Controlling Medical Costs

Obama’s Medicare Appointee Has Accidental Encounter with Reality, Learns Nothing - Dan Mitchell

To explain, let’s start by looking at why relative prices are falling for computers, cars, TVs and telephones. This isn’t because the companies that make these products are motivated by selflessness. Like all producers, they would love to charge high prices and get enormous profits. But because they must compete for consumers who are very careful about getting the most value for their money, the only way companies can earn profits is to be more and more efficient so they can charge low prices.

So why isn’t this happening in health care? The answer, at least in part, is that consumers aren’t spending their own money so they don’t really care how much things cost. As this chart illustrates (click to enlarge), only 12 percent of every healthcare dollar is paid directly by consumers. The rest comes from third-party payers, mostly government but also insurance companies.

In other words, Berwick’s column accidentally teaches us an important lesson. When consumers are in charge and responsible for paying their own bills, markets are very efficient and costs come down. But when government policies cause third-party payer, consumers have little if any incentive to spend money wisely – leading to high costs and inefficiency.

National Debt

U.S. Treasury: China Has Decreased Its Holdings of U.S. Debt - Terence P. Jeffrey

Since September 2008, when they eclipsed Japan, entities in mainland China have been the largest foreign owners of U.S. government debt. But, as indicated by the Treasury Department chart linked here, Chinese ownership of U.S. Treasury securities peaked in October 2010 and has declined in each of the four most recent months reported by the Treasury Department.

At the end of October 2010, China owned 1.1753 trillion in U.S. Treasury securities. That dropped to $1.1641 trillion by the end of November, $1.1601 trillion by the end of December, $1.1547 trillion by the end of January, and $1.1541 trillion by the end of February 2011.

Keynes vs. Hayek Video

Fight of the Century from Econ Stories:

College Costs

Raymund Paredes: $10,000 Degrees "Entirely Feasible" - Reeve Hamilton

At a board meeting of the Texas Higher Education Coordinating Board on Wednesday, Higher Education Commissioner Raymund Paredes said that $10,000 bachelor's degrees — books included — as proposed by Gov. Rick Perry are "entirely feasible."

He hopes to have concrete proposals and coursework in place to meet the challenge before the start of the next legislative session in 2013.

A repeated theme in the board's discussion about the governor's cost-cutting proposal was that they were not seeking to replace existing degrees or artificially push the costs of those down, but were rather seeking to provide alternative options for low-income students. "We're not talking about every field," Paredes said. "We're not talking about every baccalaureate degree. We're not talking about every student."

Van Davis, special projects director for the coordinating board said that all low-cost degree programs would have to share certain characteristics. They would have to be rigorous, highly structured, allow for advancement based on proven competency levels, leverage technology, and have buy-in from faculty members. "Low cost does not equate to low rigor or even low value," Davis said.

A key to reaching the goal will be leveraging existing resources, such as online degree programs and open source textbooks. "Our institutions are already doing so many pieces of this," Davis said, noting that it was largely a matter of putting those pieces together in the right way.

Retirement Plans

Even U.S. can't afford generous defined benefit systems - Michael Barone

Pensions are not the only defined-benefit system in our society. Social Security is a defined-benefit system: You pay money in and you get retirement benefits when you reach a certain age. Medicare is a defined-benefit system as well, though when you become eligible you may be surprised to find it doesn't cover everything: that's why elderly people buy Medigap insurance policies.

Many on the political left decry the disappearance of defined-benefit pension plans from the private sector and strive mightily to maintain them for public-sector employees. They argue that people with defined-contribution plans often don't save enough for a comfortable retirement or make bad investment choices.

They argue that defined-benefit plans and defined-benefit public policies provide you with absolute 100 percent security and eliminate all risk. Unfortunately it's becoming clear they don't.

The people who put defined-benefit plans and policies in place assumed there would always be someone able to pay for them.

There would always be enough new workers to pay for retirees' Social Security and Medicare. Benefits were raised on the assumption that the baby boom generation would produce a baby boom of its own. Oops. Birth rates near replacement levels, which we have now, are not enough. The ratio of workers to retirees is in inexorable decline.

General Motors would always be a big enough company to pay for the pensions and health benefits promised to hundreds of thousands of retirees. Turned out it wasn't.

