Free Markets, Free People

regulation

Obama claims oil a “fuel of the past”

Here we go again:

As rising gas prices become a key issue on the campaign trail, the president argued that using less oil is an important part of the solution.

“We’ve got to develop every source of American energy; not just oil and gas, but wind power and solar power, nuclear power, biofuels. We need to invest in the technology that will help us use less oil in our cars and our trucks, in our buildings, in our factories. That’s the only solution to the challenge, because as we start using less, that lowers the demand, prices come down,” the president told workers at the Daimler Trucks manufacturing plant in Mount Holly, N.C.

Yet in the same speech he calls oil “the fuel of the past”.

Is it?

Of  course not.  It is a fuel he’s decided he no longer wants to pursue for political reasons based in very shaky science.  But fuel of the past?  Fossil fuel is more of a part of our lives now than it has ever been and while alternate fuels are desirable, they’re not even close to being ready for prime time despite massive investment for decades.  But oil a fuel of the past? 

Absurd.

This is typical Obama – try to have it both ways.  Talk about developing “every source of American energy” to include oil and gas and then claim that oil is a ‘fuel of the past’.  That’s a not so subtle reminder that he really doesn’t support fossil fuel production (and hasn’t – see his claims about the “oil industry subsidy”), despite the continuous attempt to take credit for increased oil production during his time in office when his administration has had no hand in it).

The president continued to defend his “all-of-the-above” strategy against Republican attacks on his energy policy. “If somebody tells you we’re not producing enough oil, they just don’t know the facts,” he said.

Really? Well, we’re not, and that’s a fact.  We could be producing much, much more if the Obama administration would get out of the way.  The little known truth about the so-called “fact” Obama throws around about oil production being at its 8 year high, is he had nothing to do with that.  And furthermore, next year, we’ll see a significant decline in production from the lands the federal government controls (it will conveniently happen after the election, of course).  Note the final paragraph below.  It points to another reason why Obama’s claim is disingenuous:

The federal government controls about a third of the nation’s oil production, through federal onshore leases (mostly in the West, where it owns half the land) and leases to drill in outer continental shelf (OCS) starting 10 miles off the coast. The rest of America’s oil production is on state-owned land (including coastal areas) and on private lands subject to state regulation.

As a direct result of the president’s severe constriction of oil production under federal leases, domestic U.S. oil production will be nearly one million barrels per day lower this year than it would have been otherwise.

Meanwhile, production from newly available shale oil and oil sands on private and state-owned land has been booming—more than enough to make up for the steep decline in production under federal leases. That boom, combined with slackened demand since the start of the recession, has reduced America’s dependence on foreign oil to about half its daily consumption of 20 million barrels per day, down from 60 percent in 2005.

In fact, the truth is much different than the Obama claim in which he attempts to take credit for today’s oil production:

Even in the few areas of the OCS that remain open, the administration is seeking to strangle production. As a result of the various deep-water drilling moratoriums, a third of the Gulf’s deep-water drilling rigs have left for other shores, dissuaded by the regulatory uncertainty. As a result of the shallow-water “permitorium” even shallow-water drilling has slowed to a crawl. According to the Department of Energy, oil production from the Gulf of Mexico will drop by 700,000 barrels per day by the end of 2012, which further decreases in ensuing years. And as for America’s working families, the combination of moratoriums and “permitorium” are estimated to have cost 60,000 thousand jobs in 2010 alone.

On federal lands the story has been the same. Just as technological breakthroughs have paved the way for tapping into the vast oil reserves of the Rocky Mountain states, the administration cut the number of new leases by 50 percent in 2010 alone.

Oil is not a “fuel of the past”.  Obama’s agenda actually demands we abandon it.  And he would in a New York minute if there wouldn’t be electoral consequences.     His administration’s track record concerning oil and gas exploitation as well as new regulatory regime the EPA is implementing and actions of Secretaries Chu and Salazar give lie to the claims made.

Oil and gas are, in fact, the critical fuels of the future.  It is and will remain the lifeblood of our economy for decades.  An administration that doesn’t realize that and works to curtail it deserves to be shown the door at the earliest possible opportunity.  If you think gas prices are high now, remember that without the increase in oil production on state and private land, it would be higher than it is now.

Unicorns and moon-ponies (or pond scum) won’t fuel the economy.  Oil will.  And an “all of the above” strategy should obviously include massive increases in oil production on federal lands.  Don’t let this guy get away with his false claims and destructive energy policy.  Help show him the door, November.

