Healthcare isn’t a marketplace

A great summation exhorting us to stop using the term “marketplace” to describe healthcare.

https://www.linkedin.com/pulse/quit-using-word-marketplace-when-you-talk-healthcare-america-hull?trk=hp-feed-article-title-publish

The key point and question that the author goes on to answer is:

A market is a place where buyers and sellers, functioning as independent agents in pursuit of their self interest, meet to negotiate a mutually agreeable exchange of money for products/services.  At Wharton, they taught us, furthermore, that an efficient market has three basic qualities: A critical mass of buyers and sellers, low transaction fees, and information transparency between buyers and sellers.   Do either of those two scenarios remind you of the American healthcare system?

The rest of the post is succinct and on point.

Government – the only sphere on earth where abject failure leads to more power and responsibility

It is a curious and novel tendency that government failures don’t lead to accountability and a search for knowledge and truth, but rather inexorable demands for yet more powers. Witness the increasing calls for the public option in healthcare insurance. Are we really going to trust the powers who gave us the VA and the monumental failures of Obamacare with even more arbitrary and market upending powers that will be impossible to claw back? This is a remarkable centrifugal force unique to government. Try getting away with this in the private sector and see how long it lasts.

The problem isn’t the scapegoated free market (that has not actually existed in healthcare for decades) or insurance companies when we witness rising premiums, the failure of insurance exchanges, and the decades-long march of healthcare costs rising faster than the rate of inflation. Although one can’t help but engage in just a tiny bit of schadenfreude at insurance companies groaning under the weight of their own Faustian bargains with the government in support of the Affordable Care Act (the tradeoff being forced and locked in customers in exchange for standardized coverage plans coverage of pre-existing conditions, and an overall environment of cross-subsidization of low-risk policyholders to higher risk ones). Too bad that there are real lives at stake and 20% of our economy continuing its long rapid descent into a massive government intervention – making this no small laughing matter.

The problem is the unintended (and often intended, as is the case of the mergers of health systems and the demise of the private physician practice) consequences of strangulating regulations and inept government policies foisted on the market by the tyranny of experts who are too arrogant to perceive that no individual or collection of elite individuals could ever effectively replace the collective and mysterious emergent order of free individuals making free choices. This aforementioned comedy of errors was entirely predictable, at least among those not within tenured positions within CMS and HHS and the rent-seekers that lobby them for rules that further entrench their monopolies (ahem, large insurers and large health systems).

Speaking of the tyranny of experts, I can’t help but view them as analogous to the competing architects in a Monty Python sketch in which one accidentally designs a slaughterhouse and one designs something that does exactly the opposite of what he says it will do – still somehow winning the contract. For the time-strapped for comedy, the best analogy occurs starting at the 3:15 mark.

 

Let’s repeal Obamacare and replace it with something more consumer-centric

At long last, Republicans have started to coalesce their various one-off healthcare reform ideas from the past 6 years into a semblance of a comprehensive Obamacare repeal and replace proposal. There is much to appreciate in this proposal, which includes oft-repeated catchy taglines of, “a better way,” “patient-centered,” and my personal favorite, “backpack.” I will discuss more on the backpack later. The whole presentation, which I have linked above, can be watched in a recent AEI video.

What this proposal does not promote is my own personal preferences of a drastically reduced role for health insurance, a product that should be beaten back into its proper place for coverage of catastrophes only. The price-obfuscating impacts of coverage for every service and the price-decreasing impact that would ensue if consumers were able to see prices and outcomes more transparently by paying more directly out of their pockets is not part of this proposal. Nor does it address the supply-side needed reforms such as lifting the competition stifling (and therefore price increasing) impacts of the various regulatory mandates and rent-seeking political lobbying of regional monopoly hospitals that prevent new hospitals and clinics from opening. Finally, while it promotes Medicare and Medicaid reform, it leaves Medicare, which is mostly a middle class welfare and wealth transfer that has a naturally price inflating impact, largely intact. These are my caveats for why I don’t consider this a perfect proposal. That being said, the main themes presented certainly stanch the government takeover of healthcare bleeding and presents significant and politically feasible patient-centric reforms in place of the current construct of byzantine, dizzying, and unsustainable complex web of government controls and mandates. For this fact alone, this substantial reform proposal should be applauded and supported as a significant improvement to the status quo that just might get enough electoral support if Americans pay attention to it and can keep from being distracted by the ongoing Trump/Clinton circus. As a former boss of mine used to tell me, “don’t let perfect be the enemy of good.”