10 States Where Pensions Are Running Out of Money - Douglas A. McIntyre and Charles B. Stockdale

24/7 Wall St. reviewed the pension funds of all 50 states collected by Pew as of 2009, the latest period when data is available for all of them. We looked for how much the most underfunded pensions were compared to the level that actuaries suggested in 2009. We also looked at the recommended amounts of annual contributions that each state made. 24/7 compiled a list of The Ten States Where Pensions Are Running Out of Money based on state pensions that are underfunded and which have a shortfall of the 2009 recommended level.

Quantitative Easing

Sarah Palin for the Fed? - New York Sun

The big question as Chairman Bernanke gets set for his first quarterly press conference is how Sarah Palin was able to figure out sooner than everyone else that the Federal Reserve’s campaign of quantitative easing wouldn’t work. Disappointment in the Fed’s policies is being reported this morning at the top of page one of the New York Times. It reports that “most Americans are not feeling the difference” from the Fed’s “experimental effort to spur a recovery by purchasing vast quantities of federal debt.” It reports that “a broad range of economists say that the disappointing results show the limits of the central bank’s ability to lift the nation from its economic malaise.”

Plus, everything you need to know about QE2:



Via Liberal Compassion: Liberal Elite Tells Those Suffering From High Food Prices To Get "A Better Job"

Government Handouts

Government Cash Handouts Now Top Tax Revenues - Elizabeth MacDonald

U.S. households are now getting more in cash handouts from the government than they are paying in taxes for the first time since the Great Depression.

Households received $2.3 trillion in some kind of government support in 2010. That includes expanded unemployment benefits, as well as payments for Social Security, Medicare, Medicaid, and stimulus spending, among other things.

But that’s more than the $2.2 trillion households paid in taxes, an amount that has slumped largely due to the recession, according to an analysis by the Fiscal Times.

Also, an estimated 59% of the 308.7 million Americans in this country get at least one federal benefit, according to the Census Bureau, based on 2009 data. An estimated 46.5 million get Social Security; 42.6 million get Medicare; 42.4 million get Medicaid; 36.1 million get food stamps; 12.4 million get housing subsidies; and 3.2 million get Veterans' benefits.

And the handouts from the government have been growing. Government cash handouts account for a whopping 79% of household growth since 2007, even as household tax payments--for things like the income and payroll tax, among other taxes--have fallen by $312 billion.

Taco Bell Lawsuit

Taco Bell Demands an Apology After Beef Lawsuit Dropped - Slashfood Editor

Taco Bell would like an apology from the folks who brought (and then withdrew) the lawsuit against them that claimed their meat mixture was less than 35 percent beef. "Would It Kill You to Say You're Sorry?" asks the ad Taco Bell has launched today in newspapers across the country.

High Oil Prices

Speculation - John Hinderaker

It is getting hard to keep track of all of the disgraceful things Barack Obama is doing, but we shouldn't overlook his effort to blame high energy prices on "speculators." In fact, the high price of petroleum, which in turn raises the cost of everything else, is due to a combination of market forces and the Obama administration's terrible energy policies. When you have an administration that openly wishes for higher energy costs, it shouldn't be a surprise when prices go up.

But Obama doesn't want to take the blame for the consequences of his policies, so he follows his usual Alinskyite policy--fabricate a villain and demonize him.

The Department of Distraction Swings Into Action - The Professor

It is becoming clear that Obama’s criticism of speculators was not a one-off. Instead, it is part of a broader campaign to demonize them. Today’s installment of the Two Minutes’ Hate came courtesy of the Justice Department (so tempted to use quotes around that). Eric Holder announced the formation of an Oil and Gas Price Fraud Working Group consisting of Department of Justice, the National Association of Attorneys General, the Commodity Futures Trading Commission, the Federal Trade Commission, the Department of the Treasury, the Federal Reserve Board, the Securities and Exchange Commission, as well as the Departments of Agriculture and Energy. The Group’s charge is:

In March 2011, President Obama asked the Attorney General to work with federal and state agencies to monitor oil and gas markets for potential wrongdoing. In response to the President’s call for action, Department of Justice leadership consulted with federal agencies and state attorneys general and discussed pending inquiries in some states, the most effective legal tools and areas that require additional exploration. As a result of this examination and to further the central mission of the Financial Fraud Enforcement Task Force, the Attorney General formed the Oil and Gas Price Fraud Working Group.