~McQ

Twitter: @McQandO

How To Manipulate Women Voters: An Obama Campaign Primer

If it’s not painfully obvious by now, the Obama campaign is banking on women voters being the key to re-election. Running on “Hope and Change” isn’t going to work this time around, and the specter of George Bush will only get about as many miles as a Chevy Volt on a full charge. The usually reliable grievance groups, identity cohorts and college students are not as enthused this time around, and the Obama campaign is apparently worried about that $1,000,000,000 in cash won’t be enough to get it past the finish line. So, naturally, some voting bloc must be pandered to and manipulated in order to secure a second term.

Enter the Contraception Wars (a major battle of the General War on Women). Relying on the various Democratic identity politics to get your voter base out is tedious, time consuming, and requires a lot more vote-buying to pay off the different interest groups. Seeing as how they may not be a reliable base anyway, then why not go for the largest voting bloc out there: women!

In recent elections, voter turnout rates for women have equaled or exceeded voter turnout rates for men. Women, who constitute more than half the population, have cast between four and seven million more votes than men in recent elections. In every presidential election since 1980, the proportion [of] female adults who voted has exceeded the proportion of made adults who voted.

The one thing that all women have in common is that they alone have the necessary biological equipment for having babies. If they were made to feel that their equipment was under attack (“Republicans are coming to steal your ladyparts!“), and that only Obamamagne can defend their honor, then perhaps they will race to the polls in support of their hero. Of course, there will have to be some “free” stuff thrown in to sweeten the pot and make women feel as if they are losing something unless Obama is re-elected. Accordingly, what follows is the multi-step process for ensuring the women vote goes solidly for Obama in November:

1. Raise awareness: Subtly introduce the subject of contraception from out of left field at a Republican debate. This will get the tongues wagging and foreshadow who the villains are.

2. Free Stuff: Using your arrogated powers, mandate that all employers who provide insurance must include contraception (including abortifacients and sterilization) in their plans, regardless of conscientious objection, the First Amendment or, y’know, any of that freedom nonsense. By giving women “free” contraception, etc., you necessarily pit them against those who would deny them their grant. Executing this step is vitally important to framing the villains and carrying out Step 3.

3. Create the wedge issue: Because certain quarters will predictably howl at the intrusion upon their liberties, this Step is almost self-executing. Once the villainous voices are set to wailing, pretend to show concern for their plaints and then offer an “accommodation” that changes nothing but highlights your Solomonic wisdom (aided, of course, by a compliant media). The results of this Step are two-fold — (a) it politicizes the issue so that people will have to choose sides, and (b) it creates the illusion that you are fair and just, while your opponents are rigid and uncaring.

4. Flip the issue: Up to this point, the issue has been “I want to give you free stuff, but the greedy bastards don’t want to pay for it.” That may raise legitimate concerns among a sizable portion of the voting bloc you are courting. So, instead, change the narrative to “I want to protect your ability to get the free stuff, but they don’t want you to have it at all!” In flipping the issue from “don’t want to pay for” to “want to ban” you have neatly cleaved your intended voting bloc from your political enemies. Under this telling of the story, the villains are out to get women and only you will stand up to protect them.

5. Generate sound bytes: This Step is a bit tricky and must be followed carefully. The basis for any campaign is a good PR strategy. There will be plenty of older sound bytes out there already, but those will be generally stale and unhelpful. What you need to properly execute this Step is a current controversy. In order to do that you will need a public forum (such as Congressional hearing) in which to force the issue. Start by finding someone to represent your voting bloc and push her presence at the forum in a way that is sure to keep her from actually appearing. (As an added bonus, falsely claim that no representative of the voting bloc was allowed to appear.) Be sure that this speaker will be a sympathetic victim such as a lowly “college student” (regardless of whether she is or not). Now, and this part is very important, have your willing victim draw enemy fire by testifying about activities that perfectly fit the definition of “slut”, all but openly daring your opponents to use the word. Don’t worry about someone taking the bait — someone always rises to occasion.

6. Profit: Now that you have created a wedge issue, identified victim and villain, and staked out your claim to your voter bloc, all you have to do is pound the wedge home. Using your newly generated sound byte(s), you are firmly on the path to political nirvana. Your friends and allies will eagerly disseminate, distort and decry the outrageous outrageousness of your political opponents, firmly ensconcing your coveted voter bloc on your side. It will be the talk of the town for quite some time, ready to be refreshed at the right moments. In addition, it will provide a welcome distraction to your pathetic record, a flailing economy, and impending dangers that show you unequal to the task.

