Mark Pauly is usually an ally of those who support free-market health care reform. But, occassionally, he strays off the reservation. Recently, he and I debated the merits of an individual mandate for health insurance on publicsquare.net. Click here to listen.
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Wrong, Wrong, Wrong, Wrong, WRONG!!
The Pittsburgh Tribune-Review quotes Republican National Committee chairman Michael Steele on how Congress should go about reforming health care:
Having Congress reshape health care puts “the wrong people at the table,” Steele said. He said stakeholders — “doctors, lawyers, health care employees, insurance companies” — should develop a solution and present it to Congress, rather than the other way around.
Steele needs to brush up on his Adam Smith:
People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.
Like I said, Jonathan Chait was on to something.
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Timeless Wisdom from Walter Williams
Back in the 1980s, the irreplaceable Walter Williams produced a documentary based on one of his more controversial books, The State Against Blacks. Someone has done a great service and posted the documentary on youtube. Everything Walter said back then is true today — and just as applicable. The only discordant note is that when Walter refers to “welfare reform,” it is important to understand that he is talking about the expansion of handouts and centralization in the 1960s and 1970s, not the pro-market welfare reform of the 1990s:
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Reporting the Minimum Wage
Economists generally agree that minimum wage laws tend to put low-skilled workers out of work. (Even economists who support minimum wage laws for reasons of politics or “justice” don’t really argue that the laws don’t raise unemployment.) But that message hasn’t really reached journalists. Today’s stories on the mandated rise in the minimum wage take one of two forms: Assuming that the raise is “good news” for low-paid workers, or quoting one economist on each side. The latter is certainly better, but it does convey the sense that “economists disagree about the effects of minimum wage laws,” which doesn’t really reflect the state of economic knowledge.
NPR used both versions. Some of its hourly newscasts led with “The minimum wage hike means 70 cents more per hour for low-income workers.” But some also noted, “That’s supposed to be good news for low-income workers, but economists disagree about whether it will help or hurt the economy.” NPR did a somewhat balanced story yesterday.
Many journalists went with the easy, mostly wrong, “good news” approach, as these headlines and first sentences illustrate:
- ABC News: Relief for Workers at Bottom: Minimum Wage Goes Up
- Time: With the U.S. trillions of dollars in the hole, 70 cents an hour sounds like chump change. But it’s a big boost for the millions of workers who earn that much extra as of July 24.
- Philadelphia Inquirer: Minimum-wage workers to get a pay bump today
- WFMY (Greensboro, NC): Starting today, minimum wage workers will see extra cash in their pay checks.
- News on 6 (Tulsa): Thousands of Oklahoma workers will receive a pay raise on Friday when a new federal minimum wage takes effect.
But some did at least acknowledge the controversy:
- AP: Minimum wage hike could threaten low earners’ jobs
- USA Today: The third minimum wage increase in three years, effective Friday, is a moneymaker and a money-taker: Millions of workers soon will see pumped-up paychecks, while many already-struggling businesses face the burden of increased payroll costs.
- CNN: Minimum wage hike: More money or fewer jobs?/On Friday the federal minimum wage jumps to $7.25 an hour from $6.55. Economists differ as to whether that will hurt or help low-income workers.
- Kansas City Star: The federal minimum wage rises today from $6.55 to $7.25 an hour, bringing with it controversy about whether the increase is good or bad for the economy.
The New York Times gets the prize for its stark decline in economic understanding. Its editorial today begins, in a triumph of hope over economic reasoning:
Read the rest of this post →The Productivity Challenge: Is Health Care as Bad as Education?
Catherine Rampell, editor of the NYTimes Economix blog, has kindly relayed my challenge to her readers: “name a field with a productivity collapse worse than that in education.”
Ms. Rampell, like several Cato@Liberty readers, suggests health care as a possible “winner.” I haven’t yet spent enough time with the data to be absolutely sure one way or the other, but so far I have to disagree.
It’s true that health care costs have risen dramatically over the past 40 years. The CDC has a great digest of health statistics that puts per capita health care spending at $356 in 1970 and $7,026 in 2006 (table 124). Adjusting the earlier figure for inflation it comes to $1,851, meaning that per capita health spending has gone up by a factor of 3.6. Public school spending per pupil has gone up by about 2.3 times from 1969–70 to 2005-06. But while educational outcomes at the end of high school are stagnant and the graduation rate has declined, we’ve enjoyed incredible medical advances. After spending an hour or two with Google and the CDC stats book, here’s what I find:
- Neonatal mortality was cut by 2/3 between 1970 and 2005, from 20 to 6.87 per 1,000 births
- Fetal mortality rate (miscarriage) was cut by more than half: from 14 in 1970 down to 6.2 in 2003 (per 1,000 live births plus fetal deaths)
- Life expectancy at birth was raised by 7 years
- Limitation of activity caused by chronic conditions: 13.3 % in 1997, 11.6% in 2006
- There’s now a nearly 90% cure rate for a childhood leukemia
- Depression is far more treatable
- Fertility treatments are greatly advanced
- Prosthetics are dramatically better
- Lasik eye surgery was invented
- Gastric bypass surgery is now available for the morbidly obese
- Joint replacements are far more common and effective
- Reconstructive surgery is greatly advanced
- We now have vaccines for rubella, pneumonia, hepatitis A and B, chicken pox, lyme disease, and meningitis
- Smallpox was eradicated
- Numerous technological advances have made diagnostic and surgical procedures less painful and easier to recover from, including: arthroscopy, laparoscopy, MRIs, CTs, SPECT and PET scans
It’s also important to consider that Americans have chosen to lead lives that seem more likely to engender health problems over the past four decades. Though we’ve cut down on smoking, which should make us healthier, Americans today are both less physically active and more gluttonous. Not surprisingly, obesity has more than doubled, rising from 14.6 to 34.1 percent of the population. You’d think that heart disease would have gone off the charts as a result, but it’s actually been more than cut in half, from 493 to 211 deaths per 100,000, thanks, presumably, to medical advances that have more than compensated for our couchpotatofication. [And lest anyone assume that students have become harder to teach over the past 40 years, the evidence seems to point in the opposite direction.]
So far at least, the evidence doesn’t seem to support the notion that the health care sector has suffered a productivity collapse quite like education. It still looks as though schooling, and only schooling, has gotten both worse and substantially more expensive since 1970.
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Obama’s Press Conference: Rush to Judgment
At the Politico I write:
It’s easy to find, as Gallup just did, that majorities of the public want everything — guaranteed health insurance, that covers all possible problems, that lets you choose your own doctor and the treatments you need, that lets you keep your current plan — and they want it cheap. Or they’re OK with letting someone else pay. So when President Obama promises health care that does all those things, he can find a receptive audience. Still, when you ask people whether they really believe the federal government can provide more health care to more people, and save money in the process, most of them don’t. And that’s the problem Obama faces. And the reason he’s so insistent on doing it NOW is that he fears that the longer people mull that conundrum, the more they will realize the unlikelihood of a vast new federal program bringing down the cost of anything.
Obama also said that his administration “inherited an enormous deficit.…have not reduced it as much as we need to and we would like to.” That’s a half-truth at best. The Bush administration and the Republican Congress spent like drunken sailors. But driving the deficit into the stratosphere is Obama’s decision. If he thought the deficit was too high, he didn’t have to push a $787 billion stimulus bill and a $3.6 trillion budget. If he thinks the effects of the stimulus are worth the enormous, unprecedented, unimagined deficits, then let him stand up and say so instead of pretending that he’s been trying to “reduce it.”
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