Are Speculators Responsible for Today’s Higher Oil Prices? - Warren Meyer

There are two checks on current commodity values that make sustained speculative bubbles much less likely. First, physical commodities are really expensive to inventory. I can hold futures contracts on a million barrels of oil in my desk drawer; a million barrels of physical oil requires a container the size of 63 Olympic swimming pools. Second, the demand curve for oil futures is based on expectations and predictions and hope and fear. The demand curve for physical oil is grounded in the real economics of electricity generation and powering factories and driving trucks.

So lets consider speculation in this context. We start from a market in oil for current delivery that is in balance, where the price is such that supply and demand are roughly equal. Now, enter speculators. They supposedly drive the price up above this “natural” price. As the price rises, we know producers will seek ways to bring more oil to market, and consumers will reduce their consumption. The result is a glut – an excess of supply over demand. Here is the real question to ask if one suspects that speculators are driving the price of oil for current delivery above and beyond the market clearing price: Where is all the extra oil going?

More White House Demagoguery on Gas Prices - John Hinderaker

It is easy to show that Obama's attack on the oil companies is baseless. To begin with, what do "subsidies" have to do with high gas prices? I assume that by "subsidies" Obama means that there is still some oil company income that the government doesn't tax. But the effect of a tax break is to lower prices, not raise them. On the other hand, the government does raise the price of gasoline, very significantly, by levying massive taxes on gasoline at both the federal and state levels. In fact, the government profits much more from the money you pay at the pump than any American oil company does.

...

Many people do not realize that the American oil companies are relatively minor producers on the international scene. Because of our restrictive drilling policies, they do not have access to substantial quantities of oil in the ground. They are major refiners, but relatively small producers of crude oil. The largest American oil company, Exxon-Mobil, barely registers in terms of control over supplies of crude oil. You have to hunt for it on this chart, which we wrote about here.

Frontiers in Computing

Super-Small Transistor Created: Artificial Atom Powered by Single Electrons

A University of Pittsburgh-led team has created a single-electron transistor that provides a building block for new, more powerful computer memories, advanced electronic materials, and the basic components of quantum computers.

The researchers report in Nature Nanotechnology that the transistor's central component -- an island only 1.5 nanometers in diameter -- operates with the addition of only one or two electrons. That capability would make the transistor important to a range of computational applications, from ultradense memories to quantum processors, powerful devices that promise to solve problems so complex that all of the world's computers working together for billions of years could not crack them.

Researchers Succeed in Quantum Teleportation of Light Waves - Rebecca Boyle

The results pave the way for high-speed, high-fidelity transmission of information, according to Elanor Huntington, a professor at the University of New South Wales in Australia who was part of the study.

“If we can do this, we can do just about any form of communication needed for any quantum technology,” she said in a news release.

Instead of using ones and zeroes, quantum computers store data as qubits, which can represent one and zero simultaneously. This superposition enables the computers to solve multiple problems at once. The new, faster teleportation process means scientists can move blocks of this quantum information around within a computer or across a network, Huntington said.

IBM Launches Five-Year Effort To Develop Quantum Computing - Rebecca Boyle

IBM is breathing new life into a quantum computing research division at its Thomas J. Watson Research Center, reports New York Times. The computer giant has hired alumni from promising quantum computing programs at Yale and the University of California-Santa Barbara, both of which made quantum leaps in the past year using standard superconducting material.

Groups at both universities have been using rhenium or niobium on a semiconductor surface and cooling the system to absolute zero so that it exhibits quantum behavior. As the Times reports, the method relies on standard microelectronics manufacturing tech, which could make quantum computers easier and cheaper to make.

State Deficits

The Tao of Jerry - William Voegeli

Californians can take scant comfort from the prospect that a blue-state meltdown may start elsewhere. (Illinois, for instance, appears to have dug itself into an even deeper hole.) No matter which other states have it worse, California faces years of austerity. According to a report issued in November 2010 by the Legislative Analyst's Office (LAO)—California's counterpart to the Congressional Budget Office—the state's general fund is heading for a $20 billion shortfall every year until 2016, as far ahead as LAO cares to project. Since LAO does not expect general fund revenues to exceed $100 billion until 2015, these deficits would be more than one-fifth of the state's budget for half a decade.

And that's the good news. "We believe that our projections probably understate the magnitude of the state's fiscal problems during the forecast period," the report says. The picture would have been even bleaker if LAO had factored in the billions of additional dollars California must devote each year to fulfill pension and health care obligations to public employees who have retired or will in the future. (When and how the state will pay for those promises, and whether it will bend or break some—these were too murky for the agency to quantify and forecast.) LAO does estimate that the unfunded liabilities for these obligations amount to $136 billion. California's "long-term fiscal liabilities—for infrastructure, retirement, and budgetary borrowing—are already huge," the report states. "By deferring hard decisions on how to finance routine annual budgets of state programs to future years, the state risks increasing further the already immense fiscal challenges facing tomorrow's Californians."

