Free Markets, Free People

Daily Archives: May 18, 2011


Emergency rooms aren’t closing because the market doesn’t work, but because it does

Emergency rooms in “urban and suburban” areas (not rural – the study is limited to urban and suburban) are closing rather rapidly it seems:

Hospital emergency rooms, particularly those serving the urban poor, are closing at an alarming rate even as emergency visits are rising, according to a report published on Tuesday.

Urban and suburban areas have lost a quarter of their hospital emergency departments over the last 20 years, according to the study, in The Journal of the American Medical Association. In 1990, there were 2,446 hospitals with emergency departments in nonrural areas. That number dropped to 1,779 in 2009, even as the total number of emergency room visits nationwide increased by roughly 35 percent.

Emergency departments were most likely to have closed if they served large numbers of the poor, were at commercially operated hospitals, were in hospitals with skimpy profit margins or operated in highly competitive markets, the researchers found.

Sit there for a moment and let that all sink in.  Got it?  All ready to go?  Now, let this sink in:

“This suggests market forces play a larger role in the distribution and availability of care” in the United States, Dr. Hsia said, especially emergency care. “We can’t expect the market to allocate critical resources like these in an equitable way.”

Really? That’s precisely what the market is doing here – Dr. Hsia just doesn’t like it’s method of allocation or the outcome, that’s all.  So the hidden premise here is we (the collective) should allocate “critical resources” (emergency rooms and health care providers) differently than the market does (subsidize) and we’ll say a “market failure” made us do it, mkay?

That’s exactly the case Dr. Hsia is trying to build although it isn’t said outright.  Market failure requires we (collective) pick up the slack (through government) and pay what is necessary (no matter how much it puts us in debt) to ensure “critical resources” (ERs and docs)  are allocated “fairly” (as we think they should).  This is also known as a form “central planning” which has always worked so well.

So that would mean unprofitable requiring emergency rooms stay open and we (collective) subsidizing them.  BTW, anyone else find it ironic that there’s competition among hospitals keeping prices down to the point that some ERs are unprofitable,  yet we’re consistently told that health care costs are spiraling out of control?

Anyway, as you recall the vaunted ObamaCare is supposed to take care of all this, right, because then even the poor will have insurance.  And once they have insurance, they’ll never darken an ER again – except when they have a real live emergency.    Well here’s a clue junior, the poor already have insurance – its called Medicaid.  The problem isn’t lack of insurance, it is a lack of doctors.  And it isn’t going to get better soon.  Massachusetts has already demonstrated the problem:

When the Massachusetts Legislature made health insurance mandatory five years ago, supporters of the first-in-the-nation law hoped it would keep patients out of hospital emergency rooms.

Patients with insurance, the theory went, would have better access to internists, family practitioners, and pediatricians, lessening their reliance on emergency rooms for routine care.

There is more evidence today that it did not turn out that way.

Three-quarters of Massachusetts emergency room physicians who responded to a survey last month said the number of patients in their ERs climbed in the last year.

They cited ‘’physician shortages’’ along with a growing elderly population as the top two reasons why more patients come to ERs.

The law ‘’didn’t create an infrastructure,’’ said Dr. David John, chief of emergency care at Caritas Carney Hospital in Boston. “Doctors offices are full to capacity.’’

That’s right … MA’s single payer system is swamped.  You can waive your magic wand and behold everyone has insurance, but you can’t waive your wand and make health care providers appear.  And most doctors know that Medicaid is probably the worst paying insurance out there, not to mention the bureaucratic hassle that goes with it, so they limit their number of Medicaid patient – a prudent small business decision.  Because after all, doctors are small businessmen and women.  They employ staff, make payrolls, etc.  So, just like hospitals that do the same thing, they’re concerned with – what’s that nasty word?  Oh yeah, profit.

Nope, the market isn’t the problem here.  It is doing precisely what markets should do.  The outcome just isn’t the preferred one.

Oh, and under the category “never let reality stand in the way of your reality” or perhaps “facts, who needs facts, I have an agenda”, we find this.

~McQ

Twitter: @McQandO


More ObamaCare waivers an indication that it is bad law

There’s  a lot being written and said about the latest batch of ObamaCare waivers and the fact that many have gone to companies in Nancy Pelosi’s area.  And, of course, the agency granting them has claimed that Pelosi had absolutely no effect on them being granted.

Okay, that’s not the important point anyway.  Tim Pawlenty actually manages to stumble across it as he claims cronyism in their grant:

"I don’t blame people for trying to get out from underneath it — that it is an awful law," Pawlenty said. "But when you have that many needs for exemptions, it tells you that the law — it is a warning sign that the law is broken and doesn’t work."

