By John R. Graham •
Tuesday October 6, 2015 10:35 AM PDT •
No good words were used to describe last week’s Employment Situation Summary: “Every aspect of the September jobs report was disappointing,” wrote Michelle Girard, chief U.S. economist at RBS (quoted in Forbes). This is largely a repeat of the August jobs report, although those and previous months’ figures were also revised downwards.
One-quarter of September’s new jobs were in health services: 34,000 of 142,000 added to nonfarm payrolls. Of those 34,000 health jobs, 37 percent were in ambulatory facilities, and 45 percent in hospitals. This is a change from the past few months. Because of a long-term shift in the location of care, there are now almost seven million people working in ambulatory settings, versus just under five million working in hospitals.
We should hope September’s disproportionately high hospital jobs growth is idiosyncratic, and the trend to faster growth in ambulatory facilities is restored. Hospitals are very expensive facilities and have very concentrated lobbying power that they bring to bear to keep their payments higher than they would be otherwise. One of their most successful talking points is that hospitals are the largest employers in a community, which obviously attracts the support of politicians. As the health services workforce shifts to ambulatory settings, this talking point will lose its power.
Significant revisions to previous months’ reports are reflected in the longer term change (See Table II). Over the past twelve months, employment in ambulatory settings has somewhat faster (4.06 percent) than hospital employment (3.04 percent). The health services workforce overall has grown faster (3.17 percent) than the non-health workforce (1.83 percent).
Labor costs comprise a large share of health spending, which is less productive than spending in other parts of the economy. Unfortunately, continuing high growth in health jobs likely contributes to slow economic growth today and Obamacare’s failure to slow the rate of health spending.
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For the pivotal alternative to Obamacare, please see the Independent Institute’s new book, A Better Choice: Healthcare Solutions for America, by John C. Goodman.
Tags: Employment, healthcare spending, jobs, Obamacare
By Mary Theroux •
Monday October 5, 2015 2:57 PM PDT •
Few have the stomach for watching the Planned Parenthood videos—among others, Nancy Pelosi refuses to watch them (though I suspect this has more to do with politics than stomach).
So how to get to the truth of the claim by Planned Parenthood head Cecile Richards that the videos were “heavily doctored”?
Certainly watching the videos, it’s hard to see how “doctoring” could have created out of whole cloth the video footage of lab technicians poking through clearly identifiable tiny body parts, nor the video of a conversation revealing that labs receiving parts such as arms and legs prefer the hands and feet to be removed so they look less like what they are. (“It’s almost as if they don’t want to know where it comes from. Where they’re like ‘We need limbs, but no hands or feet need to be attached. ...Make it so we don’t know what it is.’” Later she jokes that when shipping “intact cases,” i.e., entire bodies, you must warn the lab in advance, or else a lab tech will open the package and scream “Oh my god!”)
In support of its “doctored” claim, Planned Parenthood commissioned a report* from a firm otherwise known for politically-motivated smear campaigns, Fusion GPS, a “commercial research firm,” for which I could find no online information beyond a static home page with text.
By John R. Graham •
Monday October 5, 2015 11:02 AM PDT •
After a few months lagging behind other construction, health facilities construction starts finally showed some life in August (See Table I). Although on a twelve-month basis it is still running slower than the booming construction market overall, health construction grew by 1.9 percent from July. Other construction grew by only 0.7 percent.
When looking only at private construction, health facilities and other building starts are at about the same rate of growth for the twelve-month period. However, health facilities construction grew three times faster—2.1 percent versus 0.7 percent—than other building starts over one month.
Even public health construction, which had lagged massively in previous months, grew twice as fast as other public construction from July to June—1.0 percent versus 0.5 percent. This increase is dramatic because public health facilities construction had actually declined in previous months, which remains apparent in the twelve-month negative rate of growth.
If this reflects a pick-up in building Veterans Health Administration hospitals, that is a problem, because the VHA remains racked with scandal and problems. As for private health facilities: Hospitals are often the least efficient location of care. Building more of them foretells increasing health costs.
By Randall Holcombe •
Friday October 2, 2015 8:54 AM PDT •
Wishing for something to be true does not make it true. Declaring an area to be gun-free is wishful thinking. We know campuses are not gun-free zones from the news reports of campus shootings.
Declaring an area to be a gun-free zone discourages law-abiding citizens from carrying guns there, but it encourages people who intend to commit crimes with firearms because it gives them some assurance they will not meet with armed resistance from law-abiding citizens.
Even the most dim-witted among us can surely see that such a declaration invites criminals to engage in firearm-related crimes in an area where they know law-abiding citizens will not shoot back. This could be mass shootings, robberies, rape, or any crime in which an armed criminal wants more assurance of having the upper hand. Criminals, by definition, do not obey the law.