The focus is clearly on consumer choice, portability, decentralization of decisions to state and local levels, and sustainability of Medicare. It is this concept of portability that is referenced as a backpack of items that will allow consumers to move across companies and states and maintain their same coverage and access to health services. Paul Ryan opened the session indicating that Obamacare is singularly focused on quantity of people insured, while ignoring the staggering costs in the system that Obamacare caused that are, in his words, causing the act to collapse under its own weight. Not to mention the tremendous loss of individual freedom and choice that resulted from centralized decision making and mounds of mandates arising out of D.C. Allowed to blossom, these are salient points that I believe will resonate with a public that has been remarkably skeptical and loathing of Obamacare. The marketing pitch is clear – consumers, take back your choice and freedom to choose the health plans that are right for you and not dictated by a government bureaucrat. Perhaps it is more appropriate to say take it back from thousands of bureaucrats, as one Congressman indicates in the video, there are fully 159 agencies and commissions currently involved in interpreting and implementing the dictates of Obamacare.  Several congressmen, including Budget Committee Chairman Tom Price (R-GA), Education and the Workforce Committee Chairman John Kline (R-MN), Energy & Commerce Committee Chairman Fred Upton (R-MI), and Ways & Means Committee Chairman Kevin Brady (R-TX) took turns articulating the proposal once Ryan got off the dais. Below, I have summarized the important components of the proposal, ranked in order of my opinion on which are the most important to least important.

  • Extending the health insurance tax break to individuals that businesses currently receive, and capping the amount that businesses can receive tax breaks. This concept will sever the link that causes Americans to be solely dependent on their employer for health insurance and promotes portability and accessibility of insurance. Hopefully, it results in more people taking the initiative to get insurance on their own and subsequently bargaining for higher direct compensation from their employers. The capping of tax breaks for businesses is intended to serve as a cost inflation and “over-insurance” containment provisions. Coupled with the ending of specific coverage mandates, also part of the proposal, this could go a long way towards incenting people to get more affordable coverage that makes sense for their life situation and promote innovative models such as high deductible plans, insurance coupled with wellness programs that promote actual health and wellness, and insurance that covers catastrophes only complemented with health savings accounts. These forces could make a major dent in insurance cost inflation and concomitantly overall health cost inflation.
  • Free up insurance purchasing across state lines – this simple and sensible act will drive up competition and will do much more to drive consumer choice and put downward pressure on prices than the continually failing exchanges and insurance co-ops (most of which have declared bankruptcy by now) could ever do, even though that was their ostensible original purpose. The challenge is that it is impossible to drive choice and cost containment when you also force standardized minimum levels of coverage and mandated cross-subsidization of high risk individuals.
  • Promotion of Health Savings Accounts – Provisions of Obamacare amazingly and wrong headedly penalize HSAs through the tax codes. This proposal would wisely end those disincentives and work to actively promote their use. HSAs are popular despite their government created disadvantages.. Furthermore, usage of HSAs promotes pricing transparency and healthcare service usage portability and flexibility.
  • Medicare Reform – The proposal kills off the unpopular and unaccountable Independent Payment Advisory Board and promotes consumer choice through expansion of the popular Medicare Advantage Program.
  • Provide state block grants for Medicaid – this will provide greater flexibility at the state level to craft cost saving programs at the localized level.
  • Provide for ability of Small Business Group Purchasing Associations – the proposal would allow for small businesses to band together for group purchasing of insurance coverage. While I prefer a high degree of an individualized market(which hopefully the tax breaks to consumers will promote), the fact is that most employees now expect and HR departments like to offer health insurance as a hiring incentive. Allowing small businesses to band together and to receive the same tax incentives as larger businesses will promote further consumer access with the nice boon to small business employment. Currently, Obamacare punishes small businesses through a web of complex rules that force them to either cover employees on increasingly expensive and bloated plans or pay a tax penalty per employee that they do not cover.
  • Protection of Pre-Existing conditions coupled with state incentives to create risk pools. While I would submit that a free-market system that promoted insurance for catastrophic conditions only would solve for this without the need for regulatory enforcement, this provision that is currently part of Obamacare is one of the few things that is actually politically popular. Thus, it is important from a politically feasible standpoint to keep it. One way of potentially holding down cross-subsidization amongst premiums and spiking premium costs for the average holder is to also create risk pools for certain conditions as a backstop to insurance coverage. The concept of risk pools is also promoted in the proposal.

