Category Archives: markets

A Carbon Tax Proposal

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No less a pair of lights than George Shultz and James Baker III have one regarding atmospheric carbon emissions.  They’re prefacing their case on their then-boss, President Ronald Reagan’s successful negotiation of the Montreal Protocol to rein in the failures of atmospheric CFCs that were destroying the ozone layer.  Not that the two have anything to do with each other, but it makes for good obfuscation.

Shultz and Baker have four “pillars” to their proposal:

First, creating a gradually increasing carbon tax. Second, returning the tax proceeds to the American people in the form of dividends. Third, establishing border carbon adjustments that protect American competitiveness and encourage other countries to follow suit. And fourth, rolling back government regulations once such a system is in place.

Their first pillar echoes ex-President Barack Obama’s (D) promise to let electricity generators use all the coal they wanted; Obama’s policies just would put them out of business.  No carbon emissions. Period.  Never mind that there’s very little need to reduce carbon emissions.  Atmospheric CO2 used to generate acid rain, but that pollution is long since reduced to the point of elimination.  Beyond that, the EPA’s pseudo-science “finding” notwithstanding, atmospheric CO2 is plant food, not a pollutant.  We eliminate that plant food at risk.

Return the tax proceeds to us as dividends?  That’s just wealth redistribution by government fiat.  Haven’t we had enough of Progressive redistribution failure already?  Not to mention the cynically internally illogical mechanism for the redistribution.

A $40-per-ton carbon tax would provide a family of four with roughly $2,000 in carbon dividends in the first year, an amount that could grow over time as the carbon tax rate increased.

How could the dividend grow—isn’t the tax supposed to reduce emissions significantly?

Border carbon adjustments?  Pit importers against exporters again.  That’s the outcome of the existing border adjustment tax being proposed in the House today.

Roll back the regulations once “such a system is in place?”  Really?  Can Shultz or Baker name two programs that have been rolled back once they’ve been enacted?  They’re not that naïve.

This is just more Progressive foolishness, now being spouted by two fine gentlemen who’re past their age of usefulness.

What Should a Health Plan Cover?

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Anna Wilde Mathews wondered about that in her piece in The Wall Street Journal.  First, a couple of asides.  Notice the tacit acknowledgment that we have no health insurance plans available.  That industry was eliminated in toto by Obamacare, which replaced the industry with a Federally mandated, publicly/privately funded health coverage welfare program.  Next, notice the tacit assumption in the piece’s subhead: that the law should mandate business decisions.

To the piece itself:

The 2010 health law created a new set of federal requirements for plans sold to individuals and small businesses, including a list of 10 benefits, among them prescription drugs, mental-health services and laboratory tests. It also mandated that plans cover preventive services such as vaccinations at no cost to enrollees.

Along with women’s contraceptives (but not men’s…) at no cost to enrollees or the businesses providing the plans.

Trimming certain benefit categories from the required list could sharply raise the cost of those benefits for consumers who opt to have them.

That’s Mathews’ claim, anyway.  What she’s chosen to ignore is that a competitive, free market would sharply reduce the cost of most of those “benefits.”  What she’s also chosen to ignore is that eliminating the mandatory nature of the coverages would sharply lower the cost to millions of others who don’t need those “benefits,” but who must pay for them anyway—even if they’re included in a plan at “no cost to enrollees,” a fiction cynically foisted onto us by the Obama administration.  Enrollees certainly are paying for them; the added cost is simply hidden in a higher overall price.  And the rest of us are paying for them, too, in premiums similarly elevated to pay for that required coverage and/or in the taxes we must pay to pay for the subsidy.

It’s certainly true that other, rarer or more expensive to treat problems would have higher prices, but there’s never been a case made for why Government should pay for these ahead of family, friends, charity, church, local community—the usual suspects.

Plans with skinnier coverage can carry lower premiums, actuaries say. But as with everything in health care, that comes with a trade-off.

NSS.  But those trade-off decisions belong to the individual, not to Government.

Free Markets and Medical Care

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Under Obamacare we have no free market in medical insurance or in medical care itself.  In fact, before Obamacare we had no free markets in those two industries, either: individual States controlled the premiums they would permit (within bands, but it was the States’ bands) and the measures required to be covered within each premium band.  Medical care was subject to what doctors and hospitals would be reimbursed by the insurance companies.  And insurance policies could not be sold across State borders, for all that insurers like Blue Cross\Blue Shield could sell substantially similar policies in various States: if someone moved, they could not take their original policy with them—even if they’d gotten it through their employer and in the new State they worked for that same employer—they had to buy the new policy.

But what about an all-cash market, where doctors and hospitals name their prices, and patients can shop around—a truly free market for medical care that bypasses health insurance and that thereby pushes a truly free market for actual health insurance rather than the health coverage welfare program we have under Obamacare?  Reason had some thoughts on such an outlandish thing a short bit ago.

….costs [as they stand today] are completely contingent on a wide variety of factors, especially what insurance plan you have or whether you have insurance at all. More recently, I’ve had the same problem trying to price out basic blood tests (a lipid panel) in southwestern Ohio, as simple and mechanical a procedure as exists. Without clear pricing, we’ll never get far in radically improving the cost and quality of care for non-emergency services. In areas that are not traditionally covered by insurance—think Lasik surgery, cosmetic dentistry, and plastic surgery—a very different model obtains and you see exactly the sort of market-driven efficiencies that we see in virtually every other part of our commercial lives. The surgeon Jeffrey Singer has written about how various insurance contracts bar him from even discussing discounted cash payments with patients who announce they have insurance.

