By J.C., on July 6th, 2008
One of the reasons that the costs of medical care continue to escalate is the litigious society we live in. Physicians, leery of the litigious patient, must practice medicine in a defensive manner. Oftentimes, they must prescribe medications or order expensive tests to cover all bases. These expensive routine workups are a primary reason why hospital bills can be so expensive.
For example, the patient who complains of chest pain while in the hospital for some other minor reason will typically get a battery of tests such as an electrocardiogram, cardiac enzymes, electrolytes, pulse oximetry, and a chest x-ray even if he or she does clinically look like he is having a heart attack. If the physician fails to do all these things and the patient does indeed have a heart attack, the physician may be on the hook for that event.
Thus in such a litigious environment, every physician should obtain malpractice insurance. In many specialties, such as obstetrics, these costs can be prohibitively expensive in certain states, driving physicians out of those states. However, some states, such as Texas, have addressed tort reform. Texas has enacted a law several years ago that caps noneconomic damages at $250,000. This sort of policy limits liability for the physician and drives down the cost of malpractice insurance significantly. It is interesting to note that since the law went into effect, the number of physicians applying for medical licenses in Texas has increased every year.
Tort reform and capping of damages obviously has the significant benefit of allowing physicians to practice medicine with limited liability. Thus, it is significantly pro-physician and is cost-effective. However, from the patient’s perspective, putting a number on a possible outcome from malpractice may not be palatable. After all, we live in a society where people can successfully sue others for millions of dollars from other types of accidents.
Thus, malpractice will continue to be an issue at the forefront of the health economic and policy debate. From my perspective, the medical industry is regulated in almost every other area. It might as well regulate malpractice and make the health economy more financially viable.
By Mark Mahorney, on July 6th, 2008
At over $4 a gallon, gas is definitely putting the pinch on consumers. Wired writes, “No Mocha For Me, Thanks. I’ve Gotta Buy Gas.” We aren’t sweating the little things; we’re simply cutting them out.
The media is self-centered. It loves to write about itself without regard for whether its audience is interested or not. Lately, everywhere I turn I see “the death of print” articles sniveling over the struggling newspaper and magazine industry. They put the blame squarely on the Internet.
I squarely disagree with this assessment. No doubt some advertising dollars have shifted to the Internet and some readers have shifted their viewing to the Internet. So it’s a contributing factor.
But at the heart of it is gas prices. Consumers are having to divert a few hundred dollars a month to gas. Where does that money come from? It comes out of discretionary income, the money we have left over after paying our bills. It’s the money we spend on mochas, newspapers, magazines, and going out to eat.
One of the first things consumers are going to cut back on is newspapers and magazines. They’re still reading, but instead of paying for paper, they’re turning to the Internet and cutting out the cost of delivery. So the media is out the markup.
But more importantly, advertisers go where the readers are. It’s not that advertisers are preferring to advertise via the Internet necessarily, but rather advertisers are ticks and leaches. They go wherever consumers go. And gasoline prices have driven consumers to the Net.
Will they go back to print when times are better? That depends on how long it takes for the economy to recover. In part, they will become used to getting more of their info via the Net. Technology companies are finally seriously committed to coming out with products that make getting information from the Net easier and more portable. We’re seeing more UMPCs and Netbooks offerings, larger screens on cell phones, and better batteries. And the media is making their content easier to access via feeds.
Eventually, the economy will improve as it always does, but by the time that happens we may have already moved on and left print behind.
By Jennifer Bunn, on July 6th, 2008
A recent poll by the California HealthCare Foundation found that even though a substantial amount of patients use the Internet to obtain their health information, few patients make use of the physician rating sites, and fewer still (2%) used the information available to change their physician. However, this could change as more people become aware of the availability of this “service” and insurers push patients to use them.
The AMA has certainly voiced their reservations about this practice. The push for these types of sites seems to be coming from insurers in tiered networks.
“In such networks, health plan members pay less out of pocket for seeing physicians who meet the insurer’s quality criteria, which doctors generally have criticized as faulty.”
-P. Dolan (http://www.ama-assn.org/amednews/2008/06/23/bil10623.htm)
The author goes on to say,
“Much of the growth in physician ratings sites have come from health plans pushing a consumer-driven approach to health care.”
Also of concern, according to Dolan, are insurer-based sites that allow patients to post unproven comments regarding their doctors, a practice that seems dangerously close to the definition of libel. The legal definition of libel is “a false and malicious publication printed for the purpose of defaming a living person.”