That is, of course, unless you’ve miscalculated. If your premise is wrong that women are all the same and will all vote the same way if given the proper motivation, then this plan could backfire.

Or maybe, just maybe, women aren’t as manipulable as you believe, and they actually care about their families, their jobs, their home budgets, and their liberties. If that’s the case, then you might just be screwed no matter what you do.

Brazilian orange juice banned in US

oranges

Right now there’s a shortage of orange juice in the US because of a number of diseases, especially one called “greening” that has been destroying the crop.

However, there’s an alternative – import Brazilian orange juice

But we can’t:

The U.S. Food and Drug Administration, after several weeks of deliberation, has blocked imports of frozen, concentrated orange juice from Brazil, probably for the next 18 months or so, even though the agency says the juice is perfectly safe.

So if it is admittedly safe and we need the juice to help meet demand (and keep the price down) why can’t we import this juice?  Why can’t we do what is necessary with something the FDA says is safe?

Regulation.

The FDA’s explanation is that its hands are legally tied. Its tests show that practically all concentrated juice from Brazil currently contains traces of the fungicide carbendazim, first detected in December by Coca-Cola, maker of Minute Maid juices. The amounts are small — so small that the U.S. Environmental Protection Agency says no consumers should be concerned.

The problem is, carbendazim has not been used on oranges in the U.S. in recent years, and the legal permission to use it on that crop has lapsed. As a result, there’s not a legal "tolerance" for residues of this pesticide in orange products.

So, according to the FDA, any speck of this fungicide, if found in orange juice, is an illegal adulterant and won’t be allowed, even though residues of the same fungicide are allowed in many other foods, including apple and grape juice.

There is no “legal permission” to use the fungicide on the crop because such “permission” has lapsed and thus there is no “legal tolerance” for any residue no matter how benign.  Consequently, because of that lapse the regulatory regime says “no go” on the import of something perfectly safe and in demand.

The result of the unwarranted ban (this orange juice is welcome in Europe, by the way):

In 2010, about 11 percent of all the orange juice consumed in America came from Brazil, according to the U.S. Department of Agriculture. That share may seem modest, but economist Thomas Prusa of Rutgers tells The Salt that cutting it out could boost wholesale prices of concentrated orange juice by 20 to 45 percent.

So gas prices aren’t the only thing going up soon.  And in the case of orange juice, the price increase can be tied directly to government regulation.

As orange juice goes up by 20 to 45%, who is it that will be hurt the most?  That’s right – the poorest among us who now either have to find a substitute or perhaps forgo the juice altogether.

~McQ

Twitter: @McQandO

The cost of the regulatory state

One of the claims President Obama made in his State of the Union address was that his administration was engaged in cutting the red tape and doing away with regulations that stood in the way of prosperity

There is no question that some regulations are outdated, unnecessary, or too costly. In fact, I’ve approved fewer regulations in the first three years of my presidency than my Republican predecessor did in his. I’ve ordered every federal agency to eliminate rules that don’t make sense. We’ve already announced over 500 reforms, and just a fraction of them will save business and citizens more than $10 billion over the next five years.

Of course, like many of his claims, the devil is in the details and upon closer scrutiny, the claim has no real foundation in fact.

His first claim is a carefully constructed lie as Free Enterprise points out:

The White House admits that its rules have so far cost $25 billion, which is much more than at the same point during the Clinton and George W. Bush administrations.

The claim is also couched in non-specifics for a reason.  The “500 reforms” are mostly regulations with little or no monetary impact on those who have to satisfy them.  However, the administration has added more rules that cross the magic 100 million dollar impact line than any other administration.  And, of course, those require, by law, that the monetary impact be assessed.  Here’s an example of one (PDF, pg 69):

Enforcement Fairness Act (5 U.S.C. 801 et seq.). This interim final rule:

a. Will have an annual effect on the economy of $100 million or more. This rule will affect every new well on the OCS, and every operator, both large and small must meet the same criteria for well construction regardless of company size. This rulemaking may have a significant economic effect on a substantial number of small entities and the impact on small businesses will be analyzed more thoroughly in an Initial Regulatory Flexibility Analysis. While large companies will bear the majority of these costs, small companies as both leaseholders and contractors supporting OCS drilling operations will be affected.

