Gov. Perry on Economic Development in Texas

In an August column appearing in the San Francisco Examiner, Texas Governor Rick Perry wrote: "Just six years ago, Texas was mired in a health care crisis. Our doctors were leaving the state, or abandoning the profession entirely, because of frivolous lawsuits and the steadily increasing medical malpractice insurance premiums that resulted."

But Texas has since joined 24 other states by enacting reforms that include a reasonable limit on non-economic damages for pain and suffering of up to $750,000 per incident. This essential reform does not limit compensatory awards for calculable lost wages and medical expenses, but it does balance the interests of patients and care providers while helping to ensure access to necessary care.

Now, according to Governor Perry, doctors' insurance rates have declined by an average of 27 percent while the "number of doctors applying to practice medicine in Texas has skyrocketed by 57 percent. In . . . just the first five years after reforms passed, 14,498 doctors either returned to practice in Texas or began practicing here for the first time."

Gov. Rick Perry says the state will invest $2.5 million through the Texas Enterprise Fund (TEF) to assist Nationwide Mutual Insurance Co. in expanding its operations in San Antonio.

The governor’s office says the move will help to create 750 high-paying jobs and generate more than $94.8 million in capital investment in Texas.

Nationwide is based in Columbus, Ohio. The company offers a full range of insurance and financial services and has operations across the United States.

It was not immediately clear how many people Nationwide currently employs in San Antonio.

The bulk of the initial job growth will be in the areas of sales and services positions, which will help support existing business and generate new growth for the company.

“Nationwide’s expansion in San Antonio is a testament to the success of the TEF and Texas’ status as the best state in the nation to invest, work and raise a family,” Perry says. “Companies like Nationwide will continue to create jobs in Texas because of our state’s low taxes, regulatory environment and educated and diverse workforce.”

John Raybuck is regional vice president of Nationwide’s Texas operations.

“The Texas Enterprise Fund, combined with the attractive workforce in San Antonio, were key factors in our decision to choose San Antonio for expansion of our operations,” he says.

At Perry’s request, the Texas Legislature created the TEF in 2003 and re-appropriated funding in 2005, 2007 and 2009 in order to help ensure the growth of Texas businesses and create more jobs throughout the state. TEF projects must be approved by the governor, lieutenant governor and Speaker of the House. Supporters say the fund has become one of the state’s most competitive tools to recruit and bolster business.

To date, the TEF has invested more than $383 million in projects generating more than 56,000 new jobs and more than $14 billion in capital investment in the state.

Heading for a city with greater opportunities? It'll cost you. One measure of a region's economic health is the relative price of moving-truck rentals.

It has been said that people vote with their feet. They pick up and go to where the jobs and opportunities are.

The hard part is that it costs more -- a lot more -- to move to where the jobs and opportunities are than to move to where jobs and opportunities are limited. My favorite measure for this doesn't come from the Bureau of Labor Statistics. Nor does it come from any other agency of the federal government.

It comes from U-Haul, the truck and trailer rental company. It has on-the-ground evidence and prices its rentals accordingly. Go to its Web site, and you can learn quickly where people are going. You can also learn where they are leaving.

How will you know this? Simple.

If lots of people are trying to go where you want to go, it will cost a lot more than renting equipment to go to the place everyone is trying to leave. Just as there is a law of supply and demand, there is a law of arrivals and departures. Finding a moving truck will be expensive where departures outnumber arrivals. It will be cheap in places where arrivals outnumber departures.

Suppose, for instance, that you are living in Las Vegas. With a recent unemployment rate of 13.4%, things are tough there. In fact, it's a tough time in what is traditionally a rough time of year for Las Vegas. Skeptics should check a travel Web site like Expedia. When I did, a three-night stay at the four-star Rio was $60 a night, barely more than a roadside motel. You could stay at the five-star Bellagio for $199 a night.

Admittedly, this was a Sunday to Wednesday stay, not a weekend, but it gives you an idea of why the unemployment rate is so high: People aren't traveling, vacationing or gambling as much these days.

So what does it cost to leave Las Vegas?

Try $1,880 if you want to rent a 26-foot U-Haul truck, fill it with your worldly goods, and drive it to San Antonio. (In these comparisons, Nov. 3 was selected as the moving date.) But if you wanted to leave San Antonio (August unemployment rate: 7%) and move to Las Vegas, it would cost you only $437 for the same equipment.

That's quite a difference.

The difference is substantial even for cities that aren't hurting nearly as much. To move from Seattle, with an unemployment rate of 8.8% in August (well below the national average of 9.8%), to San Antonio would cost $1,404, but only $858 to move from San Antonio to Seattle.

The 'Texas premium'
I found similar price differences for other cities. Want to move from Chicago (9.7% unemployment) to Houston (8.4% unemployment)? It will cost you $1,970. But it will cost only $449 to make the trip from Houston to Chicago. Los Angeles (11.8% unemployment) to Houston was $2,051, while Houston to Los Angeles was only $555.