Declaring an area to be a gun-free zone makes it more likely that a gun crime will occur there.
The argument in favor of declaring an area a gun-free zone is that despite the news reports, mass shootings and other gun crimes are relatively rare, and there is a bigger risk of accidental harm from the actions of law abiding citizens than from criminals. The benefit from preventing accidents by law-abiding citizens outweighs the increased risk of gun crimes that gun-free zones encourage.
The only reasonable argument in favor of gun-free zones is that the threat from armed law-abiding citizens is greater than from armed criminals.
Tags: Civil Liberties, Civil Society, Constitution, Law, Liberty, Nanny State, Personal Liberty, Politics, Second Amendment, The State
By Abigail Hall •
Friday October 2, 2015 5:00 AM PDT •
Peter is a wealthy man and has $1,000 in his wallet. He plans to use it for a variety of things—some groceries, taking his wife out to dinner, and buying some new golf clubs he’s been admiring.
Enter Paul. Paul thinks that Peter’s money could be put to better use, like helping low-income families get healthcare and putting children into preschool, among other things. As a result of his beliefs, Paul threatens Peter. Peter can “voluntarily donate” to these programs, but if he refuses, or doesn’t offer “enough” of his income, Paul will take Peter’s money anyway and hold him in captivity.
Would you consider this to be fair? Probably not. Just because Paul wants Peter to spend his money on certain honorable causes doesn’t mean that Paul has the right to take Peter’s money. Paul is stealing from Peter. He is violating Peter’s rights by stealing his property.
Most people would take issue with the above scenario. However, many people advocate this kind of activity everyday. Instead of just Paul and Peter, however, it’s Peter, Paul, and the government. Paul thinks Peter should spend his money in some particular way and Peter disagrees. Since Paul is not powerful enough to compel Peter to fork over his money for certain causes, he lobbies the government and votes to raise Peter’s tax rate.
“Peter is rich,” Paul says. “He’s in the top 20 percent of income earners! He should do his part to help his fellow man.”
Tags: Income Tax, justice, Morality, Murray Rothbard, Taxation, Theft
By Carl Close •
Thursday October 1, 2015 10:10 AM PDT •
Like an economy, a scientific discipline can undergo periods of boom and bust. Is climate science experiencing an unsustainable boom? Certainly its growth has been astounding. Over the past 20 years, the number of scientific papers related to “anthropogenic climate change” has increased twelve-fold, according to a search using Google Scholar. But whether or not climate science will ultimately suffer a bust may depend on the causes of its surge. While several factors have contributed, the role of Big Players—namely, the Intergovernmental Panel on Climate Change and various government agencies that dole out huge sums as research grants—has been critical. It also raises a red flag.
One reason is that a change in the priorities, funding, or prestige of Big Players can turn a boom into a bust. But another reason may yield greater cause for concern, William N. Butos and Thomas J. McQuade explain in the Fall 2015 issue of The Independent Review. Although large organizations that set the direction for scientific inquiry or business activity can conceivably accelerate progress, their tremendous size and influence—and the way they interact with social phenomena such as opportunism and ideology—distort the feedback loops that otherwise help make science and markets self-correcting processes.
Climate science may or may not be experiencing a bubble that will burst in the foreseeable future. But this uncertainty is beside the point. The major lesson, Butos and McQuade write, “is that in science, as in the economy, Big Players of any sort distort normal systemic activity, render the emergent outcomes unstable and unreliable, and create an ideal breeding ground for incentives that motivate ideologically biased people to circumvent normal constraints in the name of pursing a ‘greater good.’”
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[This post first appeared in the September 29, 2015, issue of The Lighthouse. To subscribe to this weekly newsletter, enter your email address on the Independent Institute’s sign-up page.]
Tags: booms and busts, climate policy, climate science
By John R. Graham •
Thursday October 1, 2015 9:10 AM PDT •
August’s Producer Price Index was flat, month on month, and dropped 0.8 percent, year on year, continuing the trend we saw in July. Producer prices for health goods and services are rising faster than other producer prices (see Table I).
Outside health care, goods for both final and intermediate demand declined from July. Although it has taken a while, it looks like prices increases for pharmaceutical preparations and their inputs are moderating significantly. Prices for medical devices are still growing faster than prices for final demand goods overall, but not dramatically so.
Producer prices for health services actually grew a little slower than prices of other services. What is interesting is the difference in the rate of inflation for hospital inpatient versus outpatient services. Outpatient prices are declining, while inpatient prices are rising, resulting in quite a gap.
