Power Pal

I've read some articles lately about medical tourism and came across one today from BusinessWeek called " Outsourcing the Patients ". It talks about a really interesting trend of health insurers sending their policyholders overseas to get health care because the costs are so much cheaper. And we're not talking about some obscure insurers, the article refers to Blue Cross Blue Shield of South Carolina for its example. These insurers are really concerned about rising health care costs in the U.S. It's what sent WellPoint's stock tumbling almost 30% this past week - an amazing loss in market value - because they had to make "revisions to our prior earnings guidance due to higher than expected medical costs". One of the biggest Blue affiliates with over 250 actuaries underestimating costs definitely spooks the market and speaks to how high costs really are. To put how high costs are in perspective, here's a summary from the BusinessWeek article co...

I'm not really a Michael Moore fan, but I do have to say that I enjoyed watching his movie SiCKO a few weeks ago. It's sensationalized, melodramatic, and uses his usually hyperbole. You laugh, sometimes you want to cry, your jaw drops repeatedly because of ridiculous juxtapositions, but it gets the basic point across - we have a problem here. And the movie does offer some really good background on the health-care industry and how it differs from those in other countries, particularly those in Europe. The basic question it raises is the following: in a developed economy, should health care be an entitlement? It's a pretty interesting policy question. The ultimate goal as a nation, as I'm sure no one would disagree, is to generate the best overal health for the citizens of a country as efficiently as possible with the least amount of cost. Sounds simple. But how do you do that? Do you rely on the free markets? Do you socialize health care? What system generates the best...

I watched an absolutely horrifying documentary on-demand on Netflix called No End In Sight . I highly recommend it. It covers the Iraq war, primarily the aftermath of the war - in particular focusing on the lack of planning, poor decision making, and arrogance of the Bush administration. The beginning parts of the movie make clear the lack of post-war planning that was in place when the war started and even when the war ended. There were literally no plans. That part of the movie is obviously disturbing. But the majority of the movie is actually focused in on three policies put into place by Paul Bremer under the Coalition Provisional Authority. Those were: Not declaring martial law and not providing enough troops to maintain order De-Ba'athification Disbanding the Iraqi Army The repurcussions of the first one are pretty obvious. There's no police, there's no army, and Saddam Hussein released thousands of criminals before the war started. What do you expect to happen?...

As a Cal lifetime alum, I get a free subscription to Forefront, a quarterly publication the College of Engineering puts out. The Fall issues cover was titled " Green Future ". There were a few really cool ideas in there that researchers in the engineering department are pushing forward. There were two that I wanted to comment on. The first was a project to recapture waste heat by creating nano-scale devices that convert heat to elecricity. The premise is to use the " Seebeck Effect " (thermoelectric effect) in cheap organic materials to produce electricity from all of the wasted heat that's created in burning fossil fuels. Apparently, for every 1 watt of power, you waste 1.5 watts of energy in waste heat. That's a ridiculous amount of waste. The world's power output is somewhere in the 10 trillion watt range, so that means there's 15 trillion watts being wasted. If you could recapture even a small fraction of that with these types of thermoelectric ...

I read a good article in the opinion section of the WSJ a couple days ago about corruption in the World Bank's dealing with Kenya. It's an interesting follow-up to my previous post about profit-motivated capitalism being better than philanthropy . The WSJ article highlights several recent examples of how money was being misused by both Kenyan officials and the World Bank themselves. It was that corruption that prompted Paul Wolfowitz in 2006 to withhold $260 million in lending to Kenya in an attempt to link future lending with guarentees of changes in Kenya. Wolfowitz was forced out and lending increased dramatically as he left. And of course, corruption did not abate in Kenya. The problem with disbursing funds without appropriate guarentees of change or oversight to ensure those changes are carried out is that it feeds a culture of corruption. And, as I've mentioned before, it's that corruption and lack of rule of law that is holding people back from helping th...

I read a great article in the WSJ about a "housing first" plan that can both improve the lives of the homeless, particularly those that are chronically ill, and save taxpayer money at the same time. You can have it both ways! The article highlighted the results of a four-year study conducted in Chicago that looked at homeless people with chronic medical problems. The study compared two groups. The control group received "usual care", which was basically just a piecemeal system of emergency shelters and family and recovery programs. The study group, by comparison, received housing and intensive follow-up by a case manager. The wonderful result of the study was that the group that received housing and follow-up spent half as many days in hospitals and nursing homes and went to emergency rooms half as often as the usual-care group did over an 18 month period. The reduced medical care easily made up for the $12,000 cost of the housing and case-work that was provided ....

So there's rich, and then there's super rich. I recently read an article in the WSJ about the top 400 taxpayers based on income. Pretty incredible statistics. Those top 400, or what they call the "Fortunate 400", pulled in $85.6 billion in income in 2005. That's over $200 million each ... in one year! Here's a quick graphic to drive that home: Very impressive. There's all the obvious jaw-dropping statistics to go with that. For instance, to make the cut to be in the 400 you had to pull in at least $100 million. With an average of $200 million, that means there's people pulling in well over that number. Obviously, quite crazy numbers, and generally speaking not necessarily anything to be concerned about. I'm all for capitalism. But one of the more disheartening statistics was that adjusting for inflation, the minimum income to make the cutoff into the Fortunate 400 has nearly tripled since 1992. That's probably not a good sign as I imagine that...

Came across this one on Mankiw's blog as well (... someone has been stealing my WSJ's each morning before I can pick them up outside). Martin Feldstein, a professor at Harvard and chairman of the Council of Economic Advisors for Reagan, had an opinion article in the WSJ yesterday that outlined a possible solution to the mortgage crisis. Criteria for the plan is: don't shift burden to taxpayers, don't force banks to eat all the losses, and create an incentive for homeowners to stay in their homes. The idea is that the US government would provide loans to homeowners up to 20% of their mortgage amount, with a 15 year pay-back period and adjustable interest rate based on the two-year treasury note. The whole thing would be funded by selling more two-year treasury notes. This would obviously not stop anyone from walking away from their home if they have negative equity, but it might prompt those that are worried about that scenario happening to them in the future to sti...

I wrote a short entry several months ago trying to get behind the U.S. mortgage mess . I thought that was a good quick primer on how we got into the situation we're in economically. I was skimming through Mankiw's blog today, though, and came across this really funny cartoon primer on the subprime mortgage problem . It's about 45 slides, but worth the time to flip through. It's a much more amusing way of looking at what happened. So, how does the U.S. get itself out of this situation? Bernanke this past week recommended that bank's should either lower the principal amount on at-risk mortgages or that the federal government (via the Federal Housing Administration) should back-stop those loans themselves. I can only speculate, but I imagine the Fed is worried about all of those loans continuing to default and needing to be written down. If that were to happen, the losses would continue to spiral down to other parts of the economy, feeding the "deleveraging...