Hubwonk host Joe Selvaggi talks with Doug Quatrocchi, executive director of Masslandlords.net about the historical effects of rent control in Boston and Cambridge in the past and discuss the gap between the stated goals and the likely outcome of Boston Mayor Wu’s 25-member Rent Stabilization Advisory Committee.
Guest:
Doug Quatrocchi is currently Executive Director of MassLandlords, the trade association for landlords in Massachusetts. Doug received his Masters in aeronautical engineering from MIT in 2006. He then worked for five years as an engineer at Pratt & Whitney in East Hartford, CT, where he focused on process improvement and software development for the F100, F119, and PurePower programs. About two years into his time at Pratt he became a small business owner by purchasing his home, also a rental property, in Worcester, MA. In 2010, still a landlord, he took an equity opportunity at his first angel-funded startup, Terrafugia, Inc., where he managed their DARPA Transformer contracts and eventually became responsible for IT, manufacturing planning, aspects of HR, and aspects of regulatory compliance. He left Terrafugia in October 2012. He worked with a number of very early stage and pre-incorporation startups, including the Music Industry Database (formerly ArtistBomb). In December 2013 Doug was asked by the non-profit Worcester Property Owners Association to take a more direct leadership role. This resulted in the launch of MassLandlords in February 2014. In June 2016, the former Worcester Property Owners Association completed its rebrand to MassLandlords, Inc.
WATCH:
Recent Episodes
BOSTON, MA – Over the past decade, the revenue for hospitals generated by the federal 340B drug discount program, initially intended to serve low-income, uninsured populations, has exploded even while a number of important Massachusetts hospitals have reduced the level of charity care they provide, according to a new study published by Pioneer Institute. The Pioneer Institute study, “340B Drug Discounts: An Increasingly Dysfunctional Program,” notes that nationwide, 340B drug sales rose from $9 billion in 2014 to $38 billion in 2020.
“The 340B drug discount program started with the best of intentions: to make high-quality prescription drugs and healthcare more affordable to low-income, uninsured populations,” said Dr. Bill Smith, Pioneer Institute Director of the Life Sciences Initiative and co-author, with Pioneer Senior Fellow Josh Archambault, of the study. “The 340B program has, unfortunately, been transformed into a lucrative revenue stream for hospitals and pharmacies who can arbitrage drug discounts. With the exception of a small number of dedicated hospitals and clinics, the original goals of the program have largely been lost.”
WATCH: WEBINAR: “340B Program: Examining Patient Access to Affordable Medicines”
On March 22, Pioneer held a discussion on the efficacy and efficiency of the 340B program, with Pioneer’s Dr. William Smith, as well as nationally-recognized speakers Terry Wilcox, Executive Director of Patients Rising, and Robert Popovian, Vice President of Health Economics and Policy for Equideum Health.
The Pioneer report also highlights numerous problems with the 340B program, noting that it has “served to enrich for-profit pharmacy chains and pharmacy benefit managers (PBMs), weakened community-based physician and oncology care, pushed patients into more expensive hospital-based care, incentivized the system toward more expensive therapies—all while providing fewer and fewer services to the low-income uninsured.”
The report includes a number of federal and state policy recommendations to improve the 340B program, such as tighter definitions of patient eligibility and charity care, and more extensive transparency and reporting requirements commensurate with the status of these institutions as nonprofit entities. The report argues that the nonprofit tax treatment of hospitals, as well as their participation in the 340B program, should lend itself to more generous provision of charity care for vulnerable populations.
“Given the huge growth in revenues deriving from the 340B program, we would expect to see significant expansions in the provision of charity care and services for lower-income populations from these hospitals, as that was the intent of the program,” said Pioneer Senior Fellow Josh Archambault. “Unfortunately, we’ve seen the opposite scenario play out with 340B. Certain institutions appear to be triple dipping, taking the additional money that comes with taxpayer funded expansions of coverage, reducing their charity care amounts, and at the same time exploiting the 340B program to maximize revenue, which should be stable or going down with each expansion of coverage as more individuals have health coverage.”
You can read the full Pioneer Institute report here.
Watch: Hubwonk360 Host Joe Selvaggi talks with William Smith about the 340B Program
About the Authors
William S. Smith is Senior Fellow and Director of the Life Sciences Initiative at Pioneer Institute. He has 25 years of experience in government and in corporate roles, including as vice president of public affairs and policy at Pfizer, and as a consultant to major pharmaceutical, biotechnology and medical device companies. He held senior staff positions for the Republican House leadership on Capitol Hill, the White House, and in the Massachusetts Governor’s office. He earned his PhD with distinction at The Catholic University of America (CUA).
Josh Archambault is President and Founder of Presidents Lane Consulting. He is a Senior Fellow at Pioneer Institute, as well as Cicero Institute. His work experience has ranged from work as a Senior Legislative Aide to a governor, Legislative Director for a state senator, to years working for think tanks operating in thirty-five states, and in D.C. He is a regular contributor to the influential Forbes.com blog, The Apothecary. Josh holds a master’s in public policy from Harvard University’s Kennedy School of Government and a B.A. in political studies and economics from Gordon College.
About Pioneer Institute
Pioneer’s mission is to develop and communicate dynamic ideas that advance prosperity and a vibrant civic life in Massachusetts and beyond. Pioneer’s vision of success is a state and nation where our people can prosper and our society thrive because we enjoy world-class options in education, healthcare, transportation and economic opportunity, and where our government is limited, accountable and transparent. Pioneer values an America where our citizenry is well-educated and willing to test our beliefs based on facts and the free exchange of ideas, and committed to liberty, personal responsibility, and free enterprise.
