Billions in Subsidies for Solar and Wind Are Wasted by Delayed Approvals of Connections to a Slow-Growing Grid

(p. A1) Plans to install 3,000 acres of solar panels in Kentucky and Virginia are delayed for years. Wind farms in Minnesota and North Dakota have been abruptly canceled. And programs to encourage Massachusetts and Maine residents to adopt solar power are faltering.

The energy transition poised for takeoff in the United States amid record investment in wind, solar and other low-carbon technologies is facing a serious obstacle: The volume of projects has overwhelmed the nation’s antiquated systems to connect new sources of electricity to homes and businesses.

So many projects are trying to squeeze through the approval process that delays can drag on for years, leaving some developers to throw up their hands and walk away.

More than 8,100 energy projects — the vast majority of them wind, solar and batteries — were waiting for permission to connect to electric grids at the end of 2021, up from 5,600 the year before, jamming the system known as interconnection.

. . .

(p. A15) It now takes roughly four years, on average, for developers to get approval, double the time it took a decade ago.

And when companies finally get their projects reviewed, they often face another hurdle: the local grid is at capacity, and they are required to spend much more than they planned for new transmission lines and other upgrades.

. . .

Electricity production generates roughly one-quarter of the greenhouse gases produced by the United States; cleaning it up is key to President Biden’s plan to fight global warming. The landmark climate bill he signed last year provides $370 billion in subsidies to help make low-carbon energy technologies — like wind, solar, nuclear or batteries — cheaper than fossil fuels.

But the law does little to address many practical barriers to building clean energy projects, such as permitting holdups, local opposition or transmission constraints. Unless those obstacles get resolved, experts say, there’s a risk that billions in federal subsidies won’t translate into the deep emissions cuts envisioned by lawmakers.

. . .

Delays can upend the business models of renewable energy developers. As time ticks by, rising materials costs can erode a project’s viability. Options to buy land expire. Potential customers lose interest.

. . .

When a proposed energy project drops out of the queue, the grid operator often has to redo studies for other pending projects and shift costs to other developers, which can trigger more cancellations and delays.

It also creates perverse incentives, experts said. Some developers will submit multiple proposals for wind and solar farms at different locations without intending to build them all. Instead, they hope that one of their proposals will come after another developer who has to pay for major network upgrades. The rise of this sort of speculative bidding has further jammed up the queue.

“Imagine if we paid for highways this way,” said Rob Gramlich, president of the consulting group Grid Strategies. “If a highway is fully congested, the next car that gets on has to pay for a whole lane expansion. When that driver sees the bill, they drop off. Or, if they do pay for it themselves, everyone else gets to use that infrastructure. It doesn’t make any sense.”

. . .

Massachusetts and Maine offer a warning, said David Gahl, executive director of the Solar and Storage Industries Institute. In both states, lawmakers offered hefty incentives for small-scale solar installations. Investors poured money in, but within months, grid managers were overwhelmed, delaying hundreds of projects.

“There’s a lesson there,” Mr. Gahl said. “You can pass big, ambitious climate laws, but if you don’t pay attention to details like interconnection rules, you can quickly run into trouble.”

For the full story, see:

Brad Plumer. “U.S. Solar Goal Stalled by Wait On Creaky Grid.” The New York Times (Friday, February 24, 2023): A1 & A15.

(Note: ellipses added.)

(Note: the online version of the story was updated Feb. 28, 2023, and has the title “The U.S. Has Billions for Wind and Solar Projects. Good Luck Plugging Them In.”)

Americans “Vote with Their Feet” Against Higher Taxes

(p. A15) The Tax Foundation’s 2021 State Business Tax Climate report ranks California’s state and local taxes as the second highest in the nation, just below New Jersey and above New York. People are fleeing these states.

. . .

I analyzed all 50 states’ net domestic migration levels and compared those levels with each state’s overall tax ranking. The ranking includes a weighing of taxes on corporate profits, individual income, sales, property and unemployment insurance.

The 10 states with the lowest taxes gained an average of 948 per 100,000 total population. For states that ranked 11th through 20th on taxes, the average was 457. For states ranking 21st to 30th, the gain was only 97. Net domestic migration turned negative for states ranking 31st to 40th with a loss of 141. And for the 10 states with the highest taxes, the average loss was 809 per 100,000.

These findings strongly reinforce the popular saying that people vote with their feet. They will leave places with relatively high taxes for those with lower levies. It may surprise Mr. Newsom, but people generally want to keep more of the money they earn.

