In July The Atlantic published an article about the fact that the State of Texas seems to have avoided the economic recession that has hit the rest of the country. The article points out that Texas came into the recession in good shape because in 2008 Texas was enjoying a strong economy based on an energy boom.
According to the article:
"Real estate executives and economists struggled to find one reason why the Texas economy largely avoided the real estate boom and bust, but a few theories emerged. First, San Antonio Mayor Julian Castro suggested that a reliance on property taxes in Texas (compared to California) might have dulled real estate appreciation. Second, the banks that survived the Savings and Loan crisis in the 1980s have mostly held onto conservative and un-exotic lending practices. Third, land and utilities are generally cheaper throughout Texas, which holds down the cost of the living. Fourth, besides Dallas, Texas' major cities have diversified away from the kind of real estate and financial services addiction that plagued CaliFlAriVada (that's CA, FL, AZ, NV), where the recession has been the most severe."
The article also points out that the major cities in Texas have hosted stable industries. That has generally resulted in consistent growth.
The article concludes:
"Maybe it's the lack of a state income or capital gains tax. Or the dearth of union workers. Or the plentiful labor supply on the border of Mexico, or the lower wages, or the stable and lean regulations. There's something about Texas that makes it the most popular place for business to do its business, as CEO Magazine and CNBC both found the last year. As Brooke Rollins, president of the Texas Public Policy Foundation, told me: "Our research shows that the more tax incentives and less regulation you have, and the less likely businesses are to get sued, the more likely it is they'll want to come and prosper in your state.""
I would like to add one other reason why Texas has not participated in the recession. According to an American Medical News article in 2008, there was another factor. In 2003 Texans approved a state constitutional amendment limiting noneconomic damages in medical liability cases to $250,000 for physicians. Five years later, the cap is being credited for slashing liability insurance premiums, boosting the ranks of doctors in the state, and improving medical access to patients. This is the kind of healthcare reform we need!
The article at American Medical News points out:
"Texas physicians have witnessed a 25% overall drop in liability rates since 2003, the state insurance department says. For the first time, the state's largest medical liability carrier, Texas Medical Liability Trust, saw a 50% reduction in lawsuit filings, this from 2003 to 2008. Texas went from four insurers to more than 30 during that period.
"According to the Texas Medical Board, medical license applications have soared from 2,561 to 4,041 -- a 58% jump. At the same time, the number of neurosurgeons has climbed 12%, while the supply of orthopedic surgeons has risen 9%.
"The results seen in Texas, with lowered liability insurance premiums, are repeated in experiences from other states that have enacted caps of varying degrees. In February, the AMA released an analysis of independent research that showed caps on noneconomic damages are effective and have lowered premiums at least 17%, with some specialties seeing even greater drops."
This is the answer to our nations so-called 'healthcare crisis'--not more government control. When the rest of the states realize that they can prosper instead of going broke, maybe they will take a look at what has happened in Texas and learn from it.
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