Free Markets, Free People

Daily Archives: July 2, 2009

Today’s Employment Situation

First of all, let’s compare the current situation with employment with what the Obama Adnministration told us would happen if we didn’t pass the stimulus package.  As has been obvious for some time now the stimulus is not–as we repeatedly predicted–substantially impacting the employment situation.

stimulus-vs-unemployment-june-dots

Unemployment: Promised v. Actual

Instead, employment has risen by more than 3%.

Now, today’s surprise was not that there were a net 467,000 jobs lost last month, but that the employment rate went up by only 0.1%.  The answer to that mystery is found in the employment data from the BLS, which shows that the civilian labor force declined by 358,000 people last month.

The Bureau of labor Statistics uses a neat bit of sleight-of-hand when calculating the unemployment rate.  If you are not in the workforce, you aren’t counted as unemployed.  You disappear from the numbers.

There are a number of ways to leave the labor force.  You can retire.  You can become injured or disabled.  Or, you can simply become so discouraged that you stop looking for a job.

For the latter category, that means you may still not have enough money to house and clothe your family.  and you might still really want to work.  But there are no jobs for you, and if you stop actively looking for work, then you drop out of the labor force.

Granted, there’s no other way to really count the labor force, but this does help explain why the employment rate remained much more restrained vis a vis the actual number of net job losses.  The number of people not in the labor force increased from 80,371,000 in May to 80,729,000 in June.  That nearly equals the number of job losses, so the unemployment rate comes out nearly even.

Know Thy Enemy – And Loath Him

And after reading this, it won’t be hard to do:

Pakistan’s top Taliban leader, Baitullah Mehsud, is buying children as young as 7 to serve as suicide bombers in the growing spate of attacks against Pakistani, Afghan and U.S. targets, U.S. Defense Department and Pakistani officials say.

A Pakistani official, who spoke on the condition that he not be named because of the sensitive nature of the topic, said the going price for child bombers was $7,000 to $14,000 – huge sums in Pakistan, where per-capita income is about $2,600 a year.

“[Mehsud] has turned suicide bombing into a production output, not unlike [the way] Toyota outputs cars,” a U.S. Defense Department official told reporters recently. He spoke on the condition that he not be named because of ongoing intelligence efforts to catch Mehsud, a prime target for a U.S. and Pakistani anti-Taliban campaign.

People like Mehsud claim to represent a religion of peace and act on its behalf. Yet no religion of peace would ever sanction or condone actions such as this. Perhaps it is time we quit accepting their stated claims that they’re Islamic warriors and call them what they deserve to be called – animals barely worth the price of a bullet.

Rarely will you find me using the term “exterminate”. But when I read things like this, I truly believe that the Taliban are more than deserving of complete and utter extermination. This is a “seed” which needs to germinate no further.

God speed to the 4,000 Marines who’ve just launched Operation Khanjar. May their aim be true enough to bring down this miserable swine somewhere along the line.

~McQ

Government Run Health Care – “Anecdotal” or Indicators of a Systemic Problem?

A couple of quick examples of real world problems with government run health care. South Africa:

KwaZulu-Natal health MEC Dr Sibongiseni Dhlomo has issued an ultimatum to striking doctors, calling on them to return to work on Friday or face the music.

Addressing the media in Durban on Friday, Dhlomo said notices had been sent to all hospitals calling on all striking doctors, dentists and pharmacists to resume their duties no later than 08:00.

The department was also preparing a court interdict to force the striking health professionals to end the strike, he said.

“We as the department of health are designated as an essential service provider and therefore find the action of these health professionals [is] disrupting service delivery and compromising patients’ lives,” said Dhlomo.

He said the department had been more than reasonable in dealing with the unprotected strike.

“This situation is untenable, we cannot continue to put the lives of our people in danger and the government will act,” he said.

Dhlomo said people had died due to the unavailability of doctors, although he was unable give the number of people who died as a result of the strike.

A recent example you’re probably more familiar with from Canada:

A critically ill premature baby is moved to a U.S hospital to get the treatment she couldn’t get in the system we’re told we should emulate. Cost-effective care? In Canada, as elsewhere, you get what you pay for.

Ava Isabella Stinson was born last Thursday at St. Joseph’s hospital in Hamilton, Ontario. Weighing only two pounds, she was born 13 weeks premature and needed some very special care. Unfortunately, there were no open neonatal intensive care beds for her at St. Joseph’s — or anywhere else in the entire province of Ontario, it seems.

Canada’s perfectly planned and cost-effective system had no room at the inn for Ava, who of necessity had to be sent across the border to a Buffalo, N.Y., hospital to suffer under our chaotic and costly system. She had no time to be put on a Canadian waiting list. She got the care she needed at an American hospital under a system President Obama has labeled “unsustainable.”