San Francisco (10.7% unemployment) to Dallas (8.3% unemployment) will cost you $1,988. But the opposite will cost only $689. Boston to Dallas was $2,134, while Dallas to Boston was only $634.

Miami (10.8% unemployment) to Austin, Texas (7.2% unemployment), will cost $1,706. But the reverse will cost only $827. Similarly, Phoenix to Austin will cost $1,490, while Austin to Phoenix will cost only $654.

We might call these differences the "Texas premium" because regardless of location -- East Coast, West Coast or somewhere in between -- the migration appears to be to Texas. U-Haul is lowering the price drastically for anyone who is willing to move the equipment back.

To be sure, all the differences aren't as extreme. If you want to move from hip but hurting Nashville (9.8% unemployment) to hip and growing Austin, for instance, it will cost $998 -- but it won't cost much less to move from Austin to Nashville, $826.

In a time when lots of people are feeling powerless, there is a big message here: There is still a lot we can do for ourselves. We can make decisions. We can, and do, move to places where life looks better.

Questions about personal finance and investments may be e-mailed to scott@scottburns.com. Questions of general interest may be answered in future columns. More columns by Scott Burns can be found on MSN Money and at AssetBuilder.com.

A full accounting of medical malpractice reforms shows the benefits would be $242 billion a year.

Earlier this month, the Congressional Budget Office (CBO) said medical-liability reforms could save about $11 billion annually. This assessment is a gross underestimate of the potential benefits of reform and was intended to give cover to congressional Democrats who say malpractice-liability costs are trifling. But a full accounting shows the benefits would be a hefty $242 billion a year, more than 10 percent of America's health expenditures.

Last year alone, damage awards for medical-malpractice claims reached $5.9 billion. Adding in legal costs, underwriting costs, and administrative expenses, total med-mal tort costs were nearly three times higher — $16 billion. From 1986 through 2002, the average insurance payment for a malpractice claim more than tripled to $320,000. The average jury award for medical liability was $637,134 in 2006.

Getting sued is now part of the job description for physicians. Each year, up to 25 percent of them face lawsuits. Doctors are found innocent in 90 percent of cases, but they lose even then — average defense costs per claim approach $100,000. Fear of lawsuits causes most doctors to practice "defensive medicine," meaning they order unnecessary tests, referrals, and procedures to protect themselves against allegations of medical negligence.

A recent survey of doctors published in the Journal of the American Medical Association found that 93 percent of physicians admit to practicing defensive medicine. A 2008 survey by the Massachusetts Medical Society found that about 25 percent of medical procedures are defensive in nature.

Defensive medicine wastes patients' and doctors' time and costs $191 billion annually, according to the best scholarly research. Such waste drives up the cost of medical care and the price of health insurance. In fact, by making health insurance more expensive, defensive medicine adds at least 3.4 million Americans to the rolls of the uninsured, and reduced productivity and annual output by more than $41 billion in 2008. To ease the burdens of malpractice lawsuits, jury awards should be capped for impossible-to-quantify "pain and suffering," so-called non-economic damages.

According to my study "Tort Law Tally," capping awards in med-mal lawsuits cuts losses an average of 39 percent and annual insurance premiums by 13 percent. But the most important benefit from caps is better access to care. States with caps have 12 percent more physicians per capita than states without caps, according to a study published by the U.S. Department of Health and Human Services.

Non-economic-damage caps were an integral part of the malpractice reforms adopted in Missouri in 2005. Skyrocketing malpractice premiums had caused shortages of specialists, and patients had problems getting treatment. Thanks to the reforms, med-mal claims in Missouri are at a 30-year low. Average payouts are $50,000 lower than they were in 2005, before the caps went into effect.

Texas capped non-economic damages in 2003 as part of a broader tort-reform package, and since then, more than 16,500 doctors have flooded into Texas, many to previously underserved rural and minority communities. Texas has jumped six spots in the American Medical Association's ranking of doctors per capita. Nearly 430,000 Texans have health insurance today as a result of the medical liability reforms, says the Perryman Group.

Rising liability costs are causing hospitals to close; doctors to flee states; maternity centers, trauma centers, and clinics to shut down; and patients to travel long distances due to chronic shortages of providers in some communities. Congressional testimony relates the cases of Tony Dyess, who is brain-damaged, and Fred Andricks, who died, because lawyers drove neurologists out of their local areas, forcing long delays in treatment while being airlifted.

Despite these grim realities, Senate Majority Leader Harry Reid, a Nevada Democrat, claims: "The whole premise of a medical malpractice 'crisis' is unfounded." The senator is wrong, and so are those, including the CBO, who minimize the burdens.

Effective malpractice reforms would allow doctors to spend more time with patients, not attorneys, increase access to health insurance and local providers, and provide benefits of at least $242 billion a year. Less spending on wasteful litigation means better patient care and lower costs for all Americans.

Mr. McQuillan is director of business and economic studies at the Pacific Research Institute and coauthor of "The Facts about Medical Malpractice Liability Costs" and "Tort Law Tally."