Considering the new requirements for redundant barriers and new tests, we estimate that this rulemaking will add an average of about $1.42 million to each new deepwater well drilled and completed with a MODU, $170 thousand for each new deepwater well drilled with a platform rig, and $90 thousand for each new shallow water well. While not an insignificant amount, we note this extra recurring cost is less than 2 percent of the cost of drilling a well in deepwater and around 1 percent for most shallow water wells.

b. Will not cause a major increase in costs or prices for consumers, individual industries, Federal, State, or local government agencies, or geographic regions. The impact on domestic deepwater hydrocarbon production as a result of these regulations is expected to be negative, but the size of the impact is not expected to materially impact the world oil markets. The deepwater GOM is an oil province and the domestic crude oil prices are set by the world oil markets. Currently there is sufficient spare capacity in OPEC to offset a decrease in GOM deepwater production that could occur as a result of this rule.

Therefore, the increase in the price of hydrocarbon products to consumers from the increased cost to drill and operate on the OCS is expected to be minimal. However, more of the oil for domestic consumption may be purchased from overseas markets because the cost of OCS oil and gas production will rise relative to other sources of supply. This shift would contribute negatively to our balance of trade.

These rules were proposed in the wake of the BP oil spill in the Gulf of Mexico (GOM).  They clearly identify the effect of the rules. Ironically they include increased cost to consumers, more dependence on foreign oil, and a negative increase in the balance of trade – all problems the administration and most economists identify is problems to be solved if the economy is to move forward.

Now, some may argue that these rules were necessary.  I’d argue that perhaps some new regulation was necessary, but it should have been a regulation which, to the best of its ability, mitigated the effects listed to the minimum, or eliminated them altogether.  Instead, the regulators airily note the effects and then blow them off.  In reality, regulators really don’t care if it costs consumers more, deepens our dependence on foreign oil or ups the balance of trade.

In the State of the Union address, Obama tried to grab the middle and pretend he is a friend to small business:

You see, an economy built to last is one where we encourage the talent and ingenuity of every person in this country.  That means women should earn equal pay for equal work.  (Applause.)  It means we should support everyone who’s willing to work, and every risk-taker and entrepreneur who aspires to become the next Steve Jobs. 

After all, innovation is what America has always been about.  Most new jobs are created in start-ups and small businesses.  So let’s pass an agenda that helps them succeed.  Tear down regulations that prevent aspiring entrepreneurs from getting the financing to grow.  (Applause.)  Expand tax relief to small businesses that are raising wages and creating good jobs.  Both parties agree on these ideas.  So put them in a bill, and get it on my desk this year.  (Applause.)

But again facts undermine the claim.  As the Small Business Association reports, regulations disproportionately effect small businesses:

In the face of yet higher costs of federal regulations, the research shows that small businesses continue to bear a disproportionate share of the federal regulatory burden. The findings are consistent with those in Hopkins (1995), Crain and Hopkins (2001), and Crain (2005).

The research finds that the total costs of federal regulations have further increased from the level established in the 2005 study, as have the costs per employee. More specifically, the total cost of federal regulations has increased to $1.75 trillion, while the updated cost per employee for firms with fewer than 20 employees is now $10,585 (a 36 percent difference between the costs incurred by small firms when compared with their larger counterparts).

Say one thing while doing the opposite.  Vintage Obama.  Tomorrow’s Steve Jobs would have a very expensive uphill climb in today’s regulatory climate.  The net effect? $1.75 trillion dollars of cost to small businesses, the place where “most jobs are created” per Obama.

The SBA also reports:

Environmental regulations appear to be the main cost drivers in determining the severity of the disproportionate impact on small firms. Compliance with environmental regulations costs 364 percent more in small firms than in large firms. The cost of tax compliance is 206 percent higher in small firms than the cost in large firms.

Those regulations are primarily driven by OSHA and EPA.  And there’s no secret  about the expansion of both regulators and regulation being pushed by Obama’s EPA focused on the environment.

The “good” news, however, this is one “shovel ready” project that seems to be creating jobs:

Large, small, global and regional — law firms are opening Washington offices at a rate not seen since before the recession, as they position themselves for work centered around the capital’s regulatory machinery.

Yes, I was being very facetious, however, when sharks smell blood in the water, they tend to gather in large numbers in anticipation of a feeding frenzy.  Despite Obama’s claims to the contrary, there’s a reason this is happening, and it isn’t because the administration is lessening or cutting regulations, it is because it is imposing more and needs additional legal enforcement help (there’s also the side that will concentrate on defense). 