Patients should be aware that there might be ulterior motives to these sites before taking advantage of the information contained within. It is doubtful that insurance companies are sponsoring some of these sites simply for altruistic reasons; rather, they are hoping that they will be able to steer their customers to doctors that fit into their system in terms of cost-efficiency.
As for whether or not it can be considered libel to make potentially career-altering statements about physicians online, patients should take these statements with a grain of salt, as they must for a lot of information found on the web that is often misleading or blatantly false.
By Greg Beatty, on July 6th, 2008
Art and commerce have long had an uneasy relationship. In fact, I can’t help thinking about economics and writing without being reminded of the saying attributed to Moliere, the French playwright: “Writing is like prostitution. First you do it for love, and then for a few close friends, and then for money.”
In other words, there’s a not too subtle association of pure artistry with poverty and an equally strong suggestion that if you write for money you’re somehow whoring yourself out…but we’ll come back to that point. What interests me is a subject that’s less frequently discussed even than art or sex: economics, specifically, economics in fiction. This means everything from how economic forces are shown to shape human identity and desire (hint: it’s usually bad) to how authors and their characters conceptualize economics.
I’d like to start with science fiction and the Free Lunch Question. In his SF classic The Moon is a Harsh Mistress, science fiction grandmaster (and libertarian) Robert Heinlein popularized the term TANSTAAFL which means “There Ain’t No Such Thing As A Free Lunch.” Meant to show the down to earth (ha!) pragmatism of his lunar colonists whose tough situations stripped all fantasies away from their economic calculations, TANSTAAFL has passed in to science fiction fandom as a generalized accepted truth. It even makes an appearance in Wikipedia where the entry on the phrase indicates it shows an understanding of opportunity costs.
The Moon is a Harsh Mistress came out in 1966. Flash forward 35 years to another writer, Spider Robinson (who was, early in his career, tagged as the next Heinlein), and we have The Free Lunch. Now, given Robinson’s well-known appreciation of Heinlein (he’s written a gushing essay on Heinlein and finished a work Heinlein left as a stack of notes), from the title alone I’d to assume this is meant to be read as an open and direct answer to the master, and that suspicion is confirmed in Chapter 17 when one of the main characters thinks of how universally true this “Heinlein proverb” has been.
But what does Spider offer in its proverbial place? The Free Lunch, while pleasant, falls decidedly short in its understanding of economics, especially Friedrich Hayek on prices. Robinson gives us a lovely portrait of a multi-sensory amusement park (Dreamworld), characters who are genius outcasts with hearts of gold, and a string of fun encounters that make the book a good light read. However, the free lunch that gives the book its title is, well, silly, and it’s tied in to an extremely complex plot twist.
A number of weak, dwarfish time travelers have come back to our time to interfere with the flow of history and make a new world. You see, humanity so polluted the world that it has poisoned itself. The crux point is suspiciously close to our own time; they must act now or miss the chance and let the world poison itself. These time travelers decide that most of the problems humanity’s had have come from “insufficient wealth” and that they’ll solve this by secretly using their advanced technologies to make everyone rich. Leaving aside a number of problems (Is this really where our problems come from? If they have this superior technology, why don’t they fix their damaged genes?), there’s still a major question of information contamination.
Among his other contributions, Hayek showed that prices function to communicate dense amounts of information. Pumping free goods into the economy, making technologies work better than they should, and increasing production by making software bug free, the idea is that the free lunch will enable us to build a civilization strong enough to weather the coming crash.
While this shows Robinson’s well-established good heart, I have to squint and say…hmm. You’ll destroy the price system and increase production and consumption to ward off an ecological crisis? I think, my friend, that your free lunch will be quite costly in the end.
But perhaps I’m wrong. Take a look at The Free Lunch and let me—and Spider—know what you think.
By G.L.C., on July 6th, 2008
Tort is a civil wrong other than a breach of contract – an injury to someone’s person, reputation, or feelings or damage to real or personal property – for which a lawsuit can be brought by the injured party. The legal rules of liability for torts impact economic behavior. These rules provide the circumstances under which courts grant damages to the injured party. In the United States, courts can hold injurers liable for many different types of torts such as automobile accidents, contract fraud, trespass, medical malpractice, and injuries associated with defective products.
The tort liability system in the United States, at almost 2% of the GDP*, is the most expensive in the world. It is a pro-consumer system which makes companies responsible for any damages caused by their products and services. It forces the companies to consider the scope for damages that the company’s product(s) may cause.
The basic idea behind the tort liability system in making the injurers pay for the damages or harm they cause is that it not only compensates the victims, it also gives the injurers incentives to reduce the frequency of or prevent the injury in the future.
