Back a couple of years ago, when the debate over health care finance was the big topic of the day, my students often wanted to discuss the topic, trying to understand the positions being taken by the different interest groups and politicians. It wasn’t easy, and I try to avoid being overtly political and partisan, but I always tried to explain that I thought the problem was a systemic one, one that arises because the market for health care had become so distorted. Markets work to efficiently allocate resources because consumers and producers use the market and the price mechanism to communicate their preferences and costs, reaching efficient solutions. But as a result of historical and political decisions dating back into the 50s, the market for health care doesn’t let consumers and providers talk to each other directly. Instead, for the most part, we have an intermediary in the form of the insurance companies. Maybe two intermediaries – insurers and employers. Employees pay insurance premiums to insurance companies; employers also pay insurers; patients consume services, but only pay part of the cost because the insurance company also pays. In some ways it’s like going to all-you-can-eat buffets – you already paid, so you might as well gorge, and if you’re wasteful, so what? Prices will only go up a little, and not immediately.
I thought of this when I saw this editorial today: A Serious Plan to Replace Obamacare
Here’s a brief excerpt:
Price signals, a staple of any functioning free market, have been muffled in health care, where third parties (insurers and the government) pay roughly 88 percent of health care costs, up from 52 percent in 1960. Because patients don’t pay the bills, most of them have no idea how much services cost, let alone what they are worth. This leaves doctors and hospitals in a competitive vacuum where price and value bear little relation to one another.
“Instead of top-down price controls imposed by 15 bureaucrats at IPAB,” Ryan said, “let’s try bottom-up competition driven by 300 million consumers.” [Congressman] Ryan calls for a uniform tax credit for everyone to purchase health insurance. This would immediately end several problems created by the prevailing employer-based insurance system, which offers fewer options, traps many Americans in jobs they would rather leave and causes many to over-insure themselves. For government health care programs, Ryan expanded on the plan he outlined in his House-passed budget, which promotes greater freedom and flexibility than Medicare or Medicaid currently offer.
This comes at the same time as articles like this: “Health Insurers Push Premiums Sharply Higher” I could have told you this would happen.
If you study the projections about our government budget deficits and the looming debt crisis, much of it stems from projected increases in healthcare costs, especially Medicare, Medicaid, and “Obamacare.” Healthcare costs are not going to be fixed by government control, nor by continuation of the current system. For health care costs to have any chance of coming under control, the market must be allowed to work, and that means we need to let consumers make the decisions, not the insurance companies.
An ex-Google exec implored Obama to raise his taxes. The president responded, “I appreciate the fact that you recognize that we’re in this thing together. We’re not our own. Those of us who have been successful have always got to remember that.”
You see that Obama equates public-spiritedness with higher taxes. The Google man could do all sorts of wonderful things with his money — things both charitable and entrepreneurial. And the entrepreneurial uses could well increase revenue to the government.
I love it that my job as a statistics teacher requires me to pay attention to new and vitally important statistical studies:
A news story in Mail Online is headlined: “At Last, Statistics that Prove a Sexist Stereotype . . . Women Are Worse At Parking”
This is my favorite part – women are always using this excuse!
Researchers at the Ruhr University Bochum in Germany asked 65 volunteers to park a £23,000 Audi – and found that women took up to 20 seconds longer than men.
Some women blame the problem on the fact their breasts make it more difficult to turn around while parking.
SCINDeA stands for the South Central Indian Network for Development Alternatives. It is an NGO, a non-governmental organization, which coordinates a network of many other NGOs. Their primary focus is on women, youths, and children and are committed to gender equality. They have a presence in 450 – 500 villages in South Central India, mostly in the state of Tamil Nadu.
Headed by Dr. Sheila Benjamin and her husband, Dr. Bennett Benjamin, SCINDeA is a wonderful organization, organizing and facilitating many programs that are improving lives across south India.
At SCINDeA, Bennett Benjamin presented outstanding lectures on rural India, poverty, women’s issues, the caste system, and it is safe to say he was one of the most knowledgeable and delightful people we met. Sheila made many of our arrangements when we were in Tamil Nadu, and she was our guide and teacher throughout that portion of our journey. A kind, beautiful, wise woman , filled with grace and compassion.
Bennett said, “We’re making a small difference.” I disagree; they are making a huge difference. I was honored to learn from them. To learn more, visit their website.
You hear about this a lot, but it’s not always clear what is meant by it. And while it is almost universal that capital investment is necessary in order for a country’s economy to grow, especially in a sustained way, there is less clarity as to exactly what we mean by capital growth and by investment. But it’s a simple logic that people either spend or save their incomes, and it’s equally simple and obvious that without savings, banks have no money available to lend or businesses receive no financial investment. Daniel J. Mitchell points out that there should not be a tax bias against capital formation.
And then he includes a great flow chart which really illustrates the double taxation problem we have which discourages savings in America.
There are a lot of boxes, so it’s not a simple flowchart, but the underlying message hopefully is very clear.
We earn income.
We then pay tax on that income.
We then either consume our after-tax income, or we save and invest it.
If we consume our after-tax income, the government largely leaves us alone.
If we save and invest our after-tax income, a single dollar of income can be taxed as many as four different times.
You don’t have to be a wild-eyed supply-side economist to conclude that this heavy bias against saving and investment is not a good idea for America’s long-run prosperity.