G4
EZ EE
KLMNO EZRA KLEIN Politicians cringe at this economic solution: more immigration ezra from G1
Davis who has studied the issue extensively, is that we imagine an economy where the number of jobs is fixed. Then, if one immi- grant comes in, he takes one of those jobs or forces a worker to accept a lower wage. But that’s not how our economy works. With more labor—particular-
ly more labor of different kinds —the economy grows larger. It produces more stuff. There are more workers buying things, cre- ating demand. That increases the total number of jobs.We under- stand perfectly well that Europe is in trouble because its low birth rates mean fewer workers—and that means less economic growth.We ourselves worry that we’re not graduating enough sci- entists and engineers. But the economy doesn’t care if it gets workers through birth rates or green cards. In fact, there’s a sense in
which green cards are superior. Economists separate newwork- ers into two categories: Those who “substitute” for existing la- bor—we’re both construction workers, and the boss can easily swap you out for me—and those who “complement” existing la- bor—you’re a construction engi- neer, and I’ma construction worker. Immigrants, more so thanU.S.-born workers, tend to be in the second category, as the jobs you want to give to someone who doesn’t speak English very well and doesn’t have many skills are different from the jobs you give to people who are fluent and have more skills. That means firms can expand
more rapidly because they have more labor of different types and that native workers can do jobs where they’re more productive. If you have lots of immigrant la- borers willing to build roads, a firm can build more roads and has more need for native workers who can supervise the crews or do the technical work. The effect of all this—which has been dem- onstrated in multiple studies— is that immigrants raise wages for the average American.
Good for the budget Because they generally pay more in taxes and collect fewer benefits over a lifetime, children of immigrants contribute more to the federal budget than those with U.S.-born parents.
Impact of children born in the U.S. on the federal budget In thousands of dollars, by age
$20
10 15
-20 -15 -10 -5 0 5
SOURCE: Te Hamilton Project But that’s only half of their
benefit. “Living standards are a function of two things,” saysMi- chael Greenstone, director of the Hamilton Project, which is host- ing a conference inWashington on the economics of immigration next week. “They’re a function of our wages and the prices of the goods we purchase.” And immi- grants reduce the prices of those goods. Patricia Cortes, an econo- mist at theUniversity of Chica- go’s Booth School of Business, found that immigrants lowered the prices in “immigrant-inten- sive industries” such as house- keeping and gardening by about 10 percent. So our wages go up, and the prices of the things we want to buy go down. We should remember, though,
that the average worker isn’t ev- ery worker. A study byHarvard economistsGeorge Borjas and Lawrence Katzj found that al- though immigrants raised native wages overall, they slightly hurt the 8 percent of workers without a high school education. A subse- quent study by Peri found that even unskilled workers sawa benefit from immigrants—but it was much smaller than that of highly skilled workers. And unskilled workers face
With immigrant parents
COST TO BUDGET BENEFIT TO BUDGET
With U.S.-born parents
Brookings Institution writes in his book “Brain Gain,” this means that immigrant families, rather than current policymakers, de- cide who enters the country. That’s nuts. Our immigration
policy should be primarily ori- ented around our national goals. And one goal is to have the world’s most innovative and dy- namic economy. It’s never going to be the case
05 10 15 20 25 30 35 40 45 50 55 60 65 70 75 Age
THE WASHINGTON POST
even tougher competition from undocumented immigrants who, because their status is so tenu- ous, will accept pay beneath the minimum wage. And they are unlikely to complain about safety regulations or work conditions. That takes unskilled immigrants from being a bit cheaper than unskilled natives and makes them a lot cheaper—which makes employers likelier to hire them for jobs that native workers could do better. This suggests first that Ameri-