Related Content
This report reviews the federal 340B drug discount program, showing that, over the past decade, the revenue for hospitals generated by the program, initially intended to serve low-income, uninsured populations, has exploded even while a number of important Massachusetts hospitals have reduced the level of charity care they provide. The study notes that nationwide, 340B drug sales rose from $9 billion in 2014 to $38 billion in 2020.
Download: 340B Drug Discounts: An Increasingly Dysfunctional Program
“She’s a good girl. She helps me a lot. She has big, big dreams. I don’t have the money, but she has big dreams. I hope she’s going to get everything, but she works so hard. She works so hard in school.”
“Our family is needing to make some really big sacrifices because we believe this is important, and so, we’re basically going to do whatever it takes… Sometimes we look at each other and go ‘I don’t know if I can do it again another month…’”
“A lot of the families have to sacrifice and work multiple jobs… And just scraping together enough money to just make tuition, just the basics.”
“It is discriminatory, that parents who want to choose an alternative to public school for their children, would not in any way receive any compensation for that, whether it be tax credit, whether it be a voucher…”
In the 1840s, nativist movement leaders formed official political parties and local chapters of the national Native American Party (later the American Party), although they continued to be commonly known as the Know-Nothing Party. Politicians sought to insert provisions into state constitutions against Catholics who refused to renounce the pope. The Know-Nothing movement brought bigotry and hatred to a new level of violence and organization.
The party’s legacy endured in the post-Civil War era, with laws and constitutional amendments it supported, still today severely limiting parents’ educational choices. A federal constitutional amendment was proposed by Speaker of the House James Blaine prohibiting money raised by taxation in any State to be under the control of any religious sect; nor shall any money so raised or lands so devoted be divided between religious sects or denominations. These were then named the Blaine Amendments of 1875.
in recent decades, often in response to challenges to school choice programs, the U.S. Supreme Court has demonstrated great interest in examining the issues of educational alternatives and attempts limit parental options. Massachusetts plays a key role in this debate. The Bay State was a key center of the Know-Nothing movement and has the oldest version of Anti-Aid Amendments in the nation, as well as a second such amendment approved in 1917. Two-fifths of Massachusetts residents are Catholic, and its Catholic schools outperform the state’s public schools, which are the best in the nation.
Hubwonk host Joe Selvaggi talks with Doug Quatrocchi, executive director of Masslandlords.net about the historical effects of rent control in Boston and Cambridge in the past and discuss the gap between the stated goals and the likely outcome of Boston Mayor Wu’s 25-member Rent Stabilization Advisory Committee.
Guest:
Doug Quatrocchi is currently Executive Director of MassLandlords, the trade association for landlords in Massachusetts. Doug received his Masters in aeronautical engineering from MIT in 2006. He then worked for five years as an engineer at Pratt & Whitney in East Hartford, CT, where he focused on process improvement and software development for the F100, F119, and PurePower programs. About two years into his time at Pratt he became a small business owner by purchasing his home, also a rental property, in Worcester, MA. In 2010, still a landlord, he took an equity opportunity at his first angel-funded startup, Terrafugia, Inc., where he managed their DARPA Transformer contracts and eventually became responsible for IT, manufacturing planning, aspects of HR, and aspects of regulatory compliance. He left Terrafugia in October 2012. He worked with a number of very early stage and pre-incorporation startups, including the Music Industry Database (formerly ArtistBomb). In December 2013 Doug was asked by the non-profit Worcester Property Owners Association to take a more direct leadership role. This resulted in the launch of MassLandlords in February 2014. In June 2016, the former Worcester Property Owners Association completed its rebrand to MassLandlords, Inc.
WATCH:
Recent Episodes
BOSTON, MA – Over the past decade, the revenue for hospitals generated by the federal 340B drug discount program, initially intended to serve low-income, uninsured populations, has exploded even while a number of important Massachusetts hospitals have reduced the level of charity care they provide, according to a new study published by Pioneer Institute. The Pioneer Institute study, “340B Drug Discounts: An Increasingly Dysfunctional Program,” notes that nationwide, 340B drug sales rose from $9 billion in 2014 to $38 billion in 2020.
“The 340B drug discount program started with the best of intentions: to make high-quality prescription drugs and healthcare more affordable to low-income, uninsured populations,” said Dr. Bill Smith, Pioneer Institute Director of the Life Sciences Initiative and co-author, with Pioneer Senior Fellow Josh Archambault, of the study. “The 340B program has, unfortunately, been transformed into a lucrative revenue stream for hospitals and pharmacies who can arbitrage drug discounts. With the exception of a small number of dedicated hospitals and clinics, the original goals of the program have largely been lost.”
WATCH: WEBINAR: “340B Program: Examining Patient Access to Affordable Medicines”
On March 22, Pioneer held a discussion on the efficacy and efficiency of the 340B program, with Pioneer’s Dr. William Smith, as well as nationally-recognized speakers Terry Wilcox, Executive Director of Patients Rising, and Robert Popovian, Vice President of Health Economics and Policy for Equideum Health.
The Pioneer report also highlights numerous problems with the 340B program, noting that it has “served to enrich for-profit pharmacy chains and pharmacy benefit managers (PBMs), weakened community-based physician and oncology care, pushed patients into more expensive hospital-based care, incentivized the system toward more expensive therapies—all while providing fewer and fewer services to the low-income uninsured.”
The report includes a number of federal and state policy recommendations to improve the 340B program, such as tighter definitions of patient eligibility and charity care, and more extensive transparency and reporting requirements commensurate with the status of these institutions as nonprofit entities. The report argues that the nonprofit tax treatment of hospitals, as well as their participation in the 340B program, should lend itself to more generous provision of charity care for vulnerable populations.