Don’t forget, the $1.75 trillion dollar cost above applies to only small business.  That means that the total cost of regulation is much higher than that.  Also don’t forget, when Obama makes his claim about not passing as many regulations as previous administrations, that’s meaningless without an dollar effect numbers.  As noted, in regulatory cost to the economy, he’s passed many more costly regulations at this point in his presidency than did the previous administration.

The bottom line, of course, is that A) you can’t believe a thing the man says and B) contrary to his claims, he’s imposed more cost on the economy via regulation, not less. 

Finally, if you think it is bad now, wait until ObamaCare kicks in.  One of the reasons law firms are beefing up their Washington DC presence is in anticipation of that law going into effect.  If you think it’s a regulatory nightmare now, just wait.  It’s going to get worse.

Sean Hackbarth, commenting on the increase in lawyers:

Resources spent on paperwork and re-jiggering business plans is less money going to business investment and job creation, but at least we know someone is benefiting from the regulatory pile-on.

Shovel-ready – and not in the good sense.

~McQ

Twitter: @McQandO

An example of how government can become an obstacle to economic recovery

I don’t imagine anyone would argue that it is supposed to be like this, however, this is reality in one city in one state and I’d guess that its true in most places to one degree or another.  The place in question?  San Francisco, where a woman wanted to open a simple ice cream shop.

Ms. Pries said it took two years to open the restaurant, due largely to the city’s morass of permits, procedures and approvals required to start a small business. While waiting for permission to operate, she still had to pay rent and other costs, going deeper into debt each passing month without knowing for sure if she would ever be allowed to open.

“It’s just a huge risk,” she said, noting that the financing came from family and friends, not a bank. “At several points you wonder if you should just walk away and take the loss.”

Ms. Pries said she had to endure months of runaround and pay a lawyer to determine whether her location (a former grocery, vacant for years) was eligible to become a restaurant. There were permit fees of $20,000; a demand that she create a detailed map of all existing area businesses (the city didn’t have one); and an $11,000 charge just to turn on the water.

Imagine how many potential business owners would have said “the hell with it” and, if possible, gone elsewhere or shelved the idea completely?  Had that happened in this case, had the woman in question not had the patience of Job and enough money to weather the 2 years in question, 14 full and part-time workers wouldn’t be employed there.

That’s the problem with stories like this – its hard to get a handle on how many businesses have been discouraged by such a permitting and regulation regime, but you have to assume they are plenty.

It should not take two years for a government to say “okay” to a business.  Nor should there be exorbitant fees associated with it.

Thankfully San Francisco has begun to recognize the enormity of its problem and attempt to do something about it.   A little thing called “reality”, in the guise of the headquarters for Twitter, has finally begun to bring some government officials around:

“The city has had the reputation of being a difficult place, and a hostile place, to do business,” said Mark Farrell, the city supervisor who has the most private-sector experience (he still operates a venture capital firm). “We’re changing the dialogue.”

According to Mr. Farrell, a critical shift occurred last year when supervisors approved a tax incentive to keep the headquarters of Twitter, the social network, in the city after the company threatened to move.

But he admitted that such actions were relatively easy compared with reforming the city’s entrenched bureaucracy. “To change the inner workings of government is a longer proposition,” he said.

Christina Olague, a former Planning Commission president who was recently appointed city supervisor, said that planning codes governing businesses had ballooned over the years to become hundreds of pages long. “It’s so convoluted,” she said. “It’s so difficult for these businesses to move ahead.”

But the byzantine, time consuming and costly regulatory process, for the most part, still remains.   Check out this animated video which illustrates how absurd it can be. 

 

 

As we’ve said any number of times here, if government wants to play a role in the economy and the economic recovery, perhaps the best role it can play is, for the most part, to get the hell out of the way.

~McQ

Twitter: @McQandO

An Electric Car Mandate?

The editors of the Washington Examiner consider the probable effects of the new CAFE standards (being imposed by the EPA now instead of NHTSA) and ask a pertinent question:

Getting from the current 35 mpg CAFE standard to 54.5 can be achieved by such expedients as making air conditioning systems work more efficiently. We have a bridge in Brooklyn to sell to anybody who thinks that’s even remotely realistic. There is one primary method of increasing fuel economy — weight reduction. That in turn means automakers will have to use much more exotic materials, including especially the petroleum-processing byproduct known as “plastic.” But using more plastic will make it much more difficult to satisfy current federal safety standards. The bottom-line will be much more expensive vehicles and dramatically fewer kinds of vehicles.

