Ronald Coase and the Battle of Breastfeeding

momPeople pay to make them bigger and smaller and there is an entire store in the mall dedicated to them. Every year, thousands of people walk to cure them of cancer. If there are 7 billion people in the world, this means about 3.5 billion people have them. What am I talking about?

Today, I’m talking about boobs.

For something so common, it seems like this part of the body generates a lot of controversy. If you don’t believe me, ask people to talk about Super Bowl halftime shows. I’d bet within five minutes someone mentions “Nipplegate,” referring to 2004 Super Bowl halftime show in which Janet Jackson (with an assist from recording artist Justin Timberlake) had her nipple exposed for less than a second on live TV. Pandemonium ensued.

What came to be known as the world’s most famous “wardrobe malfunction” isn’t the only time an exposed breast has caused problems. It seems as though at least once a week I come across a story online or on television regarding breastfeeding in public. Every time the story is the same, a woman is asked to cover up while feeding an infant in public, takes to the internet to share her grievance, and comment thread chaos ensues (see here, here, and here for examples).


Is China Really Crashing?

ChinaWe seem to be panicking about China’s economy. Let’s pause and look at some of the facts.

First, consider the short-term concerns that sent shock waves across the world. Unlike the United States, where very developed capital markets are connected to the economy at large, in China the linkage is less strong. Even so, what has really happened to the stock market over there? The Shanghai Composite Index has dropped from 5,166 in June of this year to 3,005 as I write this—about 40 percent. But the index was at 2,059 in July of 2014, when the crazy bull market started, which means it is still more than 50 percent above where it was a bit more than a year ago! Many retail investors who knew little about investing were encouraged to put their money in stocks and use considerable leverage in the process, which caused the stock market to overheat. Things are gradually steadying.

Another short-term concern has been the devaluation of the Chinese currency. China allowed the renminbi to drop from 6.2 to 6.4 against the U.S. dollar. But today it is at 6.36, altogether a very small devaluation if we compare this with the average exchange rate in the first few months of 2015. On the other hand, the devaluation of the renminbi against other currencies such as the euro entails a simple correction: because of the strengthening of the dollar, the renminbi, which to a large extent had been shadowing the greenback, had risen against other currencies—so China let the value drop. But it is still stronger against the euro than it was a year ago.


British National Health Service Stops Paying for Lifesaving Drugs

senior-health-care_squareBritain’s government-monopoly (single-payer) health plan, the National Health Service (NHS), has announced plans to stop paying for the most innovative, lifesaving drugs:

More than 5,000 cancer patients will be denied life-extending drugs under plans which charities say are a “dreadful” step backwards for the NHS.

Health officials have just announced sweeping restrictions on treatment, which will mean patients with breast, bowel, skin and pancreatic cancer will no longer be able to receive drugs funded by the NHS.

In total, 17 cancer drugs for 25 different indications will no longer be paid for in future.

Charities said the direction the health service was heading in could set progress back by centuries.

The Cancer Drugs Fund was launched in 2011, following a manifesto pledge by David Cameron, who said patients should no longer be denied drugs on cost grounds.

Drugs which will no longer be funded include Kadcyla for advanced breast cancer, Avastin for many bowel and breast cancer patients, Revlimid and Imnovid for multiple myeloma, and Abraxane, the first treatment for pancreatic cancer in 17 years.

(Laura Donnelly, “Thousands of Cancer Patients to be Denied Treatment,” The Telegraph, September 4, 2015)


U.S. Has Less Economic Freedom than Chile, Jordan, or Taiwan

Today the Fraser Institute in Vancouver, Canada, released the 2015 Economic Freedom of the World Report (pdf) and it’s bad news for the United States, where economic freedom is falling. The U.S. ranks only 16th in economic freedom trailing Chile, Jordan, and Taiwan.

The EFW Report measures the level of economic freedom in 157 countries by gathering country-specific data on 42 distinct variables in five broad categories: (1) size of government, i.e., taxes and spending; (2) legal structure and security of property rights; (3) access to sound money; (4) freedom to trade internationally; and (5) regulation of credit, labor, and business.

