Old Guy Moment
Posted by Joshua Sharf in General on August 21st, 2009
Dramatis Personae:
Me
A young co-worker
Me (approaching the coffee station): Oh, we’re out of high-test.
Young Co-worker: What’s high-test?
Me (pausing momentarily): You know, from when there was leaded gas.
Young Co-worker: Leaded gas? I’ve heard of unleaded gas…
Health Care Microeconomics
Posted by Joshua Sharf in Health Care on August 20th, 2009
When Susie was living in Oceanside, the local hospital was located at – I’m not making this up – One Healthy Way. Evidently the Democrats had already implemented their health care plans.
Of course, there are many healthy ways, but the only way to get all of them going at once is to put decision-making power in the hands of actual consumers. In the latest Atlantic, David Goldhill takes a close look at the perverse economic incentives currently embedded in our health care system, incentives that create all sorts of inefficiencies. In this case, “inefficiencies” can mean longer waits for worse care at higher prices. Virtually all of these distortions originate from a house of cards of government policies, each policy intended to fix the problems that the previous ones created, all the while making things steadily less stable.
It’s a brilliant piece, really, applying basic supply-and-demand economics and marketplace dynamics to the pieces of this system, and showing how they explain what’s wrong, and why our health care and insurance are costing us so much.
As with housing, directing so much of society’s resources to health care is stimulating the provision of vastly more care. Along the way, it’s also distorting demand, raising prices, and making us all poorer by crowding out other, possibly more beneficial, uses for the resources now air-dropped onto the island of health care.
Starting with insurance,virtually everything we do in health policy prevents prices from finding their own levels, providers and consumers from adjusting to dynamic market forces, confuses prices with costs, discourages cost competition, and then punishes people for responding to the incentives that policy creates. Fundamentally, the problem is an unwillingness to confront actual costs and to pay for what we use. We expect insurance to cover routine expenses, which ought not be insurable events. Medicare gets away paying less than cost for services that are only available because someone else picks up the difference. We’re recklessly borrowing from our future. The patient is rarely the customer, and when he tries to be cost-conscious, hospitals won’t let him.
Every distortion we complain about has some weird incentive behind it. Insurance costs so much because we expect it to pay for too much. We have to restrain hospitals from buying new equipment because we subsidize it. We prevent specialty facilities from competing with hospitals because we overpay for some services and underpay for others. And the hospitals’ objections to competition mirror those of the railroads 100 years ago. Britain right now is suffering through the Conrail of public health. He doesn’t specifically address the growing wait-times for specialists, but there’s probably a perfectly good awful policy behind that, too.
Goldhill also comes up with reasonable estimates of how much the current bogeymen actually cost us. You could take the entire insurance industry profit for 2009 and pay for America’s medical care for 4 days. Think about that. The “excess profit” that insurance-company-haters rail about amounts to 1% of our health spending. IT efficiencies would probably improve service, but would also return about 3% of actual costs.
Goldhill proposes shifting the decision-making and purchasing back to the actual patient. You pay for routine expenses out of income. You pay for big expenses out of savings and credit. And a single, government-run policy would backstop against catastrophe.
It shouldn’t be a surprise that, in an article full of what should be commonplace economic observations, the one false note is political. A government-run catastrophic health plan would be under constant political pressure to carve out exceptions to favored groups and to lower the ceiling for everyone. Competing catastrophic plans would be able to experiment with coverage amounts and price points.
Still, this is the kind of rigorous application of basic economics that’s been missing from the debate, and especially missing from any Democrat proposals on the table right now.
Civil Society Subsumed
Posted by Joshua Sharf in Budget on August 20th, 2009
A couple of weeks ago, the Mercatus Center noticed that Brad Pitt’s non-profit was seeking stimulus money for its mission to help rebuild New Orleans:
The Make It Right Foundation (profiled here on ABC’s 20/20) — as well as dozens if not hundreds of other local initiatives and non-profits — have done incredible work in rebuilding the Gulf Coast after Hurricane Katrina. But much of this success is due to their independence from large government bureaucracies. Stimulus funding has the potential to act as what Jane Jacobs called “cataclysmic money.” There is a real danger that if social entrepreneurs and non-profits like Pitt’s become dependent upon federal funds, they will in effect become arms of the federal government. This would have a dangerous effect on civil society, and reduce our resilience to disasters and shocks, whether natural or economic. (emphasis added -ed.)
