The Wall Street Journal has an editorial kvelling about the "remarkable" "success" of Texas in job creation, attributing the growth to the state's "free market and business-friendly climate." It all makes fine sense, covering terrain surveyed here earlier in the review of Governor Perry's book and in the post on Michael Barone's Texas boom column. The money paragraph, though, is right here:
Texan construction employment has contracted by 2.3% since the end of the recession, along with manufacturing (a 1.8% decline) and information (-8.4%). But growth in other areas has surpassed these losses. Professional and business services accounted for 22.9% of the total jobs added, health care for 30.5% and trade and energy for 10.6%.
The editorial then complains, "the core impulse of Obamanomics is to make America less like Texas and more like California, with more government, more unions, more central planning, higher taxes."
But if what's really driving job growth in Texas is health care, and if, as has been noted here based on Atul Gawande's reporting for the New Yorker, McAllen, Texas, is one of the most expensive health care markets in the country, at high cost to Medicare but without much in the way of improved outcomes, then what's really going on here isn't so much free markets but rent-seeking behavior on the part of health-care industry types trying to sponge up as much Medicare money as possible.
Not that there isn't some genuinely excellent health care in Texas. But a lot of federal funding goes into it; the National Institutes of Health awarded Baylor College of Medicine $202,869,815 for 2010 and the University of Texas's MD Anderson Cancer Center got another $165,830,210 in NIH money in 2010. The Baylor College of Medicine Web site boasts of $344 million in annual federal research funding, while MD Anderson's boasts of $206,664,447 in federal grants and contracts and $23,204,735 in "State-appropriated general revenue and tobacco settlement."
And that's just the research funding, not the funding for actually providing clinical health care to patients. There the data is much less transparent, because while the hospitals and medical schools are eager to brag about how much federal research money they get — because the grants are competitively awarded and therefore prestigious — they are less eager to brag about how much of their revenues come from Medicare and Medicaid, in part because, if they did, people might start wondering why the surgeons and administrators are making $1 million and $2 million a year to provide what are to some large degree taxpayer-funded services. The federal government only shows Medicare spending by state up to 2004, and it doesn't disclose payments to individual institutions.
Anyway, making this into some kind of free-market success story is pushing it. Yes, part of the reason health care has flourished in Texas is that the doctors beat back the medical malpractice lawyers and got some tort reform at the state level. And yes, part of the reason those $2 million-a-year surgeons like to work in Texas is that there's no state income tax and cheaper housing because of less land-use and building regulation. But even in Texas, health care can't keep growing relative to the rest of the economy forever, especially if Medicare and Medicaid, i.e., the taxpayers, are paying.