...

The planted axiom is that higher taxes—California's are already among the highest in the nation—will get the state through the recession and recovery without further reductions or reorganizations of its public sector, hastening the happy day when things can go back to normal. The long-term structural deficits that appear endemic in the blue-state model of high taxes, big government, and strong public employee unions all argue, however, that "normal" is the problem. Americans are endorsing this proposition with the articles they write and the bonds they sell but also, more importantly, by decisions about where to build lives and enterprises. The first results from the 2010 census, released in December, show that the population of Texas, a state with no corporate or individual income tax, grew twice as fast as the nation's overall population between 2000 and 2010. California grew at the national rate, meaning that for the first time since 1850, the census will result in no additional California seats in the House of Representatives. (New York will lose two House seats; Illinois and New Jersey will each lose one. Texas adds four.) More generally, as Michael Barone has calculated, 35% of the nation's population growth since 2000 took place in the nine states that have no income tax, which together accounted for only 19% of the nation's total population at the beginning of the decade.

National Debt

A Very Good Question about Our National Debt - Jim Manzi

A very smart commenter at the American Scene called “cw,” who almost always disagrees with me in a highly productive way, asked what I think is an excellent question:

So here is a technical question for Jim or whoever else can answer it: how much would taxes need to be raised to maintain our current entitlement regime?

The total present value of payments expected under Social Security and Medicare beyond what is expected to be collected under current tax laws is about $100 trillion. One way to put that amount of money in context is to note that it is about twice the amount of all the net private assets that exist in America today.

To answer cw’s question directly, the best back-of-envelope estimate is that meeting this unfunded portion of our Social Security and Medicare commitments would require roughly an immediate 80 percent increase in federal income taxes, sustained forever.

That is one end of a spectrum. The other is to cut out $100 trillion of present value of anticipated entitlement spending.

Employment Outlook

It isn't a good time to be looking for that first job:

Paul Ryan

Speaking Truth to Power - Michael Walsh

If you want to understand why Paul Ryan has suddenly become the de facto leader of the sad, pathetic, shriveled thing known as the Republican party, you need look no farther than his response to the classless sandbagging he got from the Bringer of Kinetic Military Action and Vacationer-in-Chief:

Click through for video.


Official web site of U.S. Congressman Paul Ryan.
Facebook: Paul Ryan

Obama's Budget Speech

Waste, Fraud and Abuse: Obama's speech was replete with all three - James Taranto

What's needed, he claimed, is "a serious plan" that will "require tough choices." He then outlined a four-step "approach"--it wasn't detailed enough to achieve planhood--that showed his promise of honesty to be an utter fraud.

The first step is "to keep annual domestic spending low." Wait, it's low? He then adds this qualification:

I will not sacrifice the core investments that we need to grow and create jobs. We will invest in medical research. We will invest in clean energy technology. We will invest in new roads and airports and broadband access. We will invest in education. We will invest in job training. We will do what we need to do to compete, and we will win the future.

So when he said of government spending that Americans "like the stuff that it buys," he was referring to himself. He seems less than determined to "keep" spending low, much less actually to reduce it considerably, which is what will be required.

President Boring - Roger Simon

What is it about Barack Obama that caused his vice president Joe Biden to fall asleep during the president’s speech Tuesday?

Did Biden, getting on in years, just need his afternoon nap? Well, maybe, but the television cameras showed a woman quite near the veep nodding out as well.

No, I think it was a natural response. Biden and the woman were bored stiff. Barack Obama has become the most tedious president in my lifetime. He is like those college professors whose classes you did everything you could to avoid but, if you had to go, sat as far back as possible in order to get a little shut-eye yourself.

But what is it about Obama that makes him so boring? I submit it is something quite simple — he has nothing to say. He is a boring person, the quintessential “hollow man” in the T.S. Eliot sense. He is kind of a socialist, kind of a liberal, kind of a multi-culturalist, kind of an environmentalist, kind of globalist, kind of a budget cutter — but none of them with any real commitment. Basically, he’s a vague and uncommitted person pretending to be otherwise. He is the man that voted “present,” now in the presidency. The fact that he never specified the targets of “hope” and “change” during his election was far from a campaign ploy and more typical than we ever dreamed. There never was a there there. And now, I strongly suspect, there never will be.