Researchers James Gwartney, Robert Lawson, and Joshua Hall crunched the numbers (here is the master data file) and found that Hong Kong and Singapore once again occupy the top two positions. The other nations in the top 10 are New Zealand, Switzerland, United Arab Emirates, Mauritius, Jordan, Ireland, Canada, and the United Kingdom. Venezuela is in last place.

A 16th-place ranking might not sound bad, but the U.S. once ranked 2nd and has trended downward consistently since 2000. The EFW Report concludes: “Nowhere has the reversal of the rising [global] trend in economic freedom been more evident than in the United States.”

Today Chile, Georgia, Jordan, Qatar, and Taiwan have more economic freedom than the United States. The U.S. is now only slightly ahead of Armenia and Romania.


Hospital Profits Rise 9 Percent

health_costsThis week’s Quarterly Services Survey (QSS), published by the Census Bureau, reported some interesting data:

The estimate of U.S. health care and social assistance revenue for the second quarter of 2015, not adjusted for seasonal variation, or price changes, was $591.3 billion, an increase of 2.2 percent (± 0.8%) from the first quarter of 2015 and up 6.4 percent (± 1.3%) from the second quarter of 2014. The fourth quarter of 2014 to first quarter of 2015 percent change was revised from -0.4 percent (± 1.1%) to -0.5 percent (± 1.1%).

The QSS adds important information to the more widely reported quarterly Gross Domestic Product (GDP) and Employment Situation Summary (ESS) releases that I frequently discuss on the blog.

Examining the detailed tables, revenues of health facilities, net of social services, increased to $550.0 billion in Q2 versus $516.6 billion in 2014 Q2, an increase of 6.07 percent. What is important about the QSS is that it reports both revenue and expenses for the facilities. Expenses grew to $502.2 billion from $472.9 billion, or 5.84 percent. That is, gross margins in health services increased.

The increase in profitability was especially noticeable in hospitals. Hospitals’ net revenue (revenue less expenses) per inpatient day increased to $351 from $321, an increase of 8.33 percent. Net revenue per discharge increased to $2,129 from $1,937, an increase of 9.03 percent.

Truly, hospitals are Obamacare’s big winners.

* * *

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.

Health Services Make Up One-Fourth of August’s New Jobs

Last Friday’s Employment Situation Summary, which showed slow job growth overall, contained a big jump for health services: 23 percent of the jobs created in August were in health services (see Table I).

Of the 41,000 health jobs, slightly more than half were in ambulatory settings. 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.

This is a positive development, because hospitals are very expensive facilities and possess very concentrated lobbying power that they deploy to keep their payments higher than they would be otherwise. (One of the hospital industry’s most successful talking points is that they are often the largest employer in a community, a fact that attracts the support of politicians for obvious reasons, but as the health services workforce shifts to ambulatory settings, this talking point will lose its power.)


Commonwealth Fund’s Red Herring on Risk Selection in Obamacare

Money-Spiral-Image-for-PostOne of this blog’s consistent themes is that Obamacare encourages insurers to seek to enroll healthy people in exchanges and to shun sick people. A new study from the Commonwealth Fund insists this is not the case. It concludes that “insurers aren’t seeking lower-risk customers outside the ACA exchanges as some feared” and that “the ACA’s insurance reforms are working in the individual market.”

I will share the study’s conclusion, then explain the red-herring hypothesis it is meant to test:

Because the ACA’s premium subsidies are available only through the federal and state exchanges, it is no surprise that the majority of coverage in the individual market is sold there.

We see little evidence of insurers actively pursuing risk segmentation in their offerings on and off the exchanges. One way risk segmentation might occur is for insurers to offer leaner plans off the exchanges because these appeal more to healthier people.

Notably, the most generous (and most expensive) plans—i.e., the gold- and platinum-level plans—are much more prevalent off-exchange than on, constituting one-third of projected enrollment off compared with less than one-fifth on.