For the full commentary, see:

James L. Doti. “Californians Aren’t the Only Tax Refugees.” The Wall Street Journal (Thursday, Jan. 12, 2023): A15.

(Note: ellipsis added.)

(Note: the online version of the commentary has the date January 11, 2023, and has the same title as the print version.)

The Tax Foundation’s report mentioned above is:

Walczak, Jared, and Janelle Cammenga. “2021 State Business Tax Climate Index.” Washington, D.C.: Tax Foundation, 2020.

Over 100,000 “Non-Covid Excess Deaths” Per Year in 2020 and 2021

(p. A15) Covid-19 is deadly, but so were the draconian steps taken to mitigate it. During the first two years of the pandemic, “excess deaths”—the death toll above the historical trend—markedly exceeded the number of deaths attributed to Covid. In a paper we just published in Inquiry, based on data from the Centers for Disease Control and Prevention, we found that “non-Covid excess deaths” totaled nearly 100,000 a year in 2020 and 2021.

Even these numbers likely overestimate deaths from Covid and underestimate those from other causes. Covid testing has become ubiquitous in hospitals, and the official count of “Covid deaths” includes people who tested positive but died of other causes.

For the full commentary, see:

Rob Arnott and Casey B. Mulligan. “How Deadly Were the Covid Lockdowns?” The Wall Street Journal (Thursday, Jan. 12, 2023): A15.

(Note: the online version of the commentary has the date January 11, 2023, and has the same title as the print version.)

The Mulligan and Arnott commentary is based on their academic article:

Mulligan, Casey B., and Robert D. Arnott. “The Young Were Not Spared: What Death Certificates Reveal About Non-Covid Excess Deaths.” INQUIRY: The Journal of Health Care Organization, Provision, and Financing 59 (Jan.-Dec. 2022): 00469580221139016.

“Nonprofit” Hospitals “Enjoy Lucrative Tax Exemptions” but Often Pressure Poor to Pay More

(p. 1) More than half the nation’s roughly 5,000 hospitals are nonprofits like Providence. They enjoy lucrative tax exemptions; Providence avoids more than $1 billion a year in taxes. In exchange, the Internal Revenue Service requires them to provide services, such as free care for the poor, that benefit the communities in which they operate.

But in recent decades, many of the hospitals have become virtually indistinguishable from for-profit companies, adopting an unrelenting focus on the bottom line and straying from their traditional charitable missions.

To understand the shift, The Times reviewed thousands of pages of court records, internal hospital financial records and memos, tax filings, and complaints filed with regulators, and interviewed dozens of patients, lawyers, current and former hospital executives, doctors, nurses and consultants.

The Times found that the consequences have been stark. Many nonprofit hospitals were ill equipped for a flood of critically sick Covid-19 patients because they had been operating with skeleton staffs in an effort to cut costs and boost profits. Others lacked intensive care units and other resources to weather a pandemic because the nonprofit chains that owned them had focused on investments in rich communities at the expense of poorer ones.

And, as Providence illustrates, some hospital systems have not only reduced their emphasis on providing free care to the poor but also developed elaborate systems to convert needy patients into sources of revenue. The result, in (p. 22) the case of Providence, is that thousands of poor patients were saddled with debts that they never should have owed, The Times found.

Founded by nuns in the 1850s, Providence says its mission is to be “steadfast in serving all, especially those who are poor and vulnerable.” Today, based in Renton, Wash., Providence is one of the largest nonprofit health systems in the country, with 51 hospitals and more than 900 clinics. Its revenue last year exceeded $27 billion.

Providence is sitting on $10 billion that it invests, Wall Street-style, alongside top private equity firms. It even runs its own venture capital fund.

For the full story, see:

Jessica Silver-Greenberg and Katie Thomas. “Entitled to Free Treatment But Hounded by Hospitals.” The New York Times, First Section (Sunday, September 25, 2022): 1 & 22-23.

(Note: the online version of the story was updated Dec. [sic] 15, 2022, and has the title “They Were Entitled to Free Care. Hospitals Hounded Them to Pay.”)

New York City and State Government Workers “Stole More Than $1.5 Million” of Federal Covid Loan Subsidies

(p. A19) A New York City correction official, eight Police Department employees and eight other current and former city and state workers schemed to defraud Covid relief programs that were intended to provide money to struggling business owners, the authorities said on Wednesday.

