Are Health Plans That Cover Yoga the ‘Next Frontier’?

31397649_SWhen a leading benefits consultant writes an article in the Harvard Business Review recommending that health plans cover yoga, it should be glaringly apparent that we have perverse incentives in U.S. health benefits:

Cigna insurance CEO David Cordani says the Centers for Medicaid and Medicare Services’ recent payment changes that emphasize quality over quantity in healthcare will shift the focus on “sick care to more well care.” But a widespread embrace of diet, fitness and other wellness programs is still a way off….

Insurers should cover “new wellness- and prevention-oriented treatments such as yoga and meditation, Sukanya Soderland,” a partner in consulting firm Oliver Wyman’s health practice, wrote recently in the Harvard Business Review. (Jayne O’Donnell & Laura Ungar USA Today)


Time to KO the Idea of Boxing Bans

Upon watching the first session of women’s Olympic boxing in London in 2012, leading neuroscientist John Hardy stated that,

We shouldn’t get our fun out of watching people inflict brain damage on each other. To me as a neurologist it’s almost surreal.

Indeed, boxing has a reputation for producing some real medical nightmares. Having an ear bitten off by Mike Tyson might be the least of a boxer’s problems. The force of a professional boxer’s fist is equivalent to that of a 13 pound bowling ball traveling some 20 miles per hour. While blows to the body aren’t likely to feel particularly good, it’s shots to the head that doctors find most concerning. It doesn’t take a rocket scientist to realize that repeated blows to the head aren’t a good thing.

Indeed, taking punches of this caliber to the face and head can have some truly nasty impacts. Studies have found between 15 and 40 percent of ex-boxers have some symptom(s) of traumatic brain injury (TBI). Speech difficulty, neck and muscle stiffness, memory loss, and other psychological problems have been reported and characterize what’s known as “punch drunk syndrome” or dementia pugilistica. Boxing has also been linked to other brain-related illnesses. Muhammed Ali, arguably the word’s most famous boxer has long suffered from Parkinson’s disease. His doctors have attributed this to his boxing career.

Boxing is not the only sport in which TBI is likely. Mixed Martial Arts (MMA), football, cheerleading, and soccer have all come under scrutiny due to rate of head injuries among professional and amateur players.

MMA head injuries

Source: American Journal of Sports Medicine

This past July, California governor Jerry Brown signed into law a bill prohibiting middle and high school football teams from holding full-contact practices more than twice a week, limiting the duration of said practices, and prohibiting full-contact practices outright during the off season.

While such stories have received significant attention. Nothing quite compares to what’s been said about boxing. People have likened the sport to human cock fighting. It is argued that the sport is comparatively more dangerous than others and that boxing exploits individuals who often hail from poor or otherwise disadvantaged backgrounds. A variety of changes have been proposed, from requiring protective gear, to banning blows to the head, to outlawing the sport outright.

Simply put, banning boxing is paternalism writ large. These policies, like the ones placing bans on football practices is a breeding ground for “big brother” to stick his finger in someone else’s business. Moreover, such bans would likely make the sport more dangerous, not less.

The fact is, no one is forcing a boxer to get into the ring. Saying that a boxer “doesn’t know the risk” or “can’t understand” is insulting their intelligence. In reality, boxers know full well what they are doing and have determined that the risk is worth the possible rewards. In some cases, the payoffs are huge. For example, professional boxer Floyd Mayweather has cashed checks of at least $25 million for each of his fights going back to 2007. Since 1996, he’s earned some $400 million. According to Forbes, Mayweather brought in some $105 million for 72 minutes of ring time in 2014. If you break that down, Mayweather earns him some $1,458,333 for every minute he spends in the ring!

Many would say that not all boxers earn such large returns. While certainly true, consider that the sport offers opportunities for many to get out of precarious situations. Manny Pacquiao, widely considered one of the world’s best boxers, for example, was born in utter poverty in the Philippines. Boxing provided him, and others, a way out of poor financial circumstances. Given the opportunity of participating in a dangerous sport and possibly improving their quality of life, they’ve decided it’s worth it. Banning boxing would shut the doors on such options.

