Get Real about Jobs

by Chidem Kurdas

Today President Obama is holding a jobs summit, with the professed goal of soliciting ideas to encourage businesses to hire. Short-term tax credits for employers are among the measures mentioned.

Yesterday here on ThinkMarkets Mario Rizzo pointed to the distorting impact of such proposals and cited Gary Becker’s argument that cutting income taxes is a better way to stimulate employment.  There is another type of distortion – related to the highly informative back and forth by Jerry O’Driscoll and Roger Koppl on Mario’s post – that should be spelled out. Even as the economy recovers, government-created uncertainty is going to discourage hiring. Continue reading

Healthcare Constructivism: A View From My Window

by Mario Rizzo 

I have taken a quick look at some of the provisions of the recently-passed House healthcare bill. What I want to do here is determine how it will affect me and others in a similar situation. I do not think my own situation is exceptional. I urge others to determine how it will affect them.   Continue reading

Unintended Consequences of Swine Flu Panic

 by Mario Rizzo  

Recently the Obama Administration declared the H1N1 pandemic a “state of emergency.” While there is a largely technical meaning to this, some people have understandably gotten nervous. All this adds to the extraordinary public concern about a flu that, so far, as proven milder than the seasonal flu – albeit with a different profile of people getting ill.  

The problem is and is going to be the stress on emergency room facilities with people who are alarmed but not really in need of ER services. There will be a cost to the swine flu precautionary activities. By increasing the waiting time and confusion in ERs some people with life-threatening problems will die who otherwise would not have.   Continue reading

Will Obamacare Be Deficit-Neutral? Part 2

by Mario Rizzo

To much fanfare the House Democrats just revealed their healthcare plan. Three items from the CNN report caught my eye:

“The nearly 2,000 page bill — a combination of three different versions passed by House committees…”

A priori, I say this will be a nightmare to read and a mess to interpret.

“Pelosi’s office said the bill would cut the federal deficit by roughly $30 billion over the next decade. The measure is financed through a combination of a tax surcharge on wealthy Americans and spending constraints in Medicare and Medicaid.”

That is $30 billion over TEN years.  When have Congressional estimates of savings not been seriously wrong in the direction of greater spending?

“Medicare expenditures would be cut by 1.3 percent annually.”

Politically impossible under the current mindset.

I am astonished by the patently obvious nonsense that is being peddled by this Congress.  Let them admit that what they propose will cost a ton and add to the deficits. Then, at least, we could see if there are any counter-balancing benefits.

UPDATE: A few hours ago the House Democrats said the bill would cost $871 billion over ten years.  However they “misspoke.”  Oops. It has now been revealed that it will cost $1.05 trillion over ten years. (But now it will save about $100 billion over ten years.)  Stay tuned.

Planning And Democracy: Redux

by Mario Rizzo 

The Senate Finance Committee has filed its current version of healthcare reform. It is here.  

(HT: Volokh Conspiracy)  

It is 1,502 pages long and it is in legislative language. If passed, it will affect our lives in important ways. Let me suggest that you all read it carefully and then let your senators know what you think. 

Of course you won’t do that and neither will I. We are rationally ignorant and we shall remain that way. 

Will the senators, not on the committee, read it? I doubt it. They will be too busy giving their opinions on selected portions. However, special interests will know about the particular provisions that affect them. As to the senators on the committee, staffers will give summaries. How much they understand or care about provisions that affect the general interests in contrast to the interests that elect them is unknown.  

The welfare state makes a mockery of the rule of law and of representative democracy.

Fast Track To The Single Payer

by Mario Rizzo  

For some time I have been interested in the dynamics of public policy – specifically, how particular policies make further policies more likely. Glen Whitman and I explored this in general terms in our paper, “The Camel’s Nose is in the Tent”  and our own Sandy Ikeda’s book, The Dynamics of Interventionism offers a different, but largely compatible, general dynamic framework  

I believe that dynamic-tendency (or slippery-slope) analysis — if carried on in a coherent theoretical framework with plausible empirical assumptions — can be a powerful supplementary critique of public policy.

The healthcare area seems especially prone to the dynamics of the slippery slope. In this post I wish to point to several factors that will ensure that the current proposals, if adopted, will not constitute a policy-equilibrium. Thus, they will likely lead to more and worse intervention by the state.  Continue reading

Delusions of Healthcare Policy

by Mario Rizzo  

The Wall Street Journal reports, mirable dictu, the latest Senate healthcare plan passes the Congressional Budget Office’s test for not adding to the deficit. In fact, the plan will trim the deficit by $81 billion over ten years. That is an average of $8.1 billion per year in a projected deficit that is so high I can’t remember what it is. This is your classic rounding error. Let that pass.   

What is the basic financing mechanism?   Continue reading

Healthcare Bias

by Chidem Kurdas

Proponents of the new medical entitlement program claim that it will improve the quality of healthcare by putting treatments to the test. Yet they ignore what’s already tested, and at great cost. This is part of a long-time pattern. Much of the political elite and the media routinely discriminate against the most useful medical technologies in existence, namely pharmaceuticals and biologics.

Pharmaceuticals are rigorously tested. Their quality and effectiveness are documented in randomized clinical trials that are the gold standard for testing treatments. They undergo a lengthy review by experts before being allowed to go on the market. No other medical technology is subjected to such extensive regulatory scrutiny.

The regulatory system imposes horrendous hardship on people who would benefit from certain medications that are kept out of the market, as well as a huge expense on everybody. Still, the fact remains that pharmaceuticals are better tested and proven than any other type of treatment.

That sharp difference is routinely ignored in public discourse.  The prescription drug industry is so demonized that it’s politically incorrect to say anything good about it.

