• Category Archives News and Politics
  • Why a Facelift Costs Less Than a Knee Replacement

    Between 1998 and 2017 prices for “Medical Care Services” in the US (as measured by the BLS’s CPI for Medical Care Services) more than doubled (+105.3 percent increase) while the CPI for “Hospital and Related Services” (data here) nearly tripled (+189.3 percent increase). Those increases in the costs of medical-related services compared to only a 50.3 percent increase in overall consumer prices over that period (BLS data here). On an annual basis, the costs of medical care services in the US have increased almost 4 percent per year since 1998 and the cost of hospital services increased annually by 5.8 percent.

    In contrast, overall inflation averaged only 2.2 percent annually over that period. The only consumer product or service that has increased more than medical care services and about the same as hospital costs over the last several decades is college tuition and fees, which have increased nearly 6 percent annually since 1998 for public universities.

    One of the reasons that the costs of medical care services in the US have increased more than twice as much as general consumer prices since 1998 is that a large and increasing share of medical costs are paid by third parties (private health insurance, Medicare, Medicaid, Department of Veterans Affairs, etc.) and only a small and shrinking percentage of health care costs are paid out-of-pocket by consumers. According to government data, almost half (47.6 percent) of health care expenditures in 1960 were paid by consumers out-of-pocket and by 2017 that share of expenditures has fallen to only 10.6 percent (see chart above).

    Spending Unknown Amounts of Unseen Money

    It’s no big surprise that overall health care costs have continued to rise over time as the share of third-party payments has risen to almost 90 percent and the out-of-pocket share approaches 10 percent. Consumers of health care have significantly reduced incentives to monitor prices and be cost-conscious buyers of medical and hospital services when they pay only about 10 percent themselves, and the incentives of medical care providers to hold costs down are greatly reduced knowing that their customers aren’t paying out of pocket and aren’t price sensitive.

    How would the market for medical services operate differently if prices were transparent and consumers were paying out-of-pocket for medical procedures in a competitive market? Well, we can look to the $16 billion US market for elective cosmetic surgery for some answers. In every year since 1997, the American Society for Aesthetic Plastic Surgery has issued an annual report on cosmetic procedures in the US (both surgical and nonsurgical) that includes the number of procedures, the average cost per procedure (starting in 1998), the total spending per procedure, and the age and gender distribution for each procedure. Here is a link to the press release for the 2017 report, and the full report is available here.

    The table above (click to enlarge) displays the 20 cosmetic procedures that were available in both 1998 and 2017, the average prices for those procedures in each year (in current dollars), the number of each of those procedures performed in those two years, and the percent increase in average price for each procedure between 1998 and 2017. The procedures are ranked by the number of cosmetic procedures last year. Here are some interesting findings from this year’s report and the table above:

    • For the top seven most popular cosmetic procedures displayed above for last year, none of them increased in price since 1998 more than the 50.3 percent increase in overall consumer prices, meaning that the real, inflation-adjusted price of all ten of those procedures has fallen over the last 19 years. Only four of the 20 cosmetic procedures (facelift, nose surgery, upper arm lift, and chin augmentation) increased more than the overall CPI, while the other 16 procedures increased less than overall consumer prices.
    • For three of the most popular nonsurgical procedures in 2017—botox injection, chemical peel and laser hair removal—the nominal prices have either fallen over the last 19 years, by nearly 1 percent for botox (from $424 to $420) and by more than 33 percent for chemical peel (from $821 to $545), or barely increased (1.1 percent increase in laser hair removal from $452 to $457). Note also that the demand for two of those procedures has increased dramatically—botox procedures increased by nearly ten times and laser hair removal by 63 percent.
    • The two most popular surgical cosmetic procedures last year were breast augmentation and liposuction, which have increased in current dollar prices by 25.5 percent and 28.0 percent respectively since 1998. Both of those average price increases were roughly half of the 50.3 percent increase in consumer prices over the last 19 years, meaning that the real, inflation-adjusted prices for breast augmentation and liposuction procedures have fallen since 1998—by 17 percent for breast augmentation and by 15 percent for liposuction.
    • The unweighted average price increase between 1998 and 2017 for the 20 cosmetic procedures displayed above was 34.2 percent, which is far below the 50.3 percent increase in consumer prices in general over the last 19 years. When the average procedure prices are weighted by the number of procedures performed last year, the average price increase since 1998 is only 12.6 percent. Of the 20 procedures above, 16 increased in price by less than overall inflation (and therefore decreased in real terms) since 1998, and only four increased in price by more than inflation (facelift, nose surgery, upper arm lift, and chin augmentation).
    • And most importantly, none of the 20 cosmetic procedures in the table above have increased in price by anywhere close to the 105.3 percent increase in the price of medical care services or the 189.3 percent increase in hospital services since 1998. The largest cosmetic procedure price increase since 1998 was the nearly 83 percent increase for chin augmentation, which is still far below the more than doubling of prices for medical services overall and nearly three-fold increase in the CPI for hospital services.
    • As in previous years, there was a huge gender imbalance for cosmetic procedures in 2017—women accounted for 91.3 percent of the 4.78 million total cosmetic procedures performed last year (92.3 percent of surgical procedures and 90.8 percent of non-surgical procedures.