What those who call for bans on boxing also seem to forget is that those in charge of boxing work to make the sport as safe as possible. Amateur boxers frequently don headgear and other padding in addition to their gloves. Watch any match on TV and you’ll notice medical staff must be present at every match. The ringside doctor or the referee can (and do) end a bought if they feel a boxer’s health is in danger. Boxers are also put in different weight classes (lightweight, middleweight, heavyweight, etc.). This not only makes fights more interesting with more equally matched fighters, but also significantly decreases the rate of injury.

Banning boxing would have further consequences. Just as banning drugs or prostitution doesn’t eliminate those activities, a ban on boxing or severe regulations wouldn’t end the sport. Instead, such actions are likely to drive the sport into an underground black market. Instead of occurring in a ring in Las Vegas, we’d see boxing in underground clubs. Unlike current fights with medical personnel, referees, and boxing gloves, we’d see bouts with (comparatively more dangerous) bare fists, fighters knocked unconscious, and higher rates of injury. While we can likely all appreciate the desire to increase the safety of athletes, whether boxing, football, or another sport, heavy regulations or banning the events are likely to fail in achieving the stated goals and result in perverse outcomes.

The “Miracle” of Kirznerian Entrepreneurship


I learned a lot about miracles recently thanks to a penetrating sermon by pastor Mark McNees of Element3 Church, a “progressive” non-denominational church in Tallahassee. And it prompted a lot of thinking about markets and entrepreneurship, particularly entrepreneurship as conceived by Austrian economists, most notably Israel Kirzner. (Kirzner is required reading in my social entrepreneurship seminar at Florida State University.) It also happens to be the conceptual foundation for my novel St. Nic, Inc. which uses a Hayekian and Kirznerian framework to show in the context of a re-imagined Santa Claus allegory on how markets and entrepreneurs benefit society and what happens when bureaucrats don’t understand them.

The point of this post is not to evangelize Christianity. But McNees’ sermon provided a layered approach to understanding the “miracle” of modern entrepreneurship using a biblical context and then demonstrating a real-world application (although I’m not sure he would characterize it in this way). So it would be both disingenuous and inaccurate to relate the insight I gleaned, which is quite secular, without it. McNees was discussing the miracle of Jesus feeding 4,000 people (Matt 15:32-39). For days, Jesus healed the lame, the crippled, the blind, the mute and others. Then he realized that all these thousands didn’t have enough to eat. His disciples asked Jesus where they would get enough food to feed them. Jesus replied: “How much bread do you have?” The disciples said seven loaves and some small fish. Hardly enough to feed them let alone thousands, right? Well Jesus takes the bread and begins breaking it up until the thousands are fed and they have more than enough. Pretty fantastical from a conventional western rationalist perspective. In fact, many people use these kinds of biblical stories to demonstrate the implausibility and irrationality of religion and Christianity specifically.

But here’s the rub: Entrepreneurs perform these “miracles” every day in the real world. This is what entrepreneurs and innovators do. They identify–“discover”–opportunities and bring resources to bear on solving practical problems in ways no one else thinks could be done. The disciples didn’t believe that seven loaves of bread and a few fish could feed thousands. That’s what people tell entrepreneurs all the the time: they don’t have the knowledge, the resources, the money, the expertise, the access to markets for their vision–whether a product or service–to become reality. Entrepreneurs take a loaf of bread and figure out a way to make it feed thousands and make the world a better place.

McNees didn’t use this economic framework explicitly, but his illustration of a modern-day miracle was an allegory for this kind of entrepreneurship. Two years ago, McNees and members of Element3 church met a boy in Haiti, Jovens, without functioning legs in the slum of the poorest city in the poorest country in the Western Hemisphere. The boy’s plight touched him deeply, and he vowed (he was “called”) to do something about this child’s situation (in addition to all the other work Element3 was doing in Haiti, Central America, and Tallahassee). He didn’t know how he would do it–after all, he’s just a pastor, not a doctor, not a surgeon, not a prosthetic designer or manufacturer, and not a wealthy philanthropist–but he determined to make it happen. He had a vision for Jovens. For two years, he worked with members of the church, tapped into his network in Tallahassee and the nation, and identified new resources to make it happen. Last week, Jovens, the boy without legs, was walking for the first time in his life using a US manufactured, customized prosthetic leg. He was playing basketball, and even danced. He was smiling for the first time anyone could remember. (Here is a short video of Jovens’ miracle.)