Regarding that bit about Lasik: my wife had Lasik surgery on both eyes several years ago, pre-Obamacare.  Health insurance didn’t cover the procedure, so we paid roughly $2,500 per eye to get the work done.

Today, Lasik still isn’t covered—it’s still a cash-only procedure—there are lots more eye doctors qualified to do the surgery and doing it, even though there was no real shortage of such eye doctors at the time of my wife’s surgery, and the necessarily competitive environment of such a cash-basis product has driven prices down markedly, while improving the quality of the procedure.  The procedure can cost as little as $300 per eye, depending on what the patient wants done.  Notice two things about that last bit.  What the patient wants done, not what an insurer is willing to pay for having done.

What [gets] done: a potful of things available to do today that weren’t available those years ago, driven by competition as forcefully as the price has been.  Here are two examples.  Bladeless LASIK procedures, which use a second laser not used in bladed procedures with additional benefits like faster and more pleasant recovery.  Tailoring the laser that does the actual reshaping of the eye’s cornea to deal with microscopic imperfections in the cornea’s shape rather than older procedures that did a broad-brush reshaping.  In those days, vision would be markedly improved, but the tailoring was limited to optimizing one eye for reading and the other eye for distance viewing.  A tailored laser procedure today (some procedures are called Wavefront technology) much more accurately reshapes the cornea to improve night vision (remember the night glare/halo effect that used to be a common side effect?).

Hospitals, too, as the Oklahoma Surgery Center is demonstrating.  They price their procedures right up front—and their costs are far lower than industry standards.  For instance,

$19,000 for [a patient’s] whole-knee replacement, a discount of nearly 50% on what [the patient] expected to be charged at his local hospital. And that price would include everything from airfare to the organization’s only facility, in Oklahoma City, to medications and physical therapy. If unforeseen complications arose during or after the procedure, the Surgery Center would cover those costs. [The patient] wouldn’t see another bill.

Pricing competition, and importantly, pricing competition without the government fetters of regulations that have little to do with the actual medical care being provided.  There’s more room for pricing competition—which improves the quality and technologies available as part of that competition—when the medical provider doesn’t have to spend payroll on non-medical folks: compliance personnel.

Go figure.

Regulators Against Market Competition

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Their obstruction sometimes has lethal consequences, and sometimes those consequences kill the least of the least among us: babies.

A little bit ago, in Salem, VA, a 24-weeks pregnant woman was taken to the ER suffering what turned out to be a placental abruption, a condition in which the placenta has detached from the uterus.  It’s often deadly for both the mother and the baby.  This hospital was not equipped to handle this sort of emergency, but six miles away, there was a hospital, Carilion Medical Center, that was so equipped, including an ambulance with incubators that could sustain the necessarily untimely ripped baby during transport to the other hospital.

That ambulance proved unavailable; it was on a call in the opposite direction.

They saved the mother’s life.

The baby didn’t make it.

The hospital to which the pregnant mother had been taken—the closest one to her—had been denied a permit for its own “high-tech neonatal care facilities:” the government of Virginia had decided that the facilities were not necessary.  The government of Virginia had made a business regulatory decision instead of letting the hospital business make its own decision, and that decision contributed to the death of this baby.

Virginia has a Certificate of Public Need (COPN) law requiring hospitals and other medical providers to get special permission from the state government before they are allowed to offer new services, like the specialty nursery that may have saved that child’s life…. These COPN licensing processes are supposed to balance the interests of hospitals with the needs of the public, but in reality they are fraught with politics and allow special interests to effectively veto unwanted competition.

Government balancing hospital interests against public necessity, with competing hospitals for the scales.  Because neither the hospital nor the public can be trusted to be adult enough to make their own decisions without their Know Betters “guiding” them.  But competing interests are fully competent.

The only opposition came from Alice Ackerman, a professor of pediatrics at Virginia Tech’s medical school—the Carilion School of Medicine, which has longstanding ties to Carilion hospital. In written testimony submitted to the Department of Health, Ackerman argued that the number of specialty bassinets at Carilion was sufficient to meet the needs of southwest Virginia.

And then Karen Remley, then Virginia Health Commissioner, denied the hospital’s permit. Under Virginia’s Certificate of Public Need laws, she alone had the final say in the matter.

Read the Reason report at the link.

This stinks.

The New York Times Misunderstands

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Again.  This time the paper is hyperventilating over the coming end of the world order as we know it because the UK and the US are reaffirming our special relationship through the mechanism, as the NYT‘s headline has it, of British Alignment With Trump….

Great Britain’s relationship with the US spells doom because, as seen through the lens of the NYT‘s TDS, Great Britain’s dependency on Europe will be upset, and the European Union is key to world stability.  For instance:

Mr Trump offered to reward Britain’s exit from the European Union with a speedy trade deal. But this risks encouraging more exits from the bloc and possibly its disintegration. The resulting turmoil on the Continent, which includes several top British trading partners, could risk harming Britain’s economy far more than an American trade deal would help.

There are two major (not sole) reasons the Brits chose to go out from the EU.  One is the ability to cut its own trade deals without the bureaucrats of the EU ruling body looking over their shoulder and telling them no, they can’t do that.  The other is the ability to control their own borders and deciding for themselves who should be allowed to come in without the bureaucrats of the EU ruling body….

The paper’s plaint also operates from the false premise that the EU should remain together unchanged.  The nations of the EU are too disparate in social, political, economic philosophies; it’s an inherently unstable arrangement.  Too, those several top British trading partners, which are not limited to France and Germany, will benefit from being able to cut their own trade deals, should they decide to go out from the EU, too.

Beyond that, British security will be greater for the closer alignment with us that’s becoming possible than it is and would be with an EU as timid toward Russia as it is and wants to be.