Breakthrough for Trucks and Tolling

Posted on April 18, 2018 by matt ohern
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In my discussions with trucking industry officials in recent years, I learned that—despite anti-tolls propaganda from affiliated groups such as ATA’s Alliance for Toll-Free Interstates—most of them appreciate the benefits of today’s all-electronic tolling: no need to stop and wait in line at toll plazas, avoiding accidents at said plazas, saving fuel, and the significantly lower cost of collection, compared with 20th century cash tolling. In addition, the fact that a large number of trucking fleets use toll roads and increasingly pay electronically via ATA-approved service providers Bestpass and PrePass Plus indicates a coming to terms with existing toll roads.
But there is one concern that has not gone away. Trucking officials repeatedly stress that they have no acceptable way to pass along to their customers (shippers of goods) the toll charges incurred. This has always struck me as bizarre, and my only explanation is that it is a conviction developed during the long history of cash tolling. In principle, all-electronic tolling should make it easy to figure out which loads of cargo incurred which toll charges getting from shipper to recipient—but apparently, nobody had gone to the trouble of devising a workable way to do this.
But a viable answer was unveiled last month. On March 23rd, Bestpass issued a news release headlined, “Bestpass Launches Toll Rebilling for Commercial Fleets.” Bestpass already offered its trucking company customers a single transponder compatible with tolling systems across the country, plus a single itemized monthly invoice—no matter how many different toll roads the company’s fleet may have traversed that month.
As explained by CEO John Andrews in the news release, “With Bestpass Rebilling, our customers can now recoup toll costs while radically simplifying their back-office operations.” The release explains that “Bestpass customers will be able to use the Bestpass web portal to designate single vehicles or groups of vehicles that are responsible for incurred toll transactions. They can also create toll statements for their customers on demand, for any time period and with their company logo, to provide supporting documentation so as to ensure they get reimbursed for the relevant toll charges.
So it looks to me as if the trucking industry finally has a solution to the problem of being able to pass along toll charges to their customers. To verify that I was interpreting this correctly, I queried Bestpass on this. A spokesman confirmed, emailing me that “Bestpass Rebilling does make it possible to pass along toll charges to a shipper,” and providing a few details of how this would work.
In recent decades, during periods when fuel taxes were very high, many trucking companies added “fuel surcharges” to their customer billings, and most customers paid them. That was in part due to the trucking industry making a strong public case that they could not and should not absorb such increased fuel costs.
Whether shippers will pay documented toll charges is, of course, a different question. Here is where ATA and other industry organizations can play an important role. Per-mile tolls are very likely going to be part of the replacement of per-gallon fuel taxes in coming decades. So shippers need to be educated that per-mile charges will be part of the cost of moving goods by truck. With itemized toll charges, shippers will know what they are paying for.
(This article first ran in the April issue of Surface Transportation Innovations.)
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Medicaid Expansion is Riskier Today than a Month Ago

Posted on April 4, 2018 by matt ohern
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The massive “Omnibus” spending plan passed by Congress last month did not include a bail out for insurance companies. There has been little mention of this dramatic development and the consequences are significant and should impact the current Medicaid expansion debate in Virginia’s General Assembly.
Tennessee Senator Lamar Alexander, who worked long and hard to get this insurance company bail out into the recent spending bill, conceded defeat and made this little noticed comment: “… the only choice we have is to go back to repeal and replace the Affordable Care Act.”
Soon there will be another major effort to reform Obamacare and that outcome could have significant impact here in Virginia. That is why the debate on Medicaid expansion should be set aside until we know what Congress does. Why make a major change when the rules of the game could dramatically change?
The alternative being worked on today is to build on last year’s idea promoted by Senators Lindsey Graham, Bill Cassidy, Ron Johnson and Dean Heller. This plan would move much of the current federal health program to the states, including Medicaid.
This replacement for Obamacare will focus on three areas: 1) lower costs and improve/increase patient choices; 2) give states flexibility and resources to reach these goals; and 3) set federal guidelines for people to choose private coverage if they want.
Medicaid would become a block grant to the states. And this means that Virginia will have to design a program that makes sense within the parameters set out in this new bill, should it pass.
Our General Assembly should not pass Medicaid expansion until the federal playing field is better defined. It should take Medicaid expansion out of the budget with the understanding that once Congress determines in a few months what will happen to Obamacare, then our elected officials can decide how to manage not only Medicaid, but whatever other healthcare responsibilities are handed to the states.
The current Congress is under the gun to pass a repeal-and-replace program that makes sense. The elections this fall will likely bring a number of new liberal Democrats into Congress. How many no one knows but history indicates that the House could well be turned over to the Democrats. This means that any repeal and replace legislation must be passed this spring or summer or nothing will be passed during the current Trump Administration.
The General Assembly will know by Labor Day if Congress has changed the rules and decided to send much of health care, including Medicaid, to the states in one or more huge block grants. At that time, our elected officials can either hold a Special Session and tackle Medicaid expansion or hold off until January after spending quality time figuring out how best to proceed.
But if the General Assembly decides to rush ahead and pass Medicaid expansion knowing major changes could occur, there are a number of questions that it should answer before it approves such a new direction, including:

  1. Why should Virginia not experience dramatic budget increases, far beyond current projections, as have other states which expanded Medicaid, and how will it handle that situation? Most states that expanded Medicaid faced 50% or more additional costs than anticipated. Why should Virginia be any different? Will the hospital “bed tax” be increased? If not, then how will these additional budget short falls be met?
  2. Will a “work requirement” demand proof of actually looking for a job and seeking better employment by the new Medicaid recipients, or will the legislators simply ask if someone is looking for work? Will volunteering at a local church raking leaves be considered meeting the work requirement? This needs to be clearly spelled out.
  3. Many doctors refuse to take Medicaid patients because of lousy government reimbursements rates. Adding 400,000 people to Medicaid will make it more difficult for these patients to see a limited supply of doctors. Why is this issue avoided?
  4. How is the state going to be sure that those who are enrolled in Medicaid deserve to be in the program? What is the qualification/certification process? Does such a system exist today for the current Medicaid population? Illinois is saving $350 million a year with a better qualification process and Pennsylvania is saving $300 million a year according to the Foundation for Government Accountability.

For the General Assembly to expand Medicaid, just weeks before major changes could take place, is a disservice to the taxpayers. A delay in legislative action makes a lot of sense.
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$300 Million Tax Increase Is Baked into Medicaid Expansion

Posted on April 4, 2018 by matt ohern
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Governor Ralph Northam and U.S. Senator Mark Warner hit the road yesterday with the media in tow, making the case that Medicaid expansion will free up $421 million over two years for other priorities such as K-12 schools.
“When we talk about education, we have to talk about health care,” Warner said during a roundtable discussion at Albert H. Hill Middle School in Richmond, as reported by the Richmond Times-Dispatch. “We’ve got to do this.”
Meanwhile Secretary of Finance Aubrey Layne is making the case that enacting Medicaid expansion is necessary to preserve Virginia’s coveted AAA bond rating, which is teetering on the edge of a downgrade.
That’s quite the rhetorical jiu jitsu move. For years, Republicans have opposed expanding Medicaid under the provisions of the Affordable Care Act on the grounds that it would be fiscally irresponsible, running up state Medicaid expenditures even after accounting for a 90% federal contribution, and competing with other priorities such as K-12 schools, higher education, and pay raises for state employees.
How is it possible for the Commonwealth to simultaneously expand Medicaid at an estimated cost of $300 million over the next two years and free up $421 million for other programs, as the Washington Post quotes Northam as saying? Two things. First the state cost of Medicaid expansion would be offset by means of an “assessment” — in other words, a tax — on the net patient revenue of Virginia’s acute care hospitals. Surprised to hear about that? Yeah, so am I.
Second, Medicaid expansion will allow the state to reduce spending by $380 million on indigent care funding, state spending on mental health, prison inmates and various programs for the poor, according to the House version of the budget. (I can’t figure out where Northam gets his $421 million estimate.)
Voila! That’s $380 million (or $421 million if you use Northam’s figure) that can be spent on other things, such as directing money into the state’s cash reserves and/or K-12 schools. Regarding those reserves, the state has only $281 million set aside in the event of a several revenue downturn, with $154 million scheduled to be injected this year. The budget submitted by former Governor Terry McAuliffe would have added $281 million, but the proposed budget adopted by the House would add only $91 million over the next two-year budget, and the proposed budget adopted by the Senate would add only $180 million.
Bacon’s bottom line:
Does the public realize that there is a $300 million tax increase embedded in this plan? I did not understand that to be the case until I read the news accounts with a fine-tooth comb. The Times Dispatch and Washington Post coverage mentioned the tax only in passing deep in their stories. Of course it’s in the interest of Democrats to downplay the tax increase, but, remarkably, I’ve seen nothing to suggest that Senate Republicans, who oppose expansion, have made an issue of it.
Let’s imagine an alternate universe in which Virginians said, (a) we want Medicaid expansion, and (b) we want to fund it without a tax increase on hospital revenues, which likely would be passed on to patients in the form of higher hospital charges. If the state is generating savings in the realm of $400 million a year from Medicaid expansion, why not just apply those savings to the 10% state share of the program? Why the necessity of adding a roughly $300 million “assessment?”
According to the numbers we’ve been given, paying for Medicaid expansion with savings to state programs would leave about $100 million left over to plunk into the state’s cash reserve. Of course, that approach wouldn’t allow Northam and Warner to tell people that “Medicaid expansion” will help Virginia schools, and it wouldn’t put as much money into the state’s cash reserves as Layne would like.
I find it astonishing that the hospital assessment has not become a hot-button issue. Health care costs are out of control as it is, and a $300 million tax on patient revenues can only make the problem worse (unless you believe that hospitals will settle for lower profits, in which case I’ve got some great swamp land in Florida I’d like to sell you.)
You’ve got to give Northam political credit. He and House Republicans are very close to pulling off the trick of expanding Medicaid and “freeing up” hundreds of millions of dollars for new spending without Virginians even noticing that they’d be indirectly paying for a $300 million tax increase on hospitals. This guy is good.
(This column first ran in Bacons Rebellion on March 30, 2018)
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Groups Advocate Banning Privately-Owned Autonomous Vehicles