[...]

Total costs, as calculated by the EPA, will exceed $157 billion, making this by far the most expensive CAFE rule ever. For comparison, the previous rule in 2010 cost $51 billion, according to the EPA. But the EPA doesn’t include this fact in its calculation: Annual U.S. car sales are 14-16 million units, yet over time, this rule will remove the equivalent of half a year’s worth of buyers. Will that be when the EPA takes a cue from Obamacare and issues an individual mandate that we all must buy Chevy Volts?

I’m just curious, for those who support the individual mandate dictated by Obamacare, what is the argument that such an electric car mandate isn’t possible? If the federal government can force us to purchase insurance from the companies it allows to offer the product based on the idea that health care is a national issue, how is promoting cleaner air and more energy security not the same thing? Indeed, it would seem that the arguments are even stronger for forcing everyone to buy electric cars if furthering the “common good” is the only real restriction on federal power.

So what is the difference from a legal, constitutional standpoint? Is there one?

Medicare’s Doctor (and patient) trap

John Goodman poses a scenario for you to consider:

Suppose you are accused of a crime and suppose your lawyer is paid the way doctors are paid. That is, suppose some third-party payer bureaucracy pays your lawyer a different fee for each separate task she performs in your defense. Just to make up some numbers that reflect the full degree of arbitrariness we find in medicine, let’s suppose your lawyer is paid $50 per hour for jury selection and $500 per hour for making your final case to the jury.

What would happen? At the end of your trial, your lawyer’s summation would be stirring, compelling, logical and persuasive. In fact, it might well get you off scot free if only it were delivered to the right jury. But you don’t have the right jury. Because of the fee schedule, your lawyer skimped on jury selection way back at the beginning of your trial.

This is why you don’t want to pay a lawyer, or any other professional, by task. You want your lawyer to be able to reallocate her time — in this case, from the summation speech to the voir dire proceeding. If each hour of her time is compensated at the same rate, she will feel free to allocate the last hour spent on your case to its highest valued use rather than to the activity that is paid the highest fee.

None of us would ever want to pay a lawyer by task, would we (not talking about a will or legal document production here, but instead some form of defense against charges which necessitates a jury trial and requiring the accomplishment of many tasks)?  We’d instead insist upon paying them for a package of services designed to do whatever is necessary to defend us to the best of their ability with the ultimate goal of us walking free.

Right?

So why is it we can’t demand the same of doctors?  Why can’t we demand a package of services designed by them to address all of our medical problems?

Well if your stuck with Medicare or Medicaid, you’re stuck with government price fixing and payment by task, that’s why.  First the price fixing:

Medicare has a list of some 7,500 separate tasks it pays physicians to perform. For each task there is a price that varies according to location and other factors. Of the 800,000 practicing physicians in this country, not all are in Medicare and no doctor is going to perform every task on Medicare’s list.

Yet Medicare is potentially setting about 6 billion prices across the country at any one time.

OK?  Bad enough that Medicare has completely removed the price mechanism from the process. As economist Dr. Mark Perry notes:

These problems sound a lot like the deficiencies of Soviet-style central planning in general when the government, rather than the market, sets prices, see Economic Calculation Problem.

Exactly and stultifyingly obvious, correct?  In fact, it’s something one shouldn’t have to point out.  Nor, would it seem, should it be something that we’re doing either.  But we are.  You just have to remember, our government doesn’t care about history, because, well, you know, it will get it right where all these other governments have failed.  Just watch.

If the price fixing isn’t bad enough, it has also hit upon a procedure that actually inhibits the delivery of good health care rather than incentivizing it.

Medicare has strict rules about how tasks can be combined. For example, “special needs” patients typically have five or more comorbidities — a fancy way of saying that a lot of things are going wrong at once. These patients are costing Medicare about $60,000 a year and they consume a large share of Medicare’s entire budget. Ideally, when one of these patients sees a doctor, the doctor will deal with all five problems sequentially. That would economize on the patient’s time and ensure that the treatment regime for each malady is integrated and consistent with all the others.

Under Medicare’s payment system, however, a specialist can only bill Medicare the full fee for treating one of the five conditions during a single visit. If she treats the other four, she can only bill half price for those services. It’s even worse for primary care physicians. They cannot bill anything for treating the additional four conditions.

So, for example, if you have diabetes, COPD, high blood pressure or any combination of a number of other chronic diseases, tough cookies, your doc can only treat one per visit – unless, of course, he or she wants to work for free on the others.

