(un)Intended Consequences

I have a friend in Florida who is a financial/legal person with a large hospital. This guy understands policy and he understand economics. He told me that when stimulus money was sent to Florida early last year, there was a mandated provision that some of that money go to hospitals to hire more doctors. Sounds good. Problem is that there are a limited amount of doctors in the market, so when hospitals went to hire additional doctors away from other hospitals, those hospitals ended up having to offer their own doctors more money to stay. My friend said when this all started they were paying their doctors $130,000 a year. By the time it was over they were paying those same doctors $160,000, and they basically had the same amount of doctors. In other words, the stimulus allowed the doctors to get a $30,000 raise, and the stimulus paid for that, for a year. After that, the hospital was stuck with continuing to pay that additional amount on their own. No new doctors were hired.

It's always good to hear the back story of these "brilliant" moves by political leaders who apparently don't understand basic economics. Stories like this are the reason why I don't trust the numbers these people use to sell their health care reform, or why I don't believe their assertions will ever come about in the way they promise.

If Nancy Pelosi can put a definite number of how much money will be saved through eliminating fraud and waste in Medicare, that means she can point to where that fraud and waste is taking place. Why isn't she or anyone else going after that right now? Why do they need a bill to do that? If the bill does not pass, does that mean that she (they) will not deal with this waste and fraud?

If insurance companies are evil because they raise premiums 30-40%, isn't our federal government just as "evil" for raising our taxes, our debt, our deficit by those same percentages. I have no love affair for insurance companies, and I am definitely not anti-government; but democrats are falsely setting the insurance companies as the bad guys. The truth is their profit margin (3.3%) is rather small compared to most private industries. In fact there are 85 industries with higher profit margins. If Obama really wants to stick it to health insurance companies, make them compete with each other across state lines. Most monopolies, particularly the government, hate competition.