The defendants submitted phony applications for disaster relief loans on behalf of hair and nail salons and day care programs that did not exist, federal prosecutors in Manhattan said. The prosecutors said many defendants spent the proceeds of their loans on personal expenses, like casino gambling, stocks, furniture and luxury clothing.

They collectively stole more than $1.5 million from the federal Small Business Administration and financial institutions that issued guaranteed loans, and the intent was to steal hundreds of thousands of dollars more, the prosecutors said.

. . .

The charges unsealed on Wednesday [Nov. 30, 2022] are part of wave of fraud prosecutions around the country related to the trillions of dollars that the government has pumped into programs to bolster the economy and provide assistance to people who had lost their jobs. The New York Times reported in August that the government had charged 1,500 people with defrauding programs that provide pandemic aid, with more than 450 convictions resulting from the cases. The Small Business Administration’s inspector general’s office has agents going through two million potentially fraudulent loan applications.

For the full story, see:

Benjamin Weiser, Chelsia Rose Marcius and Jan Ransom. “17 Public Workers Are Charged With Stealing Covid Funds.” The New York Times (Thursday, December 1, 2022): A19.

(Note: ellipsis, and bracketed date, added.]

(Note: the online version of the story has the date Nov. 30, 2022, and has the title “17 Public Employees Charged in Schemes to Steal Covid Relief Funds.”)

Taiwanese Engineers Who Built Dictator Xi’s Computer Chips, Are Voting With Their Feet for Taiwan’s Democracy and Freedom

(p. B1) TAIPEI, Taiwan — The job offer from a Chinese semiconductor company was appealing. A higher salary. Work trips to explore new technologies.

No matter that it would be less prestigious for Kevin Li than his job in Taiwan at one of the world’s leading chip makers. Mr. Li eagerly moved to northeast China in 2018, taking part in a wave of corporate migration as the Chinese government moved aggressively to build up its semiconductor industry.

He went back to Taiwan after two years, as Covid-19 swept through China and global tensions intensified. Other highly skilled Taiwanese engineers are going home, too.

For many, the strict pandemic measures have been tiresome. Geopolitics has made the job even more fraught, with China increasingly vocal about staking its claim on Taiwan, a self-ruled democracy.

. . .

(p. B4) For now, Mr. Li is staying in Taiwan, working for an American chip company operating there and siding with the invigorated patriotic sentiment and the ethos of individual liberty.

“The advantage of working in Taiwan is that you don’t have to worry about officials shutting down the whole company because of one thought,” he said. “The atmosphere is very important. At least I can watch all kinds of programs criticizing the governments on both sides of the Taiwan Strait without worrying about being arrested.”

For the full story, see:

Jane Perlez, Amy Chang Chien and John Liu. “Taiwanese Who Built Up Chip Sector in China Are Fed Up and Going Home.” The New York Times (Tuesday, November 22, 2022): B1 & B4.

(Note: the online version of the story has the date Nov. 16, 2022, and has the title “Engineers From Taiwan Bolstered China’s Chip Industry. Now They’re Leaving.” The online version says that the title of the print version is “They Built Up China’s Chip Sector. Now, They’re Going Home to Taiwan” but the title of my national edition copy is “Taiwanese Who Built Up Chip Sector in China Are Fed Up and Going Home.”)

To Get Fed Funding, Rural Hospitals Must Agree to Transfer In-Patients to Bigger Hospitals that Do Not Want the Transfers

(p. A1) CASCADE, Idaho — It was 3 a.m. at the 10-bed hospital near the River of No Return, and by every measure, Ella Wenrich should have been dead.

Gastrointestinal bleeding had sent her hemoglobin level — typically above 12 — down to 3.3, and she needed an enormous blood transfusion at a larger medical center. But amid a surge in Covid cases, every major facility within 400 miles refused to take her. The smallest hospital in Idaho was, once again, on its own.

. . .

For 46 million Americans, rural hospitals are a lifeline, yet an increasing number of them are closing. The federal government is trying to resuscitate them with a new program that offers a huge infusion of cash to ease their financial strain. But it comes with a bewildering condition: They must end all inpatient care.

The program, which invites more than 1,700 small institutions to become federally designated “rural emergency hospitals,” would inject monthly payments amounting to more than $3 million a year into each of their budgets, a game-changing total for many that would not only keep them open (p. A16) but allow them to expand services and staff. In return, they must commit to discharging or transferring their patients to bigger hospitals within 24 hours.