Continue reading

Healthcare Honesty

by Chidem Kurdas

Cost savings from Medicare are claimed as one of the major sources of finance for the new medical entitlement program making its way through Congress, a claim that is astonishing in its brazen disregard of history.

President Obama talks about eliminating waste and inefficiency in Medicare, then turns around and reassures people there won’t be any Medicare cuts.  The savings are to come entirely from making Medicare more efficient and paying only for quality service. This notion is not new. It’s been around a long time.  Medicare, from its inception in 1965, has been a bottomless pit where money silently disappears into the coffers of the medical-industrial complex. There’s been attempts over the decades to control costs, using a variety of methods.

In the 1990s, when health management organizations slowed down the growth of private medical spending, Congress enacted a law to apply managed care to Medicare. “The program was authorized by the Balanced Budget Act of 1997 with the intent of expanding health care options to Medicare beneficiaries by savings generated through what advocates assumed would be the efficiencies of managed care,” says a 2001 report.

Continue reading

Healthcare Tax Gimmick

by Chidem Kurdas

Yesterday at a news conference  President Obama laid out his view of the healthcare bill being hammered out in Congressional committees. One could question many of his statements—although the members of the press picked to ask questions did not. So as not to write a post of inordinate length, I’m will focus on just one point.

Mr. Obama says that savings will take care of about two-thirds of the cost of the new entitlement program. “The remaining one-third is what the argument has been about of late,” he says.  For the sake of the argument, let’s stay with that.

The one-third of the money is to come, in one form or another, from the rich—or those so defined. The President says he’s OK with the House proposal to add a surcharge  to families with a joint income of a million dollars. He emphasizes how important it is that the middle class not be saddled with this additional burden. Continue reading

Healthcare Miracle

by Chidem Kurdas

“You’ll save money,” says President Obama a propos health reform.  You’ll consume more medical services, the demand for those services will go up and you’ll save money. Truly a miracle, like ancient Kings curing scrofula by touch.

The bill passed by a Senate committee requires employers to provide medical coverage for employees or pay a penalty. Individuals who choose not to have insurance face a penalty of up to $750 a year. People below a certain level of income are to receive subsidies to purchase insurance.

In effect, medical insurance would become compulsory. That would have a significant impact regardless of how exactly the insurance is provided or subsidized.

Compulsory medical insurance and the resulting growth in payments will be a fine thing for hospitals—just what they need to salve their economic woes. Uninsured patients are a drain on hospitals. Surely it is no coincidence that Hillary Clinton and Mr. Obama were the two Presidential candidates that received the most donations from the healthcare industry.

For those donors, the bill is what the doctor ordered. But what does it mean for the rest of us? Continue reading

Healthcare Game

by Chidem Kurdas

Funny thing about the Obama healthcare plan. It resembles a Rube Goldberg machine, as did the 1990s Clinton version. The present proposal “relies on a combination of subsidies and regulation to achieve universal coverage, and introduces a public plan to compete with insurers and hold down costs,” according to Paul Krugman in the NYT.

Why not simply extend Medicare to everybody? Oh, I forgot, Medicare Part A is projected to run out of money by 2017. And the only reason the other parts don’t face potential insolvency is that they’re financed from general tax revenue. Given the government’s track record with medical entitlements, the claim that a new  public plan will hold down costs is laughable.

Medicare costs more than half a trillion dollars a year now; within a decade it will require almost $1 trillion a year. If you want to skirt the cost issue, it’s best not to mention Medicare. This is the kind thing Charlotte Twight identified as a way proponents of larger government quash opposition. Concoct an elaborate new program of subsidies and regulations, mask the cost, focus on the new entitlement, and you’ll get more people behind the program. Continue reading

Rising in Phoenix: Entrepreneurial responses to housing and health-care problems

by Sandy Ikeda

The New York Times, in “Amid Housing Bust, Phoenix Begins a New Frenzy”, reports that “Real estate got just about everyone into trouble in Phoenix, and the thinking seems to be that real estate is going to get everyone out.”

If the property looks promising, Mr. Jarvis puts in a bid on behalf of any of his dozens of clients eager to become landlords. When he wins, he offers to let the family stay in the house and rent for much less than their mortgage payment.

Phoenix is also where “supermarket health clinics”and urgent-care centers for the uninsured have proliferated.  Some have been able to adjust quickly to a souring economy.

Health clinics located inside grocery stores typically offer less-comprehensive medical service than urgent-care centers such as NextCare and Maricopa Urgent Care…  NextCare, which has 17 clinics in the Phoenix area, has responded to the downturn with a series of moves aimed at reaching more patients.

Read more about it in this story from AZCentral. Continue reading

The “Unreasonable” Cost of Medical Insurance

by Mario Rizzo

People quite rightly complain about the cost of health insurance and bemoan the fact that, for some, insurance is out of financial reach. The following article from the New York Times  points to a factor that no doubt is illustrative of one source of the problem. This factor is just one of the mandates the Congress or individual states have created.  

Every year, state and federal governments spend more than $15 billion, and insurers at least $5 billion more, on substance-abuse treatment services for some four million people. That amount may soon increase sharply: last year, Congress passed the mental health parity law, which for the first time includes addiction treatment under a federal law requiring that insurers cover mental and physical ailments at equal levels.   

Many clinics across the county have waiting lists, and researchers estimate that some 20 million Americans who could benefit from treatment do not get it.

Yet very few rehabilitation programs have the evidence to show that they are effective. The resort-and-spa private clinics generally do not allow outside researchers to verify their published success rates. The publicly supported programs spend their scarce resources on patient care, not costly studies (Emphasis added).