“Given the huge growth in revenues deriving from the 340B program, we would expect to see significant expansions in the provision of charity care and services for lower-income populations from these hospitals, as that was the intent of the program,” said Pioneer Senior Fellow Josh Archambault. “Unfortunately, we’ve seen the opposite scenario play out with 340B. Certain institutions appear to be triple dipping, taking the additional money that comes with taxpayer funded expansions of coverage, reducing their charity care amounts, and at the same time exploiting the 340B program to maximize revenue, which should be stable or going down with each expansion of coverage as more individuals have health coverage.”
You can read the full Pioneer Institute report here.
Watch: Hubwonk360 Host Joe Selvaggi talks with William Smith about the 340B Program
About the Authors
William S. Smith is Senior Fellow and Director of the Life Sciences Initiative at Pioneer Institute. He has 25 years of experience in government and in corporate roles, including as vice president of public affairs and policy at Pfizer, and as a consultant to major pharmaceutical, biotechnology and medical device companies. He held senior staff positions for the Republican House leadership on Capitol Hill, the White House, and in the Massachusetts Governor’s office. He earned his PhD with distinction at The Catholic University of America (CUA).
Josh Archambault is President and Founder of Presidents Lane Consulting. He is a Senior Fellow at Pioneer Institute, as well as Cicero Institute. His work experience has ranged from work as a Senior Legislative Aide to a governor, Legislative Director for a state senator, to years working for think tanks operating in thirty-five states, and in D.C. He is a regular contributor to the influential Forbes.com blog, The Apothecary. Josh holds a master’s in public policy from Harvard University’s Kennedy School of Government and a B.A. in political studies and economics from Gordon College.
About Pioneer Institute
Pioneer’s mission is to develop and communicate dynamic ideas that advance prosperity and a vibrant civic life in Massachusetts and beyond. Pioneer’s vision of success is a state and nation where our people can prosper and our society thrive because we enjoy world-class options in education, healthcare, transportation and economic opportunity, and where our government is limited, accountable and transparent. Pioneer values an America where our citizenry is well-educated and willing to test our beliefs based on facts and the free exchange of ideas, and committed to liberty, personal responsibility, and free enterprise.
Related Content
This report reviews the federal 340B drug discount program, showing that, over the past decade, the revenue for hospitals generated by the program, initially intended to serve low-income, uninsured populations, has exploded even while a number of important Massachusetts hospitals have reduced the level of charity care they provide. The study notes that nationwide, 340B drug sales rose from $9 billion in 2014 to $38 billion in 2020.
Download: 340B Drug Discounts: An Increasingly Dysfunctional Program
Rent Control Redux: Mayor’s Committee Likely to Provide Astroturf Over Expertise
/in Economic Opportunity, Featured, Housing, Podcast Hubwonk /by Editorial StaffHubwonk host Joe Selvaggi talks with Doug Quatrocchi, executive director of Masslandlords.net about the historical effects of rent control in Boston and Cambridge in the past and discuss the gap between the stated goals and the likely outcome of Boston Mayor Wu’s 25-member Rent Stabilization Advisory Committee.
Guest:
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Read a Transcript of This Episode
Please excuse typos.
Joe Selvaggi:
This is Hubwonk. I’m Joe Selvaggi
Joe Selvaggi:
Welcome to Hubwonk, a podcast of Pioneer Institute, a think tank in Boston. It was Nobel prize winning economist Assar Linbeck who famously observed that in many cases, rent control appears to be the most efficient technique presently known to destroy a city except for bombing. Indeed rent control effects seem to be among the few topics on which nearly all who study agreed that consensus includes MIT professor Chris Palmer, a recent Hubwonk guest who examined the policy’s 25 year negative effect on Cambridge before rent control was banned in a statewide referendum in 1994. Nevertheless, Michelle Wu, during both her campaign. And now as Boston mayor has made rent control (or the more pleasant sounding “rent stabilization”), the centerpiece of her promise to address Boston’s high cost of rentals. To that end Mayor Wu has commissioned a new 25 member rent advisory committee, which commissions a broad group of stakeholders to roll up their sleeves and examine how best to implement the policy.
Joe Selvaggi:
While voters should be pleased the committee members names and organizations are provided on the city’s website, they might be concerned the list contains only one landlord. Indeed, some advisors such as the one from the Boston Teachers Union seem to have no connection to housing or the rental community at all. Why would the mayor choose advisors for a policy that has been both unsuccessful and unpopular in the past and overlook the expertise of those who provide the rental units in the city and who presumably know best how to better serve renters in the future? And if not organized to cultivate a healthy rental community, what is the more likely purpose and goal of the Rent stabilization advisory committee? My guest today is Doug Quatrocchi, Executive Director of MassLandlords.net, the largest nonprofit for owners and managers of Massachusetts residential real estate. Mass landlords is a platform that offers training information and support to landlords across the Commonwealth and areas of real estate law regulation and standards. Douglas share with us his own research and observations of rent control in Boston and Cambridge in the past. And tell us why he is concerned that the new rent stabilization advisory committee may be comprised of those who may actually work against the interest of landlords and thereby harm the Boston renters the mayor has stated she intends to help. When I return, I’ll be joined by MassLandlords.net executive director, Doug Quatrocchi.
Joe Selvaggi:
Okay. We’re back. This is Hubwonk. I’m Joe Salvaggi, and I’m now pleased to be joined by the director of MassLandlord.net’s Doug Quatrocchi. Welcome back to Hubwonk, Doug.
Doug Quatrocchi:
Thanks very much so good to be here.
Joe Selvaggi:
It’s great to have you back. I want to talk about some housing policy proposals recently proposed by Mayor Wu. But before we get to the nitty gritty of the mayor’s policy proposals, I’d like our listeners to know a little bit more about what MassLandlords.net is all about. What do you do?
