Tag Archives: North Carolina

Econ 101: A Lesson in the Tender Mercies of Medical Care

Posted on October 14, 2009 | Leave a comment

So, it turns out that while you may be able to legislate price, you can not legislate costs:

For years, Mayo Clinic officials have complained that Medicare and Medicaid pay less than what it costs to treat patients.

Now they’re doing something about it.

In the past week, the Rochester-based clinic said it will stop caring for 50 Medicaid patients in Montana and Nebraska starting Jan. 1, unless they have a rare disease that can’t be treated elsewhere. Also on that date, a handful of Mayo’s primary care doctors in Arizona will opt out of Medicare, forcing some 3,200 patients to pay out-of-pocket or find new providers.

Really!?!

You mean that when government imposes price ceilings you get shortages?  Who would have thought that?

The difference between prices and costs is not just a fine distinction made by economists. Prices are what pay for costs — and if they do not pay enough to cover the costs, then centuries of history in countries around the world show that the supply is going to decline in quantity or quality, or both. In the case of medical care, the supply is a matter of life and death.

…

When politicians talk about “bringing down the cost of medical care,” they are not talking about reducing any of these costs by one cent. They are talking about forcing prices down through one scheme or another.

-Thomas Sowell

It is a law as sure as gravity; when you artificially reduce the price of something below what the market would otherwise demand, you will get less of it or worse of it.

Count on it.

Postscript:  For added fun, here is a foretaste of the feast to come:

“Both of these moves are very difficult for us to make,” said spokeswoman Shelly Plutowski. “Both point to the fact that we as a country need to change the way we pay for health care. Mayo Clinic and other providers lose money on every Medicare patient we see, and the same goes for Medicaid.”

Last year, it cost Mayo $840 million more to treat Medicare patients than it received in payments, Plutowski said. The clinic also lost $100 million treating Medicaid patients, she said.

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The Mind of the Leftist

Posted on October 14, 2009 | Leave a comment

I am working on a project at the office with some colleagues that are not from the United States.  During lunch we had some time to chat and so I took the opportunity to ask them what “the world” thought of Obama’s Nobel.  They grinned, a bit more sheepishly than I thought they would, and admitted that it was, indeed, a little early for him to win.  So far so good.

With my toe firmly in the water, I decided to get their take on Universal Health Care.  I felt that their insights would be useful, one being from Italy and the other from Slovakia.  Before I go on, I should say that these guys are some of the most educated people I have worked with in a long time.  And while they have recently been at the Northeast Ivy; Harvard, they have degrees in the sciences as well.  In fact, the Italian has his PhD in physics.

So, imagine my surprise when these two highly educated scientists came down in favor of universal health care.  And more than that, they both felt it is a right as citizens to have this health care provided to them.

I am stunned.

Leftists are everywhere.

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Posted in Health Care, Politics: North Carolina

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But I Voted For Him

Posted on October 13, 2009 | Leave a comment

And now I want me money.  Or so goes the general consensus if you read the Reuters article describing the Home Rescue Plan.

Obama, grappling with the worst U.S. housing crisis since the Great Depression, pledged to help as many as 9 million families keep their homes by reworking their mortgages.

Let’s not forget that the whole reason those 9 million families are struggling is because the government “pledged to help as many as 9 million families keep obtain their homes by reworking cheating* on their mortgages.

Eight months later, the plan is plagued by delays, red tape

delay and red tape?  A government program defined by delay and red tape?  Come on!

some critics say, a reluctance by banks to do their part.

Riiight.  Cause last time the banks “did their part” a housing bubble was created, then burst and we were plunged into this problem.  After which the banks were rewarded for “doing their part” by having themselves taken over, vilified, their CEO’s fired and then their pay limited.  Honestly, why wouldn’t the banks “do their part?”

Just 17 percent of eligible borrowers have had their loans modified and monthly payments cut. Hardly any have been given a cut in the amount they owe on homes which are now worth less.

Huh.  Weird.  It doesn’t seem that banks want to lend money to people who demonstrate that they can’t pay money back to banks that lend them money.  Bitches!  Oh, especially hard hit are the owners who have negative equity-who would have guessed?

For homeowners like Jeff Latta, there was no help at all.