These are simply the highlights. I will need to dig into the documented details of the plan to provide additional thoughts, but I certainly appreciate the direction this is heading.

School choice in America – what are we waiting for?

This podcast on school choice, in which Jason Bedrick is interviewed on the landscape and philosophical rationale in support of school choice, is highly informative and I highly recommend the full listen. Some highlights that I found insightful are as follows:

  • University of Arkansas School Choice Demonstration Project has several studies demonstrating the positive impact school choice has, including a meta-analysis (a study of studies) that showcases the beneficial impact of school choice and school reform at statistical levels of significance. The volume of positive results rolling in from a growing number of localities and states where there are pockets of school choice is becoming harder to refute and ignore. It is time for individuals to start looking at their own localities and asking why their own school choices are so restrictive.
  • While school vouchers are the funding option that is most discussed in policy circles, they are not the only or even perhaps the best option available to school reform advocates. Education savings accounts and tax credits are alternatives that present compelling economic benefits as well as possessing legal characteristics that allow for circumventing the Blaine laws that exist in many states. On the former, vouchers have one economics limitation in that their actual dollar value is recognized and known across the education system and thus can be gamed by school providers as a price floor, which can spur cost inflation and undermine the desired impact of providing better education options to disadvantaged communities as they get priced out of the market. Contrast this with savings accounts that can accumulate and can be spent in a more flexible manner across a wider range of education activities, which present economic forces that mitigate inflation. The Blaine laws that exist in many states was originally a muddle-headed approach in the late 1800s to prevent Catholic schools from receiving federal dollars. Nowadays the laws are now widely used to prevent any religious school from receiving government funds. My own aside to this is that we should always be extremely cautious when promoting government power at the expense of someone else’s individual liberties, even if we firmly believe it is in our own personal and parochial interests. Indeed, the Blaine laws were fomented by Protestant Christians concerned with immigrants from Catholic-dominant lands, such as Ireland and Italy, setting up their own Catholic schools and not assimilating into American culture. Ill-founded xenophobic concerns unfortunately often lead to using government power to coerce our fellow man and trample on their rights. Nowadays, it is these same largely Protestant Christians fighting Blaine laws in the hopes of clawing back their tax dollars to use on the private Christian schools of their own choosing. The fact that our Protestant forebearers created this anachronism is a cruel irony.
  • One common attack against one form of school choice reform, public charter schools, is that in some cases they have not outperformed their traditional public school peers in the same area. Mr. Bedrick indicates that if one goes beyond that surface level point-in-time comparison one quickly realizes that in most cases, the fact that there was competition forced the public school to increase their performance; in essence the mere fact of school choice and competition created a rising tide that lifted all boats. Furthermore, qualitative surveys and interviews with parents in these districts point to much higher satisfaction amongst parents on the responsiveness and customer service aspects of the pre-existing public schools. In short, options and competition made everyone better off and forced the previous public school monopoly to be far more responsive to their customers.
  • There is a common fear that school diversity will wind up breaking the common societal bonds that we idealistically believe we benefit from as communities out of common public schools. Mr. Bedrick points out that private school students actually achieve higher scores on civics and in their support for other views and pluralism than their public school peers.

