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Rambling thoughts on who knows what... Because not everything is as the conventional wisdom would have it... BLOGS I SORT OF LIKE... Volokh Conspiracy ProfessorBainbridge MarginalRevolution Patterico Powerline Ace Wizbang JustOneMinute XRLQ Betsy's Page HE WHO USED TO LINK ME EVERY NOW AND THEN InstaPundit Email Steve
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Friday, December 17, 2010
I see at least someone in government accepts my argument that health insurance companies are basically nothing more than a 'financing mechanism', or as I put it, conduits through which money flows from one group of people (patients) to another group of people (health care providers).
Of course, I would really hate it if this was the basis on which Obamacare's health insurance mandate was held to be constitutional...
I've written before that media bias shows up in many ways, sometimes in the stories they choose to cover or not cover, and sometimes in the way the information is presented...
An example of the latter is today's Washington Post story on the tax cut deal, where an accompanying chart shows the 'Average tax change per taxpayer'. The chart shows the tax change per taxpayer compared to the 2010 tax rates that would have expired but for the bill, and not compared to the 2011 tax rates that would have been in effect if this bill hadn't been passed. Thus, while the numbers are correct, the chart shows a much lower reduction in taxes (for all income groups) than would have been the case had the 'Bush tax cuts' not been extended... presenting, in my view, a distorted view of what was at stake. Thursday, December 16, 2010
While Eric Holder's Justice Department has rightfully taken flak for their 'see no evil, do nothing' approach to voting rights, they should also get kudos for coming to the aid of Asian students who were harassed and physically assaulted by black students in a Philadelphia High School last year.
On the other hand, the Justice Department was somewhat late to the party, following on the heels of action taken by the Pennsylvania Human Rights Commission. And the Justice Department couldn't seem to force itself to do anything stronger than require the Philadelphia school system to "develop a plan for preventing bullying... conduct training to increase multicultural awareness... and maintain records of harassment", no federal civil rights charges of any kind - civil or criminal - were filed against the perpetrators of the attacks. But at least they did something. Tuesday, December 14, 2010
I'm happy that at least one judge has ruled the Obamacare insurance mandate is unconstitutional and I hope the Supreme Court affirms the decision, but let's be clear, contrary to assertions made by a lot of smart people, the insurance mandate is not necessary to keep the insurance companies from going broke...
Yes, having to cover people with pre-existing conditions and eliminating caps on coverage will increase the costs paid by insurance companies.... but they won't have to eat those higher costs, they will simply - yes, simply - pass those costs on to their customers. At their core, insurance companies are merely conduits by which money from one group of people (patients) pass to another group of people (health care providers) with a portion of the money siphoned off to pay the administrative costs (including a profit) of the conduit. While there may be occasional instances where there is an imbalance between money coming in and money going out, over the long term, the insurance companies are pretty much going to make sure the money they collect from their customers is equal to the money being paid out to medical care providers. If, for some reason, the money paid out goes up, so too will the premiums the insurance companies charge their customers. And so it will be the case with payments made for those with pre-existing conditions and those who would have otherwise exhausted their coverage... the insurance company will pay out more and they will simply - yes, simply - just increase the premiums they charge. This will create a bit of a vicious circle, as each round of premium hikes drives more mostly-healthy people to drop their coverage, thus reducing the premiums collected by the insurance company which in turn will drive up the premiums charged to those who remain in the insurance pool and so on and so on.... which leads to an end game where the only people seeking coverage are those with pre-existing conditions who are told they could get covered but only if they pay an incredibly high premium... a premium that approximates what they would have had to pay if they were paying for their care out of pocket. But in the end, the insurance company will ensure that they collect amounts equal to what they pay out.... so it isn't the insurance companies that the mandate is designed to protect, but rather us policyholders, who otherwise would have our premiums increased to the point where we'd have to do without coverage... unless, of course, we had a pre-existing condition. Monday, December 13, 2010
Critical to GM's stock price is their being able to convince the investing public that GM management knows what they're doing... for the obvious reason that investors don't buy stock in companies which are run by people thought to be idiots.