Don’t believe me?

[When Dr. Young] sees Medicare or Medicaid patients at Tarrant County’s JPS Physicians Group, he can only deal with one ailment at a time. Even if a patient has several chronic diseases — diabetes, congestive heart failure, high blood pressure — the government’s payment rules allow him to only charge for one.

“You could spend the extra time and deal with everything, but you are completely giving away your services to do that,” he said. Patients are told to schedule another appointment or see a specialist.

Young calls the payment rules “ridiculously complicated.”

That has nothing to do with being complicated.  It has to do with stupidity overruling common sense and the stupidity being enforced by an uncaring bureaucracy.  “Rulz is rulz, Doc”.   Do what is best for your patient and do it for free – that’s one way to lower costs, isn’t it?

But don’t forget – government involvement will mean better care at lower cost.  That’s the promise, right?

Instead government is now redefining “better” to mean “their way or the highway”.  It has nothing to do with what is better for the patient or the doctor.  It has to do with what is better politically.  And, of course, better for the bureaucracy.  In this case, that means squeezing the doctor for everything they can get at the expense of the patient.  Since you don’t have a choice about Medicare when you reach 65, any doctor you see doesn’t have a choice about how he or she treats you.

The only choice you have? 

Live with it … if you can.

~McQ

Twitter: @McQandO

EPA: When reality meets bureaucratic inertia

What if you passed a law that required the use of alternative fuels from particular sources to be blended with petroleum based fuels to help “break our dependence” on petroleum from “unfriendly countries” (and cut greenhouse gases).  And what if, a few years later, new and abundant sources of domestic oil and gas were found, plus even more from secure allies like Canada?

Wouldn’t it makes sense to reconsider the original legislation in light of the new finds. 

Oh, and one more thing … what if one of the alternative fuels mandated to be mixed with gasoline hadn’t yet materialized commercially?  Would you exempt refiners or fine them?

Common sense says you exempt them.  The EPA has, instead, chosen to fine them.

When the companies that supply motor fuel close the books on 2011, they will pay about $6.8 million in penalties to the Treasury because they failed to mix a special type of biofuel into their gasoline and diesel as required by law.

But there was none to be had. Outside a handful of laboratories and workshops, the ingredient, cellulosic biofuel, does not exist.

Somehow that appears to be considered the fault of the refiners.  And the EPA is requiring the fines be levied and paid. 

Any guess as to who will end up paying those fines?

The 2007 law requires three types of bio fuels be mixed:  “car and truck fuel made from cellulose, diesel fuel made from biomass and fuel made from biological materials but with a 50 percent reduction in greenhouse gases” according to the NY Times.

But cellulosic fuel is commercially unavailable.  There simply is none to be had.

Michael J. McAdams, executive director of the Advanced Biofuels Association, said the state of the technology for turning biological material like wood chips or nonfood plants straight into hydrocarbons — instead of relying on conversion by nature over millions of years, which is how crude oil originates — was advancing but was not yet ready for commercial introduction.

Of the technologies that are being tried out, he added, “There are some that are closer to the beaker and some that are closer to the barrel.”

But the requirement – and the fines – remain.

Meanwhile, time has marched on and guess what? 

Mr. Drevna of the refiners association argued that in contrast to 2007, when Congress passed the law, “all of a sudden we’re starting to find tremendous resources of our own, oil and natural gas, here in the United States, because of fracking,” referring to a drilling process that involves injecting chemicals and water into underground rock to release gas and oil.

What is more, the industry expects the 1,700-mile Keystone Pipeline, which would run from oil sands deposits in Canada to the Gulf Coast, to provide more fuel for refineries, he said.

But the EPA is unmoved by that or the fact that cellulosic fuel is unavailable:

But Cathy Milbourn, an E.P.A. spokeswoman, said that her agency still believed that the 8.65-million-gallon quota for cellulosic ethanol for 2012 was “reasonably attainable.” By setting a quota, she added, “we avoid a situation where real cellulosic biofuel production exceeds the mandated volume,” which would weaken demand.

Hmmm … expert: “We’re closer to the beaker than the barrel”.  Bureaucrat: “Even though the product is not commercially available, we still believe the mandate for this year is reasonably attainable.”

Yet there is nothing on the horizon for commercially available cellulosic ethanol in 2012:

One possible early source is the energy company Poet, a large producer of ethanol from corn kernels. The company is doing early work now on a site in Emmetsburg, Iowa, that is supposed to produce up to 25 million gallons a year of fuel alcohol beginning in 2013 from corn cobs.