Well, the news is that this has pretty much already happened with lots of non-profits. Many derive the overwhelming portion of their income from Medicare/Medicaid, or from state government grants and purchases of their services. Here in Colorado, for instance, Jewish Family Services reported in 2007 that roughly $2.5 million of $7 million in contributions, or 36%, came from government grants. Compare this with something like the Gathering Place, a drop-in shelter for homeless women, which received no direct government aid, and whose government purchases amounted to less than 10% of total income. No wonder organizations like JFS were lined up around the block to support Referendum C.
The degree to which these non-profits have become courtiers, to which they’ve essentially outsourced their fundraising operations to governments and a couple of lobbyists, is probably largely unknown to the public. It’s a whole new dependency class. If these guys get their way, there will soon be another effort to raise taxes, this time in the middle of a recession. And once again, the government-dependent non-profits will be complaining about how their critical services are about to be cut.
As Arnold Kling has pointed out, the ability to exit is ultimately more important than the ability to vote. The reason these non-profits are more responsive in the first place is that failure has consequences in their ability to fundraise.
Europeans Have More Babies – Well, Europe, Anyway
Posted by Joshua Sharf in Uncategorized on August 19th, 2009
Now that Elden has finally finished a room – my office – things should start to move faster. Certainly my Internet connection will move faster.
Fast enough to catch this item from the Washington Post, marveling how the birth rates in Europe seem to be on the rebound. The researchers used the relationship between something called HDI, or Human Development Index, and the Total Fertility Rate (TFR). Keep an eye on that latter measure, because it’s going to become very important.
According to the researchers, once a society reaches a certain HDI, its fertility increases. Not only is this true statically – countries past the magic 0.86 mark in 2005 show higher birth rates – but it’s true dynamically. Countries which moved past the 0.86 score almost all increase their fertility compared to 1975.
So Mark Steyn is wrong, right? Europe’s declining fertility has been reversed through the magic of the progressive welfare state, and perhaps this will give them the leeway to commandeer ever-larger portions of future generations’ wealth! The only mystery is why this miracle is occurring, which of course provides the paper’s obligatory plea for more funds for further research.
The flaw in the analysis is the sort that could only be made by researchers trained to ignore the most obvious reasons. Remember that “T” and that stands for “Total?” Right. The study makes absolutely no effort to determine who is having all these kids. I know this because I actually went to the library and read both the paper and the accompanying “Demography” note by Stanford researcher Shripad Tuljapurkar. Because it insists on treating all residents of a country the same, it flails about, looking for the magical mystery pill that’s causing some countries but not others to abide by the trend. They finally settle on some vague sense that maybe it has to do with how easy it is for women to earn a living and re-enter the workforce. The problem, as the Tuljapurkar admits, is that HDI doesn’t make any distinctions between the sexes:
…in some countries, including Japan, South Korea, and Canada, the TFR continued to decline…These puzzling findings may instead due to the use of the HDI, which does not directly tell us which aspects of human development affect women rather than men.
The authors themselves list a litany of statistical relationships they’d like to examine for correlations:
labour-market flexibility, social security and individual welfare, gender and economic inequality, human capital and social/family policies…
Hmmm, what’s missing here?
Basically, the authors just pull this idea out of thin air, with nothing in their research pointing to it. They do so because they don’t admit – can’t admit – that it’s the immigrants who are having the kids. Everyone knows this, apparently, except the three authors of this paper, because they didn’t bother to look. Fertility didn’t increase in Japan and South Korea because they have virtually no immigrant population to speak of. The reversal in Israel began in 1992 because that’s when the walls came down and Jews were finally free to get the hell out of the formerly Communist country. Even if I grant that you can call a reversal year of 1976 on a data set that begins in 1975, fertility increases level off in the USA, even as HDI marches on. Hispanic women have, according to the Census Bureau, the distinction of being the only ethnic group reproducing above replacement rate.
In fact, this paper tells us nothing new. It actually reconfirms the societal trends that are killing the liberal West. And it reconfirms the evergreen that social science researchers find what they were looking for in the first place.
