News: CJ Exclusives

COVID-19 has forced many changes; can government continue to change with them?

Rep. David Lewis, R-Harnett, addresses a mostly empty N.C. House chamber on April 28, 2020. (Screen shot from N.C. House of Representatives' YouTube channel)
Rep. David Lewis, R-Harnett, addresses a mostly empty N.C. House chamber on April 28, 2020. (Screen shot from N.C. House of Representatives' YouTube channel)

The COVID-19 pandemic has brought many questions with precious few answers. 

It’s tough to debate otherwise. 

A dearth of data, beyond the numbers of confirmed cases and deaths, allowing people to make reasonable decisions about their safety — and returning to some sense of normalcy — is clearly problematic.

It’s just one aspect as a general lack of transparency from government officials. The economy, then, continues its rapid freefall. The timetables put North Carolina at a competitive disadvantage with neighboring South Carolina, Tennessee, and Georgia. Those states either plan or have planned to relax some of their restrictions on commerce and mobility.

“It will depend on the facts and the data and the science” before the first phase of reopening begins, Cooper has said. 

Some aspects of the government orders, even considering the emergency declaration, are at odds with the U.S. Constitution, particularly the first and second amendments. Wake County, for instance, originally closed guns shops, before backtracking, and have limited people’s right to worship. The Raleigh Police Department went so far as to arrest a ReopenNC protester, calling protesting a non-essential activity. The governor later clarified the issue, calling it a fundamental right.

Much will change as we begin to reopen, but with disruption comes innovation. We realize now a virtual reality is closer than we probably imagined, and that laws, such as those, limiting medical equipment are being exposed as arcane and in desperate need of reform. The same goes for outdated rules on occupational licensing and institutional learning.

Government at all levels can learn from its response to this pandemic and, in many instances, scale back rules that strangle competition and inhibit opportunities for people trying to make a living. As the N.C. General Assembly in April for a few days, we examined several areas that could serve as points of focus. 

Health care and medicine 

The coronavirus bred a host of regulatory reforms, but most won’t outlast the virus without legislative action. 

The coronavirus outbreak ravaged North Carolina’s health care system, but it also dismantled regulatory restrictions on telemedicine, independent practice, licensure, and the supply of healthcare.  

Certificate-of-need laws left North Carolina unprepared for the pandemic, says Jordan Roberts, John Locke Foundation health care policy analyst.  

CON laws originally aimed to cut costs by restricting the supply of health care, but critics say they hurt patients by driving up prices. They give control over the distribution of medical equipment and facilities to a state board staffed by hospitals, lawmakers, insurers, and others.

States with CON laws have roughly 1.3 fewer hospital beds per 1,000 people than their counterparts without CON laws, according to a study by the Mercatus Center.  

North Carolina lagged behind the nation’s average hospital capacity, with 2.1 hospital beds per 1,000 residents in 2016 — less than half of China’s bed capacity of 4.3 beds per 1,000 residents. 

“As we look forward to getting back to a more functional health care system, the state should not be in the business of dictating where the supply of health care should be,” Roberts said. “We should get Raleigh out of the business of restricting supply. It raises prices, and patients are the ones made worse off.”  

The outbreak also loosened the regulatory stranglehold on telemedicine.  

Before the pandemic, only seniors who lived in rural areas and could travel to designated locations qualified for Medicare telemedicine coverage. Most private insurers levied similar restrictions — until the outbreak crumbled barriers against telemedicine.  

Now, seniors can access telemedicine in their homes, and the legislature will consider mandating parity for telemedicine visits. From hospital systems to rural clinics, health care providers have rolled out telemedicine programs to treat patients. 

But most of the reforms are temporary, and they will last only as long as the pandemic without legislative intervention. 

Providers worry their investments in telemedicine will backfire. Many are already losing money while elective procedures remain on hold, and the return of telemedicine regulations would decimate their virtual patient base.  