And Mascoma, a company partly owned by General Motors, announced last month that it would get up to $80 million from the Energy Department to help build a plant in Kinross, Mich., that is supposed to make fuel alcohol from wood waste. Valero Energy, the oil company, and the State of Michigan are also providing funds.

Yet other cellulosic fuel efforts have faltered. A year ago, after it was offered more than $150 million in government grants, Range Fuels closed a commercial factory in Soperton, Ga., where pine chips were to be turned into fuel alcohols, because it ran into technological problems.

Yes that’s right folks, Government Motors is sucking up $80 mil in taxpayer dollars for a startup on a product that experts say isn’t ready for prime time and, as demonstrated by the Georgia plant, still has technical problems which apparently prohibit the commercial production of the desired alternate fuel (after it sucked up $150 mil of tax payer money).

This is ideological agenda driven madness abetted by bureaucratic stupidity.  However, no one has ever claimed bureaucracies deal in reality. They’re fall back for such absurdities is process.   Fining companies for not using a product that isn’t available but mandated simply underlines how decidedly absurd they can be.  The EPA is on a mission.  It has been directed to push that agenda by whatever means necessary.

Meanwhile the changes that should be reflected in the new reality – more abundant domestic and safe oil and gas, are being roundly ignored and their exploitation mostly hindered.  And you, Mr. and Mrs. Taxpayer, are being fined and looted to push this absurd agenda.

~McQ

Twitter: @McQandO

Is being a slacker now a disability?

The regulatory state again finds a new way to try to handicap businesses.  This time it is the EEOC:

Employers are facing more uncertainty in the wake of a letter from the Equal Employment Opportunity Commission warning them that requiring a high school diploma from a job applicant might violate the Americans with Disabilities Act.

The development also has some wondering whether the agency’s advice will result in an educational backlash by creating less of an incentive for some high school students to graduate.

The “informal discussion letter” from the EEOC said an employer’s requirement of a high school diploma, long a standard criterion for screening potential employees, must be “job-related for the position in question and consistent with business necessity.” The letter was posted on the commission’s website on Dec. 2.

Job related things like a modicum of assurance, supposedly offered by high school completion, that a candidate might be able to read and write? 

And if that isn’t a necessity anymore, then why do it.  Of course that means no college so no studying OWS for credit, but hey, Wal-Mart may have to take you.

Many, many, many people, upon the passage of the feel good Americans With Disabilities Act warned that stupidity such as this was the inevitable and logical end game of the regulators. 

As you can see, and as usual, they were right.

Maria Greco Danaher, a lawyer with the labor and employment law firm Ogletree Deakins, said the EEOC letter means that employers must determine whether job applicants whose learning disabilities kept them from obtaining diplomas can perform the essential job functions, with or without reasonable accommodation. She said the development is “worthy of notice” for employers.

“While an employer is not required to ‘prefer’ a learning-disabled applicant over other applicants with more extensive qualifications, it is clear that the EEOC is informing employers that disabled individuals cannot be excluded from consideration for employment based upon artificial barriers in the form of inflexible qualification standards,” she wrote in a blog post.

So, it is the job of the company, according to Danaher, to make these sorts of determinations because the EEOC thinks it is discriminatory to simply require a high school diploma which has always been used to filter candidates?

One assumes then that requiring a college degree would fall in the same category, no?  I mean most of those who require it, other than wanting someone who has demonstrated the intelligence and perseverance to complete a prescribed course of study satisfactorily (and the sort of positive traits that relate to work that such an accomplishment brings), really have no “job related” requirements except the usual: the ability write, read and do basic math.  How dare they?

This is an “informal discussion letter”, better known among those who follow politics as a “trial balloon”.  The EEOC has every intention of trying to make this a regulation.  What they’re doing now is similar to the “public comment” portion that is supposed to give the public the ability to point out the huge downside of their proposal before they make it a regulation anyway.

Oh, and about that incentive to finish high school being lessened by something like this?  Hand wave away:

“No, we don’t think the regulation would discourage people from obtaining high school diplomas,” said Peggy Mastroianni, legal counsel for the EEOC. “People are aware that they need all the education they can get.”

Are they?  That explains the 8% drop out rate I guess.  But look at that statement.  Pure assertion on both ends of it.  “We don’t think” … famous last words of the stereotypical bureaucrat.  There’s never been a regulation that had unintended consequences, has there?

~McQ

Twitter: @McQandO