Elden Moves to Denver
Posted by Joshua Sharf in General on August 16th, 2009
OK, so he’s not painting the Sistine Chapel on the ceiling. But after a week’s worth of painting, we almost have one room done. Closets, bits of ceiling, and one room, except for the baseboard, which naturally continues to render the room unusable. All of this means that we’re still living out of boxes. The most commonly-heard reply to the oft-asked question,” do we have…?” is, “yes, it’s in a box somewhere.” Less would be in boxes somewhere if we could actually get a room – any room – where we could move the furniture up against the walls, take off the tarps, and start actually using the room.
This isn’t the first painter we’ve retained. The first painter we retained walked off with over $700 in money that was intended for paint, and pre-payments of various yard chores. This painter isn’t dishonest at all, just painfully slow.
That’s also the reason why we’re painting after having redone the long-suffering floors, a high-risk operation if every there was one. Initially, we had everything timed so that the painting would be done just before I left to go drive truck 1800 miles from NY, the floors would be done during the drive, and we would arrive home to a new house.
Instead, it’s camping out indoors with the Sharfs. But the dogs find the various floor-level permutations endlessly fascinating.
Predictable Response
Posted by Joshua Sharf in Health Care on August 3rd, 2009
I’m getting ready to hit the road here in Hazleton, Penn. This morning’s news is full of angry reactions over the health care bill at Senators’ and Representatives’ townhall meetings.
Come late August, maybe a week before Congress reconvenes, expect a speech from Obama explaining how, “we heard from you. Boy, did we hear from you. And we listened.” Obama will then go on to explain how the bill’s revisions that he is proposing will meet these complaints. It’s unlikely that the bill will actually contain much retreat from the President’s goals of socializing the system. In fact, he may use the break as an opportunity to re-insert some of the bolder proposals in the initial bill, and sell them as meeting people’s demands.
Why so late? Well, it will give resentment a chance to build. Scared Democrats may be looking for a political victory (i.e., as bill passed) and at the same time be looking to make use of Obama’s personal (although not policy) popularity. And of course, the less time people have to actually look at the thing, the more likely Congress will be to pass it.
Never the Twine Shall Meet
Posted by Joshua Sharf in Uncategorized on August 2nd, 2009
You know, twine. Heavier than string, lighter than rope. Twine. No fewer than three different workers at the Oceanside Walgreen’s had no idea what twine was. Maybe they thought I was doing my Eliza Doolittle impersonation, and knew that they didn’t carry Tom Sawyer or Huck Finn.
I hate to say this, but flying United last time reminded me of what a class experience Jet Blue is. Last night, though, the TV stations worked fine, but the music stations had no sound, which is a problem for radio. What I wanted to do was go to sleep for a few hours. What I did was work on the new County Party website. So I arrived in NY in the midst of my own personal, if significantly more low-key and low-stakes, version of 24.
Do you know long it takes to pack a 26-foot truck? I mean, pack it so that ants couldn’t find space in there? About 7 hours, is how long. Which means that the beagle is 7 hours closer to a nervous breakdown, and I was yet another 7 hours further away from sleep. I wish I could report that a truck packed the gills dampened the reverb from the beautifully maintained Pennsylvania Interstate system, but there’s absolutely nothing about that statement that’s correct.
Now the last time I did the first portion of this trip, I-80 through Pennslvania and New Jersey, and I-95 from Jersey through the gloriously-named Throgs Neck Bridge, it was in the reverse direction, at about midnight, and I had no idea where I was, or really where I was headed, only that I really didn’t have any good options for changing routes. This time, I got to see what I missed. If I ever saw the view of Manhattan from the GW Bridge, I had certainly forgotten it. And the sheer complexity of the New York highway system is awe-inspiring, although even that’s not quite enough to let you forgive Robert Moses for what he did to the place with his roads.
What’s interesting is how even the Interstates need to bow to the dictates of geology. Pennsylvania has these great folds of mountains that cut from southwest to northeast, and the only roads that try to cross against them are the Turnpike, and to a lesser extent, US-322 to State College. Even I-80 skirts the top of them without really challenging, and US-30, the old Lincoln Highway, mostly follows them until they curve south near Pittsburgh.
Tomorrow, I’m hoping to try US-11 and US-322. Until then, that’s all from Hazleton, PA.