The government’s reasoning is simple: Many rural hospitals can no longer afford to offer inpatient care. A rural closure is often preceded by a decline in volume, according to a congressional report, and empty beds can drain the hospital’s ability to provide outpatient services that the community needs.

But the new opportunity is presenting many institutions with an excruciating choice.

“On one hand, you have a massive incentive, a ‘Wow!’ kind of deal that feels impossible to turn down,” said Harold Miller, the president of the nonprofit Center for Healthcare Quality and Payment Reform. “But it’s based on this longstanding myth that they’ve been forced to deliver inpatient services — not that their communities need those services to survive.”

Some rural health care providers and health policy analysts say the officials behind the rule are out of touch with the difficulties of transferring rural patients. Bigger hospitals — bogged down with Covid surges, pediatric R.S.V. patients and their own financial woes — are increasingly unwilling to accept transferred patients, particularly from small field hospitals unaffiliated with their own systems.

There are also blizzards, downed cattle fences and mountain pass roads that close for months at a time.

. . .

Cascade Medical Center, where Ms. Wenrich was treated, seems like exactly the type of hospital that federal officials had in mind.

This former lumber mill community is home to less than a thousand people, but the hospital serves patients from across 2,800 square miles; patients travel up to eight hours round trip from homes without addresses.

For the full story, see:

Emily Baumgaertner and Michael Hanson. “Hospital Funding Has Catch: Cut Inpatient Care.” The New York Times (Saturday, December 10, 2022): A1 & A18-A19.

(Note: ellipses added.)

(Note: the online version of the story was updated Dec. 13, 2022, and has the title “A Rural Hospital’s Excruciating Choice: $3.2 Million a Year or Inpatient Care?”)

Feds Gave Bigger Covid Subsidies to Hospitals Charging Higher Prices

(p. A1) When Covid-19 struck, the U.S. government gave hospitals tens of billions of dollars to help them cope with the strains of the pandemic.

Many of the hospitals didn’t need it.

The aid enriched some well-off systems, while failing to meet the needs of many that were struggling, according to a Wall Street Journal analysis of federal financial-disclosure reports.

The mismatch stemmed in part from the way the federal government determined how much a hospital should get. A main factor used to allocate relief was a hospital’s revenue, rather than Covid caseload or financial distress. The idea was that revenue was a good indicator of a hospital’s size.

Among the recipients were large, wealthy hospital owners—including some nonprofits—that reported profits from patient care during the periods they got aid. Some were well off enough to put money into investment funds, while others spent on new facilities and ex-(p. A10)panded campuses.

Hundreds of other hospitals that got federal funding, however, reported losses. Some were forced to lay off nurses and make other cuts, saying they didn’t get enough aid to overcome their strains. Some served areas that had among the highest Covid death rates.

The revenue-based award system, especially prevalent in the early days of the pandemic, tended to favor hospitals with higher prices.

For the full story, see:

Melanie Evans, Liz Essley Whyte and Tom McGinty. “Covid Aid Went to Hospitals That Didn’t Need the Money.” The Wall Street Journal (Monday, Dec. 5, 2022): A1 & A10.

(Note: the online version of the story has the date December 4, 2022, and has the title “Billions in Covid Aid Went to Hospitals That Didn’t Need It.”)

As of January 2022, Koch Industries Had Invested $1.7 Billion into Renewable-Energy Infrastructure

(p. B10) Norwegian startup Freyr Battery and energy conglomerate Koch Industries Inc. are accelerating their plan to build a multibillion-dollar battery plant that will be among the largest to tap incentives in President Biden’s climate, tax and spending plan, Freyr said.

. . .

Koch has emerged as one of the biggest investors in batteries, a turnabout from its emphasis on fossil fuels. It has said it wants to benefit from the falling cost of renewable-energy technologies and help drive it down further. As of January [2022], it had invested a total of $1.7 billion into electric batteries, energy storage and solar-power infrastructure, according to its website.

The plan is unusual among battery projects in being dedicated primarily to the energy-storage market rather than electric vehicles.

For the full story, see:

Stephen Wilmot. “Koch Teams Up on Battery Plant.” The Wall Street Journal (Saturday, November 12, 2022): B10.

(Note: ellipsis, and bracketed year, added.)

(Note: the online version of the story has the date November 11, 2022, and has the title “Koch Teams With Startup to Build Giant Battery Factory.”)