So... on first look, one might be impressed by the announcement that GM is looking to reduce its workforce by getting rid of 'the couple of thousand' workers it doesn't need. But... why didn't GM make this reduction when it was reorganizing under bankruptcy, when presumably GM wouldn't have had to make $60,000 payments to each terminated worker? By my calculation, paying $60,000 to 2,000 (the common definition of 'couple') workers is going to cost GM stockholders $120 MILLION.... which is not an insignificant amount of money. How competent can they be if they didn't know a mere year or so ago that they were keeping more workers than they needed? And that doing so was going to cost them a whole lot more money than if they got rid of them back then. It isn't as if GM's sales have fallen through the floor in recent months, at least not if you believe GM's pronouncements about how good they're doing. And why didn't GM make this announcement in the days before their recent IPO? Did they not know even then that they had too many workers? Given that $120 million isn't a rounding error in GM's financial statements, doesn't withholding that information from prospective investors amount to some kind of serious breach on GM's part? I can only guess at what was going on in their collective minds... and none of the possibilities make sense... at least not if one was trying to run a company for the benefit of its shareholders.
I'm not looking to pick on the recently departed, but how worried could Mark Madoff have been about coming up with money to pay bills if his wife and kid were off vacationing in Disney World at the same time he was hanging himself? The last I checked, it does cost money to go to Disney World...
Virginia Senator Mark Warner should get some credit for at least that "Washington regulators are stifling fresh investment and discouraging innovation through new rules and requirements."
However, his proposal, that federal agencies eliminate one regulation for every newly issued regulation, would do close to nothing to improve the situation. Leaving aside that Washington never gets rid of old laws, it isn't the absolute number of regulations that is causing businesses to sit on their hands, it is the fear that Washington will change the rules governing the activities they're now doing. Businesses (or, more accurately, the people who own and manage businesses) don't just evaluate the economy when deciding whether to hire and expand, they also look at the regulatory and legal environment. And just as very few businesses want to expand right before an economic downturn, businesses are scared off expanding when they're constantly in danger of being hit with new - and expensive - rules. Take, for example, a business that is thinking about hiring some new workers. As part of their planning, they look at the cost of the benefits that each newly hired worker will receive. How are they supposed to do that if Washington is threatening to issue new laws that increase the costs of those benefits? Or with Washington to impose new rules governing financial transactions? If Mark Warner wanted to give businesses some peace of mind, he'd propose a moratorium on Washington issuing new regulations. Thursday, December 09, 2010
Showing that even smart guys can get it wrong sometimes, Daniel Mitchell is wrong in arguing that third party (employer) paid health care is the reason prices for medical care are rising so much faster than the CPI.
While prices for medical services (typically paid for by 'someone else') have risen at a faster rate than prices for cosmetic medical services (which typically are paid for by the patient themselves), this doesn't establish that such third party payers are THE reason medical care costs are rising at a much faster rate than the CPI. First of all, it is inconsistent for (most) conservatives to make this argument as they traditionally argue that costs incurred by the company are passed on to and ultimately paid by the company's customers (as in the case of corporate taxes and other expenses that increase the cost of the company's products) and/or the employee (through reduced compensation). If this is the case (and I agree that it is) then the employee does pay, albeit in a different way, for all of their health care and thus there shouldn't be any difference in the rise in prices for the two categories of care. So if that can't explain the difference, what can? Well, how about the fact that cosmetic services are not considered (at least by most people) to be as critically needed as medical services incurred for dealing with sickness or injury. Cosmetic medicine is optional, a luxury, and as such, prices are thus constrained by the high elasticity of the demand curve. If prices rise too fast, people simply do without that particular good or service. This isn't the case with the rest of the medical care bucket. People don't feel they can put off or do without care for sickness and injury, so the demand curve is much less responsive to price hikes... thus, the price hikes. If price hikes aren't going to lead to people demanding less of a service, just as we can count on the sun rising in the east, we can count on providers of that service raising their prices. In other words, the rise in prices is largely due to the simple fact that when it comes to fixing a broken bone or treating pneumonia, the price just doesn't matter.
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