What prevents greater school choice and diversity? What keeps us captive to the school of the zip code we happen to live in? One commonly maligned enemy are the teachers unions. While they certainly seem to be a roadblock, I sincerely believe that the real enemy is our own individual and collective inertia. Public schools are the status quo and represent how it has been done for generations, so why should we change? I would submit to you as parents, grandparents, and students, that the world could be a great amount brighter if we have school choice and schools innovating and diversifying their curriculum. Picture all of our collective laments on how the public schools fail to deliver on the arts, liberal arts, STEM, trades, or how they are prone to centralized dictates such as common core. Imagine how that might change if we could take our highly creative child to the new school started in our area that focuses highly on the arts, or if we could take our burgeoning engineer to the school focused on STEM.  These innovative and diverse models would blossom and grow if only they were allowed to.  Aside from all of that, it would seem to me that freedom of choice of where to spend your dollars and where to send your kids to school, while also allowing the poor and children captive to failing school to escape them, is the right thing to promote as a policy in of itself.

 

 

What is a sweatshop? Should they not exist?

MI Touring Nike's Factories
**FILE**Workers at a Nike factory on the outskirts of Ho Chi Minh City, Vietnam, assemble shoes in this Oct. 10, 2000, file photo. Michigan State, among many schools with sponsorship agreements with Nike and the school will have senior associate athletic director Mark Hollis joining Nike officials for an upcoming tour of manufacturing facilities in Vietnam and China. (AP Photo/Richard Vogel)

The fundamental question on the existence and morality of sweatshops through this podcast, as presented by Economist Ben Powell, who is located in my hometown of Lubbock, Texas at the Free Market Institute of Texas Tech University and happens to be a friend of a friend, provides a thought provoking view of sweatshops and whether we should focus our philanthropic energies on shutting them down, demanding higher wages and better workplace conditions, and/or boycotting the goods produced out of sweatshops. One would expect an economist to point out the unintended consequences of utopian decisions we would like to impose. Powell does a remarkable job of distilling economic frameworks such as price theory and immigration to their reducible and translatable components so that even the layman can enjoy and learn from them, hence my pitch to my friends and followers to give it a listen since one can rarely find economics topics presented with such clarity for the non-economist.

One of the chief insights in the podcast is that we must not fail to keep philosophy (in this case, perhaps we should call it humanism) from a connection to economics when evaluating policy and what we advocate for and support. While those of us in the West might get tremendously squeamish about sweatshop conditions and profess a knee-jerk reaction that of course they should be shut down (our humanism instincts), we must consider the unintended consequences of what would happen if we could in fact enact our plans. Economics + Philosophy must guide our knowledge, thoughts, and responses to such issues.  This ultimately forces us to consider what the next best alternative of the sweatshop worker is and to more critically examine why the individual chooses employment there. It must be stated that nobody should support slave labor, so let’s put that red herring to rest since in the vast majority of cases individuals choose to work in these factories that we in the West would admittedly deem abhorrent conditions. Thus, there is in fact an element of localized choice in these cases that we must consider. The great challenge and the deeper level to focus on is the fact that the overall range of employment options for these individuals is remarkably poor and sweatshops likely offer the best alternative on hand for them to be able to feed themselves and their families. In essence, the choice can often be working in a sweatshop or working in subsistence farming, which often offers far less money and far more grueling conditions, nor does farming provide a step onto the industrial skills ladder that sweatshop work often provides. While we may reflexively want to attack a symptom, the broader disease is nations with venal and corrupt government that have little institutional foundations that support an open and growing society that would facilitate the individual escaping their condition. The essential foundations for such a dynamic society can be summarized as limited and competent and non-corrupt government, individual property rights, the rule of law and freedom from arbitrary prosecution and perspection, freedom of contract, and a strong and impartial judicial system.

As it relates to individual choice, one might easily be led to believe that sweatshop workers should be given better working conditions such as more time off, more vacation, and safer and more elegant working conditions. Such a simplistic analysis would miss the point of economic tradeoffs. One might ask anyone in this world whether they would like more pay and better working conditions and all except for the world’s few true masochists would provide an invariable “yes” as an answer to that trite question. When pressed as to whether workers would trade off lower wages in order to receive those benefits, the vast majority of people working in sweatshops would invariably say “no” given their high dependence and relative value of cash in hand. Furthermore, to explore and get to the heart of how a worker in Bangladesh could get paid substantially far less pay than a textile worker in North Carolina, it is also absurdly simplistic to compare hourly wages. A true analysis must look at wage rate/productivity ratios for the differences between these two types of workers. Intuitively, the highly paid North Carolina worker is going to produce a tremendous amount more than their Bangladeshi counterpart through a combination of higher skills and better use of capital, dictating a higher relative wage. If a Bangladeshi is not paid significantly less, then their alternative choice to the sweatshop becomes unemployment.