    What Does This Mean?

    The competitive market for cosmetic procedures operates differently than the traditional market for health care in important and significant ways. Cosmetic procedures, unlike most medical services, are not usually covered by insurance. Patients paying 100 percent out-of-pocket for elective cosmetic procedures are cost-conscious and have strong incentives to shop around and compare prices at the dozens of competing providers in any large city.

    Providers operate in a very competitive market with transparent pricing and therefore have incentives to provide cosmetic procedures at competitive prices. Those providers are also less burdened and encumbered by the bureaucratic paperwork that is typically involved with the provision of most standard medical care with third-party payments.

    Because of the price transparency and market competition that characterizes the market for cosmetic procedures, the prices of most cosmetic procedures have fallen in real terms since 1998, and some non-surgical procedures have even fallen in nominal dollars before adjusting for price changes. In all cases, cosmetic procedures have increased in price by far less than the 105 percent increase in the price of medical care services between 1998 and 2017 and the 189 percent increase in hospital services. In summary, the market for cosmetic surgery operates very much like other competitive markets with the same expected results: falling real prices over time for most cosmetic procedures.

    If cosmetic procedures were covered by third-party payers like insurance companies, Medicare, and Medicaid, what would have happened to their prices over time? Basic economics tells us that those prices would have most likely risen at about the same 105.3 percent increase in the prices of medical services in general between 1998 and 2017.

    The main economic lesson here is that the greater the degree of market competition, price transparency, and out-of-pocket payments, the more constrained prices are, in health care or any other sector of the economy. Another important economic lesson is that the greater the degree of government intervention, opaque prices, and third-party payments, the less constrained prices are, in health care or any other sector of the economy. Some important lessons to consider as we attempt to reform national health care… once again.

    Reprinted from the American Enterprise Institute.

    Mark J. Perry

    Mark J. Perry is a scholar at the American Enterprise Institute and a professor of economics and finance at the University of Michigan’s Flint campus.

    This article was originally published on FEE.org. Read the original article.

  • King George III Would Have Loved Today’s Gun Control Movement


    The only “common sense gun control” that its advocates are eventually going to agree on is to take your guns away. And you won’t get them back. How do I know that? That’s exactly what they did in Europe.

    Much has been said in recent week in the United States about “common sense gun control,” and not being a U.S resident is likely going to get me a great deal of vitriol. After all, it happens to be a regular occurrence that when Europeans comment on the American gun debate, they do so with a big deal of ignorance about both guns, gun culture, and the United States as a whole. A noticeable difference in history education between my American friends and myself was that we weren’t taught American independence as something fundamentally important, but as more of yet another lost war in European history. You win some, you lose some. That this loss has brought about one of the most fundamental state philosophies of freedom goes unnoticed in the European education system.

    The fact that American revolutionaries stood up to the tyrannical rule of the British Empire, especially that they were up against an experienced military that was feared on the European continent, is important. Their bravery to take up arms against an oppressor is exactly what drove the French Revolution. Its decision to include the values of individual liberty in its founding documents was shared by the French revolutionaries as well, as they did with the Declaration of the Rights of Man and of the Citizen in 1789, the same year that the Bill of Rights was written.