I’d like to believe the outpatient prices are under pressure from ambulatory clinics. As for inpatient prices – well, this data gibes well with the Quarterly Services Survey, which showed an increase in hospital profits.
Tags: healthcare spending, price level changes
By John R. Graham •
Wednesday September 30, 2015 9:06 AM PDT •
Last week’s third estimate of Gross Domestic Product for the second quarter confirms that growth in health spending might be moderating somewhat from its initial Obamacare-fueled rush. Unfortunately, it is not a clear break in the trend of health spending consuming an increasing share of our national income.
Current GDP grew $264.4 billion, or 1.5 percent, from Q1 (Table I). One-tenth of this growth, $25.2 billion, was health services. At this rate, health services grow in line with their share of GDP. However, if we look over the entire year since 2014, Q1, we note a trend that seems to be persisting, despite last quarter’s moderate growth (Table II). At $110.13, health services spending accounted for 17 percent of GDP growth over the four quarters. The rate of growth was 5.69 percent, in excess of current GDP growth.
The GDP estimates corroborate other estimates discussed in this blog that indicate health spending has resumed its upward trajectory.
Technical note: When I discuss health services in these quarterly GDP releases, I mean only health services. I do not include purchases of medical equipment, or facilities construction. While I include Medicare and Medicaid, I do not include Veterans Health Administration or other government benefits. So, these dollar figures undercount the amount of our economy consumed by the government-health complex.
(See: Measuring the Economy: A Primer on the GDP and the National Income and Product Accounts, Bureau of Economic Analysis, October 2014, pages 5-2 and 5-3; Micah B. Hartman, et al., “A Reconciliation of Health Care Expenditures in the National Health Expenditures Accounts and in Gross Domestic Product,” Research Spotlight, Survey of Current Business, September 2010, pages 42-52.)
Tags: Affordable Care Act, economic growth, healthcare spending
By Aaron Tao •
Tuesday September 29, 2015 12:15 PM PDT •
“We don’t want to ‘save the planet’ from human beings; we want to improve the planet for human beings.” —Alex Epstein
I never thought I would encounter a book titled The Moral Case for Fossil Fuels. After all, in this day and age, it is the politically correct and fashionable trend for activists, media, politicians, and even the Pope to call upon each and every one of us to break our “addiction” to oil.
For as long as I can remember, my science classes from grade school through college carried some variation of the environmental message that warns of doom to future generations and our planet unless we embrace “sustainability” and drastically change our patterns of production and consumption. If we do not curb our usage of resource X and reduce humanity’s “impact” on the Earth, apocalyptic scenarios from overpopulation to reaching “peak oil” were bound to become reality.
But it’s now 2015, and the “population bomb” did not go off. And by every indication, we are nowhere close to running out of petroleum anytime soon (largely thanks to the shale revolution). Perhaps most astoundingly, even as human populations have grown dramatically and increased their use of fossil fuels, the world has become a much better place. This is the message that Alex Epstein emphasizes in his well-written, persuasively argued book.
Tags: Book Review, Books, Climate Change, Development Economics, Energy, Environment, environmentalism, fossil fuels, Free Market, globalization, Innovation, Prosperity, Technology
By John R. Graham •
Tuesday September 29, 2015 6:00 AM PDT •
Mercer, a leading firm of consulting actuaries, tells us that the cost of employee benefits in 2016 will grow slowly – a “winning streak”:
Early responses from a major Mercer survey still in the field show employers predicting that health benefit cost per employee will rise by 4.2% on average in 2016 (see Fig. 1) after they make planned changes such as raising deductibles or switching carriers.
One way employers have learned to keep cost growth low by increasing deductibles. We call this “consumer-driven health care” because when employees control a larger share of health dollars directly they will consume medical care more prudently. The next step is private exchanges, which give employees a wider choice of plans. These exchanges have reduced benefit costs.
However, we still have not cracked the problem that prices are formed by health plans and providers: Patients can increasingly react to prices, but they cannot participate in forming prices, like they do in normal markets. This might explain why there is no real reduction in growth of the cost of employee benefits, despite Mercer’s cheering a “winning streak.”
Indeed, even without the increase in deductibles – which have risen seven times faster than wages over the last ten years – the real growth in cost of health benefits is a little higher than it was a decade ago. This is clear in Mercer’s Figure 1. Current price inflation is zero, so the nominal cost growth of 4.2 percent is all real growth. In the mid-2000s, nominal cost growth was a 6.1 percent annually, but inflation was around 3 percent, indicating real growth of about 3 percent.
Overall, if the cost curve is bending at all, it is bending in the wrong direction.