Another interesting insight from the podcast is the alcohol prohibition analogy of Baptists and Bootleggers in grouping the cast of characters in the sweatshop debate. Baptists are the NGOs and philanthropists who are actually committed to the cause of reform, at least making them morally principled. They just often have wrongheaded and misinformed notions of policy prescriptions that should be pursued as a result of their convictions and their effectiveness. Bootleggers are the Unions and others who have a tremendous vested interest in pushing sweatshop wages to a higher point such that they are rendered uncompetitive, thus boosting their own wages. Bootleggers will thus remain unrepentant hurdles to reform while cynically acting as if they have the sweatshop worker’s interests at heart. The intent of the podcast is implicitly to convince the “Baptists” that they will do more harm than good with their approach and to direct their energies elsewhere.

This begs the question of where the concerned over the plight of sweatshop workers should direct their focus. As Powell indicates, the most effective policy reforms would be to support more open forms of immigration. This simple act of changing one’s domicile from a nation lacking the foundations I listed above to one that does (i.e. from Bangladesh to America) increases their wage earning potential 1000% overnight, according to Powell. In the long run, policies that support institutional and government reform will greatly aid in lifting millions from their plights within their native lands. What is clear is that demanding higher wages could very well result in no job and is therefore the opposite of what we should be advocating. Similarly, demanding safer workplace conditions will result in lower wages, which will harm those most in need of straight up cash.

As an aside, I can’t help but notice that Libertarianism.org uses some of the same visuals that I do for this blog – Washington’s crossing of the Delaware and Plato’s Academy. I am not sure whether I should feel validated or concerned that people will assume that I am a copycat, but I assure you that the usage is purely coincidental. I began the blog back in October and just recently picked up the podcast. Great minds think alike…

What would I look like in an orange jumpsuit?

The title is a question that I ask myself when I think about what life would look like if a young 2LT Obenhaus had treated his Secret clearance knowledge of U.S. Military and Patriot Missile system secrets with the same cavalier reckless abandon that Hillary Clinton showed with classified information while head of the state department.

I think former ambassador to the U.N. John Bolton is on to something here in this article when he indicates the contrasting reactions between those that have served in government positions handling classified information and those that have not:

For alumni of U.S. national-security departments and agencies, Hillary Clinton’s email saga is mind-numbing. The publicly available information makes clear she and her aides violated so many elementary security prohibitions that alumni are speechless. They wonder, had they done what she did, how quickly they would have lost their clearances and jobs and how extensive the criminal indictments against them would be.

By contrast, many who have never served in government or dealt with classified information see the affair as opaque, even overblown. Certainly Clinton has worked hard to foster that impression. Leaving political spin aside, and without delving into arcane legal analysis, which is it? What did Clinton and her entourage actually do day-to-day, and what does it mean? In hopes of making things a little clearer, herewith the observations of one State Department alumnus, who has pondered how he would look in an orange jumpsuit were he in Clinton’s shoes.

Bolton goes on to indicate that Clinton made two fundamental errors. One is that she just plain violated common sense. The second is that it is irrefutable that she deliberately used non-classified systems to send classified information, and her arguments for why she did that and her daft pleas of ignorance are near impossible to believe. Even if she is ultimately exonerated and cleared by the FBI, which I would argue that us more lowly types would never get away with what she is getting away with, her lapses in judgment and blatant disrespect for the office are indeed troublesome.

The ultimate question is, do we want someone of equal parts lack of common sense and judgment as well as someone who is so above the law that they have little regard for classified American information to serve at our helm? I dare say that the Americans that are rushing to Bernie Sanders are as much evidence of Clinton’s weakness and a resounding vote with footsteps that the haze of perfidy that always seems to trail the Clintons is a clear indication that this won’t just go away, despite the Clinton tried and true methods of obfuscation and self-pitying cries of vast right wing conspiracies.