can workers would be better off if we figured out a way to take the 12million undocumented im- migrants and give them legal sta- tus, and second that we might want to give them more direct help if we’re going to increase immigration. Both are possible —just politically difficult. What shouldn’t be politically
difficult is forming a consensus around increasing highly skilled immigrants. Because of a 1965 law, our im-
migration system is based around family unification.More than 65 percent of visas are for purposes of bringing family members to theUnited States. Only 15 percent are for economic reasons. As DarrellWest of the
MICHELLE SINGLETARY
Disappointed, but still in Obama’s corner
color from G1
she toldme. “I just thought by nowthe progresswould bemore evident for theman-on-the-street level.” By her own account,Hart’s per-
sonal finances are in pretty good shape, at leastwhen compared with the almost 44million people living in poverty. She has awell- paying job s as the chief financial officer forAmVets, a nonprofit Maryland-based veteran services organization.Her husband is em- ployed. She can afford to send two children to private school. She says she and her husband havemanaged theirmoneywell. Despite the fact that during the
broadcastHart said sheworried that soon her familymight be forced to dine regularly on hot dogs and beans, she didn’tmean that literally. She says shemade that statement to add levity to a discussion that isn’t funny: the state of our economy. “Itwas symbolic,” she said. “I’m
a lotmore fortunate than others.” It is the possibility of deep fi-
nancial trouble that isworrying Hart. It’s the higher cost of gas, groceries and other living expens- es that ismaking her anxious. It’s the fact that her home has lost value. It’s her having to pull back fromdiscretionary spending and shopping so her daughters can stay in private school thatmakes her feel lesswell-off.Hart is con- cerned about the people she knowswho have lost their jobs. In his answer toHart,Obama
ticked off a list of financial re- forms dealingwith student loans, health care, credit cards and mortgages.He said he under- stood her frustrations. “I’mnot saying once in awhile
you don’twant to get a newpair of shoes,”Obama joked. Hartwas still not feeling it.
And the “it” is finding relief from her financial fears. Butwhen I pressed her,Hart
sayswhat really disappoints her is that the changeObama prom- ised hasn’t come fast enough. “Iwas operating off expecta-
tions he set during the campaign trail,”Hart said. “I thought there was something special and secret he knewthatwouldmake things
MICHAEL S. WILLIAMSON/THE WASHINGTON POST
VelmaHart said of Obama: “I guess I started to believe, on some small level, that he had a magic wand.” by the Secret Service.”
operate differently.” I askedHart: “Are your expec-
tations unrealistic?” “Absolutely,” she said. “It took
decades to get here.He’s only been in office for two years.But I guess I started to believe, on some small level, that he had amagic wand.Maybe in that respectmy questionwas somewhat unfair.” Hart isn’t a symbol of fed-up
Obama supporters. She’s a stand- in for peoplewho are doing okay financially butwho are still un- easy. Sowhat did shewant to hear
fromthe president? “Iwanted himto say, ‘No, this
is not your newreality.’ Iwanted himto say, ‘I don’t knowwhat the newreality is.We are stillwork- ing through a lot of stuff.This is a transitional period. It is going to be hard now.There is light at the end of the tunnel.We are going to get to the light, but it’s going to take some time.Right now, you are expecting toomuch from me.’ ” Hart jokes: “If he had said that,
Iwould have run up and hugged himand run the risk of being shot
Readers canwrite toMichelle Singletary c/o TheWashington Post, 1150 15th St.,NW,Washington,D.C. 20071.Her e-mail address is
singletarym@washpost.com. Comments and questions are welcome, but due to the volume of mail, personal responsesmay not be possible. Please also note comments or questionsmay be used in a future column,with thewriter’s name, unless a specific request to do otherwise is indicated.