The outbreak pushed North Carolina into opening its borders to doctors who are licensed in other states. But the state never lifted regulations against out-of-state telemedicine providers. 

“We should allow patients to decide who they want to see, and doctors where they want to practice,” Roberts said. “It’s silly that we’ve erected 50 different artificial barriers around each state.” 

The pandemic pushed other states to ease physician supervision restrictions on nurse practitioners. In North Carolina, nurse practitioners cant practice unless they pay a supervising physician for a mandated two meetings a year and various signatures. 

“During the pandemic, they made these changes to help patients and doctors. There’s no reason they shouldn’t be made permanent,” Roberts said.  

Show me the money! 

As Gov. Roy Cooper and local N.C. officials shut down most economic activity to tackle the pandemic, budget officials had to sweep aside fiscal forecasts. When commerce abruptly halts, tax collections plummet. 

Moreover, officials in both Washington, D.C., and Raleigh delayed income tax filing deadlines from mid-April to mid-July. The state let businesses temporarily forego unemployment insurance tax payments. 

The result? Uncertainty for lawmakers who returned to Raleigh on April 28 for the legislature’s short session. Tempered expectations, too. 

In mid-January, the General Assembly seemed poised to offer K-12 public school teachers a 4.4% raise over two years and refund $680 million to taxpayers. Cooper vetoed the pay raise. The refund never got out of the Senate. 

Then COVID-19 hit. Lawmakers now hope to cover the obligations they’ve already made. The legislature’s Fiscal Research Division projected delaying the tax filing deadline to July 15 will cost state coffers $2 billion during this budget year, which ends June 30. 

The budget year starting July 1 looks worse. At a John Locke Foundation virtual event April 27, House Speaker Tim Moore, R-Cleveland, said he expected tax collections would fall $2.5 billion to $3 billion below forecasts. Or more. 

As the COVID-19 session opened April 28, spending targets varied widely. Of the $6 billion North Carolina governments received from the federal government’s Coronavirus Aid, Relief, and Economic Stability Act, $2 billion was earmarked for local agencies.  

Cooper wanted to spend $1.4 billion of the rest. Moore’s initial plan was $1.7 billion. The Senate’s proposal was $1.3 billion. 

The final package passed May 2. It totaled $1.6 billion 

The CARES Act tied lawmakers’ hands, too. All the money from Washington was earmarked to pay for new programs, rather than letting states refill coffers with money lost from taxes they never collected. 

States had to spend it all before Dec. 31, returning what was left to Washington. 

John Locke Foundation CEO Amy Cooke, working with the Nebraska-based Platte Institute, wrote to the majority and minority leaders in the U.S. House and Senate, asking for flexibility. The letter, signed by free-market think tank leaders in 27 other states, argued that legislatures should have the authority to restore lost tax dollars. Governments were blindsided by the COVID-19 outbreak and couldn’t prepare for the consequences.  

At press time, Congress hadn’t responded. But Cooper and legislative leaders didn’t wait. They planned to divert some of that money in ways the CARES Act didn’t allow.

Occupational licensing  

With at least 10% of North Carolina’s workforce filing for unemployment benefits over the course of a few weeks, the state desperately needs to get back to work. Easing some occupational licensing restrictions would help maintain jobs as the state recovers from the ravages of COVID-19, says Jon Sanders, director of regulatory studies at JLF.  

North Carolina licenses 188 occupations — in all, 22% of the state’s workforce, shows research from the libertarian Mercatus Center at George Mason University. Another 8.4% of the population must be certified under state rules.  

Not all occupations requiring licenses in North Carolina are what you might expect. Doctors, nurses, lawyers, and general contractors must have licenses to legally operate, but the state forces many others — such as floor sanders, sign language interpreters, taxidermists, and locksmiths — to get licensed before they go to work.  

In 2017, the Institute for Justice scrutinized licensing laws for 102 lower-income jobs in North Carolina. The state required licenses for 67 such careers, including makeup artists, auctioneers, and security alarm installers. All face steep fines for working without bureaucratic permission.  