Latta, a 53 year-old retiree, pays $1,600 in monthly home payments that eat up 93 percent of his pension and he struggles to make child support payments.

So, a 53-year-old man decides that he wants to quit working at 53 [at least] and discovers that he is having trouble paying the bills.  Unbelievable.

To help pay his mortgage, Latta has slashed his bills by hunting for food in the wooded hills around his town of Albany in southern Ohio, and growing his own vegetables.

Serious.  I wonder if “slashed” means the same thing in Reuters talk as it does in Pino talk?  However, to his credit, Mr. Latta is doing a lot more than many other folks in his condition.  But let’s be honest here, if $1600 is 93% of his pension, he has $120 left over.  No vegetable is going to cover that gap.

In March, Latta heard about Obama’s Home Affordable Modification Program, or HAMP, that allows mortgage payments to be reduced to 31 percent of a homeowner’s income.

Awesome.  Because you can just legislate away the annoying aspects concerning the laws of Economics.

Latta applied for a loan modification but was rejected. His bank said his income from selling pumpkins and firewood — a net of $906 in 2008 — was too high.

Serious.  Even HAMP must know on some level that this is just silly; it’s designed to fail.

That banks lent irresponsibly in the U.S. property boom is irrefutable. As San Diego-based realtor Steve Rodgers says: “If you could fog a mirror, they’d give you a mortgage.”

While this is true, it is also true that banks were forced to carry a required portion of their lending portfolio in this low income high risk demographics.   To say that they did this on their own is disingenuous.

Look, in the end I feel bad for Mr. Latta.  But check this out, if you make $1720 a month you can’t afford to live in a house.  Move to an apartment.  Or a smaller house.  Or something.  And more advice?  Give up on the pumpkins and firewood and move to Raleigh; they have work there.

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Posted in Economics, Economy

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Alan Colmes: Is a Capitalist

Posted on October 11, 2009 | Leave a comment

Saturday afternoon, Alan posted on the emerging news media; citizenry media.

With newspapers folding and many denizens in the old media not understanding the new media, the young entrepreneurs at metrojacksonville.com are on the edge of the curve.  Locals, including officials, can’t wait to post there, knowing their messages will be read by an engaged citizenry.  They are using the web the way it is meant to be used, incorporating a level of interactivity that most newspapers haven’t grabbed onto.

I couldn’t help but being impressed by Ayn Rand reaching to us from the past:

Creative destruction. Even as a reliable icon like the delivered print newspaper makes it’s way into the the same museum as the rotary telephone, VCR and horse drawn buggy, we see the beautiful effects of ingenuity, creativity and the capitalist way. More and more people are finding that the old way of receiving news is no longer meeting their needs, so they “vote” with their wallets. Given the fact that news print and printing presses and journalists and editors are “rationed by price” we are seeing the release of these resources due to people purchasing other forms of news delivery.

Certainly the impact of the loss of their jobs will be hard for those journalists, editors and print specialists, but society overall will benefit and become more productive. Net/net, everybody wins. We see a less efficient form of media fall away, we see competition in the new forms that we are allowed to choose from and, even better, they are cheaper than the $0.75 a day it costs to purchase the local fish wrapper. In short, life is good, even great.

Imagine the lack of progress if the government stepped in, stole your money right from your pocket and propped up an industry that no one wants to see succeed? I would think we would be upset that the progress of a nation would be halted in it’s steps. Impossible? Nope:

blogs.reuters.com/mediafile/2009/09/24/how-to-subsidize-news-without-feeling-dirty/

Posted by John Galt
October 10th, 2009 at 10:56 pm

Who knew that Ayn lives?

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Posted in Economics, Economy

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Changing of the Guard

Posted on October 7, 2009 | Leave a comment

Well, for better or for worse, it happened.  The folks in Wake County who have opposed the Diversity Plan won.  And they won big.  I can only imagine that this means they are going to try and break down the work that has been done to ensure that schools maintain a balance of economically challenged families and non-economically challenged folks.

I have been torn in the days leading up to this election.  I am almost totally Libertarian.  Therefore I mostly disagree with the folks on the left when it comes to the economy and those on the right when it comes to things related to the social issues.  Schools always get me.  Every time.  And so it was this time as well, though even harder.