Posted on April 4, 2018 by matt ohern
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Last year this newsletter reported on the ongoing modeling efforts of OECD’s International Transport Forum, which claimed that Lisbon, Portugal could meet all its surface transportation needs via shared mobility, while significantly reducing vehicle emissions—if only all individually owned vehicles were banned. Well, I thought, that’s Europe for you. But now the idea is being promoted here in the USA.
A statement called “Shared Mobility Principles for Livable Cities” was posted online in February by a coalition of environmental and transportation groups. It sets forth 10 principles, mostly feel-good ideas about equity and a zero-emission future. It also supports fair user fees, under which “every vehicle and mode should pay their fair share for road use, congestion, pollution, and use of curb space.” But then comes the big one. Principle 10 states that the only autonomous vehicles (AVs) to be allowed in “dense urban areas” should be those operated in shared fleets.
Brittany Hunter of the Foundation for Economic Education pointed out in a blog post on March 1st, “It is highly probable that once [AVs] get to the point of mass production, the use of regular cars will be limited naturally . . . . If [conventional vehicles are] not prohibited, mass [AV] adoption is likely to occur regardless, making autonomous vehicles the only real game in town.” Hunter goes on to explain that “If ‘regular’ vehicles are no longer on the roads, prohibiting private ownership of driverless cars would effectively mean banning the private ownership of vehicles altogether.” And that seems to be the point.
Marc Scribner of the Competitive Enterprise Institute highlighted the fact that the Shared Mobility Principles document was the brainchild of Robin Chase, co-founder of Zipcar. And besides a number of green groups (NRDC, World Resources Institute, etc.), the companies endorsing this document are notable for including Uber and Lyft. About two dozen other “service providers” are also listed as endorsers. Hunter and Scribner rightly charge these fleet operators with engaging in a form of crony capitalism. As Scribner put it, “Uber sees the competition of the future—and it’s you.”
A transportation planner might argue that the restriction to fleet-only AV operations would apply only to “dense” urban areas. But that would likely be a very slippery slope. Ban privately owned AVs today in the urban core, and tomorrow the same groups will demand that the ban be extended to inner suburbs, and on from there.
Hunter noticed an interesting omission from the list of endorsers: Tesla. She noted that Elon Musk has proposed a Tesla Network, under which the owner of a future autonomous Tesla would be able to add the car to the Tesla shared fleet, to be earning money for the owner during those hours of the day or night when the owner was not using it. While I doubt if I would want random strangers using my AV, the extra income might make an autonomous Tesla considerably more affordable to many would-be owners. This is a market-based alternative to the Shared Mobility Principles that would be enforced on unwilling vehicle owners.
The Economist last month included some speculations on potential AV futures, pointing out potential problems as well as benefits. In its summary, titled “Who’s Behind the Wheel,” its editors wrote, “Autonomous vehicles offer passengers [sic] freedom from accidents, pollution, congestion, and the bother of trying to find a parking space. But they will require other freedoms to be given up in return—especially the ability to drive your own vehicle anywhere.”
AVs, per se, will require no such thing. And I doubt if most Americans would stand for being forbidden to own a motor vehicle.
(This article first ran in the April issue of Surface Transportation Innovations.)
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Good morning, Vietnam!