In a post-COVID-19 world, it makes even less sense that some low-risk professions are barricaded by red tape and governed to prevent concierge and gig-economy style services, said Shoshana Weissmann, a policy fellow at the Washington D.C.-based R Street Institute.

For example, organizations like the N.C. Board of Cosmetic Examiners refuse to allow hair stylists and nail technicians to take business outside salons — even though some customers may be more comfortable getting haircuts or manicures in their own homes as isolation orders lift but fear of COVID-19 exposure remains.

That’s crazy, Weissmann said.

Occupational licensure is touted by proponents to protect consumers and workers. But it creates barricades for people most in need of work, Weissmann said. It stifles consumers, too, who would be willing to pay for services at home but aren’t allowed to buy them because of licensing laws.

The General Assembly should tackle the issue bit by bit, loosening licensing requirements for lower risk careers — like auctioneers, hair stylists, makeup artists, and taxidermists, Weissmann said.

“One thing I definitely advocate is not doing omnibus bills, as much as I’d love to knock out a bunch of licenses,” she said. “Unfortunately, that just brings a bunch of lobbies together.”  

Legislators have “a million issues to focus on at a time like this,” Weissman said, but looking at ways to transfer occupational licenses from another state is a practical way to bolster the workforce without forcing highly trained people to jump through extra hoops.  

Higher education  

College entrance exams are canceled or postponed nationwide. Graduations are in flux. Classes are online.  

It’s a new world for the University of North Carolina System, which over the course of a few weeks moved tens of thousands of students off its 17 campuses and transitioned 50,000 in-person classes to the internet. With the change has come new policy challenges, some of which deserve more scrutiny, experts say.  

UNC remains uncertain how the COVID-19 pandemic will affect fall enrollment, class settings, and much more. But one thing is certain, said Joe Coletti, senior fellow for fiscal and tax policy at JLF. Whether classes continue on campus, or online, the university system will take a financial hit.  

Eight percent of high school seniors in the nation are nixing college plans because of COVID-19, shows a March survey from Simpson Scarborough, a Virginia firm for higher education. Another poll from the Art and Science Group, an education consulting company in Baltimore, found one in six college bound students have given up on the idea of attending a traditional four-year institution because of the pandemic.   

UNC is optimistic, and has every reason to be so, said UNC’s interim President Bill Roper during an April meeting. But the system is preparing, not sure what to expect.   

In March, UNC shifted its SAT and ACT score admissions standards to help students who can’t retake tests post better scores on their fall college applications. UNC formerly required applicants to hold a minimum 2.5 high school GPA and an SAT score of 880 or ACT score of 17. Now, after the board voted to change requirements for the next three years, applicants need a minimum 2.5 GPA or an SAT score of 1010 or ACT score of 19.  

The policy change, which takes effect in the fall, doesn’t make SAT or ACT tests optional, said UNC spokesman Jason Tyson.  

The UNC Board of Governors has long considered changes to minimum admissions standards. But when COVID-19 catalyzed an onslaught of school closings and economic hardship in North Carolina, urgency set in, some board members said. Some want to make the new standards permanent. Others think it’s a bad idea.  

BOG member Steve Long, a Raleigh tax lawyer, is concerned UNC will financially burden more students who aren’t ready to enroll at a four-year university. The recommendation came from university administrators, not students or the business community, Long said.  

Some people are more suited for a two-year program at a community college before enrolling at UNC. Others might choose a trade school instead of a four-year university, Long said. Pushing underprepared students to enroll is never a good idea, especially if they drop out later with loads of debt, he added.  

The new standards are problematic, said Jenna Robinson, president of the James Martin Center for Academic Renewal.  

“The UNC System took advantage of the crisis to push through its preferred policy,” Robinson told CJ. “It is a de facto lowering of standards, and although it will allow UNC schools to admit more students, it is unlikely to translate into more graduates.” 

UNC should focus less on student recruitment and more on graduation, she said.  