Doug Quatrocchi:
Sure. Yeah, we’re a 5 0 1 C6 nonprofit trade association. We exist to help owners create better rental housing. That’s really our purpose. And that’s a, a purpose that both landlords and renters can get behind. And we’re primarily about education. So as a C6, we can do policy advocacy, which is part of why we’re here now, but really our day to day is really about training landlords about security deposit law, not discriminating, even accidentally maintaining lead-safe and otherwise safe housing. And that’s a big part of why we launched the certified Massachusetts landlord, which is a nation first, a state specific professional designation for landlords to promise to follow best practices, take a test and commit to continuing education. So we’re really all about creating better rental housing.
Joe Selvaggi:
So you’re kind of trying to professionalize the business of being a landlord. But many of our listeners are either own a home or are renters themselves. Why should let’s say a renter or people who own, who are not in the rental business, why should they care about whether landlords are successful?
Doug Quatrocchi:
Well, we need a lot of rental housing and rental housing is not something that applies to a small group of people. If you think about the arc of your life, typically when you start out young, you don’t own a home yet you rent somewhere. And then typically as, as we age, we tend to go into rented home. So it’s really important that there’s a lot of rental housing if available, even if we don’t think about it right now we may need it later and lots of our family and friends need rental housing too. So it’s really important that we have this type of housing in the marketplace.
Joe Selvaggi:
So more landlords means more abundant rental units for everyone. So let’s also offer our listeners a little bit of a as a backdrop to our discussion, a little bit of basic economics. We all can agree on all sides of all issues here. And with regard to rents that in Boston rents are very, very high. You know, there’s no secret to anyone why in your view are, is rental units or the cost of housing. So high in Boston
Doug Quatrocchi:
Yeah. Is a real problem. Rents are unaffordably high for lots of us. And even if we want to buy a home to be a homeowner, those prices are up too, unaffordably high for lots of people. So it’s a real longstanding problem, really about a hundred years since we’ve enacted zoning, we were able to create all the housing we needed in Massachusetts and more broadly in the us when we had had it, wasn’t a free for all, but we had more liberal use of land and the ability to add units, the ability to rent by the room and all of that has stopped for some very questionable motivations over the years. We tried to patch it in the seventies, the law called chapter 40 B, which says, if you don’t have enough affordable housing in your town or city, then a developer can come in and put in a lot in a single development.
Doug Quatrocchi:
But the historical way we’ve had housing has always been small additions, small growth, small subdivisions across a very large market. And that really hasn’t been allowed to happen in the last a hundred years. So Massachusetts has had a lot more people come here. We’ve had a lot more jobs and everything’s, it’s a really pretty good place to live. You consider all the places you could be in the world. Lots of people wanna live here, but we have not substantially increased our housing stocks since we first enacted zoning neighborhoods still look by and large the same as they did a hundred years ago. And that doesn’t work for the number of who wanna live and work here.
Joe Selvaggi:
So so what you’re saying is of course we’re a great place to live, but the, the zoning laws have constrained supply and you’ve got a, a demand that exceeds the supply. So, you know, basically economists say the prices go up. So we know that markets are more or less communication mechanism. They communicate preferences and they say to producers if something’s expensive why don’t you then produce a lot of it and collect the profits of, of that. So why wouldn’t all this high rent generate massive development projects that would ease this pressure and, and balance supply with demand?
Doug Quatrocchi:
Well, you would think it would, right. But the fact is rental housing in particular is illegal. And most of Massachusetts, you can’t add any new housing without permission from a local zoning board. And typically that permission is very difficult to get. Now, Boston’s a good example of a place that has a lot of rental house and a lot of development activity, but that’s because Boston zoning board has certain procedures that large developers can use and understand to follow to get their projects built. But you look out across most of the states or even inside greater Boston. There’s very little opportunity to build even a single new unit. The metropolitan area plan council has a amazing tool called the zoning Atlas, where they look at the effect of not just whether it’s single double three unit zoning, but floor, area ratios, lot sizes, setbacks minimum parking requirements and so on. And they determine whether you can effectively have two units at all, or it’s effect single family and huge parts of the state, especially what we think of as very dense Boston and greater Boston do not allow the creation of a single new housing unit.
Joe Selvaggi:
So it makes it difficult to become effectively a landlord. So where we make it difficult for landlords we make we constrain supply and make it difficult for tenants. So I’m gonna make it a leap here. What you’re asserting is what’s good for landlord. What, what cultivates good landlord ship is also, what’s good for tenants.
Doug Quatrocchi:
Yeah. In general, you want people to be able to operate rental that there’s lots of rental to choose from so price to stabilize.
Joe Selvaggi:
So let’s move to the topic of our, our discussion today which is mayor Woo’s campaign promise to take on the problem of high rents. And her idea of a solution is a full thought of support for rent control. I think her preferred term is Brent stabilization. I haven’t really understood substantial difference between the two terms, but let’s to use the rent control for now to that end, she created a a new newly announced, I think this was March 11th, the rent stabilization advisory committee. Now you are the leader. I think you’re the largest landlord organization in the state. Am I right with that?
Doug Quatrocchi:
Yeah, certainly in terms of area we cover, we’ve got two that thousand hundred dues paying members in good standing. Yeah. So I would say that
Joe Selvaggi:
Now there’s about 25 members on that committee. Were, were you invited to be a member of this committee representing the, that number of landlords?
Doug Quatrocchi:
No. I would’ve been delighted just to even provide a recommendation because we’ve got, you know, 2,500 members, only 5% of them are in the city of awesome, but still that’s 120 landlords that would’ve made fantastic additions to this committee. If the mayor’s office had said, Hey, could you recommend any one person let alone a couple? We would’ve been very happy to do that, but no. And I know the mayor’s office knows about us. We have a lot of shared interests and certain things they, they hear from us regularly reached out to the mayor. When she was running and said, please don’t advocate for rent control, but you know, we’ve never heard back from them, so
Joe Selvaggi:
Sure. So, but again, theoretically everybody’s goals are aligned. You we’ve established that what’s good for landlords is good for tenants. So presumably the mayor does want what’s best for all of us. What are, do you know that what are the stated goals of this new leaf formed committee?