Posted on April 4, 2018 by matt ohern
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For two weeks last month, I saw a much different agriculture in Southeast Asia. From experts such as J.P.Morgan’s agricultural advisor in Hong Kong to the U.S. Embassy, and USDA’s, I saw and heard the great opportunities for all of us in U.S. agriculture.
One theme which did surprise me is that China’s saber rattling regarding a potential tariff on soybeans is just that…saber rattling. Expert after expert had the common view that China would not impose a tariff. The experts had numerous reasons for reaching this conclusion. These views were expressed to members of the Illinois Agricultural Leadership Foundation class with whom I traveled to Hong Kong, Vietnam and Taiwan.
From the musty cells of the Hanoi Hilton to the flat lands surrounding Saigon, the trip was an eye opener as to how U.S. agriculture is respected, admired and relied on for both quality and quantity. The demand for U.S. products in Hong Kong and Taiwan was no surprise. Vietnam was another story.
My preconceived notion was that our time in Hanoi would be stressful and frankly ugly. I was 180 degrees wrong. From the tour guides, bus drivers, and people in coffee shops and restaurants there could be no more positive reception. Instead of seeking to distance themselves from the United States, there was and is a recurring theme of wanting to become closely allied with the United States and its agricultural prowess. Instead of a drab Communist city, I found a prosperous, skyscraper-filled, well organized city which we were told had been there over 1,000 years. Motor scooters with well-dressed people were everywhere.
USDA personnel from the Foreign Agricultural Service (FAS) provided a positive view for future agricultural products coming from the U.S. to Vietnam. Vietnam is a nation with approximately 96 million people with an average age of 30. These 30-year-olds have a strong belief that products from the U.S., Canada and Australia are very safe.
To reinforce this belief, USDA is opening a new APHIS office in Vietnam for the first time. With 96 million people Vietnam is able to produce 2 rice crops and 1 wheat crop annually. What little corn Vietnam produces, it is decades behind the U.S. because the corn harvesting is still done by shucking and drying and laying the kernels along the road edges. The average farm size of .74 acres will not support an American tractor.
Almost 48 million people participate in the nation’s workforce and approximately 25 million work in agricultural and fisheries sectors. Agricultural production still accounts for 70% of the income for the population. Vietnam seeks to reduce its agricultural labor force to under 40% of the population.
Their key exports are fish, timber, cashews, coffee, and rice.
One surprise is that Coffee exports are approximately $3.2 billion and ranks second after Brazil. Vietnam is the largest market for U.S.-grown cotton. The good news for Midwestern farmers is we were told soybean meal exports doubled from 2011-2017. In 2017, Vietnam was our 11th largest agricultural export market!
One factory we visited – C.P. Hanoi – processes 60,000 birds a day using 70 farms for production of birds. This factory provides the product to KFC. One item caught all our attention when we saw that breast meat was being ground for use in a sausage which is an enormously popular item on the Vietnam breakfast table. For general consumption they prefer dark meat.
To feed its chicken and its 40 million head of hogs, Vietnam imports 70% of its corn and soybeans.
C P Vietnam’s feed mill has major support from the American Soybean Association for the last 25 years. Vietnam imports 100% of its soybeans with 46% coming from the U.S.
C P Vietnam has a very high quality operation and, like the U.S., wants to concentrate its production and have larger, more productive farms. The company also sees itself in the chicken export market.
The return of DDGs from the U.S. being imported into Vietnam was stressed.
The U.S. Grains Council has impressive people working with local processors using corn. Along with USDA personnel, agriculture is well represented by these dedicated people. Vietnam experts see it becoming a much larger trading partner with the U.S. Good days are ahead for agriculture with Vietnam and indeed a “Good Morning.”
(The article first ran in Farm Futures on March 27, 2018)
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