Obama, Spending Three Times as Fast as Bush, Blames Bush - Jim Geraghty

There is a lot of blaming Bush in this speech. Quick perspective: Using numbers from the U.S. Treasury, we see that the debt during Bush’s eight years in office increased from $5.7 trillion to $10.6 trillion, or $4.9 trillion over eight years. That’s bad; that’s basically $610 billion per year. But in the less than three years Obama has been in office, the debt has increased from $10.6 trillion to $14.2 trillion, a $3.6 trillion increase in about 27 months. In other words, Obama is increasing the debt by $1.6 trillion per year, three times as fast as Bush.

Also, follow the link for video of the McCain/Obama Presidential debate, where candidate Obama promises to cut more than he would spend, resulting in a net spending cut.


Krauthammer’s take on Obama’s budget address: ‘I thought it was a disgrace’ - Jeff Poor

“I’m going to give you one example of how dishonest it was – he went on and on how the Republicans want to steal from your grandma to lower taxes on the rich,” Krauthammer continued. “And he talked about the Bush tax cuts and how much he is going to stand on the bridge and oppose any extension which is what he knows how to do. He has done it over and over for the last six years. The Ryan plan is not about the Bush tax cuts. It transcends them. It’s what the deficit — what Obama’s own commission recommended, strip out loopholes and lower rates for everyone. It’s not about whether it’s the Bush rates or Clinton rates. It’s a whole new approach by which the Simpson-Bowles Commission recommended itself. In fact, Bowles had recommended in one of its scenarios of a high rate of 23 percent. Ryan is at 25 percent. Obama did this knowing that this is a way to play to his base. It was a speech that was quite remarkable in how demagogic it was and I say that with all due respect.”

With video.


About Those Medicare Savings - Kevin D. Williamson

Our current unfunded entitlement liabilities run about $100 trillion.

President Obama proposes to “strengthen” Medicare through a price-fixing panel called the Independent Payments Advisory Board (IPAB).

CBO took a look at IPAB and estimated that it might save us $28 billion over the next ten years, i.e., next to nothing.

And then it took another look and lowered its estimate from next to nothing to nothing:

For 2015 and subsequent years, the IPAB is obligated to make changes to the Medicare program that will reduce spending if the rate of growth in spending per beneficiary is projected to exceed a target rate of growth linked to the consumer price index and per capita changes in nominal gross domestic product. CBO’s projections of the rates of growth in spending per beneficiary in the March 2011 baseline are below the target rates of growth for fiscal years 2015 through 2021. As a result, CBO projects that, under current law, the IPAB mechanism will not affect Medicare spending during the 2011-2021 period.

You have to admire the president: To go out and give a morally preening speech like that, with IPAB front and center, on the assumption that nobody’s reading the footnotes.

Obama’s Tax Increase Trigger: Punishing Taxpayers with Automatic Tax Hikes When Politicians Overspend - Dan Mitchell

Called a “debt failsafe trigger,” Obama’s scheme would automatically raise taxes if politicians spend too much. According to the talking points distributed by the White House, the automatic tax increase would take effect “if, by 2014, the projected ratio of debt-to-GDP is not stabilized and declining toward the end of the decade.”

Let’s ponder what this means. If politicians in Washington spend too much and cause more red ink, which happens on a routine basis, Obama wants a provision that automatically would raise taxes on the American people.

Debt Gorilla

Video: There’s an 800-pound gorilla stalking the president! - PJ Tatler

Just follow the link. You'll be glad you did.

Management Theories

The Management Myth - Matthew Stewart

So why is Mayo’s message constantly recycled and presented as something radically new and liberating? Why does every new management theorist seem to want to outdo Chairman Mao in calling for perpetual havoc on the old order? Very simply, because all economic organizations involve at least some degree of power, and power always pisses people off. That is the human condition. At the end of the day, it isn’t a new world order that the management theorists are after; it’s the sensation of the revolutionary moment. They long for that exhilarating instant when they’re fighting the good fight and imagining a future utopia. What happens after the revolution—civil war and Stalinism being good bets—could not be of less concern.

