Within a span of three weeks, President Obama has announced back-to-back new fuel economy standards for passenger vehicles and trucks. New regulations put in place will require a corporate average fuel economy (CAFE) of 54.5 miles per gallon for passenger vehicles by 2025. New standards for trucks will require a 10 to 20 percent increase in fuel efficiency before 2018.
Whether President Obama realizes it or not, fuel efficiency does not come without compromising other aspects of a vehicle. One feature that will undoubtedly be affected by these new rules is vehicle cost.
According to a study conducted by the Center for Automotive Research, the new passenger vehicle standards could eventually cost consumers an additional $5,000-$6,000 for each new vehicle. Even if gas prices rose to $6.00 per gallon, the average American driver may not recoup that huge price increase through fuel savings. Similarly, new rules for trucks are expected to add an additional $1,050 for work trucks and $6,220 for supercab tractors.
One of the most efficient ways to increase the amount of miles a vehicle can travel per gallon of gasoline is to reduce the weight of the vehicle. Therefore, auto manufacturers will be forced to make cars that are smaller and lighter in order to meet President Obama’s new CAFE standards. Far from a win for consumers, this type of government-knows-best policy is the exact opposite of how a market economy functions. Instead of making their own demands, car buyers will be forced to comply with a federal mandate that insists on prioritizing fuel efficiency above all else—safety, comfort, size, and performance all take a back seat. Car buyers will be forced to pay more and have fewer vehicle options to choose from.
Given the fact that this is such an important policy goal for President Obama, it is fair to look at his own driving habits. The president is chauffeured in a vehicle known as The Beast, a 10,000-pound limousine that gets 8 miles to the gallon. In order to achieve maximum safety and security for the president, the vehicle must be extremely heavy which, of course, decreases its fuel efficiency.
Obviously, lighter vehicles are not nearly as safe for families as heavier vehicles, so there will be increases in traffic fatalities as well.
This is consistent with Obama’s desire for equality. Americans are too wealthy – we need to produce less and consume less so that we are more like other nations. Nations like North Korea and Cuba. Naturally, Obama himself will be exempt from these standards, just as he and his family are exempt from Obamacare. Oh, and his union supporters are also getting exemptions from Obamacare in record numbers.
A story about a recent survey on Canada’s universal health care system, from the National Post.
Excerpt:
A new survey on attitudes about the health-care system reveals some interesting responses, confirming that Canadians have widespread misgivings about the system, even while not fully understanding how it works. They also favour using tax incentives to encourage healthier living and eating.
The survey of 2,300 Canadians carried out in April by the consulting firm Deloitte was part of a larger poll covering 12 countries. It is considered accurate to within two percentage points, 95% of the time.
Some of the highlights include:
– Just 5% of respondents gave the system an A grade; 45% giving it a B, 36% a C, 10% a D, and 4% a failing F.
– 33% of Canadians said they understood how the system works, down from 39% in 2009 when Deloitte did a similar survey.
– 69% feel that the system has not improved in the last two years, while there were slightly more who thought it had deteriorated, as opposed to improved, in that period.
– 36% believe that half the money spent on health care is wasted; interestingly, half of those skeptics blame the waste on people failing to take responsibility for their own health.
– 13% reported that they are caring for another person, up from 10% in 2009, a possible sign of the increasing personal burden posed by the aging population. In a third of those cases, the individual is caring for a spouse.
– 55% rated their health as excellent or very good … even though 52% report having been diagnosed with one or more chronic diseases.
– 63% favour some kind of tax-based incentive to encourage more healthy diets and lifestyles.
– About 80% favour expanding medical-school enrollments to increase the supply of doctors.
You can find some more videos describing horror stories in the Canadian system in this previous post.
Everyone agrees that the American health care system is too expensive, but do we at least get better quality outcomes? Let’s see.
Medical care in the United States is derided as miserable compared to health care systems in the rest of the developed world. Economists, government officials, insurers, and academics beat the drum for a far larger government role in health care. Much of the public assumes that their arguments are sound because the calls for change are so ubiquitous and the topic so complex. Before we turn to government as the solution, however, we should consider some unheralded facts about America’s health care system.
1. Americans have better survival rates than Europeans for common cancers. Breast cancer mortality is 52 percent higher in Germany than in the United States and 88 percent higher in the United Kingdom. Prostate cancer mortality is 604 percent higher in the United Kingdom and 457 percent higher in Norway. The mortality rate for colorectal cancer among British men and women is about 40 percent higher.
2. Americans have lower cancer mortality rates than Canadians. Breast cancer mortality in Canada is 9 percent higher than in the United States, prostate cancer is 184 percent higher, and colon cancer among men is about 10 percent higher.