An Apology to an Immigrant

2664981_SIn college I took a course in Mexican Folk Healing (don’t ask how this happened). Aside from learning that garlic will do in a pinch as an antiseptic, I can’t say I’ve ever really used a lot of the course material. I’ve yet to use a spider web as a band-aid, break a chicken egg in a cup under my bed to diagnose my illness, or use mass quantities of cinnamon as a contraceptive.

That said, I took something valuable from that class. It had nothing to do with the subject at hand, and I didn’t appreciate the lesson until nearly two years later.

As part of the course, the professor brought in a guest speaker. I cannot remember exactly where he was from, but he was an immigrant. He was warm, spoke with a thick accent, and beamed with pride about the restaurant he had opened in the city. He spoke to us about his experience with folk medicine and traditions, and how his business not only drew in other immigrants, but also introduced others in the community to different kinds of food and customs.

Several weeks later our professor came to class and announced with great sadness that the speaker from a few weeks before had been deported for being in the country illegally.


What You Don’t Know about Immigrants and Medicaid Usage

welfare_stateThe analytical firepower of the anti-immigrant right comes from the Center for Immigration Studies. Its latest report concludes that 42 percent of immigrant households, both legal and illegal, used Medicaid in 2012. Only 23 percent of households headed by a native-born American used Medicaid.

The report also discusses other welfare, including housing, food stamps, et cetera. It is a very thorough study with a wealth of detail. For example, it claims that immigrant households from Latin America are more likely to claim welfare than the native-born, while immigrant households from Asia or Europe are less likely. However, when stratified by education or income, it appears that immigrants at the same level as the native-born are more dependent on welfare.

Medicaid is a serious burden on the nation’s prosperity, and if immigrants are a big factor, that point should certainly be a policy issue. Nevertheless, the Center for Immigration Studies’ report has some challenges of its own.

Most importantly, the proportion of immigrants versus native-born “using” Medicaid or other welfare is less interesting than the dollar amount claimed by either group. For example, the so-called “Hispanic health paradox” is a poorly understood observation that people of Hispanic ethnicity are healthier than other groups at the same socio-economic level. So, the average immigrant dependent on Medicaid may cost taxpayers less than the average native-born.

Second, a household headed by an immigrant is not necessarily composed entirely of immigrants. The spouse or children may be native-born. It may not be possible to overcome this limitation of the data, but we should recognize it nevertheless.

Third, the immigrant dependent on Medicaid (or Obamacare) is caught in the same poverty trap as the native-born. Means testing for welfare and Obamacare results in high marginal income tax rates for anyone who strives to increase his household income. So, welfare as currently structured holds back both types of resident.

Finally, Medicaid and other welfare programs were not created by immigrants. They were created by politicians chosen by mostly native-born citizens. Stopping the growth of this welfare dependency is always available to those voters.

Free Kim Davis... And Fire Her!

KimDavis_MugshotKim Davis, a county clerk in Kentucky, has made the news by refusing to issue marriage licenses to same-sex couples. She’s now in jail for contempt of court, because she has refused to uphold the recent court decision giving same-sex couples the right to marry.

I have some sympathy for Davis, because when she took the job, issuing marriage licenses to same-sex couples wasn’t a part of it. Now that the court has ruled it is, she objects to this extension of her job description on religious grounds. She should not be forced to violate her religious convictions.

But, she also should not remain in a government job in which she is unwilling to do what the job legally requires. So, let her follow her religious convictions, free her from jail, and fire her from a job that, on religious grounds, she doesn’t want to do.

My guess is this story would have generated much less controversy if the person involved was Muslim and didn’t want to carry out some activity that would violate sharia law. But, I don’t see a difference here. A person who refuses to do the job should be fired. Government employees should carry out the responsibilities assigned to them by government law.

Note the difference between this case and the cases where private businesses make choices based on their religious convictions, whether it is to not decorate cakes in ways that offend them, or not offer certain health care services to their employees on religious grounds. Private businesses should be allowed to make their own policies, and the situation parallel to the Davis case would be that people who disagree (customers or employees) should not be forced to interact with those businesses.

I’m not defending the government’s laws here. I’m saying that employees who don’t want to do what is required by their employers should be fired from their jobs. If the job description changes, as it did in the Davis case, the employee is no longer a good fit for that job.