Between them, Taylor and Mayo carved up the world of management theory. According to my scientific sampling, you can save yourself from reading about 99 percent of all the management literature once you master this dialectic between rationalists and humanists. The Taylorite rationalist says: Be efficient! The Mayo-ist humanist replies: Hey, these are people we’re talking about! And the debate goes on. Ultimately, it’s just another installment in the ongoing saga of reason and passion, of the individual and the group.

The tragedy, for those who value their reading time, is that Rousseau and Shakespeare said it all much, much better.

Ryan Budget Plan

Ryan steals march on Obama as fiscal crisis looms - Michael Barone

It was Ryan's way of saying that the financial meltdown arrived largely without warning, while the impending fiscal crunch is like a runaway freight train.

"This is the most predictable crisis in the history of our country," he went on. "We are on our path to a debt crisis" like those we've seen recently in Europe, with the national debt as a percentage of gross domestic product rising, under President Obama's budget, past the 90 percent danger point on its way to 800 percent.

At some point in between, as Harvard economist Kenneth Rogoff explains in the Financial Times, interest rates spike and the government is forced to make draconian cuts.

Those Social Security checks? They can be cut anytime, as the Supreme Court held in Flemming v. Nestor in 1960. Congress can do that just as quickly as it voted $700 billion to bail out the banks in the fall of 2008.

Ryan's budget attempts to prevent that by restructuring taxes and spending programs so the national debt as a percentage of GDP will start sliding down.

Tax rates would be lowered and the tax base broadened, much as Congress did in 1986. Federal spending would revert to 2008 levels and be frozen for five years.

Corporate welfare programs, including green energy, would be ended. Defense spending would be at levels recommended by Defense Secretary Robert Gates.

Medicaid would be converted into block grants to the states, which would give them new incentives to hold down costs.

Medicare would be converted, for those now under age 55, to a program like federal employees' health benefit plans and the Medicare prescription drug program. Seniors would have a choice of plans and would receive "premium support" -- federal supplements varying in size depending on income and health.

First Thoughts on the Ryan Plan - Megan McArdle

The broad outlines of the plan would work, from a budgetary perspective. It reduces the deficit to a smaller percentage of GDP than either the current-law baseline or the more likely "alternative fiscal scenario". On the other hand, politically, it seems very unlikely to pass in anything like its current form--the Ryan plan actually cuts spending, as a percentage of GDP, from its historical levels. Given the burden of Baby Boomer retirements that we have promised to cover--and the GOP's craven cowardice and shameless pandering in the face of the senior lobby--I don't see how spending is going to fall in the near-to-medium term.

That is a reasonable objection, but not a fatal one. Most bold plans get negotiated. The question is whether the GOP is actually willing to negotiate, or somehow believes that it can get its way through sheer bloody-mindedness. With GOP freshmen idiotically cheering a potential government shutdown, as though this had anything at all to do with getting government spending or deficits under control, "bloody-mindedness" seems like the more credible current explanation.

On the other hand, they've hardly got a monopoly on that. The wildly disproportionate fury and outrage which greeted both Bowles-Simpson and the Ryan plan from the left indicate that progressives have so far failed to come to grips with the fact that they are going to have to compromise: that while some of the gap is going to be closed by tax increases, some of it is going to be closed by spending cuts. And not just defense cuts, or seemingly trivial changes to physician reimbursement rates that we hope will snowball over time, but actual cuts in services that people currently want and expect to get from government--but do not want or expect to pay for.

Mortgage Debt

Homeownership and Mortgage Debt - Mark A. Calabria

From 1990 until today, the percentage of mortgage debt to value increased by over 50%, all to gain a 2 percentage point increase in homeownership. So it seems the story of the last 20 years has been a massive increase in home debt with very little increase in actual homeownership rates.

Efficient Cooling

Using Heat to Cool Buildings - Kevin Bullis

All refrigerators and air conditioners cool by evaporating a refrigerant, a process that absorbs heat. They differ in how that refrigerant is condensed so that it can be reused for cooling. Unlike the technology inside most air conditioners, which employs electrically driven compressors to mechanically compress the vaporized refrigerant, adsorption chillers use heat to condense the refrigerant. Adsorption chillers are typically far less efficient than chillers that use electrical compressors, and are bulky and expensive. But they have the advantage of being cheap to operate, since they require very little electricity. "If you have waste heat, you can run it for free," McGrail says.

So far these chillers have been limited to applications where there is a lot of waste heat—such as industrial facilities and power plants—or where electricity isn't always available. Cutting their size and cost could make them attractive in more applications, including in homes, where they could be run using hot water from solar heaters, McGrail says.