There are two sides to every coin. The tort liability system may improve or reduce efficiency. If the tort liability claim is optimal, it alters the behavior of the companies in a socially desirable way. If it is excessive, it can have a bad effect. It can reduce the output and deter production.
There is a small degree of risk that every product sold may cause unintended harm which may not be insured against. The tort liability ensures that companies pay due attention to the safety aspect of their products. The ability of the consumers to pursue lawsuits for damages acts as an incentive for companies to make better and safer products or can be a deterrent and affect the output and production.
For the tort liability system to work as an incentive for companies, the damages must not be random. There are many who feel that if punitive damages are essentially random, then they will not provide proper incentives and, instead, act as a tax on the companies. It is a cost with no corresponding benefit. However, not everyone agrees with this finding. Many experts feel that tort liability is largely predictable and can provide proper incentives to companies. Companies have incentives to invest in product safety research in an effort to reduce liability costs while still bringing a particular product to market.
The economic benefits of the tort liability system should not be measured in terms of the compensation or payments to the victims of the tort but the gains to society through the efforts taken by the potential injurers (companies) to design safer products.
*Editor’s note: Estimated U.S. GDP for 2007, according to the CIA’s The World Factbook, is $13.84 trillion. This puts tort litigation at $276.8 billion.
By J.D. Seagraves, on July 6th, 2008
Have you ever had to give a speech in front of more than 1,000 people, half of whom were sure to disagree with what you had to say? That’s what I had to do on Sunday, May 24, at the Libertarian National Convention in Denver, and it was pretty nerve-wracking. Oh, and I forgot to mention: the speech was being broadcast live, nationally, on C-SPAN. That had to at least double the audience.
I had come to Denver to support the candidacy of my hero, Dr. Mary Ruwart. She had converted me from liberalism to libertarianism four years earlier, and she was up against a machine in her quest to be the Libertarian Party’s presidential nominee. Her competition for the nomination was former Republican congressman Bob Barr—who as a member of the “Religious Right” had helped author the Defense of Marriage Act but now said he’d had a “Libertarian Awakening.” I was skeptical, and I wanted to do anything I could to help Mary Ruwart defeat the Republican interloper. So when she asked me to give her nominating speech, I couldn’t say no—but I didn’t want to say yes.
Public speaking is said to outrank death as people’s most dreaded fear. Personally, I get nervous over the fear of getting nervous. What if I get overcome with fear and can’t speak? The thought that this might happen is what makes it more likely that it might—it’s a self-fulfilling prophecy if you let your natural fear get out of control. Everyone’s always nervous when they first step up to the lectern. So my advice is to do something to overcome those nerves as soon as possible, and nothing works better than inspiring a reaction from the audience.
“I’m here today because of Mary Ruwart,” my speech began. In this environment, just saying the candidate’s name elicited a small smattering of applause.
“And not just here in Denver—but here, philosophically, among libertarians—” I used this line to identify with the audience. I am one of them. Even the people on the other side felt a kinship with me at this point.
“—because of one person and one person only: Dr. Mary Ruwart.” At this point, the Ruwart half of the crowd erupted in cheers. I was home free. My slow pacing and pausing reeled in the audience, and now I could move a little faster. They were listening. And thus, I was no longer nervous.
I went on to give a great speech, or so I am told. I rallied at the end, making sure to have a strong finish, by telling the story of a woman who had been moved to tears by the inspiring words of my candidate. “She is a life changer,” I said of Dr. Ruwart. “She changed my life. And if we make her our nominee…” I paused before quickening my pace, “then she will build this party by continuing the Ron Paul Revolution and converting people from all over the ideological spectrum to libertarianism, real libertarianism; accept no substitute, nominate Mary Ruwart!” The crowd erupted into cheers. Later, I ran into the WWE wrestler Kane, a libertarian and Mary Ruwart supporter, who gave me a big thumbs up. What a feeling!
And just think: only a few years earlier, I had been afraid to read aloud in class. I was so nervous about becoming nervous that I was literally paralyzed. But as with any fear, I decided the best way to overcome mine was to face it head on, and I did so when I ran for public office in 2004. Four years later, I was a bit rusty, but I used these same techniques to deliver a well-received speech on national TV. If you too are intimidated by public speaking, I suggest you give my techniques a try.
Read J.D.’s related article on the Libertarian National Convention here.
By Evelyn Black, on July 6th, 2008
 While Congress tries to patch together some kind of package to help people facing foreclosure without piling even more losses onto troubled lenders, the number of homeowners facing foreclosure is quietly rising. Fast.
