Significant Drop in Private Health Facilities Construction in September

After an uptick in August, health construction starts declined significantly in September: A 0.1 percent decline versus a 0.6 percent increase for other construction starts (see Table I). On a twelve-month basis health facilities construction is positive, but running slower than the booming non-health construction market: 9 percent versus 14.3 percent.

The short-term decline occurred entirely among private health facilities, for which starts declined 0.3 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. Maybe it was time for a breather in September.

The situation is different for public health facilities, for which construction starts increased 0.5 percent in September. Nevertheless, other public construction increased fraction more. This is the second month public health facilities construction has grown. It had declined in previous months, which remains apparent in the twelve-month negative rate of growth.


Right Problem; Wrong Solution. Obama’s Push for Reduced Prison Sentences

War on DrugsPresident Obama is pushing for reductions in prison sentences for non-violent drug offenders. As this article notes, the federal prison population is more than eight times higher today than in 1980, before the Reagan administration’s War on Drugs. The United States has a larger share of its population behind bars than any other nation in the world, making it difficult to call it “the land of the free.”

The solution to our rising prison population isn’t going easier on lawbreakers, but changing the laws to eliminate victimless crimes. The War on Drugs is one of the most damaging social policies the government has initiated.

Yes, it swells the prison population, but it has many other pernicious effects. It criminalizes drug market participants and pushes them to look for ways to protect their property and their markets, because not only will police not protect them, the police are trying to hunt them down. This leads to the formation of gangs, and gun violence.


Health Services Accounts for One-Fifth of Weak Q3 GDP Growth

Money-Stethoscope_0_200Wednesday’s advance estimate of Gross Domestic Product for the third quarter indicates that growth in health spending is maintaining a disproportionate share of weak GDP growth. Commenters noted that the weak estimate was largely due to shrinking inventories. This explains why personal consumption expenditure (PCE) growth ($135.7 billion) was actually higher than GDP growth ($121.1 billion), quarter on quarter (Table I, below).

Nevertheless, spending on health services grew faster (1.22 percent) than spending on all services (1.13 percent) or PCE (1.11 percent.) The growth in health services spending ($25.1 billion) accounted for one-fifth of all GDP growth.


No More Common Core in Arizona

CommonCoreFArizona Superintendent of Public Instruction Diane Douglas made national headlines last year for standing up for parental rights in education and opposing Washington, DC-driven Common Core standards.

This morning, Superintendent Douglas motioned the state education board, the entity responsible for adopting Common Core in Arizona back in 2010, to vote on the standards, which were defeated. As KTAR News reports:

The Arizona State Board of Education in a 6-2 decision voted to repeal the Common Core State Standards Monday morning.

Superintendent of Public Instruction Diane Douglas brought the motion to the board to reverse the 2010 adoption of the standards.

In a letter addressed to board President Greg Miller, Douglas wrote, “It is hereby moved that the actions of the State Board of Education (SBE) on June 28, 2010 to adopt Common Core, now referred to as the Arizona College and Career Ready Standards, as the standards for language arts and mathematics be reversed and that all links to Common Core be severed.”

Elsewhere, ABC 15 News (Phoenix) reported that the 45-minute debate became heated:

“The board is just saying, ‘We can take care of Arizona’s children and this is a very proud day for Arizonans,” said Douglas.

“This will send a clear message to the citizens of Arizona and the nation that Arizonans are smart enough, engaged enough, and collaborative enough to control the education of our own children.”


High-Deductible Health Insurance Crushes Health Spending

A new working paper published by the National Bureau of Economic Research (NBER) shows how much high-deductible health plans reduce spending:

We study consumer responsiveness to medical care prices, leveraging a natural experiment that occurred at a large self-insured firm which forced all of its employees to switch from an insurance plan that provided free health care to a non-linear, high deductible plan. The switch caused a spending reduction between 11.79%-13.80% of total firm-wide health spending ($100 million lower spending per year). We decompose this spending reduction into the components of (i) consumer price shopping (ii) quantity reductions (iii) quantity substitutions, finding that spending reductions are entirely due to outright reductions in quantity. We find no evidence of consumers learning to price shop after two years in high-deductible coverage. Consumers reduce quantities across the spectrum of health care services, including potentially valuable care (e.g. preventive services) and potentially wasteful care (e.g. imaging services).

(Z.C. Brot-Golberg, et al., “What Does a Deductible Do? The Impact of Cost-Sharing on Health Care Prices, Quantities, and Spending Dynamics,” NBER WP No. 21632, October 2015.)

