing on Capitol Hill that detailed “10 important steps to reform our health and pension systems.” Among the problems addressed by the bipartisan panel of experts, that included Goodman, was the fact that employers are abandoning traditional pension plans. But workers who have access to 401(k)s weren’t contributing enough.

The Pension Protection Act of 2006 included key provisions backed by NCPA:

  • Automatic enrollment of new employees into 401(k) and 403(b) plans;
  • Automatic increases of contribution rates when workers receive a raise; and
  • Automatic investment in diversified portfolios. 

NCPA says that as a result of the changes “half of all future 401(k) enrollees will be enjoying higher and safer returns.” 

Experts concur. “This will revolutionize the 401(k) plan from something dependent on an individual taking action to a design that essentially gets people saving more,”says Dallas Salisbury of the Employee Benefit Research Institute.

Improving Education Through Competition 

NCPA believes that the key to improving education is to break the monopoly of the public education establishment.  

To that end, NCPA supports charter schools, public schools freed from bureaucracy and regulation to try innovative approaches. NCPA specifically advocates for tax-funded and privately-funded vouchers to allow children – mostly minorities from low-income families – to leave failing public schools and attend private schools instead. 

NCPA studies show that such “choice” programs boost student test scores. They can also help improve public schools that compete to attract students.  

A 2001 NCPA study presented evidence of the beneficial effects of a Milwaukee voucher program. Math scores of students who switched to a private school were 5 to 11 percentile points higher than those of their public school counterparts.  

And in response to the loss of its students, the Milwaukee public school system began guaranteeing that students would be able to read by the end of the third grade.

School choice programs can also save millions of taxpayer dollars.  

A 2007 study released by the NCPA, the Hispanic Council for Reform and Educational Options, and the Milton and Rose D. Friedman Foundation estimated that the 2007 class of Texas high school dropouts will cost state taxpayers $377 million each year over the course of their lifetime. This figure includes increased Medicaid costs, increased incarceration costs, and the loss of tax revenue.

School districts facing more private school competition also have lower dropout rates. The study concluded that a school choice program which “increased private school enrollment by just five percent” would reduce the public school dropout rate by as much as 17,400 students per year, and save up to $53 million annually over the expected life of the students.