    The fact that the United States enshrined the right to keep and bear arms is because the Founding Fathers drew the right conclusions from the revolution they had undertaken. Their move was bold and protective, and it was the correct one. While the Founders were building a minimal state that protected the freedom of its citizens, the French Revolution resulted in the so-called Reign of Terror in which anti-monarchists rounded up and executed those who had supported the King. They were able to because they were facing an unarmed populace.

    What is even more interesting is that modern-day gun control advocates agree with this analysis. One of their more regular responses is that “the Bill of Rights was written at a very different time,” admitting that it had its legitimacy then. If it had legitimacy back then because King George III of the United Kingdom could decide to overthrow the revolutionaries in an attempt to regain his territory and because the threat of new government becoming tyrannical was real, then what has changed? Is the United States immune to a foreign attack? Is government unable to become tyrannical? The Second Amendment might be old, but the concerns it expressed are just as accurate today as they were in the 18th century.

    Saying that the circumstances don’t allow the common man to own a firearm anymore is probably what King George III would have claimed as well. He would certainly have sympathized with people who are more suspicious of their own neighbors than those in the political offices far away from their homes. The exploitation of a tragedy for the gain of governmental control has repeatedly lead to authoritarian regimes.

    The Power of Government

    The essential question about government power isn’t who should wield it, but who could wield it. If there is the possibility of a tyrant gaining access to the highest offices (and according to many Americans, that is already the case), then wouldn’t you want constitutional provisions protecting you against that? The idea of tilting the balance between liberty and complete control as much as possible to liberty is because the people who have access to power are dangerous, whether they have good intentions or not.

    Look to Europe if you’re interested where the gun control advocates will lead you: the European Union adopted even tougher gun control measures last year.

    Some dangerous semi-automatic firearms have now been added to category A and are therefore prohibited for civilian use. This is the case for short semi-automatic firearms with loading devices over 20 rounds and long semi-automatic firearms with loading devices over 10 rounds. Similarly, long firearms that can be easily concealed, for example by means of a folding or telescopic stock, are also now prohibited.”

    The Union also enhanced control of the supervision of firearm owners as well as the sale of guns, even if they are merely deactivated objects for collectors. When the United States focuses the gun ban debate on AR-15s after a shooting is committed with this firearm, then there seems to be a reasonable connection to be drawn. In this case, the EU regulated firearms which weren’t used in the terrorist attacks in Brussels or Paris, yet it used those attacks as a reason to tighten controls. This shows that gun control advocates don’t actually need a connection to the act in question in order to argue for less gun accessibility.

    In most European countries, the administrative burden of going through the process to even own a gun paired with the associated costs makes it impossible for a large number of people to become firearm owners. Owning a gun makes you a rare breed of people. Believing in people’s right to carry guns makes you a dying species.

    Interestingly, the idea that a trained civilian can save lives if in possession of a gun seems to be accepted by France, which allowed off-duty police officers to carry their guns after the terrorist attacks in 2015. The narrative is much less about the use of guns than about a state-monopoly of its use. Once again, King George III would agree.

    The Slippery Slope Is Real

    Americans should be aware that the notion of “banning all guns” is not just a concept by conservative radio show hosts to rally people against politicians, but it’s very much what the state will do if constitutional protections are removed. This is why the Czech Republic, a relatively gun-friendly country, has seen legislative initiatives to constitutionally enshrine gun rights in order to serve as a protection against decisions by the European Union. Once launched, the legislative avalanche of anti-gun rights laws are hard to stop: EU legislators pass the bills as fast as they get suggested. The debates on the issue are minimal.

    Once governments have normalized a disarmed populace, it will be virtually impossible to regain the principle of responsible gun ownership as a debate in the houses of democracy, and even less in the minds of the man in the street.

    Bill Wirtz

    Bill Wirtz is a Young Voices Advocate. His work has been featured in several outlets, including Newsweek, Rare, RealClear, CityAM, Le Monde and Le Figaro. He also works as a Policy Analyst for the Consumer Choice Center.

    This article was originally published on FEE.org. Read the original article.

  • Gun Control Advocates Are Finally Admitting What They Really Want


    I don’t own an AR-15. I’m not a “gun person,” whatever that means. I hardly ever shoot. And I never hunt.