Doug Quatrocchi:
Well, so the word stabilization has chosen to particularly try to distance this new, whatever it’s gonna be policy proposal from past forms of rent control, where maybe in the past with like the world war II generation price controls or absolute price lock, you couldn’t do anything in price. Maybe now there’ll be like they can see de control or who knows. So they’re trying to find softer more politically acceptable language. But the stated goal is really to come up with a recommendation for rent control, not to have a debate about whether rent control’s even worth pursuing. It’s a kind of emperors new close scenario where the mayor’s handpicked a bunch of people who already agree with her, and they’re gonna come up with something that they think is gonna be politically acceptable. The intent is to have a policy proposed that the legislature would approve so that Boston could have its own form of right control. Even if the rest of the state doesn’t have it.
Joe Selvaggi:
Well, let me quote what I say. It’s a, a politically palatable framing in the mayor’s own words on her site, she’s quotes cities across the country, use rent stabilization as one tool, among many to protect tenants and keep families in their homes. The majority of Boston residents are, and families are renters. If we aren’t willing to take on the rent increases that are driving families out of Boston, then we aren’t meeting the needs of our neighborhoods. I think the broad group of stakeholders, including advocates, tenants, and developers who are willing to roll up their sleeves to reimagine what’s possible. Boy, that sounds really good. So let let’s let’s talk about these.
Doug Quatrocchi:
I, I hate first of all, to start with the metaphor, we need to need to bring every tool we can. I mean, you might use gasoline to power your car, but you would never take a, a can of gas to a fire, right. And there’s certain tools that are not right for the job. And in Massachusetts, in particular, we have exper we have experiments with and experienced rent control for 20 years in the seventies, eighties that got repealed in 94. And we can look at what happened in the rent control time versus immediately after. And we can decide, is this the kind of tool we wanna use here? And the answers unequivocally, no, like rent control has this set of serious side effects with it. So the fact that other communities still have it, it isn’t really a great selling point cuz we had it in Massachusetts already. We tried it and it did not work.
Joe Selvaggi:
Indeed. We had a podcast with professor Palmer from MIT to examine those 25 years of rent control, what it did to Cambridge in particular and to paraphrase his research. It wasn’t good. It persisted for 25 years and it was bad enough that in 1994, as you said, we had a statewide referendum to make it illegal to to impose rent control. So what I liked about your research and I did you, you’ve done a great deal of research on this yourself. Your approach was not an academic analysis of, of rent control and its effects, but you did a more of a, a story oriented personal account of, of rent control where you examined the life of a landlord and what rent control did to this couple. I was intrigued by the one story, the, I think it was the bolognas who at a beautiful home in Cambridge that they used for rental housing share with our listeners a little bit about that story.
Doug Quatrocchi:
Yeah. So I mean that, it’s really important to go back and, and recognize the terrible injustice that these rent control boards committed, perpetrated, whatever word you want on lots of housing providers in Massachusetts and the bolognas are a great example of that, a new new couple new to being a landlord. And this starting out in life bought a place that was a dump and they worked really hard to hand renovate it themselves, do it all right, restore it to its original antique glory and make it functional and safe. Do all the things that you would hope a landlord would do. And they rented the, they rented these renters that we tried to contact for this story and we did get in touch with, but they didn’t say much except the landlords broke the rent control law. And that’s ultimately what the rent control board found is that these landlords who made a good faith mistake in raising the rents did break this rent control law, but the penalty was draconian.
Doug Quatrocchi:
So rather than say, well, if you broke the law, don’t do it again. We’ve explained to you how rent control works and now, you know, better, which is getting to the point of mass landlords, educating people, right? We want people to be landlords. We wanna help them to do the right thing. Instead what the rent control board did is they, they tripled the damages, had the landlords pay the attorney’s fees even through the appeal. So ultimately they had what in 1994 1990 terms was about $64,000 worth of legal debts. They owed to the renters and that’s not the amount of rent overcharge that they may have done with not following the rent control law. Exactly. They, they overcharges renters very little by comparison and to make matters worse. The renters actually sublet their unit. They didn’t wanna live there themselves.
Doug Quatrocchi:
So the renters were charging uncontrolled rents themselves like the modern day equivalent of Airbnb. And they were pocketing all that. And the landlord had to pay this huge judgment to the renters who had all the sub of let money as well. The landlords ultimately head to declare bankruptcy and they can’t be landlords anymore. They do something else. Now they’re still around in Massachusetts, but they’re done being landlords and housing providers. It’s a great example of what you don’t want. You get this really draconian system that drives people out of the business. It rewards bad actors, renters who are subletting and in themselves breaking the rent control for some ideological purpose.
Joe Selvaggi:
So I, I, I think this story has a lot of elements. I, I just to pick out a few where we’re contrasting the, the landlords who are a hardworking certainly not wealthy couple who, as you say, took a, a home and made it a rentable. I, I saw a picture. Sure. But it was beautiful. And the, so we’ve got the landlord and the tenant actually happened to be a a Yale graduate going to Harvard graduate school temporarily. So the person who was not who, who did, who, who effectively sued to have the rent control on, or was someone substantially more educated. And then ultimately the, the takeaway is this landlord’s no longer a landlord. And presumably that property is, you know, headed for a different use. I, I would imagine one might condo it or, or make it into a single family home. You know, you essentially discouraged in, in this rent controlled world someone from being a landlord. So the person who replaced them is unlikely to wanna be a landlord either. So we’ve, we’ve compromised the supply of, of, of properties. Do I have the, the narrative about, right.