Is Jovens’ leg a miracle? Yes, by any reasonable definition. Jovens’ life was transformed in a way he, his family, or his community had never had envisioned, let alone contemplated. Yet, now, the crippled boy can walk. His community was transformed by the commitment of a man and a church in Tallahassee. For the church, hundreds of individuals were inspired by the power of one person to change the world for the better. And they had no idea how it would happen when they took on their mission. So, yes, in all the practical meanings of the word, this was a miracle. It was also entrepreneurship–seeing the possibility of what could be done with a grander vision and faith in the individual, as opposed to limiting oneself to what exists and what can be seen today.

But this story is about more than one boy or one pastor or even one Church. This is the kind of vision, commitment and faith that drives individuals of all types to make the world a better place. This is the core of entrepreneurship and innovation as conceived by Israel Kirzner and made possible by civil society and Hayekian spontaneous order. These are the concepts that inspired my novel St. Nic, Inc., which uses the same framework to show, in a practical way, how a billion dollar global enterprise could in fact provide toys to millions of children through the “miracle” of the market, spontaneous order, and Kirznerian entrepreneurship.

This kind of entrepreneurship is also what inspires many Millennials, and I see this in my seminar on social entrepreneurship. They want to make miracles happen. We use the framework of market-based entrepreneurship to show students how to embrace their visions for improving the world and commit themselves to creating their own miracles. My students can take their time and ambition and create business plans with the potential to lift up scores, dozens, and even hundreds of people without resources or networks that no one knew existed or be created. This is the fundamental nature of spontaneous order, the essence of the discovery process identified by Kirzner in his classic book Competition and Entrepreneurship.

So, yes, miracles exist, and entrepreneurs are the ones who make them happen.

How Big Is Government in the United States?

crisis_25_180x270How big is government in the United States? The answer depends on the concept used to define its size. Although many such concepts are available, and several are used from time to time, by far the most common measure, especially in studies by economists, is total government spending (G) as a percentage of the gross domestic product (GDP).

Using official data available at the online repository maintained by the Federal Reserve Bank of St. Louis and data available online for the Bureau of Economic Analysis’s National Income and Product Accounts, I have calculated that for the five-year period 2010-14, this measure of the size of government—including all levels of government, not simply the federal government, and all types of spending, not simply purchases of currently produced goods and services—was 35.8 percent.

On reflection, however, one might well wonder why G has been “normalized” so often by measuring it relative to GDP. One reason this practice is questionable is that GDP includes a large part—equal in recent years to about 10 percent of the total—known as the capital consumption allowance. This is an estimate of the amount of spending that was required simply to maintain the value of the nation’s capital stock as it depreciated because of wear and tear and obsolescence. Given that GDP is defined to include only “final” goods and services, it is questionable that expenditures made solely to maintain the capital stock should be included at all, rather than excluded as “intermediate goods,” as a large volume of the economy’s total output is already excluded (e.g., steel sold the manufacturers of machinery, wheat sold to flour mills).


Republicans Split over Patent Reform

The Washington Times has an interesting article on the division among Republicans on patent reform. According to the article:

Two dozen prominent conservative political groups, led by the influential American Conservative Union, the Club for Growth and the Eagle Forum, sent a letter Wednesday to House Speaker John A. Boehner, Senate Majority Leader Mitch McConnell and the Democratic leadership seeking to block floor votes on the so-called Innovation Act.

The bill is being shepherded through Congress by Republican Reps. Robert W. Goodlatte of Virginia, chairman of the House Judiciary Committee, and Darrell Issa of California to reform patent laws and diminish the rise of “patent troll” lawsuits in which parties seek to win money for infringements of obscure patents.

Republicans are split on the evil of patent trolls. As supporters of private property, many have trouble taking shots at the trolls when trolls acquire patents by purchase, not fraud, and simply use the court system to “protect” patent rights. Unfortunately, this is an oversimplification.


Prostate Cancer Treatment Costs Can Differ by 400 Percent. Here’s Why

priceless_180x270The body of evidence that prices for medical and hospital treatment in the United States are all over the map is growing:

UCLA researchers have for the first time described cost across an entire care process for a common condition called benign prostate hyperplasia (BPH) using time-driven activity-based costing. They found a 400 percent discrepancy between the least and most expensive ways to treat the condition.

The finding takes on even further importance as there isn’t any proven difference in outcomes between the lower and higher cost treatments, said study first author Dr. Alan Kaplan, a resident physician in the UCLA Department of Urology.