Wherein Senator Carroll Takes Offense
Posted by Joshua Sharf in Budget on July 31st, 2009
This comes along with a de-friending with extreme prejudice. The main effect of which is to keep me from following the thread on her profile, and to check to see if indeed there were any Facebook invitations to the business members of the mutual assurance company to come testify. However, far from being left out, all three parties are already, by the enabling legislation, represented on the committee:
(III) THE CHIEF EXECUTIVE OFFICER OF PINNACOL ASSURANCE, OR HIS OR HER DESIGNEE;
(IV) A MEMBER OF THE BOARD OF DIRECTORS OF PINNACOL ASSURANCE DESIGNATED BY SUCH BOARD;
…
(VI) EACH OF THE FOLLOWING APPOINTED JOINTLY BY THE PRESIDENT OF THE SENATE, MINORITY LEADER OF THE SENATE, SPEAKER OF THE HOUSE OF REPRESENTATIVES, AND MINORITY LEADER OF THE HOUSE OF REPRESENTATIVES:
(A) A POLICYHOLDER INSURED BY PINNACOL ASSURANCE;
(B) AN INJURED WORKER; AND
(C) A MEMBER OF THE PUBLIC WHO HAS KNOWLEDGE OF THE COLORADO WORKERS’ COMPENSATION SYSTEM.
Sen. Carroll’s posting said nothing about businesses or Pinnacol, the latter of which hardly needed an invitation to participate in a committee it already sits on. What’s at issue here is the propriety of the chairman of the committee, on a Facebook page rather than on her private home page, and not on the committee page, issuing an invitation to one – and only one – of the three parties to come air their complaints. The injured worker and the policyholder would, it would seem, be capable of handling that on their own.
In fact, yesterday’s Denver Post carried an article about the matter, suggesting that Pinnacol already sees the committee moving in one direction:
Ross was concerned about the direction the committee was taking, saying: “The focus or slant of this seems to not be an open study but more of Pinnacol under a microscope.”
Carroll has asked that injured workers whose claims were handled by Pinnacol contact her with their stories. She said she expected injured workers to testify during the hearings.
Asked about the proposal from Ross, Carroll said it was premature to be talking about any such deals.
“There’s a ton of data and a ton of questions all over the place,” Carroll said. “To argue for a conclusion on a committee that hasn’t even started its work yet” isn’t helpful, she said.
(Carroll’s claim that Pinnacol’s trying to put a solution on the table, “isn’t helpful,” is disingenuous to say the least, given her eagerness to solve the problem in her own way this Spring, without such a committee or any investigation.)
Her claims of impartiality are further undermined by the following press release, issued Tuesday:
Senate Chamber
State of Colorado
DenverMEDIA ADVISORY
FOR IMMEDIATE RELEASE
Tuesday, July 28, 2009CONTACT
Abigail Vacanti (303) 866-4882
Jack Wylie (303) 866-SEEKING INPUT FROM INJURED WORKERS!
Sen. Carroll asks for public testimony for Pinnacol CommitteeDENVER- Are you an injured worker or a family member of an injured worker who’s claim was handled by Pinnacol Assurance? What was your experience like? We’d like to hear from you! If you are interested in telling us your story, please email the Committee Chair, Senator Morgan Carroll (D-Aurora), at morgan@senmorgancarroll.com.
The tone, the exclamation points, (the inability to distinguish “who’s” and “whose” are another matter), all point to an interest in attracting those with a negative story to tell. It’s unlikely that very many people whose story amounts to, “I filed and claim and it was handled expeditiously and fairly,” are going to show up to defend an insurance company, those carpet-bombing villains, they. I’m sure some will take the time to communicate with the committee. I think it’s equally clear what Sen. Carroll’s level of interest in those letters will be.
Anyone with even brief experience knows how easily such hearings can be turned into parades of discontent. No doubt there are some workers who have been treated unfairly by the company. Likewise, there are either malingerers or those whose injuries were not work related who may use such a forum to play on the public’s natural sympathy. One questions whether the committee will have the time or interest in re-playing those cases fully enough to screen them out.
In short, nothing that Sen. Carroll has done, from her snide email reply to a resident, to her tempermental behavior on Facebook, does anything to set one’s mind at ease about the intent of these hearings.