That is as far as the working paper goes before delving into economese, which I’ll refrain from quoting. Sarah Kliff of summarized the details:

Average per-patient spending fell from $5,222.60 in 2012 to $4,446.08 in 2013. That’s about a 15 percent decline in a single year—and it held true across all types of health services. Between 2012 and 2014, there was a 25 percent drop in emergency room spending, an 18 percent decline in physician office visits, and a 6 percent decrease in mental health services.


Israeli Restaurant Owner Uses Market Incentives to Advance Peace


The owner of the Hummus Bar in Israel offers a 50 percent discount to Jewish and Arab customers who share a table together. A small step for peace perhaps, but an illustration of how markets encourage cooperation and peaceful interaction. Here is a two-minute story on the business owner and his idea, airing today on National Public Radio.

This story reminded me of America’s history with Jim Crow laws. One of the first businesses to be segregated by government was street cars. But it was street car owners who most vocally opposed the segregation because they didn’t want to harm, offend, and discourage their African American customers. Markets encourage cooperation and peaceful exchange, while governments often give force to the ugliest sentiments in society.

The Cascading Collapse of Obamacare’s COOPs

Chart_Steth_200One piece of Obamacare is already collapsing: The COOPs (cooperative insurers) that the federal government propped up with loans to compete in exchanges. Many are now closing down under pressure from state insurance departments, as they are threatened with insolvency because they charge premiums in the Obamacare exchanges that do not cover costs.

The administration is desperate to stave off the day of reckoning, going so far as to insist the federal loans be categorized as “assets” (rather than liabilities) on the COOPs’ balance sheets. Well, state insurance departments are having none of it. The story of Colorado’s Obamacare COOP illustrates why these new insurers were willing to risk insolvency in the exchanges, despite insisting they were doing business prudentially.

Last Friday, Colorado’s Division of Insurance ordered the state’s Obamacare COOP not to offer policies in the state’s Obamacare exchange next year. To show how quickly this COOP has fallen, I’ll share three stories:


The Silliness Surrounding Mascot Nicknames Continues

FootballFan_200x200“California Bans Use of ‘Redskins’ as School Mascot or Team Name,” according to a recent headline in the Sacramento Bee. Governor Jerry Brown signed a bill implementing that prohibition statewide, apparently “without comment,” on Sunday, October 11.

According to the same newspaper story, the new law affects just four California high schools, located in Calaveras, Merced and Madera counties. The law allows those schools to “keep uniforms bearing the [supposedly offensive] name if they [were] purchased before 2017”, provided that “the school selects a new team name, mascot or nickname.”

Doesn’t California’s legislature and its governor have more important things to worry about, such as addressing chronically large public budget deficits and municipal bankruptcies caused by excessive spending and colossal unfunded liabilities in governmental employees’ excessively generous pension and healthcare programs?


Whistleblower Reveals Drones Are Deadly and Poorly Used

26245531_SFor those interested in when and how the U.S. government uses drones abroad, getting data is difficult, if not impossible. I speak from personal experience. In writing on the use of drones internationally and domestically, I’ve found that data is sparse. Putting together anything that resembles a “comprehensive data set” means hundreds of hours of work, putting together pieces of information from a variety of sources including, declassified documents, other academic research, and a whole host of media outlets. Even then, you’re likely to end up frustrated.

Certainly, I’m not the only one to have tried to gather this information. The drone program conducted abroad by the CIA and DoD is shrouded in secrecy, leading a variety of organizations to call for more transparency.

Attempts to gather information from official government sources is next to impossible. Consider the efforts of the ACLU. Looking to obtain information on the U.S.’ “targeted killing” program abroad, the ACLU filed several Freedom of Information Act (FOIA) requests to compel the release of information. Their requests were met with the iconic phrase (yes, this is actually sent out to FOIA requests regularly), “we cannot confirm or deny” the existence of data, records, or other material.


Children Are Not Creatures of the State: New Hampshire Edition

Kids In Class_200Politicians across the country like to claim that they’re all in favor of local control of education—until parents and their locally elected officials actually start trying to exercise it.

The small New Hampshire town of Croydon is a case in point.

Like many small towns in New Hampshire, Croydon does not have public schools to serve all grade levels so it contracts with education providers in neighboring towns. At issue now is the Croydon School Board’s decision to allow five elementary students to attend the neighboring Newport Montessori School. As’s Steve Mac Donald explains:

State law allows towns to pursue these agreements, sending taxpayer education dollars to any accredited school, public, charter, or private, even in neighboring states, with the exception of religious schools. The local board, at the behest of voters, negotiates contracts and approves taxpayer-funded tuition payments to those schools. The money follows the student.

This plan has been in place for high school students for more than 25 years. Back in 2007 the Croydon school board began investigating ways to expand similar options for elementary school students. When it unveiled its choice plan for this school year, the state board cried foul and has threatened to withhold some $39,000 in state funding.