Doug Quatrocchi:
Yeah, that’s, that’s basically it. And without, you know, naming names and getting into the details of who said what, in the case, I mean, that is the general arc, and that is the result. The renter still remembers to this day, they feel that they were in the right. But of course, they’re one of those, you know, the legally trained folks, very highly educated rent control renter as was typical during the rent controlled years. Cause you know, those folks tend to get apartments faster than anyone else cuz of all the disparate impact we could talk about. But yeah, they were, they abused the system basically. So the renters had this huge win for themselves and the result is we’re all worse off because that place is not rental housing. Those landlords are not housing providers anymore. There’s less rental housing around.
Joe Selvaggi:
Yeah, let me, you mentioned it. I wasn’t gonna go there, but I do wanna explore this because some of your research does talk about it. And we talked about that with professor Palmer from MIT that ironically particularly in Cambridge, the people who are enjoying the rent control were not people who are, let’s say less well off for what you might expect to benefit. In fact, there are very often Harvard professors and your research indicates that where we have rent control, we actually see a much smaller percentage of people of color or maybe marginalized communities enjoying the benefits of rent control. Their numbers are half what they are in the general population. So these yeah, brain controls are generally exploited by those people who are most educated and most able to take advantage of a relatively complex Byzantine system. Do I have that right?
Doug Quatrocchi:
Yeah. That’s, that’s exactly right. It’s been detected empirically with data and it’s been predicted theoretically with math, that the tougher you make it to be a house provider, the longer landlords wait for the perfect applicant to come along. And we’ve got such a problem in America and Massachusetts, no less with systemic racism that the perfect applicant tends to be someone with a very high educational attainment and high income and perfect credit and never been convicted for anything. And so even, even silly stuff now you wouldn’t think of as being important like possession of weed, there’s still, you know, that’s still on people’s records from the past potentially, and you don’t want landlords to be considering that, but during the rent control years, when you could only charge so much for a unit landlords considered absolutely everything they could. And so you had a really disproportionate number of well people, you had that Harvard professor, you had a judge, you had the mayor of Cambridge. Those folks were the ones who got the rent controlled units and the ordinary people that were trying to provide rental housing too. Couldn’t. And so that’s a really unfortunate impact and that’s a strong reason why mass landlords would go to go to about four renters, opposed to a rent stabilization proposal from the mayor, because it’s gonna have this huge disparate impact on a whole lot of folks who don’t need that.
Joe Selvaggi:
So as an advocate of tenants you see run control as being against their interest and you know using the wrong tool as it were to, to solve a problem of high rank. Yeah.
Doug Quatrocchi:
And it’s really counterintuitive, like just linger in that a moment, everybody knows. It’s obviously true that if rent control is passed and you’re in an apartment today, your rents can’t go up so much so that you are safe today, but what’s really not intuitive is the effect 10, 20 years down the road for all the other people who tried to move into Boston during that time under rent control or Massachusetts, who haven’t been able to get in. So even though everybody today might be better protected by rank control, everybody forever after is hurt by the decreased supply by the decreased availability. So that’s the the message we’re trying to get to folks.
Joe Selvaggi:
So let’s go to the let, let’s give the benefit of the doubt to the air and say this committee was formed to figure out how to stabilize rent in Boston. I think there’s 25 members. I didn’t see any, they had both their names and their profession. I only saw one name on their that had landlord as a profession. What can you say you’ve examined this list of 25 people. What, what are common threads there? If, if not landlords, who is it? That’s advising the mayor?
Doug Quatrocchi:
Well, it’s like I said, a kind of emperors new close scenario where the mayors pick people who are already on board with rank control and there’s not gonna be a very robust discussion. It’s basically, if you look at the office of campaign and political, the required reports, these are a bunch of donors. So people who are active in Boston and Massachusetts, maybe they haven’t given to the mayor specifically, but they’re very influential in the community and either they have personally donated or their organizations have donated, for instance, you know, there’s not to pick on anyone in particular, but the Boston teachers union, they do fantastic. But I mean, think about how outraged people would be if there were a landlord on some kind of education reform committee, I really can’t understand why the Boston teachers union is there on this friend stabilization advisory committee, except for the fact that over the years, they’ve donated over a million dollars to Boston and Massachusetts campaigns. So it’s really about how important you are to the mayor and to city politics. And it’s not about what you bring to the table with your housing expertise per se.
Joe Selvaggi:
So we’ve got, you know, again, my, my examination of the list looks like a a long list of progressive activists and there’s there’s some landlords as there’s some developers I should say, but really only one landlord. Why it, if essentially you’re saying it’s a emperor’s new close. If everybody’s on the committee to sit there and effectively agree because they were chosen for their preference for rent control, what’s the purpose of forming a committee of, of of accolades who, well
Doug Quatrocchi:
It’s, I mean, all this stuff we’ve been talking about, the terrible impact of rent control, reducing supply, reducing quality, disparate impact. That’s not a secret to anybody. And Massachusetts does not wanna go back to rent control. So what the mayor has to do in order to achieve what is in her city, a very popular proposal among a small group of renter advocates. What the mayor has to do is make it look like lots of people want rent control because she had this advisory committee where all these people from different backgrounds and they all said, we need to have it, but it’s a kind of astroturfing endeavor. It’s not, there’s not widespread support for rent control in Massachusetts. And that’s why the city of Boston has to go to these lengths to try to advance this campaign promise.
Joe Selvaggi:
So it gives the, the policy, the Imada of a, of broad support and and makes essentially a historically unpopular policy appeal appear to be popular suddenly.
Doug Quatrocchi:
Right? Yeah, exactly.
