Do you have “pension envy?”

I just got around to reading last Sunday’s Albuquerque Journal opinion section. There I saw a piece by Nick Mandel’s piece “Pension Envy Won’t Fix State Budget, Policy Woes.” As far as I could tell, the organization does not have a website, but the essence of Mandel’s argument is:

1) Yes, government pensions are far more generous than those offered by the private sector because government can always extract money from the private sector and they don’t have any profit pressures (but please don’t hold it against us);
2) Cuts can be made to the Governor’s exempt employee hires, double-dipping should be stopped, and taxes should be raised on corporations in order to bring in more money. Well, two out of three ain’t bad. Certainly, Richardson’s has hired great numbers of exempt employees and double-dipping should be stopped (of course, the problem is that public employees are able to get pensions far too early, thus they can retire and get back to work for the government again).

I took a different take in a recent article on the pension situation. Sure, government pensions have been reduced by $80 million, but this is a drop in the bucket. As we’ve discussed in the past, the number and overall compensation levels of government employment are out of line with the private sector. Mandel prefers to ignore that.

So, Mandel offers a few good options for cost savings (and one bad tax hike), but that doesn’t mean that an inflated government bureaucracy is not a problem.

Health Care Plan Flow Chart

Those who advocate for government-run health care reform love to talk about how “simple” their plans are and how they are the ones restoring the patient-doctor relationship. The problem is that anytime government is involved in managing the economy, things get complicated…and fast.

Here is a flow-chart illustrating how the House Democrats’ health care plan would work in practice:

Unfortunately, the flow chart does not adequately illustrate how the $1.5 trillion extra needed to run the plan will have to be obtained.

This article more fully explains the flow chart and how it will be used.

Democratic Party Happy Talk on Health Care

Brian Colón, the Chairman of the Democratic Party of New Mexico, and I took part in an online health care debate for the Albuquerque Journal last week. He essentially re-stated his opening remarks in an opinion piece on health care that appeared yesterday in the Journal.

Unfortunately, while Colón is good at providing talking points as to why we need health care reform, he does a lot of writing without actually suggesting any specific ways in which Americans in general and New Mexicans in general can obtain less costly, better health care. This is not a surprise since Colón is not a policy expert, rather he is a party builder, and he may not want to step on any toes. After all, not all elected Democrats support “universal,” let alone single-payer, health care.

Unlike Brian, I have actually proposed some specific health care reforms that will, if adopted, reduce costs and lead to better health care. The problem I have with most advocates of so-called “reform” is that they are working under the assumption that the politicians can get together and Washington and come up with a government system that will please everyone. Unfortunately (for them), as Obama and Congressional leadership have been forced to come up with specifics, the various interest groups have started fighting and the plan seems to be stalling.

The simple fact is that we live in a world of limited resources. While everyone thinks they can get their way when they sit down at the lobbying table, the fact is that someone ultimately loses in a zero-sum game.

Check Out ABQ Journal’s Online Health Care Debate

This week the Albuquerque Journal is holding an online debate over the various health care issues now being debated in Congress. I was asked to participate along with Brian Colón, the Chairman of the Democratic Party of New Mexico, Todd Sandman of Presbyterian Healthcare Services, Dr. Vicki L. Perrigo, and lefty blogger Barbara Wold.
Check out the first round of questions and answers here. Check back at the Journal’s “City Seeker” blog site to follow the debate all week long.

The “Single-Payer ‘Solution'”

I’ll give him credit, John R. Hall, writing in today’s Albuquerque Journal, knows how to push people’s buttons in support of universal health care. His argument goes something like this: Obama supports it, doctors support it, the American people support it. The only ones who don’t support “universal” health care are the big, nasty insurance and drug companies, not to mention the media. Oh, and by the way, our current health care system is killing us and our babies and free market capitalism is a failure.
Hall has his polling data correct as far as I can tell. Of course, if enough people sell a given product (even socialized health care!) as a cure for all our problems, large numbers of people will begin to believe. Especially when they never see the drawbacks to the system they are being sold. But, Hall is flat out wrong when he says “America’s statistics on life expectancy and infant mortality are approaching Third World standards.” According to this table, we are on par with Ireland, Denmark, Finland, and several other decidedly 1st world nations when it comes to life expectancy and our infant mortality is rate is far better than third world nations, especially when you account for the fact that there are significant differences in the way the nations collect this data which make the US look worse than it really is.
But these two data sets are largely irrelevant when it comes to socialized medicine and the system proposed by Mr. Hall. Can capitalism work in health care? Hall argues that it cannot, but he does not provide a single shred of data as to how socialized medicine will improve our current system. We at the Rio Grande Foundation always provide real, specific, market-based solutions to our problems.
Socialized medicine’s advocates seem to think that the government has magical powers to allocate resources in an ideal manner that will make everyone happy and will do this all in a more efficient manner than exists now — or could possibly exist were we to pursue market-based reforms. Fortunately, even Obama realizes that reality is in conflict with that fantasy. Hopefully political reality finishes the job in killing a drastic move towards further socialization of our health care.

A New Mexico-based Academic Gets it Right on Health Care

Professor Allen Parkman is a Professor of Management at University of New Mexico. In a recently-published opinion piece that appeared in the Albuquerque Journal, he explains in simple, clear detail, why health care costs have spiraled out of control over the years. As he puts it with regards to Obama’s proposed reform of our health care sector, “History suggests that any cost reductions will be hard to obtain and expanded coverage will be very expensive.”
Parkman rightly points to the tax treatment of health care and how it influences consumer behavior as the single most-important flaw with America’s health care system:

On closer scrutiny, the problems with this industry should be viewed differently, as purchases of health care are often inefficient with unnecessary transaction costs. Let me explain. They can be inefficient because consumers are not exposed to the true cost of the services they are receiving and, consequently, the benefits may not justify the costs. In addition, there are unnecessary costs associated with each transaction. In contrast to a simple credit card purchase at a grocery store, health care expenses covered by insurance require additional paperwork for the provider and then administrative scrutiny from the insurance company.
Both of these problems exist because of the inappropriate use of insurance with regard to health care. Normally, we buy insurance to convert uncertainty into certainty. For example, we pay a predictable premium for fire insurance with the understanding that we will be reimbursed if our house burns down. We have converted an uncertain event (the burning of our house) into a predictable event (a premium and reimbursement if there is a fire). Fire insurance is fairly inexpensive — because it is seldom used.

As Parkman concludes, “With more realistic prices, some of the problems facing the working uninsured will be reduced. There still may be a role for the government providing catastrophic coverage for those individuals and families…real health care reform does not come from promising cost reductions and expanding coverage. It comes from making processes more efficient.”

“Reform Health Care, but to what end?”

All too often, those who want to increase the amount of regulations and level of government in the health care sector are considered to be “reformers,” a term generally associated with improving on the flaws of a current, broken system. Several recent articles and letters appeared in the West Side edition of the Albuquerque Journal arguing on behalf of such policies. In my response to these big-government advocates, I argue that moving toward a free market in health care would represent a set of “reforms” that is far more likely to address the flaws inherent in our current system.