See, the left always wants to throw more money at the problem and protect the teachers in a Union kinda way.  And that NEVER works.  Ever.  You always get the lowest common denominator and the “enterprise” suffers.  But jeez, this Diversity thing has legs.  I really think it makes better schools.  The kids are better off and they learn more and we just don’t end up failing as many kids as we otherwise would.  So I sided with the Dems on this one.  Not because I think more money is the answer; or teachers unions [I hate ’em], but because the diversity strategy is an awesome tool in the toolbox.

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Posted in Education, Politics: North Carolina

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The Price of Free Health Care

Posted on October 2, 2009 | Leave a comment

See, that’s not fair.  Everyone knows there’s no such thing as free health care.  Heck, we know there isn’t free anything.  So, what has to happen for health care to be made available to every citizen in America?  Well, it has to be paid for.  And who would pay for it?  Well, we would simply raise taxes to cover the costs.  And could we do this?  Yes, almost for sure.  To be equally sure, we would have to raise the taxes so high that even Democrats would puke.  So instead we’ll raise them just some.  And what does this get us?  A system in debt.

We have all heard that America is ranked something like 37th in the world [based on the metrics used to determine this, I think that we are really ranked #1, but why quibble].  The club that we are beaten with is “If we spend all this money on health care, why do we only get a return that ranks us 37th?  The other club, my second favorite, is “We are the only industrial nation that doesn’t have some form of universal health care.”

Let’s look at the cost those other nations have to pay.  I like GDP PPP [that is purchasing power parity].  Basically, this is a measure of the “quality of economic life” in a given country or State.  Using this measure you can compare the purchasing power of people living in North Carolina and Minnesota for example.  Of of people living in Sweden and Germany.

So, these nations that are providing medical care to all of their citizens–how do they rank in GDP PPP?  Poorly.  Very poorly.  In fact, according to one study, if you took the nations of Spain, Portugal and Greece and granted them statehood in the United States, they would immediately become the 1st, 2nd and 3rd poorest states in the Union.

Italy, Finland, Denmark, France and the UK?  Make them states instead?  They would become the 5th, 6th, 7th, 8th and 9th poorest States in America.  In fact, you could take the whole of the European Union and make it a State.  It would be the 5th poorest State right behind Arkansas and Montana.

Why?

When we turn to consider the impact of economic policy on growth, it is hard not to
notice that one particular factor above all is essentially different in large parts of Europe
compared with the USA, namely the expansion of the political sphere in general and
taxes and the size of the public sector in particular.

Taxes.

So, if we simply worked at letting medical care exist like any other commodity, we would find that America would:

  1. Have more money than any other nation to spend on health care.
  2. See the real cost of that care go down.

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Posted in Economy, Health Care, Politics: North Carolina

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WCPSS: Diversity

Posted on September 29, 2009 | Leave a comment

As my daughter started getting closer in age to going to school, I became interested in WCPSS.  I began to learn how kids are sent to school, ow they get there and why.  I also learned many many other things.  That Wake is the largest district in the State and one of the largest in the country.  That we are growing like crazy.  That we win awards for our schools and the job that we do.  And I learned that we use tests the rest of the country doesn’t use.

I come from an educator’s family; my dad taught for 33 years.  Heck, I went to school to be a teacher and spent a single year in the classroom before I realized this wasn’t for me.  An expert?  No, certainly not.  But an interested participant with not insignificant experience and training.

I also have a different take on education that most of my political flock.  I’m not pro-voucher, I’m pro public school with market solutions existing outside of that option.  See, I don’t so much see the taxes I pay going to MY children’s education as much as I see them going to a well educated public.  One of the reasons our nation is so prosperous is that we have an educated populace.  So, when I consider moving my kids into a private school, I don’t see the tax money I pay in something that I have claim to pull out.

With that said, the role of the public schools is to give an education.  They are not meant to be anything else.  And if there are tools that assist in that process, it is incumbent on the serious administrator to utilize those tools.  And I think that diverse schools are one of those tools.  I absolutely feel that parental involvement in the school contributes to the success of the students in those schools.  We volunteer and walk through the school.  I call the principle when I have concerns and am engaged with our teachers.  All of this is to say that someone other than no one is making sure that things are being done well in our school.  Further, our involvement affects other students in other ways.  When my wife and I are in the classroom, we are not only helping our child, but the other kids in class as well.  One more adult to pick up the slack and let the teacher teach just a titch more.