that each and every one of the planet’s most talented individu- als is born onU.S. soil. But those born elsewhere could be lured here. People like living here.We should be leveraging that advan- tage, mercilessly roaming the globe to find the most talented people and attract them to our country—like Dog the Bounty Hunter, but for particularly able foreign physicists. Because when we have the best talent, we have the best innovations. That’s how we landedGoogle, Intel and the atomic bomb. Immigrants are about twice as likely as native- born Americans to start a small business, and they’re 30 percent more likely to apply for a patent. But since 2001, we’ve gone
from offering 195,000 high-skill visas to about 65,000 today. In fact, we let top students come for college or graduate school—and then we don’t let them stay. “We should staple a green card to PhDs in science and technology,” West says with a sigh. “They’d like to stay here!” There are other benefits to
higher immigration, too. Con- trary to popular belief, immi- grants tend to pay more money to the government than they get back from it, as they pay lots of taxes but often collect fewer ben- efits. They’re young, which helps us keep our entitlements afloat as the boomers retire. And then, of course, there are
the benefits to the immigrants themselves, and to their families back home. But I’ve probably scared the politicians enough for one day.
kleine@washpost.com 6
LEARNMORE Read excerpts of an interview with Michael
Greenstone online.
SUNDAY, SEPTEMBER 26, 2010
Hospitals: Overhaul encourages mergers
hospitals from G1
facility, said Steven Thompson, senior vice president for Johns HopkinsMedicine. Nationally and locally, he said,
“it’s fair to say that [indepen- dent] hospitals are talking with everyone, feeling that they don’t want to be the last one standing.”
Power over price Hospitals point to the benefits
of consolidation. Larger systems have an easier time getting capi- tal for new services or equip- ment, such as electronicmedical records. The e-records, they say, should save money over time through more efficient care and fewermedical errors. Proponents say savings can be
achieved through what the legis- lation calls “accountable care organizations,” or ACOs. Rules governing ACOs are still being developed, but it is envisioned that they would include doctors, hospitals and other providers who would be paid by Medicare to cover all enrollees in a given service area. If the ACO meets quality and cost targets, its exec- utives and doctors would share the expected savings and possi- bly receive bonuses. The ACO concept expands on
models that exist through doctor groups or managed-care health plans. One well-known example is theGeisingerHealth Systemin Pennsylvania, which provides care, offers insurance, employs doctors and runs hospitals. For patients, an ACO could
mean swifter referrals from pri- mary doctors to specialists, with less time spent tracking down test results. Those with chronic illnesses, such as asthma or heart disease, would be closely tracked, and those who are hos- pitalized would have fewer read- missions for preventable prob- lems. Hopkins and others see expan-
sions as a way to position them- selves to qualify as an ACO. There’s no question that the
law is driving doctors and hospi- tals to talk about consolidating, said Brenda Bruns, with insurer Group Health of Puget Sound in the Seattle market. With two dominant hospital systems and a number of independent hospi- tals, it is similar to ones in the D.C. area, where rival facilities are expanding into the suburbs and consolidating in systems. “The biggest issue is who will
be able to partner with whom,” Bruns said. “It’s been ongoing, but the speed has increased be- cause of the whole ACO thing.” Some fear that, if regulators
aren’t careful, ACOs could also further fuel consolidation among powerful groups of hospi- tals and doctors and drive up costs. By studying such alliances inCalifornia, researcherswriting in the journal Health Affairs concluded that if ACOs are able to exert more market power in negotiations, “private insurers couldwind up payingmore, even if care is delivered more effi- ciently.”