3. Americans have better access to treatment for chronic diseases than patients in other developed countries. Some 56 percent of Americans who could benefit from statin drugs, which reduce cholesterol and protect against heart disease, are taking them. By comparison, of those patients who could benefit from these drugs, only 36 percent of the Dutch, 29 percent of the Swiss, 26 percent of Germans, 23 percent of Britons, and 17 percent of Italians receive them.
4. Americans have better access to preventive cancer screening than Canadians. Take the proportion of the appropriate-age population groups who have received recommended tests for breast, cervical, prostate, and colon cancer:
Nine out of ten middle-aged American women (89 percent) have had a mammogram, compared to fewer than three-fourths of Canadians (72 percent).
Nearly all American women (96 percent) have had a Pap smear, compared to fewer than 90 percent of Canadians.
More than half of American men (54 percent) have had a prostatespecific antigen (PSA) test, compared to fewer than one in six Canadians (16 percent).
Nearly one-third of Americans (30 percent) have had a colonoscopy, compared with fewer than one in twenty Canadians (5 percent).
5. Lower-income Americans are in better health than comparable Canadians. Twice as many American seniors with below-median incomes self-report “excellent” health (11.7 percent) compared to Canadian seniors (5.8 percent). Conversely, white, young Canadian adults with below-median incomes are 20 percent more likely than lower-income Americans to describe their health as “fair or poor.”
6. Americans spend less time waiting for care than patients in Canada and the United Kingdom. Canadian and British patients wait about twice as long—sometimes more than a year—to see a specialist, have elective surgery such as hip replacements, or get radiation treatment for cancer. All told, 827,429 people are waiting for some type of procedure in Canada. In Britain, nearly 1.8 million people are waiting for a hospital admission or outpatient treatment.
7. People in countries with more government control of health care are highly dissatisfied and believe reform is needed. More than 70 percent of German, Canadian, Australian, New Zealand, and British adults say their health system needs either “fundamental change” or “complete rebuilding.”
8. Americans are more satisfied with the care they receive than Canadians. When asked about their own health care instead of the “health care system,” more than half of Americans (51.3 percent) are very satisfied with their health care services, compared with only 41.5 percent of Canadians; a lower proportion of Americans are dissatisfied (6.8 percent) than Canadians (8.5 percent).
9. Americans have better access to important new technologies such as medical imaging than do patients in Canada or Britain. An overwhelming majority of leading American physicians identify computerized tomography (CT) and magnetic resonance imaging (MRI) as the most important medical innovations for improving patient care during the previous decade—even as economists and policy makers unfamiliar with actual medical practice decry these techniques as wasteful. The United States has thirty-four CT scanners per million Americans, compared to twelve in Canada and eight in Britain. The United States has almost twenty-seven MRI machines per million people compared to about six per million in Canada and Britain.
10. Americans are responsible for the vast majority of all health care innovations. The top five U.S. hospitals conduct more clinical trials than all the hospitals in any other developed country. Since the mid- 1970s, the Nobel Prize in medicine or physiology has gone to U.S. residents more often than recipients from all other countries combined. In only five of the past thirty-four years did a scientist living in the United States not win or share in the prize. Most important recent medical innovations were developed in the United States.
Despite serious challenges, such as escalating costs and care for the uninsured, the U.S. health care system compares favorably to those in other developed countries.
The author of that article is a senior fellow at the Hoover Institution and a professor of radiology and chief of neuroradiology at Stanford University Medical School.
So, we saw that the quality of the U.S. health care system is good, but how can we lower the costs? Is government controlled rationing (like Canada) the answer, or is there another way?
Choice and competition in health care
The Center for Freedom and prosperity seems to have found another way: choice and competition.
Excerpt:
In many ways, America’s health care system is the best in the world. It has state-of-the-art technology and highly-skilled medical professionals. America is also home to most of the cutting-edge medical research in the world. However, there are also important problems, such as the “third-party payer” model where consumers rarely pay the full cost of their own health care. This creates an incentive for both excessive and expensive use of health care, a problem that would be exacerbated by current proposals for greater government control of the health care system.
But the third-party payer problem is not the only reason that health care costs are high. State governments impose health insurance coverage mandates, often for “gold-plated” coverage, that drive up the cost of insurance. These regulations, which are unique to each state, are imposed at the behest of interest groups seeking to increase demand for their services. Combined with protectionist barriers that prevent consumers from buying policies from providers in other states, these mandates have severe unintended consequences:
They limit competition in the health insurance market by preventing insurance buyers from shopping across state lines, creating monopolistic and oligopolistic situations in many states;
They impose coverage mandates that force health insurance buyers to purchase coverage that they either do not want or cannot afford;
They force insurers to use community rating instead of experience rating, which means healthy people are forced to subsidize unhealthy people – to the effect that insurance premiums rise for many buyers and healthy people are driven out of the market.
