June 2, 2006 10:03AM

A Return‐​Quibble

Two days ago, I blogged that Americans spend too much for health care as a result of the bizarre health care financing system that has been fostered by government regulation and tax provisions. Michael Tanner subsequently responded that my claim makes little sense in a free society--Americans, who are wealthy, consume more health care because they simply prefer more health care and they have the money to buy it.

Permit me a response to Michael's response. I offer a lengthy counter on my own blog; here is an excerpt of my reply:

I think of the American health care system not as a free-market system, but as a government-designed contraption constructed to vacuum money out of the pockets of consumers and into the pockets of health-care providers. A lot of this contraption is built into state regulations of health insurance and provider licensing. The Federal government adds an important layer by encouraging "employer-provided health insurance" (i.e., vacuuming wages into prepaid health plans).


Our difference is tactical. Tanner wants to put libertarians on the side of saying, "The American health care system is the finest in the world. Don't mess it up with a socialized system like everyone else's."

I think that tactic is vulnerable to charges that people in other countries are healthier, charges which very well may be true. I would rather be in the position of attacking our vacuum contraption than defending it.

The debate continues...

June 1, 2006 4:32PM

Smeared by Krugman

Well, Paul Krugman sure smeared me in his May 29 column (sub. req’d.) where he accused me of "fraud pure and simple" in congressional testimony eight (!) years ago.

Krugman's screed was just another salvo in the current global warming charm offensive, coinciding with Al Gore's screeching movie, demonstrations against Max Mayfield, director of the National Hurricane Center, because he had the audacity to NOT blame last year's Hurricane Katrina on global warming (which would have been "fraud pure and simple"), and multiple smearings of any climate scientist who dares to speak out against the current hysteria.

Krugman was incensed with my July 27, 1998 testimony before the House Committee on Small Business.  In it, my purpose was to demonstrate that commonly held assumptions about climate change can be violated in a very few short years.

One of those is that greenhouse gas concentrations, mainly carbon dioxide, would continue on a constant exponential growth curve.  NASA scientist James Hansen had a model that did just this, published in 1988, and referred to in his June 23, 1988 Senate testimony as a "Business as Usual" (BAU) scenario.

BAU generally assumes no significant legislation and no major technological changes.  It's pretty safe to say that this was what happened in the succeeding ten years.

He had two other scenarios that were different, one that gradually reduced emissions, and one that stopped the growth of atmospheric carbon dioxide in 2000.  But those weren't germane to my discussion. Somehow, Krugman labelled my not referring to them as "fraud."

The BAU scenario produced a whopping surface temperature rise of 0.45 degrees Celsius in the short period from 1988 through 1997, the last year for which there was annual data published by the United Nations' Intergovernmental Panel on Climate Change at the time of my testimony. The observed rise was 0.11 degrees.

I cited the reasons for this.  In fact, the rate of carbon dioxide increase in the atmosphere was quite constant--rather than itself increasing like compound interest--during the period.  Ten years later, Hansen published a paper in which he hypothesized that "apparently the rate of uptake by carbon dioxide sinks, either the ocean, or more likely the forests and soils, has increased."  This was not assumed in any of his scenarios. In fact, the general hypothesis has been that, as the planet warms, the ocean takes up carbon dioxide at a slower rate.

Then, contrary to everyone's expectation, the second most-important global warming emission, methane, simply stopped increasing.  Some years have shown an actual drop in its atmospheric concentration. To this day, no one knows why.

There's also the nagging possibility that we haven't yet figured out the true "sensitivity" of surface temperature to changes in carbon dioxide.  Scientifically, that's a chilling possibility.

On May 30, Roger Pielke, Jr., a highly esteemed researcher at University of Colorado's Center for Science and Technology Policy Research, examined Hansen's scenarios.  Of the two "lower" ones, he concluded, "Neither is particularly accurate or realistic. Any conclusion that Hansen's 1988 prediction got things right, necessarily must conclude that it got things right for the wrong reason." (italics in original)

That's precisely the keynote of my testimony eight years ago:  in climate science, what you think is obviously true can literally change overnight, like the assumption of continued exponential growth of carbon dioxide, or how the earth responds.