Sen. Carroll Responds – Unpersuasively
Posted by Joshua Sharf in Budget on July 29th, 2009
Yesterday, we noted that State Sen. Morgan Carroll had been used her Facebook page to troll for complaints about Pinnacol’s claims processing. That prompted the following Facebook exchange between Sen. Carroll and a Colorado resident (forwarded to me by the resident, who wishes to remain anonymous):
Resident: Today at 5:17am
I am dismayed at your continued attempt to destroy a valuable resource for Colorado. Your current witchhunt to find negative stories to paint Pinnacol in a negative light is nothing but a blatant political stunt and is clearly seen as such. The money accumulated as reserves of Pinnacol were paid into it for an EXPLICIT reason and not a simply pile of cash for you to spend on whatever causes you deem worthy.Morgan Carroll: Today at 6:51am
This committee is a fact-finding committee. Your loyalty to this political subdivision of the State of Colorado is laudable and I am sure they appreciate it.Resident: Today at 7:06am
What is the reason or a need for such “fact finding” exercise at this juncture?Morgan Carroll: Today at 7:10am
It’s about about 15 years since the legislature that created this structure has reviewed it. Their surpluses (very high compared to national) have raised the question for some as to whether (a) policyolders (businesses) are being over-charged; or (b) whether claims to injured workers are underpaid. Neither or both may be the case. We don’t know yet. Likewise, they want us to consider privatizing them. That would require evidence and an act of the legislature to do.
Color me unpersuaded. Aside from the snide response to somewhat aggressive questioning, it’s simply not credible that someone would use a social networking site – designed for self-selection of people with mostly consonant views – to find a diverse set of opinions about anything. Especially when her official website, which would probably draw a broader range of readership, lacks any such appeal.
The senator makes a point of referring to Pinnacol as a “political subdivision,” which it surely is. That permits the state to determinte by statute the disposition of its assets. But the bill itself changes the law to permit that seizure. And it basically lies in its preamble, saying, “…clarigying the laws governing Pinnacol Assurance’s funds.” It doesn’t so much “claify” as ‘turn inside out.” It eliminates its operation as a mutual insurance company, and specifically transfers control over the company’s assets to the state. Here’s the relevant section as it reads now:
The moneys in the Pinnacol Assurance fund shall be continuously available for the purposes of this article and shall not be transferred to or revert to the general fund of the state at the end of any fiscal year. All revenues, moneys, and assets of Pinnacol Assurance belong solely to Pinnacol Assurance. The state of Colorado has no claim to nor any interest in such revenues, moneys, and assets and shall not borrow, appropriate, or direct payments from such revenues, moneys, and assets for any purpose.
Seems clear enough. The reserve fund and any profits belong to the company, not to the state. The legislation would have repealed that section in its entirely.
So let’s be clear here: the bill that Sen Morgan Carroll, supposedly neutral leader of a “fact-finding” committee, voted for, removes the fiscal independence of Pinnacol, seizes $500,000,000 of surplus premiums paid into that fund specifically to provide coverage, says nothing about reviewing anything that the interim committee is tasked to explore.
“Fact-finding” committees frequently find whatever facts they set out looking for. There email exchange, in tenor and content, make it pretty clear what facts Sen. Carroll has in mind to uncover.
Joe Biden, Take Two
Posted by Joshua Sharf in Uncategorized on July 29th, 2009
I’ll see your Sarah Palin resignation speech, and raise you a Joe Biden commencement address:
I believe so strongly, as you may recall when I was here in October, not in you particularly but your generation…
…you’re about to graduate into a point in history where everything is going to change no matter what you do, but you can affect the change.
You’re going to walk across this stage without knowing for certain what’s on the other side.
…there’s not a single solitary decision confronting your generation now that doesn’t yield a change from non-action as well as action.
Non-action is action, unlike most generations.
There’s not a single issue on this President’s plate that will not yield a change — just merely by ignoring it, it will change.
They voted for change, not certain what it would mean, but convicted in the assumption that we cannot sustain the path we’re on. (“convicted in the assumption?”)
And our own interpretive muse:
Joe Biden Take 2
By Tarzana Joe
Podcast: Play in new window | Download
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