“How School Reform Can Help Everyone but the Students”

I recently came across this thoughtful article on Newark School District reforms, buttressed by millions of dollars of cash from Mark Zuckerberg, that essentially indicates that a giant dose of money and the addition of charter schools in of themselves won’t reform failing school districts overnight. Another lesson from Newark is that reforms that are blocked by entrenched interestsNewark are never going to be easy, and there will be some failures along with the successes, particularly if parents are not a critical part of the process.

The key quote from this is from one of the teachers who stayed on at a public school until the bitter end, finally migrating to a charter due to greater flexibility in adapting to the needs of parents and children as well as the greater amount of money that makes it to the classroom. The section in full that encapsulates her story is below.

Reformers often wave away the import of parental neglect and assume that they can fix poverty through improving schools. That may be a skewed social perspective; but Russakoff’s reporting offers anecdotal evidence that good schools can actually change parents. Princess Williams, the teacher-heroine of The Prize, at first refused to abandon her public school for a charter. Armed with extra money from the reforms, she spearheaded a school improvement effort centered on engaging with parents and offering wrap-around services for families. Her successes bringing parents in and helping them help their children were truly inspiring. But she grew frustrated with the district’s inflexibility and finally decided to leave for a charter school. Williams concluded that charters were simply better able to allocate resources where they’re needed.

She’s right. Newark public schools spend $19,650 per pupil, but only $9,604 reaches the classroom. Charters spend $16,400, but $12,664 reaches the classroom. [emphasis is mine – MO]. Students in Newark charter schools learn roughly twice as much in a year as kids in public school. After all the dust settles, the charter schools launched with Zuckerberg’s money will be left standing: By 2017, 10,000 children who would have been in public schools will be enrolled in charters.

“Obama proposes new rules to close the gender pay gap even though there’s a 16% gender pay gap in his White House”

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My preface to this link is to indicate my primary reason for posting this article is to point out the hypocrisy of the Obama administration, which seems to use whatever pretext it can in order to propose onerous regulations and government intrusions into the market by diktat. Meanwhile, his own administration has a gender pay gap about as large as the statistics he flouts and which he flogs as a pretext for government action.  There is a broader narrative here that needs to be explored before summoning the dark power of the government in a pursuit of injustice it will inevitably find, whatever the merits of opposing views and irrespective of the facts, as any government agency so unleashed continues to seek to justify its existence and budget. Our agitator in chief seems to fail to recognize the role of normalized data sets and statistics, either out of ignorance or worse, out of deliberate manipulation of statistics for political purposes.

 

As a person that has spanned different environments ranging from the military, business school, and now a business career, I give my full and vocal support for equality of women at all levels of leadership. From my vantage point, this inevitably leads to more sound strategic and execution decisions that are greatly enhanced and enabled by a diversified team. I don’t intend to make any generalizations here, but women on a leadership team can make all the difference between a rash and groupthink decisions to a more balanced and thoughtful approach. Women that I went to business school with were remarkably talented, and it was particularly impressive to see those that went on to high-powered quantitative fields in investment banking or consulting. However, there is merit to what the article lays out in differences in career choices. More often than not, my business school women peers chose career paths similar to mine: marketing or general management, which has us all looking up at the more stratospheric salary heights of the consultants and investment bankers. I highly doubt many of us would trade places though. What we gave up in salary we gain in less work, less travel, and more flexibility. The stories of some of my (overwhelmingly male) investment bank counterparts working until midnight on a regular basis is enough to keep me content with a more modest salary. Thus, a blanket average approach may not be the best way to ferret out societal problems. In a similar vein and back to the article,  the key statement is this:

Bottom Line: As I wrote last summer in my post about the gender pay gap at the White House, President Obama, politicians and the gender pay gap activists can’t have it both ways, either: a) there are gender pay differences throughout the economy and in any organization including at the White House, which can be explained by factors other than gender discrimination including age, years of continuous work experience, education, differences in positions, hours worked, marital status, number of children, workplace environment and safety, industry differences, etc., or b) any gender pay gap in aggregate, unadjusted salaries automatically exposes gender discrimination – including the White House – and Obama needs to explain why he is “waging a war on his own women staffers” by paying them less than men on average.