According to a recent article in the New York Times, 2.6 million American homeowners were facing foreclosure when Congress first started crafting the bill, and six months later that number has already risen to over 3 million homeowners. By the time the package is finished and acceptable to all sides both politically and ideologically, by most estimates over 5 millions borrowers will be facing foreclosure. Even the most aggressive version of the package in Congress will help only a small number of those losing their homes.
The NYT article quotes Steve O’Connor, Senior Vice President of the Mortgage Banker’s Association, as saying, “There is no silver bullet. It will take multiple tools to turn the housing market around, and it’s going to take time.”
Ah, the elusive silver bullet. The silver bullet is in the same category as the magic wand, as in, “There’s no magic wand that can reduce gasoline prices in this economy,” or, “If I had a magic wand and could just fix [fill-in-the-blank here with any one of a couple dozen rapidly worsening social problems], I’d do it, but I don’t have a magic wand.”
Silver bullets are like magic wands, only more aggressive. Magic wands turn gas pumps into vases of daisies. Silver bullets kill werewolves. Werewolves tend to head up financial institutions and conservative think tanks, so of course they do not keep much of a supply of silver bullets on hand in those places.
But here’s the thing: We need some silver bullets, and we need them fast.
It isn’t a question anymore of ‘moral hazard’; that high-road conservative argument that wrongly reduces the whole problem to a handful of low-life, credit-card crazy poor people and greedy high-roller investors who bought themselves mini-mansions they weren’t entitled to own with money they weren’t entitled to borrow.
Financial institutions loaned out that money on terms that would have looked insane in Vegas, never mind inside mortgage lending. The lack of self-regulation in the mortgage industry at the height of the housing bubble was breathtaking, and the Mortgage Banker’s Association and its members surely know this better than anyone in or out of Congress.
What’s happening now, long before we are anywhere near the 5 million foreclosures we’re heading toward, is that whole cities are eroding, losing their tax bases as homes go vacant and formerly good neighborhoods watch their home values plummet. Formerly prosperous cities are having to cut back on essential services like police and firemen, school buses, and public transit.
As foreclosures increase, associated problems snowball out of control. Entire middle class neighborhoods in Cleveland are now destroyed, and many other Midwestern cities are rapidly following suit. It’s happening very fast, and as it happens jobs in construction and sales vanish, people are left homeless, and city and state governments are overwhelmed with social problems right at the very same time their resources for handling these problems are drying up.
So the truth is, we need a silver bullet. We need lots of silver bullets, and we needed them yesterday.
According to the NYT article:
“There is a precedent for such government endeavors, but not since the New Deal. In the 1930s, the government created the Home Owners Loan Corporation to buy mortgages and modify them. In three years, it bought a fifth of the country’s home loans,” said Alex J. Pollock, a resident fellow at the American Enterprise Institute in Washington.
Bankers get understandably skittish when anyone invokes the spirit of FDR, especially the weekend after the DOW falls 350 points in a single day and appears to be headed for more of the same. And yet, the consequences of a protracted philosophical debate on this issue could be much more disastrous than anyone in authority is admitting right now. Ordinary people get it. Mayors get it. Even governors get it.
We have the right to use the silver bullets now; the Supreme Court said so.
So let’s find some. Quick. Before it’s too late.
By Joanne Yao, on July 6th, 2008
Instead of sitting down to read the New York Times or the Wall Street Journal, imagine unplugging a paperback-sized Kindle reader from your nightstand and scrolling down to your favorite columnist. No, you can’t flip the pages.
Since Amazon CEO Jeff Bezos’ pet project hit the market, publishers and writers alike have been holding their breath to see how Kindle would morph the book industry. But more than a year later, the actual numbers of units sold remain shrouded in secrecy. The Kindle device is not ranked on Amazon.com like all other products but retains constant #1 status on its own virtual store.
In lieu of Amazon keeping its mouth shut, Citi analyst Mark Mahaney estimates that Kindle has sold about 190,000 units to date – less than the first year sales of the PalmPilot in 1997 and about half of the Apple iPod in 2001. Publisher Simon & Schuster Inc. saw a 40% growth in e-book sales in 2007, while other companies continue to scoff at the idea of enjoying Jane Austen on a machine, albeit a lightweight one that will play you with English ballroom tunes as you read.
Kindle’s success could bring electronic publications such as blogs, short stories, and newspapers into the bedroom – traditionally book territory – without a backwards look.
Do you think Kindle’s perpetually out of stock status and #1 rank are examples of slick reverse engineering or just another sign of the device’s future promise?
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