June 1, 2006 3:44PM

Cost‐​Shifting in Health Care?

Today's New York Times reports on a new study that claims that low payments from Medicare and Medicaid lead providers to shift costs to private payers.

Sounds plausible, but economists are skeptical.  Michael Morrissey argues that cost-shifting can only occur under limited circumstances (usually, when government has restricted competition among providers), and that what's actually happening is that providers are price discriminating. 

It may sound like an unimportant difference, but here's the rub.  If Morrissey is right, then increasing Medicare and Medicaid payments should increase the prices that providers charge private payers. 

Is that what the Blues want?

June 1, 2006 3:27PM

Medicare Prices to Be Posted Online

Here's some important information for the next time you visit the hospital.  After dictating prices for health care services for 20-some years, Medicare is finally going to let you see those prices. Today, the Bush administration took the first step toward posting the prices that Medicare pays providers. Today's release includes county-by-county prices paid for 30-plus hospital procedures, including:

  • heart operations and implanting cardiac defibrillators
  • hip and knee replacements
  • kidney and urinary tract operations
  • gallbladder operations and back and neck operations
  • common non-surgical admissions

In a study released this week, I wrote that this step by the Bush administration

probably will not hurt, and it could even help. However, the administration’s efforts to force price disclosure should stop there. If patients demand price information, there will be no need to force providers to supply it: providers will publish it, or perish. But as long as patients have no interest in price information, forcing providers to supply it would be a useless exercise and a costly distraction. 

June 1, 2006 3:08PM

Advice for Conservatives Wrestling with Medicaid

John Hood of North Carolina's John Locke Foundation today pens important advice to conservatives who are trying to improve Medicaid, the joint federal-state health care program (ostensibly) for the poor:

Too many conservative advocates of Medicaid reform couch their advocacy in terms such as “enrolling in private health plans will remove the stigma from patients on Medicaid” and “choice is better than cutting Medicaid reimbursements to providers, which limit recipients’ access to the best doctors.” These may be effects of a reform, but they shouldn’t be thought of as goals or even as necessarily positive.

Repeat after me: Medicaid is welfare. Medicaid is welfare. Medicaid is welfare. It is a forced redistribution of resources from those who earned them to those who did not. There may be good reasons to defend Medicaid as a concept, or to imagine some kind of more-limited program to replace it, but they must recognize that Medicaid is an arm of the welfare state. As such, no one should consider it a “right” for Medicaid recipients to have access to the very same doctors, devices, and treatments as those who pay their own way.

Full disclosure: He then goes on to quote me favorably, which may be clouding my judgment.

June 1, 2006 2:20PM

Saving Trees, Wasting Brain Power

For the first time, General Electric has filed its corporate tax return electronically.

GE's return consumed 237 megabytes of computer storage space, but apparently saved a small forest from being clear-cut to print an eight-foot high, 24,000-page stack of tax forms. That's progress I suppose, but we're still waiting for those dim bulbs in Congress to recognize that major tax reforms are needed so that American businesses can focus on "bringing good things to life" rather than slaving over endless government "paperwork."   

June 1, 2006 2:16PM

Supreme Court, Meet Sweet Science

Debates about constitutional rights often take the form of either-or propositions. Either the Supreme Court must take an iron stand on high principle, come what may, or we are left with a world of politics-takes-all.

More often than not, that intuition is right. But sometimes, the court can take a few lessons from the sweet science of boxing. Great fighters don't always win the fight in a toe-to-toe slug match. In hard fights, it can take a bit of fancy footwork. As I argue in this piece, that's exactly what's needed in a confrontation between the Supreme Court and the president over NSA surveillance.