The symptoms of a dysfunctional health insurance market – foremost the significant number of uninsured, but also rising costs – are recognized by many legislators. But the problem cannot be solved, as some suggest, by means of increased government regulation. Indeed, government regulation is the cause of most problems in the health insurance market, not the solution.
Restoring a free market health care system would be a daunting task, one that would involve, 1) sweeping reforms to the 45 percent of health care directly financed by government programs, and 2) a complete rewrite of the tax code to remove the distortions that exist in employer-provided health insurance. This paper focuses on the so-called third leg of the stool – policies to remove government barriers and restore competition to the market for individual health insurance.
Reforming the government-financed programs is definitely necessary because there is so much fraud and waste, as there always is with government, when compared to the private sector. Private sector businesses have to turn a profit, so they actually try to prevent fraud and waste.
Here’s a documentary featuring John Stossel that explains the health insurance problem. (And featuring Regina Hertzlinger, too)
Part 1 of 5:
Part 2 of 5:
Part 3 of 5:
Part 4 of 5:
Part 5 of 5:
Choice and competition govern the way we buy things that we want normally, especially when we buy things online. I am pretty happy buying things from online retailers, because I have so many stores to choose from, with lots of product reviews and retailer ratings. I usually like what I buy, because I know that I am buying a good product from a good seller. And if I don’t get a good outcome, I can leave a review of the product, service or seller as a warning for the next person. That helps to encourage producers to make quality products and services Seller rating helps to make sellers care for customers, and to accept returns on items that don’t perform. Maybe we should do that with health care, and just leave health insurance for catastrophic care – like car insurance is for accidents, but not for oil changes.
We are still suffering from the bursting of the housing bubble created by low interest rates, lowered mortgage standards, and subsidies to Fannie Mae and Freddie Mac. Those policies encouraged the granting of mortgages to people who should never have gotten them — and when they defaulted, the whole financial sector nearly collapsed.
Now some people see signs that another bubble is bursting. They call it the higher-education bubble.
For years, government has assumed it’s a good thing to go to college. College graduates tend to earn more money than non-college graduates.
Politicians of both parties have called for giving everybody a chance to go to college, just as they called for giving everybody a chance to buy a home.
So government has been subsidizing higher education with low-interest college loans, Pell grants, and cheap tuitions at state colleges and universities.
The predictable result is that higher education costs have risen much faster than inflation, much faster than personal incomes, much faster than the economy over the past 40 years.
Moreover, you can’t get out of paying off those college loans, even by going through bankruptcy. At least with a home mortgage, you can walk away and let the bank foreclose and not owe any more money.
Peter Thiel, the co-founder of PayPal, is adept at spotting bubbles. He sold out for $500 million in March 2000, at the peak of the tech bubble, when his partners wanted to hold out for more. He refused to buy a house until the housing bubble burst.
“A true bubble is when something is overvalued and intensely believed,” he has said. “Education may still be the only thing people still believe in in the United States.”
But the combination of rising costs and dubious quality may be undermining that belief.
For what have institutions of higher learning done with their vast increases in revenues? The answer in all too many cases is administrative bloat.
Take the California State University system, the second tier in that state’s public higher education. Between 1975 and 2008, the number of faculty rose by 3 percent, to 12,019 positions. During those same years, the number of administrators rose 221 percent, to 12,183. That’s right: There are more administrators than teachers at Cal State now.
These people get paid to “liaise” and “facilitate” and produce reports on diversity. How that benefits Cal State students or California taxpayers is unclear.
It is often said that American colleges and universities are the best in the world. That’s undoubtedly true in the hard sciences.
But in the humanities and to a lesser extent in the social sciences, there’s a lot of garbage. Is a degree in religious and women’s studies worth $100,000 in student loan debt? Probably not.
As economist Richard Vedder points out, 45 percent of those who enter four-year colleges don’t get a degree within six years. Given the low achievement level of most high school graduates, it’s hard to avoid the conclusion that many of them shouldn’t have bothered in the first place.
I think college is a good idea if you you don’t spend too much on it, and if you can make back the investment by getting a job in a good field. In general, no subject that is easy is worth spending $100,000 on, though. Engineering, science, medicine, law, etc. are worth it.