    But I’m nonetheless a big supporter of private gun ownership. In part, this is because I have a libertarian belief in civil liberties. In other words, my default assumption is that people should have freedom (the notion of “negative liberty“), whereas many folks on the left have a default assumption that the state should determine what’s allowed.

    I also support private gun ownership because I want a safer society. Criminals and other bad people are less likely to engage in mayhem if they know potential victims can defend themselves. And I also think that there’s a greater-than-zero chance that bad government policy eventually will lead to periodic breakdowns of civil society, in which case gun owners will be the last line of defense for law and order.

    I’m sometimes asked, though, whether supporters of the 2nd Amendment are too rigid. Shouldn’t the NRA and other groups support proposals for “common-sense gun safety”?

    Some of these gun-control ideas may even sound reasonable, but they all suffer from a common flaw. None of them would disarm criminals or reduce gun crime. And I’ve detected a very troubling pattern, namely that when you explain why these schemes won’t work, the knee-jerk response from the anti-gun crowd is that we then need greater levels of control. Indeed, if you press them on the issue, they’ll often admit that their real goal is gun confiscation.

    Though most folks in leadership positions on the left are crafty enough that they try to hide this extreme view.

    So that’s why—in a perverse way—I want to applaud John Paul Stevens, the former Supreme Court Justice, for his column in the New York Times that openly and explicitly argues for the repeal of the 2nd Amendment.

    …demonstrators should…demand a repeal of the Second Amendment. …that amendment…is a relic of the 18th century. …to get rid of the Second Amendment would be simple and would do more to weaken the N.R.A.’s ability to stymie legislative debate and block constructive gun control legislation than any other available option. …That simple but dramatic action would…eliminate the only legal rule that protects sellers of firearms in the United States.

    The reason I’m semi-applauding Stevens is that he’s an honest leftist. He’s bluntly urging that we jettison part of the Bill of Rights.

    Many—if not most—people on the left want that outcome. And a growing number of them are coming out of the pro-confiscation closet. In an article for Commentary, Noah Rothman links to several articles urging repeal of the 2nd Amendment.

    They’re talking about repealing the Second Amendment. It started with former Supreme Court Justice John Paul Stevens and George Washington University Law Professor Jonathan Turley. …Turley and Stevens were joined this week by op-ed writers in the pages of Esquire and the Seattle Times. Democratic candidates for federal office have even enlisted in the ranks of those calling for an amendment to curtail the freedoms in the Bill of Rights. …anti-Second Amendment themes…have been expressed unashamedly for years, from liberal activists like Michael Moore to conservative opinion writers at the New York Times. Those calling for the repeal of the right to bear arms today are only echoing similar calls made years ago in venues ranging from Rolling Stone, MSNBC, and Vanity Fair to the Jesuit publication America Magazine.

    But others on the left prefer to hide their views on the issue.

    Indeed, they even want to hide the views of their fellow travelers. Chris Cuomo, who has a show on MSNBC, preposterously asserted that nobody supports repeal of the 2nd Amendment.

    It’s also worth noting that Justice Stevens got scolded by a gun-control advocate at the Washington Post.

    One of the biggest threats to the recovery of the Democratic Party these days is overreach. …But rarely do we see such an unhelpful, untimely and fanciful idea as the one put forward by retired Supreme Court justice John Paul Stevens. …Stevens calls for a repeal of the Second Amendment. The move might as well be considered an in-kind contribution to the National Rifle Association, to Republicans’ efforts to keep the House and Senate in 2018, and to President Trump’s 2020 reelection bid. In one fell swoop, Stevens has lent credence to the talking point that the left really just wants to get rid of gun ownership. …This is exactly the kind of thing that motivates the right and signals to working-class swing voters that perhaps the Democratic Party and the political left doesn’t really get them.

    The bottom line is that the left’s ultimate goal is gutting the 2nd Amendment. Not much doubt of that, even if some leftists are politically savvy enough to understand that their extremist policy is politically suicidal.

    But let’s set aside the politics and look at the legal issues. There’s another reason why I’m perversely happy about the Stevens op-ed. Even though he was on the wrong side of the case, he effectively admits that the 2008 Heller decision enshrined and upheld the individual right to own firearms.

