Perverse Incentives

2009 Promise of Cheaper Health Care Has Morphed Into 2013 Price Hikes

"Remember when President Obama promised back in 2009 that his health care reform plan would cut insurance premiums for the average family by $2,500? Four years later, those promised cuts have morphed into admissions of price hikes. According to a new study from Bank of America Merrill Lynch, 70 percent of chief financial officers cite health costs as their top concern, up from 51 percent last year, mainly because of what they expect Obamacare to do to costs. Many smaller companies are contemplating dropping family coverage — and will instead offer benefits to workers only, thanks to the higher costs on the way because of Obamacare. Continue reading →

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Disturbing report finds U.S. hospitals profit more when surgery goes wrong

"US hospitals face a disincentive to improve care because they make drastically more money when surgery goes wrong than when a patient is discharged with no complications, a study published Tuesday found. An estimated $400 billion is spent on surgery in the United States every year. Privately insured patients with complications provide hospitals with a 330 percent higher profit margin than those whose surgeries went smoothly. Patients whose bills are paid by Medicare — a government insurance plan for the elderly and disabled — produced a 190 percent higher profit margin when complications arose following surgery." Continue reading →

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Wildlife trafficker kills 5 crocodiles, 90 rare birds as police descend on his compound

"Five dead crocodiles, 14 critically endangered turtles and a cache of other rare species have been found in the home of a suspected wildlife trader in one of the Philippines’ biggest slums, the government said Friday. The juvenile saltwater crocodiles, as well as 90 birds, were killed by the trader or his aides shortly before police and environment officials raided the place Wednesday, Environment Secretary Ramon Paje said. He denounced the unnamed suspects’ 'cruelty'. 'What’s particularly alarming about this poaching incident is that there were reports that most of these endangered animals were intentionally killed to avoid detection by authorities,' Paje said in a statement." Continue reading →

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Credit crisis begins to cripple Chinese cities

"Worried lenders in the informal sector raised interest rates for small and medium-size businesses, setting off a much broader wave of defaults in recent weeks, as owners found themselves unable to repay billions of dollars in bad debts, many of them handwritten and hard to enforce in court. State-owned banks have long been allowed to lend only at low, regulated rates barely above the inflation rate, with the total value of loans controlled by quarterly quotas. These loans go overwhelmingly to large state-owned businesses, government officials and politically connected individuals, who then relend the money at much higher interest rates." Continue reading →

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The Source of Systemic Crisis: Risk and Moral Hazard

"No government agency ever projects deep, long-lasting recessions, because such a period of stagnation would upend all the rosy projections that the status quo is eternally sustainable and stable. Where does all this lead us? To this: Programs that backstop banks and social insurance systems like Medicare are not like fire or life insurance because they are effectively open-ended in terms of costs and in exposure to risk. A system which pools risk without distributing it to the participants and eliminates the causal connection between risk and consequence introduces moral hazard on a grand scale." Continue reading →

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Welfare Recipients Can Now Earn More Than Teachers

"A mother with two children in New York, for instance, is able to collect $38,004 per year in welfare handouts. This is greater than the starting salary of a teacher in the state. In 33 states, welfare recipients make more than they would at an $8 per hour job. In fact, in 12 of those states, welfare recipients make more than they would at a $12 per hour job. Where is the incentive to work? Michael Tanner, a senior fellow at CATO, said, 'There is no evidence that people on welfare are lazy. But they’re also not stupid. If you pay them more not to work than they can earn by working, many will choose not to work.'" Continue reading →

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What five beers account for most emergency room visits?

"The New York Times reported on a study at Johns Hopkins Hospital in Baltimore, analyzing how many patients in the emergency room had been drinking and what they had been drinking. Not surprising, the top five were Budweiser, Steel Reserve, Colt 45, Bud Ice and Bud Light." Continue reading →

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Bill Bonner: The world’s fattest army

"Yes, dear reader, times have changed. But humans have not. Give them the opportunity, and they will turn into zombies. The late Colonel John Boyd of the US Air Force, observed that, 'It is not true the Pentagon has no strategy. It has a strategy, and once you understand what that strategy is, everything the Pentagon does makes sense. The strategy is, don’t interrupt the money flow, add to it.' Boyd was a strategist. He observed that wars were won by lean and agile fighters, who were able to improvise and innovate quickly as needs and opportunities arose. Bureaucracy does not support such warriors; it tries to get rid of them." Continue reading →

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Seattle $15/Hour Minimum Wage Being Pushed

"Washington already has the nation's highest state minimum wage at $9.19 an hour. Now, there's a push in Seattle, at least, to make it $15. That would mean fast food workers, retail clerks, baristas and other minimum wage workers would get what protesters demanded when they shut down a handful of city restaurants in May and others called for when they demonstrated nationwide in July. So far, the City Council and mayoral candidates have said they would consider it in the famously liberal city. One said, however, that it may not be soon." Continue reading →

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King of My Castle? Yeah, Right

"The City by the Bay is going through one of its worst housing shortages in memory. With typical high demand intensified by a regional boom in tech jobs, apartment open houses are mob scenes of desperate applicants clutching their credit reports. The citywide median rental price for a one-bedroom is $2,764 a month, but jumps to $3,500 in trendy areas. One reason for the shortage? Me. I’ve recently joined the ranks of San Francisco landlords who have decided that it’s better to keep an apartment empty than to lease it to tenants. Together, we have left vacant about 10,600 rental units. That’s about five percent of the city’s total." Continue reading →

Continue ReadingKing of My Castle? Yeah, Right