And so yes, when a school contains a mixture of economic diverse families, the involvement of the school’s parents exits at some level that keeps the school at least humming, if not over achieving.  Is it hard to pass a school near where you live?  Sure.  Should that be our concern when going about the business of educating a public?  Maybe, but not the top priority.  Is there more work to do?  Certainly.  Is more money the answer?  Almost certainly not.  There are many many things that can be done without adding more money; removing any represented workers for one and merit based pay for two.  But diversity works.

Leave it alone.

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Posted in Education, Politics: North Carolina

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The Power of Capitalism

Posted on September 26, 2009 | 1 comment

Never, in the history of mankind, has a nation been as wealthy as when it is free.  Free to allow markets to provide to its citizenry the choice of products at a price that reflects their value.  When governments restrict this choice, restrict this trade and restrict these rights, the people of those nations suffer, become less free and less wealthy.  In short, they are worse off than they otherwise would have been.

Proof of this, as if it needed to be proven yet again, has been demonstrated in such remote places as Kenya.  Mobile phones are being used as means to transport and transfer money.  This allows people the opportunity to spend, sell and save capital and, without surprise, increases their well being.

All this without, I dare say IN SPITE OF, government regulation.

ONCE the toys of rich yuppies, mobile phones have evolved in a few short years to become tools of economic empowerment for the world’s poorest people. These phones compensate for inadequate infrastructure, such as bad roads and slow postal services, allowing information to move more freely, making markets more efficient and unleashing entrepreneurship. All this has a direct impact on economic growth: an extra ten phones per 100 people in a typical developing country boosts GDP growth by 0.8 percentage points, according to the World Bank. More than 4 billion handsets are now in use worldwide, three-quarters of them in the developing world

Extending mobile money to other poor countries, particularly in Africa and Asia, would have a huge impact. It is a faster, cheaper and safer way to transfer money than the alternatives, such as slow, costly transfers via banks and post offices, or handing an envelope of cash to a bus driver. Rather than spend a day travelling by bus to the nearest bank, recipients in rural areas can spend their time doing more productive things. The incomes of Kenyan households using M-PESA have increased by 5-30% since they started mobile banking, according to a recent study.

Less restriction, more freedom.  Bring on the free market!

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Posted in Economy, Politics: National, Politics: North Carolina

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Where Brad and Britt Are Wrong

Posted on September 22, 2009 | 1 comment

I’ve been listening to the Brad and Britt show for some years now.  I know what I am getting when I turn ’em on.  I’m getting a couple of guys who think they’re center or neutral, think they’re not talking over folks and think they’re right.  What I get though, are some left leaning talk over guys who think they’re right.  Mostly you can only blame ’em for being leftists.  Everyone thinks they’re right and really, it’s a talk show on the radio; they are supposed to be a little bit “jabby”.  So, I know what I’m getting when I turn ’em on.

This morning though, I just went crazy.  They are talking about health care reform and the proposed system and how it’s being compared to auto insurance etc etc.  And so it starts.

Brad begins by trying to pull the analogy by saying that if you only consider folks who do drive cars, then the auto insurance parallel is accurate; we do mandate that all drivers carry car insurance.  In this he’s right.  But he fails to mention that there are three important distinctions:

  1. If the cost of owning a car becomes to great [payments, insurance and upkeep] you can opt out and the insurance stops.
  2. Really, we are only mandating that you carry insurance to cover THE OTHER GUY.  If you own the car, it is your choice to cover any damage to your actual car itself.  In short, you are allowed the choice to “self insure”.
  3. No one is saying that the car insurance folks would be forced to cover “pre-existing conditions.”

I mean really, enough with this car insurance parallel.  Serious, can you imagine how expensive car insurance would be if insurance companies were forced to cover pre-existing conditions on a car?  That they would, for example, be forced to fix a car AFTER it had been in an accident?  Silly.  SImply silly.

But there was more.  The Brad and Britt show had a guest on who claimed that as a 52-year-old man he could get very nice insurance individually that was not outrageously priced.  Let’s check.  When I do this, I like to go here: eHealthInsurance

I am looking for plans in Greensboro for a single 52-year-old man who does not smoke.