So either: a) there is a glass ceiling at the White House and Discriminator-in-Chief Obama is guilty himself of paying his female staffers significantly less than men by $12,350 per year on average, or b) Obama is guilty of statistical fraud and deception for continuing to spread misinformation about the alleged discrimination-based gender pay gap at the national level with bogus claims like “Women are paid 77 cents on the dollar for doing the same work as men.”

I also rather enjoyed the contribution of Professor Donald J. Boudreaux, author of the phenomenal Cafe Hayek blog:

Mr. Obama:

In remarks today supporting government regulations designed to close the so-called gender pay gap, you asked rhetorically “What kind of example does paying women less set for our sons and daughters?”

I’m tempted to ask different questions, such as: What kind of example does your abuse of statistics in order to politically grandstand set for our sons and daughters? (Surely you know that this ‘gap’ virtually disappears when the statistics are properly controlled for differences in women’s and men’s career choices.) Or what kind of example does your incurable itch to officiously second guess and to coercively interfere with voluntary contractual arrangements between consenting adults set for our sons and daughters?

But instead I’ll grant, for argument’s sake, the premise of your complaint about the “pay gap” and ask a different question: What kind of example does your own White House – in which, as documented by economist Mark Perry, the median salary of female employees is 16 percent lower than the median salary of male employees – set for your two daughters?

Perhaps you should stop shoving your nose into other people’s affairs and attend to your own.

Sincerely,
Donald J. Boudreaux
Professor of Economics

Let me state unequivocally that there should not be a glass ceiling. As a man with three daughters and as someone with a blue collar background, I am as much of an advocate at busting up good ol’ boy clubs as anyone. That being said, I would not want to do so with the uninvited government regulators, who represent just as much of their own good ol’ boys network as any business. Echoing Milton Friedman, just where are we going to find these angels that will do the right thing and structure business appropriately for us through a heavy handed government approach? The big difference between business and government is the market is a relentless form of pushing companies to make optimal decisions. If a company can outcompete by employing and appropriately paying one half of the work force and thus getting more of them and getting higher productivity, a company would most surely do so, and this first mover advantage would quickly be replicated in the market. The government agency, on the other hand, has no true source of accountability.

Misogyny – the reason refugees may not be able to have nice things

Cologne
The shattered windows of a book shop are boarded over the day after populist right-wing riots in Leipzig, Germany. Photo: Getty Images

Typically, I have supported much more open forms of immigration and of harboring as many refugees as are willing and able to come, with the need to factor in safety and security given the volatile and chaotic situation stemming from Syria and the broader Middle East (previous thoughts on this outlined here). My argument has traditionally been that immigration is largely beneficial across the economic, cultural, and moral spectrums. I have also sympathized previously with the position of Angela Merkel in her unique role within Europe of welcoming millions of refugees with open arms into Germany. My sympathy arises out of the pure charity of the act, even if I had a harder time sympathizing with the prudence of the direction. It is in the very least an act of leadership without equivocation, which is more than the rudderless policies of many of her European counterparts, whose lack of decision in any direction is at least equally problematic.

However, the recent events categorized by hundreds of police reports filed across multiple German cities of grotesque sexual assaults perpetrated by, as many police reports and video footage attests, men from Middle Eastern and North African origin indicates the great pitfalls of such an open arms policy. As much as the idealist in me wants to believe that moral clarity, charity, and human brotherhood will prevail, the realist in me has to reason that millions of people unaccustomed (and in many ways inimical) to Western culture and values can’t possible be absorbed in such a large volume without deleterious consequences. The great negative consequences of such an action are not only the awful attacks on women, but the unfortunate right and left-wing populism that it will drive people across the globe to embrace. A lack of prudence in refugee acceptance will inevitably lead to harmful overreactions that will do lasting harm. The component in these events most at odds with Western society is an apparent culture that openly avows and practices misogynistic views and life practices, which surfaces in a complete lack of regard for over 50% of the world population and relegating them to mere chattel status. Such events on this scale (one report indicates over 600 allegations have been made by women) could not have possibly occurred spontaneously, pointing to a premeditated and coordinated plan to do evil and harm. There must be more to this than an outlier event of drunken men misbehaving. Indeed, as Bret Stephens reports in a recent Wall Street Journal editorial, a recent World Economic Forum Global Gender Gap Report presents with remarkable clarity the lack of esteem men from Muslim majority nations hold for women. As quoted in the article, “..the report ranks the status of women in 142 countries. Bottom of the list: Yemen, Pakistan, Chad, Syria, Mali and Iran, all Muslim-majority countries. A 2013 Pew survey of Muslim views on women’s rights found that only 22% of Egyptians and 14% of Iraqis thought that women should have a right to divorce their husbands, while fully 92% of Moroccans and 87% of Palestinians thought a wife must always obey her husband.”