Hospitals vs. insurers Consolidation has added to
already tense relations between insurers and hospitals as both jockey for bargaining power. In- surers are under pressure to slow double-digit premium increases — or face increased scrutiny of their rates. For hospitals, the new law not only emphasizes ACOs; it also calls for smaller Medicare rate increases in the future, offsetting some of the financial benefits of havingmore insured patients. Insurers are “playing hard-
ball,” said Chrissy Yamada, the head of finance at independent EvergreenHospitalMedical Cen- ter outside Seattle. They want rate decreases, she said, and are backing their demands with threats. “If you don’t accept their rates
the first time, they issue a termi- nation notice,” Yamada said. “This happened twice with us this year. That’s never happened before.” Hospitals are pushing back
and looking for bigger payment increases. “None are in the single digits,”
said Andrew Oliveira, senior medical director for Aetna in the Seattle market. “We’re seeing requests for 10 percent to 40 percent.” In North Carolina, insurer
Aetna and hospital system No- vant Health settled a contract dispute in late July after a fight in court. Aetna sent letters to patients and doctors saying No- vant was demanding a 13.5 per- cent increase in payments July 1, on top of a 7.7 percent increase negotiated earlier in the year. Novant fired back with a lawsuit it filed against Aetna alleging defamation and false advertising
and claiming the insurer was threatening to kick doctors out if its network if they continued to have sole privileges at Novant hospitals. While disputes in the nation’s
capital haven’t been as public, “conversations in theDistrict are just as contentious as they are elsewhere,” Thompson said. Talks in Maryland are differ-
ent, he said, because the state takes a larger role in rate-setting between insurers and hospitals. Since the early 1970s, a state commission has approved how much hospitals can charge for services, an effort credited with keeping cost-per-admission rates below the national average.
‘A domino effect’ Thompson said Johns Hop-
kins’ move into Sibley and its Suburban Hospital purchase in Bethesda last year could help lower costs, even as Johns Hop- kins adds programs such as ex- panded cancer treatment. If Johns Hopkins takes over
Sibley, the District will be left with two independent facilities: Howard University Hospital and Children’sNationalMedical Cen- ter. All the other hospitals are owned by either Columbia, Md.-based MedStar Health or other systems, according to a report by the consultancyKPMG. InMaryland, the University of
Maryland Medical System con- trols 19 percent of the state’s hospitals, followed by MedStar with 14 percent and Johns Hop- kinswith 9 percent, but indepen- dents still account for 31 percent of the hospitals, KPMG found.
“For all the costs you jettison for economies of scale, you get new costs for being a system.”
—Bob Malte, head of Seattle’s Evergreen Hospital, who says he doesn’t think mergers can save money or give hospitals more negotiating clout with insurers.
All three systems have bought
independents inMaryland in the past three years. Nationally, mergers and acquisitions have leveled off since their peak in 2006, KPMG found. But themid- Atlantic is bucking the trend. Virginia, for example, had 23 independent hospitals in 2005 and now has 10, according to Mark Higdon, a partner at KPMG. Excluding Sibley, theDis- trict has gone fromfour indepen- dents in 2004 to two. Higdon described the trend as
“a domino effect.” He said that the D.C. area is
“on the way to becoming a very consolidatedmarket”—and that he agrees such consolidation could slow rising costs. While boosting market share — and gaining leverage over insurers — was a main reason hospitals consolidated 10 or 15 years ago, that is not somuch the case now, Higdon said. Payments from the govern-
ment and private insurers are going to be more restrictive in the future, he said, and hospitals “have to be more efficient . . . which is one of the major bene- fits of a larger system.” Thompson, at Johns Hopkins,
said the system will be able to negotiate better deals than Sib- ley could on its own for supplies, for example. It will also find other efficiencies, although he said he does not expect job losses. Would such savings result in
reduced rates to insurers? “It could. It certainly could,”
Thompson said. The head of Seattle’s Ever-
green hospital doesn’t think mergers can save money or give hospitals more negotiating clout with insurers. “For all the costs you jettison
for economies of scale,” Bob Malte said, “you get newcosts for being a system.” Andwhile some hospitals con-
solidate to better their hand when negotiating rates with in- surers, Malte said, “that’s the least noble and least appropriate reason to come together if we’re all trying to lower the cost of care.”
Kaiser Health News reporter Christopher Weaver contributed to this report. Kaiser is an editorially independent news service and a program of the Kaiser Family Foundation, a nonpartisan health- care policy organization that isn’t affiliated with Kaiser Permanente.
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