    And the five Justices who out-voted Stevens made the right decision. I’m not a legal expert, so I’ll simply cite some people who are very competent to discuss the issue. Starting with what Damon Root wrote for Reason.

    One problem with Stevens’ position is that he is dead wrong about the legal history. …For example, consider how the Second Amendment was treated in St. George Tucker’s 1803 View of the Constitution of the United States, which was the first extended analysis and commentary published about the Constitution. For generations of law students, lawyers, and judges, Tucker’s View served as a go-to con-law textbook. …He observed the debates over the ratification of the Constitution and the Bill of Rights as they happened. And he had no doubt that the Second Amendment secured an individual right of the “nonmilitary” type. “This may be considered as the true palladium of liberty,” Tucker wrote of the Second Amendment. “The right of self-defense is the first law of nature.” In other words, the Heller majority’s view of the Second Amendment is as old and venerable as the amendment itself.

    Well stated.

    Though the real hero of this story is probably Joyce Lee Malcolm, the scholar whose work was instrumental in producing the Heller decision. John Miller explains for National Review.

    Malcolm looks nothing like a hardened veteran of the gun-control wars. Small, slender, and bookish, she’s a wisp of a woman who enjoys plunging into archives and sitting through panel discussions at academic conferences. Her favorite topic is 17th- and 18th-century Anglo-American history… She doesn’t belong to the National Rifle Association, nor does she hunt. …She is also the lady who saved the Second Amendment—a scholar whose work helped make possible the Supreme Court’s landmark Heller decision, which in 2008 recognized an individual right to possess a firearm.

    Ms. Malcolm started as a traditional academic.

    For her dissertation, she moved to Oxford and Cambridge, with children in tow. …Malcolm’s doctoral dissertation focused on King Charles I and the problem of loyalty in the 1640s… The Royal Historical Society published her first book.

    But her subsequent research uncovered some fascinating insights about the right to keep and bear arms.

    At a time when armies were marching around England, ordinary people became anxious about surrendering guns. Then, in 1689, the English Bill of Rights responded by granting Protestants the right to “have Arms for their Defence.” Malcolm wasn’t the first person to notice this, of course, but as an American who had studied political loyalty in England, she approached the topic from a fresh angle. “The English felt a need to put this in writing because the king had been disarming his political opponents,” she says. “This is the origin of our Second Amendment. It’s an individual right.” …Fellowships allowed her to pursue her interest in how the right to bear arms migrated across the ocean and took root in colonial America. “The subject hadn’t been done from the English side because it’s an American question, and American constitutional scholars didn’t know the English material very well,” she says. …The Second Amendment, she insisted, recognizes an individual right to gun ownership as an essential feature of limited government. In her book’s preface, she called this the “least understood of those liberties secured by Englishmen and bequeathed to their American colonists.”

    And it turns out that careful scholarship can produce profound results.

    …in 2008, came Heller, arguably the most important gun-rights case in U.S. history. A 5–4 decision written by Scalia and citing Malcolm three times, it swept away the claims of gun-control theorists and declared that Americans enjoy an individual right to gun ownership. “…it gave us this substantial right.” She remembers a thought from the day the Court ruled: “If I have done nothing else my whole life, I have accomplished something important.” …the right to bear arms will not be infringed—thanks in part to the pioneering scholarship of Joyce Lee Malcolm.

    Let’s close with a video from Prager University, narrated by Eugene Volokh, a law professor at UCLA. He explains the legal and historical meaning of the 2nd Amendment.

    In other words, the bottom line is that the Justice Stevens op-ed and other honest leftists are right. The 2nd Amendment would need to be repealed in order to impose meaningful gun control.

    And I suppose it’s also worth mentioning that it won’t be easy to ban and confiscate guns if they ever succeeded in weakening the Bill of Rights. But hopefully, we’ll never get to that stage.

    Reprinted from International Liberty.

    Daniel J. Mitchell

    Daniel J. Mitchell is a Washington-based economist who specializes in fiscal policy, particularly tax reform, international tax competition, and the economic burden of government spending. He also serves on the editorial board of the Cayman Financial Review.

    This article was originally published on FEE.org. Read the original article.