Ah, here’s one.  $5000 deductible, Office visits are free after the deductible.  0% coinsurance.  149 a month.  Oh yeah, and you can have an HSA.

Another:  $5000 deductible, $15 office visits and 0% coinsurance.  $229 a month.

One more:  $1250 deductible, office visits are not covered and the coinsurance is 20%.  $253 a month.

Net/net, I don’t know why people think that coverage isn’t affordable.  It is.  It may not be free.  It may not cover every single thing in the whole medical world.  But the whole argument for this reform bill is that “if you get sick or hurt you should not go bankrupt.”  Here ya go.  Buy this policy and you won’t.

Last, Brad and Britt spoke about the fact that people miss allocate their money.  In other words, they aren’t spending wisely.  This resonates with me; I don’t think people budget well.  We spoke about this in a post just a few days ago:  Health Care Lottery.

In short, of people who make less than 10k a year, 46% of them play the lottery.  And they play about $600 a year.  Which, by the way, is the cost of a health insurance plan for a 25-year-old man.

I know what I get when I tune in Brad and Britt.  Today was just too much of it.

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Posted in Health Care, Politics: North Carolina

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Goodyear: Bad Policy

Posted on September 22, 2009 | Leave a comment

The United Steelworkers Union won one the other day. In the deal, the Union was able to win a number of concession from Goodyear:

  1. Minimum staffing levels
  2. Prevention of shifting production to any facility not represented by the Steelworkers Union
  3. $600 million in updates to the plants to keep them modern
  4. Wage and benefit increases
  5. Continuation of cost of living increases.
  6. A plant in Tennessee that was closed will have it’s employees to receive a buy out

So lemme get this straight.  Companies across the country, world in fact, are trying to cut back to minimize the impact of the global recession [which has most certainly ended by the way].  We are seeing staff reductions, we are seeing wage freezes and even in some cases wage roll backs.  All of this in order to keep companies from having to close.  But Goodyear?  What are they doing?  Why, of course, they are promising that they will keep a minimum number of workers on the job; not a maximum.  They are promising that they won’t move work to any plant not in America represented by the SWA.  Yeah, did ya notice that?  The Union didn’t say that they couldn’t move the jobs out of city or out-of-state or country, they simply said that the couldn’t move them where the union didn’t have representation.  So, if Goodyear wanted, they couldn’t move the plant to a Right to Work State and avoid a represented racket work force.  Nice.

Further, the Union was able to provide raises on top of cost of living increases to its membership.  All the while forcing Goodyear to spend $600 million in the plants so that they would be anchored to this ship wreck for the next several years.  Awesome.  Simply awesome.

Meanwhile,the only mention of why  these plants are in need of protection comes when the article mentions:

The Tennessee factory has been severely hurt by the economic downturn and an influx of cheap tires from China

Let’s ignore the fact that all of the tire buying American’s enjoy the “cheap tires from China.”  We like to have things provided to us at a price that is less expensive than we could otherwise find in the market.  So, while the American tire makers may see a decline in their sales, or at least in their profits, the rest of America see more money in their pockets.  This could be anyone from the single mother trying to make it to work to the florist that has to rely on tires to deliver her flowers on time.  All of this means added productivity.

Allocation of scare resources with multiple uses.

What we have now is an artificial allocation.  Or, people spending money on things that they wouldn’t otherwise spend that money on.  Which is almost always not optimal.  And somehow the press and the world rejoices at the fact that some Union jobs are saved at the expense of jobs elsewhere in the economy.  Jobs that have long ago ceased to be meaningful means of employment here in the US.  Here, you see, we are known for innovation and for services.  We need to free resources from the manual labor of tire making in order to free those minds to invent new kinds of tires.  Or news kinds of rubber.  Or any other of a long list of things yet to be invented but now prevented from being discovered.  All because of a racket.

But how, may you ask, can Goodyear continue to survive in this system where it is forced to pay fees and services to a work force that isn’t worth those fees and services?  Because, Mr. Obama has allowed Goodyear to charge an extra 35% for its tires adding directly to that companies bottom line.

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Posted in Economy, Politics: North Carolina

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