Joe Selvaggi:
Now also on the site beyond describing the mission of, of this committee it also mentions when the committee is apt to meet, do you think listeners who hear this program who feel strongly or have lived through rent control and understand its devastating effects on cities? Is there any way for them to share their point of view within this committee, is, is this committee receptive to input from outside the committee?
Doug Quatrocchi:
I mean, I’d like to know, and I’d like to be able to advise people, cause folks are asking us, so mass landlords is about to file a public records request to understand first of all, how the committee was formed, but then also whether it’s gonna be operating, for instance, we’re gonna ask the mayor to voluntarily put the rent stabilization advisory committee under the open meeting law. And that’s not a requirement. There’s some case law as it doesn’t have to be, but boy, wouldn’t that be great if there was a, a notice of hearing and then a public comment period. That’s what we’d like to see if we’re actually gonna have a robust discussion on rent stabilization and affordability.
Joe Selvaggi:
Indeed. We’d like to see the thought process I’d like to participate, and I’d be curious maybe I’ve missed something, maybe there’s something you and I don’t know that they do that might the persuade me that it’s a, a very strong policy that be retaliatory for Boston’s future. I also, I wanna tie in a, a, another, I don’t wanna I’d probably like to do another episode down the road on this policy, but the other major housing initiative that mayor has proposed is a 2% transfer tax on property over 2 million now. I think what jumps to mind to many people in that case is this is a tax on rich people selling their home. And, but I’d say there aren’t many homes in Boston, even in the nicest neighborhoods that are trading above 2 million. And yet this, this tax is expected to collect a hundred million dollars a year, presumably for a low in come development. I did notice on that organization, a fair number of developers on the committee. Do you, can you connect the dots between attacks that would generate a hundred million and a committee full of developers?
Doug Quatrocchi:
Okay. Yeah. So I mean, the reason developers wanna be on that committee is because this 2% tax is gonna generate a lot of funds. Typically the city or other communities will match development money with other money to improve the area. And a lot of folks want access to that. One of the developers that doesn’t get enough attention is actually what looks like a nonprofit, the Massachusetts association of community development corporations. They are the strongest advocate for this transfer tax and right first refusal and other proposals that are designed to generate money and transfer transfer assets from primarily rental housing operators to the public space. And so if you think about what buildings are more than 2 million, it’s not homes like you said, is rental housing. And that creates this tremendous disincentive to be a housing provider. You’re gonna split that building up into condos that all sell for less than 2 million to avoid that tax. So again, here we have an example of the mayor saying on the one hand, I wanna do something to increase rental housing and address affordability, but it, on the other hand, the policies are going to destroy rental housing.
Joe Selvaggi:
So I wanna unpack that and say, okay you’ll accept my assertion that few single family homes trade above 2 million. And that if it’s collecting a hundred million, it’s sweeping up a, quite a few people in that, in that, in that tax and that transfer tax. What you’re saying is those people that will be paying the tax are largely largely owner of large rental buildings. And so as to avoid that tax, it’s more likely that they’ll convert it to condos each of which will trade below 2 million that ultimately if you sell a 10 million property at once you’ll suffer the tax, if you divide ’em into five, 2 million units, you’ll pay no tax. If you sell it as condos, the thereby further reducing the supply of rental units, thereby driving up rental prices for those who remain renters, do I have that about right?
Doug Quatrocchi:
Yeah, it’s about right. Another rule of thumb to members is to tax what you don’t want. So if you don’t want large rental housing buildings tax those with a 2% tax, you’ll get less of them.
Joe Selvaggi:
I, I, I get it. So I, I, I found, I always find your work interesting and compelling, as I say, it’s, it’s interesting for even those who are not renters or landlords. It’s good for people who want a, a vibrant community as the mayor herself said, most people who live in Boston are renters and want to see a Boston thrive into the future. You for vibe, both historical understanding of why rent control is bad and actually some very interesting future proposals. In, in a nutshell, you, you, you, you describe what policies might make Boston renters happier might drive rent down or, or keep them from rising at the rate they are. As a last question, what would you re mayor do instead of these, these policies?
Doug Quatrocchi:
Well, I mean, there’re two, two there’s a short term and long term answer. So the short term answer is to join with mass landlords in our litigation against the department of housing, community development. We’re trying to get access to rental assistance records. Rental assistance is short term, what keeps people housed. And we have this data that shows more than half of the applications for rental assistance. The last two years during the pandemic did not get approved. And so why is that? And what can we do to make sure people get rental assistance? That’s the short term fix instead of rent control, but then long term, the long term fix is to change zoning and Boston could be leading both within the community and surrounding communities by making the city and multifamily as of right C where you’re not gonna be stopped by floor error, ratios, setback, parking, minimum, anything you’re gonna have at least two units on every lot. That’s not big development. That’s what we call gentle density. And that would double housing in Massachusetts that would tremendously stabilize prices long term. So really those two options are things that landlords and renters could both get behind.
Joe Selvaggi:
That’s a wonderful way to end the show. I let’s hope the mayor gets a chance to listen. I believe she studied economics when she was at Harvard college. So this should resonate with her. I think she understands the terms we’re using and hopefully, maybe changes course before it’s too late. Where can our listeners learn more about masslandlords.net? I I’ve just given the website.
Doug Quatrocchi:
That’s it. Yeah, it’s as easy as remembering our name MassLandlords.net. We’re very searchable. We’ve got almost 2000 free educational articles up. So if anybody wants to learn what landlord have to do with a security deposit or to avoid discrimination or lead paint, we’re a great resource. And if you are a landlord we’ll teach you
Joe Selvaggi:
Wonderful. Well, that’s a great way to end the show. Doug, thanks for being back on Hubwonk again. Thank you.