“Raising standards across the UNC system worked in the past to increase success rates. Those high standards should be reinstated.” 

But UNC already tested the idea over a five-year pilot program at Elizabeth City State University, Fayetteville State University, and N.C. Central University, UNC administrators said. Data show most students who didn’t post great SAT and ACT scores still performed well over the long haul, graduating alongside students who met SAT and ACT requirements, said ECSU Chancellor Karrie Dixon.  

Some people just don’t test well, Dixon said.

Schools that participated in the pilot program didn’t treat SAT and ACT scores as options, though, Long said in his March 15 email. Instead, it used a sliding scale of both GPA and test scores. The graduation rates of students in the pilot program haven’t exceeded 36%, he said, and that’s a sign that participating students were underprepared. 

With college exams canceled and postponed, and questions already floating about how much enrollment may decline, UNC must make sure applicants can sign on for the next school year, some board members said.  

“If we weren’t in the middle of this pandemic, I would agree with [Long’s] comments,” said BOG member Marty Kotis. UNC, which gets state funding based on enrollment growth, needs to rethink its model. But the economic and social disruption wrought by coronavirus warrants a short-term change to admissions requirements, he said. 

K-12 education 

The coming school year should be a recovery period, said Terry Stoops, vice president of research and director of regulatory studies at JLF.  

Students couldn’t get their standard education in much of 2020 with schools closed to slow the spread of COVID-19. While schools pivoted to remote learning, many students, most of them economically disadvantaged, couldn’t take part.  

A recovery school year is necessary to catch students up on all that was lost during the shutdowns, Stoops said.  

Lawmakers and education officials should focus on three areas, as outlined in Stoop’s research blog post: Instructional time should be increased, state tests waived again, and educational opportunities expanded.  

While schools are required to provide a minimum of 185 days or 1,025 hours of instruction covering at least nine calendar months, they can set start and end times for each day.  

Schools could extend the school day to make sure students get more time to learn, but it may be better to add more school days to the calendar, Stoops said.  

Calendar flexibility would grant schools even more freedom to determine when the school year should start or end, but North Carolina’s tourism industry has never been keen on the idea.  

“The ideal option is to dispense with the unnecessarily prescriptive start and enddate requirements altogether and allow school districts to formulate calendars that better meet the needs of families and communities,” Stoops wrote. 

The working group has advocated for waiving some state tests while classes are shut down. Lawmakers should consider doing it again, Stoops said, but they need to make the pitch to the federal government now.  

States get federal money for schools on the condition the state reports testing data, and North Carolina did get waivers from the federal government, for this school year. 

“Convincing federal education officials to waive testing for the 2020-21 school year would be a much harder sell, particularly if coronavirus mitigation efforts cease and the school year proceeds uninterrupted,” Stoops said. 

The time set aside to prepare for and administer the tests during and at the end of the school year would be better spent covering grade and course content, Stoops said.  

When Cooper ordered schools closed March 14, schools had to transition to online learning. Initially set to end May 15, Cooper extended the school closures for the remainder of the school year.  

The transition to online learning wasn’t entirely smooth. For some school districts, like Wake County, which teaches some 160,000 students, it took several days for remote instruction to get up and running.  

The uneven transition to online learning may lead some parents to seek alternative forms of education for their children, Stoops said.  

“One way to address unsatisfactory instruction would be to give parents the ability to use public dollars to contract with skilled and enterprising online educators for the duration of coronavirus school closures,” Stoops wrote.  

The state should eliminate enrollment restrictions on charter schools, expand eligibility for private school scholarships, and encourage school districts to adopt open enrollment, zoned choice, magnet school, and online education programs, Stoops recommended.  

“School districts need regulatory flexibility to adapt to coronavirus school closures and other circumstances beyond their control,” Stoops wrote. “Families also need multiple educational options to adapt to changes in their lives that are beyond their control. 

Reporting by Kari Travis, Lindsay Marchello, Julie Havlak, John Trump, and Rick Henderson.