“The rising cost of health care is unsustainable, and a big part of the problem is that health systems, health care providers and policy makers have a poor understanding of how much health care really costs,” Kaplan said. “Until this is well understood, taxpayers, insurers and patients alike will continue to bear the burden of soaring health care costs.” (UCLA Health)


The Costs and Benefits of Ethanol

14698864_SHere’s a back-of-the-envelope calculation on how much the mandate to require ethanol in motor fuel costs consumers, and benefits farmers.

This article notes that in 2000 about 5% of the corn crop went to the production of ethanol, and by 2013, 40% of the corn crop was devoted to ethanol production. The increased demand for corn resulted in a doubling of the per bushel price of corn.

The U.S. Department of Agriculture says in 2011 the total value of the corn crop was $63.9 billion, and that there were 400,000 corn farms in the United States. Because the price of corn has doubled due to the mandate, half of that revenue, or $31.95 billion, is a transfer from consumers to corn farmers in the form of higher prices.

Dividing that $31.95 billion cost among 319 million Americans, the cost to each American from the ethanol mandate is just about $100 a year. That includes not only the price of ethanol, but the higher price of corn in all its other uses.

That $31.95 billion is shared among the 400,000 corn farmers, so the average benefit to each farmer is $79,875.

This is a good example of how legislation providing concentrated benefits to an interest group and imposing disbursed costs on everybody can maintain political support. There is much less incentive to for individuals to mount political opposition against a program that costs them $100 a year than there is for individuals to support a program that nets them $79,875 a year.

Comply or Die – Trends in Modern Policing

Police BrutalityEvery time a police officer is killed in the line of duty, it makes local, if not national headlines. Though always shocking, the number of law enforcement fatalities has remained fairly steady over the years. According to the National Law Enforcement Officers Memorial Fund, 165 police officers were killed in the line of duty in 1917. Fatalities hit relative high points during alcohol prohibition in the 1920s, and in 1974 when 280 officers lost their lives. By 2000, this number had fallen to 162.

It is important to note this number includes all deaths, not just homicides. In 2013, the year for which the most recent data is available, 100 officers died. Of these deaths, more than half (57 percent) were the result of car accidents, motorcycle crashes, illness, and other unlikely events, not stabbings or gunshot wounds.

So we know every police officer that dies in the line of duty every year. Moreover, we know how. It may come as a surprise, however, that no such meticulous statistics are kept regarding civilian deaths at the hands of police. Federal authorities allow more than 17,000 law enforcement agencies to self-report officer-involved shootings each year.


Ratcheting Up for New Water Laws

Does California’s water shortage warrant immediate water rationing by state authorities? Jay Famiglietti, a senior water scientist at NASA’s Jet Propulsion Laboratory at Caltech, thinks so. If this sounds familiar, it’s because his March 12 Los Angeles Times op-ed advocating such drastic actions made national headlines, and his op-ed and the resulting news coverage have circulated widely over social media.

Familglietti underscores the seriousness of California’s drought and water shortage. Unfortunately, he jumps into the deep end when he urges the state to impose “immediate mandatory water rationing [that] should be authorized across all of the state’s water sectors, from domestic and municipal through agricultural and industrial.” The crisis is real, but mandatory rationing is the wrong approach.

There’s another reason this episode has the ring of familiarity. Here, we see an authority figure calling for the growth of the State during an emergency—a call for government action that reminds us of the “ratchet effect,” made famous by Robert Higgs in Crisis and Leviathan, in which a State expands during an emergency but often fails to return to its original size after the emergency has passed.


Shining Spotlight on Bogus U.C. Berkeley “Think Tank” During National Sunshine Week

19372710_MThis week is National Sunshine Week, a time when many journalists across America publish stories on government spending and transparency. One organization that needs more sunshine is the Institute for Research on Labor and Employment (IRLE) at the University of California at Berkeley, a union propaganda mill disguised as an academic think tank and financed with taxpayer dollars.

The IRLE receives money from the State of California to churn out shoddy and biased research timed to influence election results. It released two reports examining proposals to increase the minimum wage in San Francisco and Oakland before voters cast their ballots. Voters subsequently approved both wage hikes. The Oakland increase went into effect on March 2, a nearly 36 percent increase to $12.25 an hour. San Francisco’s hourly minimum wage increased to $11.05 on January 1, and will increase to $12.25 on May 1, matching Oakland’s rate.