Unintended Consequences Make “Government-Provided Health Care” a “Fiscal and Regulatory Nightmare”

(p. A17) The private plans participating in Medicare’s prescription-drug program, known as Part D, currently draw on three sources of revenue to finance prescriptions: out-of-pocket payments from patients, premium payments made by plan members, and subsidies from the federal government. In 2025, under the Inflation Reduction Act, both government subsidies and out-of-pocket payments by patients are scheduled to be cut sharply. The difference will have to be made up by premiums. But the statute inhibits this third revenue source, which is also subsidized, from increasing more than 6%. That’s hardly enough to cover inflation, let alone compensate for the other two revenue losses.

. . .

Existing plans have room to cut benefits, although the original Part D statute limits their ability to do so. As plans are under no obligation to take a loss, their other choice is to exit the market, which from the patient’s perspective means that all the benefits disappear. In essence, the Inflation Reduction Act statute may prohibit Part D plans from being economically viable, even if it doesn’t explicitly ban them.

. . .

Welcome to the fiscal and regulatory nightmare known as government-provided health care, where those writing the rules don’t understand the consequences of what they do. Democrats hate that Medicare Advantage has been available as a pseudo-private alternative to original Medicare’s single-payer arrangement. Yet they have (unwittingly?) passed a law that so thoroughly disrupts traditional Medicare as to render it the worst of the Medicare options.

For the full commentary, see:

Casey B. Mulligan and Tomas J. Philipson. “The Inflation Reduction Act Comes for Medicare.” The Wall Street Journal (Tuesday, November 22, 2022): A17.

(Note: ellipses added.)

(Note: the online version of the commentary has the date November 21, 2022, and has the same title as the print version.)

Project Entrepreneur Alex Oshmyansky Switched from Nonprofit to Profit to Raise Funds to Enable Project; Let Mark Cuban Take Credit for Project

(p. B1) DALLAS—When Mark Cuban got an email in 2018 from a stranger asking if he wanted to invest in a company dedicated to bringing down the cost of prescription drugs, he replied: “Tell me more.”

Today, the Dallas Mavericks owner and entrepreneur is helping steer the fledgling startup as it takes aim at high prescription drug prices and the industry middlemen who he says keeps them that way.

The Mark Cuban Cost Plus Drug Co. PBC, born from that brief email pitch from the company’s founder, Alex Oshmyansky, buys generic drugs from pharmaceutical manufacturers and sells them directly to patients online, rather than charging their insurance providers. By cutting out intermediaries and using a transparent pricing system, the pharmacy says it charges less than rivals for drugs: a 15% profit markup on a medicine’s cost, plus several dollars in fees for shipping and labor.

. . .

(p. B4) Several startups are attempting to reinvent parts of the pharmaceutical supply chain, removing costs by taking control of reimbursement, manufacturing and distribution.

Some firms, like ProvideGx and Civica Rx, are making drugs themselves so that they can control pricing and supply volumes. Others are selling directly to patients, bypassing the middleman known as pharmacy-benefit managers that traditionally handle drug coverage for health insurers.

A radiologist and former math prodigy, Dr. Oshmyansky received his undergraduate degree from the University of Colorado at Boulder at age 18, followed by an M.D. from Duke University and a Ph.D. in math from Oxford. He had the idea for a pharmacy after growing frustrated with pharmaceutical-industry pricing practices, such as companies hiking prices dramatically on decades-old drugs.

He planted the seed for the Cuban pharmacy in 2015 when he founded Osh’s Not-for-Profit Pharmaceuticals with a mission of manufacturing generic drugs and selling them to hospitals at a small markup on its costs.

He struggled to find investors to fund a nonprofit drug company, however, and eventually transitioned Osh’s into a for-profit entity. In 2018, he secured $1 million from investors through the Silicon Valley startup-incubator Y Combinator.

A few months later, in 2018, Dr. Oshmyansky emailed Mr. Cuban at his publicly available email address.

. . .

Eventually, Dr. Oshmyansky agreed to rename the company after Mr. Cuban in a bid to trade on his celebrity and attract free publicity.

For the full story, see:

Joseph Walker. “Mark Cuban Lands a Job at an Online Pharmacy.” The Wall Street Journal (Saturday, Dec. 10, 2022): B1 & B4.

(Note: ellipses, and bracketed year, added.)

(Note: the online version of the story has the date December 9, 2022, and has the title “Mark Cuban Has New Job: Working at Online Discount Pharmacy.”)