Doug Quatrocchi:
Sure thing. Thanks. Thanks so much, Joe, I really appreciate it.
Joe Selvaggi:
This has been another episode of Hubwonk, a podcast of Pioneer Institute. If you enjoyed today’s episode, there are several ways to support the show. It would be easier for you and better for us. If you subscribe to Hubwonk on your iTunes podcast, catcher, it would make it easier for others to find Hubwonk. If you offer a five star rating or a favorable review, we’re always grateful if you share hub won with friends, if you have idea is for me or comments or suggestions about future episode topics, you’re welcome to email me at hubwonk@pioneerinstitute.org. Please join me next week for a new episode of Hubwonk.
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Massachusetts Hospitals Pull Back on Charity Care as Revenue from Federal 340B Drug Discount Program Explodes
/in Featured, Healthcare, Press Releases: Health Care, Press Releases: Life Sciences /by Editorial StaffBOSTON, MA – Over the past decade, the revenue for hospitals generated by the federal 340B drug discount program, initially intended to serve low-income, uninsured populations, has exploded even while a number of important Massachusetts hospitals have reduced the level of charity care they provide, according to a new study published by Pioneer Institute. The Pioneer Institute study, “340B Drug Discounts: An Increasingly Dysfunctional Program,” notes that nationwide, 340B drug sales rose from $9 billion in 2014 to $38 billion in 2020.
“The 340B drug discount program started with the best of intentions: to make high-quality prescription drugs and healthcare more affordable to low-income, uninsured populations,” said Dr. Bill Smith, Pioneer Institute Director of the Life Sciences Initiative and co-author, with Pioneer Senior Fellow Josh Archambault, of the study. “The 340B program has, unfortunately, been transformed into a lucrative revenue stream for hospitals and pharmacies who can arbitrage drug discounts. With the exception of a small number of dedicated hospitals and clinics, the original goals of the program have largely been lost.”
WATCH: WEBINAR: “340B Program: Examining Patient Access to Affordable Medicines”
On March 22, Pioneer held a discussion on the efficacy and efficiency of the 340B program, with Pioneer’s Dr. William Smith, as well as nationally-recognized speakers Terry Wilcox, Executive Director of Patients Rising, and Robert Popovian, Vice President of Health Economics and Policy for Equideum Health.
The Pioneer report also highlights numerous problems with the 340B program, noting that it has “served to enrich for-profit pharmacy chains and pharmacy benefit managers (PBMs), weakened community-based physician and oncology care, pushed patients into more expensive hospital-based care, incentivized the system toward more expensive therapies—all while providing fewer and fewer services to the low-income uninsured.”
The report includes a number of federal and state policy recommendations to improve the 340B program, such as tighter definitions of patient eligibility and charity care, and more extensive transparency and reporting requirements commensurate with the status of these institutions as nonprofit entities. The report argues that the nonprofit tax treatment of hospitals, as well as their participation in the 340B program, should lend itself to more generous provision of charity care for vulnerable populations.
“Given the huge growth in revenues deriving from the 340B program, we would expect to see significant expansions in the provision of charity care and services for lower-income populations from these hospitals, as that was the intent of the program,” said Pioneer Senior Fellow Josh Archambault. “Unfortunately, we’ve seen the opposite scenario play out with 340B. Certain institutions appear to be triple dipping, taking the additional money that comes with taxpayer funded expansions of coverage, reducing their charity care amounts, and at the same time exploiting the 340B program to maximize revenue, which should be stable or going down with each expansion of coverage as more individuals have health coverage.”
You can read the full Pioneer Institute report here.
Watch: Hubwonk360 Host Joe Selvaggi talks with William Smith about the 340B Program
About the Authors
William S. Smith is Senior Fellow and Director of the Life Sciences Initiative at Pioneer Institute. He has 25 years of experience in government and in corporate roles, including as vice president of public affairs and policy at Pfizer, and as a consultant to major pharmaceutical, biotechnology and medical device companies. He held senior staff positions for the Republican House leadership on Capitol Hill, the White House, and in the Massachusetts Governor’s office. He earned his PhD with distinction at The Catholic University of America (CUA).
Josh Archambault is President and Founder of Presidents Lane Consulting. He is a Senior Fellow at Pioneer Institute, as well as Cicero Institute. His work experience has ranged from work as a Senior Legislative Aide to a governor, Legislative Director for a state senator, to years working for think tanks operating in thirty-five states, and in D.C. He is a regular contributor to the influential Forbes.com blog, The Apothecary. Josh holds a master’s in public policy from Harvard University’s Kennedy School of Government and a B.A. in political studies and economics from Gordon College.
About Pioneer Institute
Pioneer’s mission is to develop and communicate dynamic ideas that advance prosperity and a vibrant civic life in Massachusetts and beyond. Pioneer’s vision of success is a state and nation where our people can prosper and our society thrive because we enjoy world-class options in education, healthcare, transportation and economic opportunity, and where our government is limited, accountable and transparent. Pioneer values an America where our citizenry is well-educated and willing to test our beliefs based on facts and the free exchange of ideas, and committed to liberty, personal responsibility, and free enterprise.
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340B Drug Discounts: An Increasingly Dysfunctional Program
/in Health Care, Health Care Policy (Federal), Health Care Policy (MA), Innovations in Medical Care Delivery, Life Sciences, Pioneer Research /by William Smith and Joshua ArchambaultThis report reviews the federal 340B drug discount program, showing that, over the past decade, the revenue for hospitals generated by the program, initially intended to serve low-income, uninsured populations, has exploded even while a number of important Massachusetts hospitals have reduced the level of charity care they provide. The study notes that nationwide, 340B drug sales rose from $9 billion in 2014 to $38 billion in 2020.
Download: 340B Drug Discounts: An Increasingly Dysfunctional Program