Ya think?  You have about 26 or 27 states challenging the Constitutionality of the bill and its individual mandate.   You have hundreds, if not thousands of companies, agencies and businesses seeking waivers.  And obviously, there’s an organization in place to grant those waivers.  Imagine a job where you review and grant waivers to a law.  I don’t know about you, but that would tell me there must be something fundamentally wrong with it.

Pawlenty is also correct about his broader point – those without the ability to appeal for a waiver are stuck with paying the piper:

"Another example of really crony politics or crony capitalism, if you’ve got the right connections, the right lobbyists, the right interest group, you get your special deal, and the rest of us get our wallet out, and that’s in the tax code, it’s in earmarking, and now you see it in ObamaCare.”

Yes, exactly.  His larger point is absolutely correct.  Those without the connections do indeed end up having our wallets looted.  Cronyism is certainly alive and well and very prevalent not only in the treatment of ObamaCare, but in other areas as well.  Which brings up an ironic point – for the party of “fairness” this seems singularly unfair.  Yet Democrats aid and abet it – in fact, just like Republicans, they use this sort of process to gain favor with certain constituencies … at the expense of others.  And by expense, I’m including paying the bill too.

ObamaCare is an obviously wretched law.  What was supposed to be insurance reform ended up being a polyglot of government bureaucracy at a huge and unaffordable price.

Now we hear the House GOP members saying that repealing it is “hard”.  We hear candidates like Romney and Gingrich saying they agree with parts of it, like the individual mandate.  Cronyism is directly linked to power – it’s a give and take process that benefits politicians.  It comes as no surprise to me that both sides are engaged in it up to their necks.  The problem is it is unlikely to ever get fixed since it is the fox guarding the hen house and enjoying the job.

~McQ

Twitter: @McQandO


Economists: Stimulus “destroyed/forestalled” 1 million private sector jobs

Economists Timothy Conley and Bill Dupor have issued a study about the American Reinvestment and Recovery Act, also known as the “Stimulus” – approximately a trillion dollars borrowed and spent ostensibly to create and save millions of jobs and keep the unemployment rate below 8%.

We’ve known for months, each and every time the unemployment numbers come out, that it failed miserably to keep unemployment below 8%.

Conley and Dupor give the short “bottom line” version of their study’s result:

Our benchmark point estimates suggest the Act created/saved 450 thousand government-sector jobs and destroyed/forestalled one million private sector jobs.

Those jobs which were “destroyed/forestalled” fell into a 4 sectors that the economists studied:

The large majority of destroyed/forestalled jobs are in a subset of the private service sector comprised of health, (private) education, professional and business services, which we term HELP services.

[…]

[O]ur estimates are precise enough to state that we found no evidence of large positive private-sector job effects. Searching across alternative model specifications, the best-case scenario for an effectual ARRA has the Act creating/saving a (point estimate) net 659 thousand jobs, mainly in government. It appears that state and local government jobs were saved because ARRA funds were largely used to offset state revenue shortfalls and Medicaid increases (Fig. A) rather than directly boost private sector employment (e.g. Fig. B).

Here are the two figures from the study:

ARRA

 

What you see here is exactly what most critics of the plan claimed would happen – states used the money on government and not stimulating private job growth.

Result?  States forestalled their budget reckonings and unemployment, except in the private sector, continued on past 8% into the 10% area.

Of course, it appears that the architects of the ARRA never really thought this through nor did they anticipate how sending money to the states would be used.

As John Hinderaker at Powerline asks:

Does President Obama understand this? I very much doubt it. When he expressed puzzlement at the idea that the stimulus money may not have been well-spent, and said that "spending equals stimulus," he betrayed a shocking level of economic ignorance.

The answer to the question is a profound and telling “no”.  And yes, he’s betrayed a shocking level of economic ignorance throughout his presidency:

Upon acquisition of ARRA funds for a specific purpose, a state or local government could cut its own expenditure on that purpose. As a result, these governments could treat the ARRA dollars as general revenue, i.e. the dollars were effectively fungible.

In essence, it was used to save government jobs through a few easily accomplished accounting tricks.  The desired private stimulus (assuming there really was such a desired use), never came to pass.  An opportunity for state governments to review and downsize government to more efficient and appropriate levels was forestalled.

And the recession ran on.

Missing in action? 

Sheriff Joe.

~McQ

Twitter: @McQandO