And this one:

In 2007, a Canadian woman gave birth to extremely rare identical quadruplets — Autumn, Brooke, Calissa and Dahlia Jepps. They were born in the United States to Canadian parents because there was again no space available at any Canadian neonatal care unit. All they had was a wing and a prayer.

The Jepps, a nurse and a respiratory technician flew from Calgary, a city of a million people, 325 miles to Benefit Hospital in Great Falls, Mont., a city of 56,000.

Great Falls was better equipped to handle their case than was Calgary? People like to dismiss these as “anecdotal”, but they continue to describe a system in which decisions have been made that end up endangering the lives of children. It is inevitable when the primary focus of “reform” is “lowering cost”.

Doctor’s strikes. Limited if not completely unavailable neo-natal care. The refusal of the system, based on cost concerns only, to provide certain care that places the lives of those on the margin in jeopardy.

Is that what we have to look forward too?

~McQ

[HT: Micaela S]

Busting Medicare’s “Low Overhead Advantage” Myth

One of the favorite arguments of the government health care crowd is the supposed Medicare low overhead argument – i.e. Medicare is more efficient than private insurance because its overhead is so much lower than private administrative costs.

It goes like this:

But the administration of Medicare is a miracle of low overhead and a model, despite all the fraud and abuse, of what government can do right. Three percent of Medicare’s premiums go for administrative costs. By contrast, 10 to 20 percent of private-insurance premiums go for administrative costs. Roll that figure around on your tongue. When you swallow and digest it, you’ll understand that any hope of significantly reducing health-care costs depends on a public option.

Right now, the Medicare average is 3% and private insurance averages 12%. But Tom Bevan points out, some of that difference is an apples and oranges comparison:

But here’s the catch: because Medicare is devoted to serving a population that is elderly, and therefore in need of greater levels of medical care, it generates significantly higher expenditures than private insurance plans, thus making administrative costs smaller as a percentage of total costs. This creates the appearance that Medicare is a model of administrative efficiency. What Jon Alter sees as a “miracle” is really just a statistical sleight of hand.

Furthermore, Book notes that private insurers have a number of additional expenditures which fall into the category of “administrative costs” (like state health insurance premium taxes of 2-4%, marketing costs, etc) that Medicare does not have, further inflating the apparent differences in cost.

However, when you make an apples to apples comparison, Medicare comes out much worse than private insurance:

But, as you might expect, when you compare administrative costs on a per-person basis, Medicare is dramatically less efficient than private insurance plans. As you can see here, between 2001-2005, Medicare’s administrative costs on a per-person basis were 24.8% higher, on average, than private insurers.

So, contrary to claims of Alter, Krugman, and President Obama, moving tens of millions of Americans into a government run health care option won’t generate any costs savings through lower administrative costs. Just the opposite.

Make sure you click through and check out the real Medicare administrative costs as compared to private industry.

Then there’s waste fraud and abuse. Did you happen to catch that little hand wave at “fraud and abuse” in the first quote touting Medicare’s efficiency? What, pray tell, is one of the primary jobs of an administive system? Would you imagine it to be the elimination of fraud and abuse – or said another way, to ensure that the company pays legitimate claims and avoids fraudulent and unnecessary payments?

How efficient is a system which is awash in both fraud and abuse? And, without profit, what incentive do they have to eliminate it?

John Stossel takes that part of the “Medicare efficiency” myth apart:

But there’s a bigger point – the connection between “low” administrative costs and staggeringly HIGH levels of fraud and waste. As Michael Cannon at the Cato Institute and Regina Herzlinger at Harvard Business School have pointed out, much of the 10 to 20 percent of private insurance administrative costs goes to preventing fraud. Private insurers, you see, care about whether or not they lose money. Medicare, with its unlimited claim on the public purse, does not. It’s only taxpayer money, after all.

The results are predictable, but breathtaking nonetheless: an estimated $68 billion (with a B) in outright Medicare fraud every year (About $3 billion in Miami-Dade county ALONE.) On top of that, according to well-respected Dartmouth researchers, roughly a third of Medicare’s total $400 billion annual spending goes to procedures which were medically unnecessary.

That’s, on average, 68 billion every year. Imagine a private insurance company surviving with loss figures like that. But as Stossel points out, without an incentive to eliminate fraud and abuse, it continues year after year after year, with politicians and Medicare administrators tut-tutting but never really doing anything about it.

That is the reality of Medicare’s efficiency. It is also the probable model any future health care insurance run by the government. Efficiency is an illusion brought about by a statistical sleight of hand and ignoring the systemic waste, fraud and abuse of Medicare.

~McQ