These are astounding revelations and statistics, and they can’t possibly align with Western culture and values. The question then becomes, how could we reconcile our moral obligations that happen to benefit our society economically and culturally as it relates to refugees? How about taking up the Stephens’ recommendation to allow women, children, and the elderly in with open arms as the immediate first step? I would add to the Stephens formula that we could still focus on family unification (male entry), but prioritizing those that are clearly being persecuted and which we can clearly get a sense that the man of the house is not a misogynist, which could be made manifest by a spouse that is well educated, works outside of the home, daughters that are educated, etc, and professions from the man that they value women in society.

This is an intractable situation with no easy answers, so would love to get others’ thoughts on the matter.

“Are provider-led health care networks too big to fail?”

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Twenty20 License

AEI recently published an interesting article that serves as a thought experiment on whether the Affordable Care Act will push consolidated health networks to such a large degree that they become too big to fail.

I have attempted to chronicle elsewhere the growing list of unintended consequences of the ACA, as well as what I believe are some sensible, free-market oriented reforms that would set us on the right path that are tucked within a Hoover Institute essay written by University of Chicago economist John Cochrane,  but this “moral hazard” of health networks that are too big to fail that is similar to what we have recently witnessed in the financial industry and meltdown of 2008 certainly adds a new wrinkle that I had not previously contemplated.

Expanding beyond the AEI article that focuses on the Accountable Care Organizations, my own experience informs me that the ACOs within the ACA are unfortunately but one prong in the Obama administration and the Centers for Medicare and Medicaid Services (CMS) arsenal in this coordinated and dedicated effort to foist large integrated networks upon us. These will indeed wind up being “too big to fail.” Hospitals already possess an unfair advantage in blocking new entrants and hide behind “non-profit” status as well as serving as the largest employers in many communities. The massive rush to merge and acquire will surely exacerbate this.  Even organizations outside of the ACO model are going to be pushed to consolidate through being increasingly subjected to “value-based” payment models that shift payments from fee-for-service to models that are tied to various outcomes measures. CMS has set a goal of having fully 50% of payments to hospitals by 2018 funneled through such mechanisms. While on the surface shifting from fee-for-service to quality based measures seems a logical and positive step in the right direction, we must beware of the unintended consequences. Many of these “quality” payments are aimed squarely at issues such as readmitted patients back to hospitals, “excessive” spend per Medicare beneficiary that occurs in the outpatient settings, and one bundled payment per an episode of care (i.e. a hip and knee replacement). Interestingly, CMS is targeting directly the large hospital and not the outpatient settings. In essence, the hospital is heavily incentivized to buy and control the outpatient setting and physician practices in order to control the flow of patients and the finances. Or in the very least, hospitals that don’t acquire will starve out recalcitrant outpatient and physician practices that can’t or won’t toe the line to the hospital’s demands by shutting them out of their referral network. We will consequently be left with narrower networks and less choice.

Now, there might be some good in all of this as it relates to care coordination and the cost of care delivery, but do we really expect that these giant regional monopolies are going to pass on these cost savings to consumers, if indeed they actually do occur? Do we really expect the focus to be on product quality and consumer  value when there is no competition left, or will the focus turn to gaming the system, lobbying CMS, and inevitable asking for bailouts (per this article)? I would argue that the government conveniently ignored all of these likely negative consequences in their rush to revolutionize the system to their liking – one in which they will increasingly call the shots on who wins and who loses.