I find that the harder I work,
the more luck I seem to have.
Thomas Jefferson
[Note: This post is published after the post title date; it was in process when my Baltimore area home was affected by a widespread power outage early over the weekend. I discuss the outage and comment on some writings I reviewed over the weekend here.]
The "Health Insurance Mandate" and the Media
I subscribe to a number of health email newsletters, and already some of them are discussing yesterday's ObamaCare decision. I'm arbitrarily selecting one of them to quote; what is astonishing is the writer is a medical doctor. I would expect is anyone has a vested understanding in understand the issue (because of government funding nearly half the spending in the sector), it would be doctors:
"The Supreme Court has now deemed the individual mandate portion – the requirement that everyone purchase health insurance – to be constitutional."This is NOT quite true, although from a practical perspective it is accurate: it really approved ObamaCare as a tax plan which waives payment if you have approved health "insurance".
In yesterday's "quick appraisal" post, I pointed out CNN's confounded alerts on the topic. The Obama Administration wanted to argue that it was authorized under the Commerce Clause: this meant it could require someone to purchase something or penalize that person for not purchasing something. This is completely inconsistent with economic rights: for example, if I have the means to self-insure, to purchase any and accumulated medical transactions directly, why should the government be allowed to impose this on me? Why should I be forced to pay for some government's crony health "insurance" company's overhead and profit, which doesn't translate into my direct health costs? Why should I be forced to subsidize nonessential other people's socialized ordinary or elective health expenses (e.g., in vitro fertilization), some of which which I find morally objectionable (e.g., abortifacients or other artificial birth control)?
So the issue I had from the get go was that this was not even health care insurance; I am being forced against my will to subsidize nonessential health expenses socialized by crony interest groups. It's not, as Romney or Obama would suggest, my wanting to freeload on the system; the real freeloaders are the crony interest groups in a corrupt relationship with the government.
In fact, I have seen a government, which has violated every principle of free market in misguided, counterproductive, incompetent interventions done everything but promote "affordable" health care, with implicitly subsidized (i.e., pretax) employer-provided health care, price-fixing (below market price) in Medicare and Medicaid), and government or crony policies that pervert actuarial (risk-based) pricing (guaranteed issue), bury medical providers with paperwork and invasive regulations, limit patient choices (e.g., doctors) or vendors, and/or do not vest patients in cost management (e.g., unlimited doctor visits, brand (versus generic) prescriptions, etc.).
There are some circumstances for which I think the government should ensure coverage: e.g., birth defects, chronic conditions, catastrophic accidents, consequences of acts of God or acts of war/government, etc. I have often mentioned my accounting professor friend Tim; his girlfriend was involved in a catastrophic auto accident and is a quadriplegic. If they got married, the government would empty Tim's lifetime assets before contributing a dime. The same thing is true about a family member whose accumulated medical bills brings the family to bankruptcy; in other cases, there is company sponsored health insurance, but if the employee wants to start a business but he would lose his employer's health insurance, he wouldn't be able to find a viable plan. We should have government policies that respect traditional values and virtuous behavior (e.g., thrift, self-reliance, charity, initiative/entrepreneurship, etc.) and promote traditional institutions (marriageand family).
Pareto's principle suggests, for instance, 20% of the patients account for 80% of health care costs. I think a reasonable argument would be for government cover these 20% of patients directly (with reasonable means testing; for example, I don't think the government should cover Warren Buffet's health services). There are a variety of ways you could handle these patients, e.g., through Medicaid and/or national/regional/state assigned risk pools, with expenses subsidized through medical service taxes or a general consumption tax. Once the catastrophic risks are removed from the system, we could run a a medical savings/high-deductible program, with ordinary expenses paid out of pocket or through the medical savings program.
"The Affordable Care Act describes the `shared responsibility payment’ as a `penalty,’ not a `tax’. That label is fatal to the application of the Anti-Injunction Act. It does not, however, control whether an exaction is within Congress’ power to tax. In answering that constitutional question, this Court follows a functional approach, `disregarding the designation of the exaction, and viewing its substance and application.’I'm not sure others would phrase Justice Roberts' opinion this way, but the mandate is effectively a tax waived with approved health insurance.
Congress Feeds the Three Little Pigs
(Highway Fund, National Flood Insurance,
Student Loan Interest): Thumbs DOWN!
Any regular reader should know by now how I feel about government pork and Congressional nonsense as usual. It should not any reader that every voting Democrat voted in favor of this contemptible raid on the US Treasury. The trite politically spun sham rationalization of "jobs" is tiresome; the problem, of course, is that the Dems see ANY and ALL government spending as "jobs" programs. The fact is that government taxes take away money from the private sector, which would otherwise spend those resources far more effectively and efficiently, organically growing jobs.
Let's first take the highway fund. I haven't seen the reconciled differences between the House and the Senate version, but several reforms from the House have been routinely rejected by the Senate: e.g., redirect various gas and highway fees to the states themselves, restrict highway revenues to (well) highways themselves (versus transit subsidies), and eliminate earmarks; the Senate Democrats not only rejected these reforms but wanted to extend federal regulatory creep into public and private transit systems and discourage public sector road leasing to the private sector. We also need serious reform of funding to more of a mileage-based system as improving fuel efficiency results in an unfair, regressive shift of the highway cost burden to operators of older vehicles with notorious freeloader issues (e.g., electric car operators, shielded by "green energy" progressives).
Now let's take national flood insurance. John Stossel has covered this topic since his days at ABC. He has mentioned having built near the Long Island beach and having collected from federal flood insurance at least twice (before finally selling the property). He explains:
Private insurance companies were reluctant to sell insurance to those of us who build on the edges of oceans, and were they to offer it, they'd charge an arm and a leg to cover the risk. The subsidized insurance goes to affluent homeowners on both coasts. The insurance premiums were a bargain. The most I ever paid was a few hundred dollars. Federal actuaries say if the insurance were realistically priced, it would cost thousands of dollars.Why did the government set up this program in 1968? The politicians thought it was a way of mitigating the losses from federal disaster recovery costs by having users pay down in advance:
As so often happens, the program had unintended consequences. The cheap insurance encouraged more people to build on the beach, so the insurance risk is now huge. [At the time of the original broadcast], $645 billion in property is guaranteed by Uncle Sam.In fact, environmentalists claim that the federal flood program encourages building in the floodplain and has undesirable effects on the ecology (because of the government effectively lowering the cost of building and living there by subsidizing insurance). The federal program actually subcontracts up to a third of premiums to the private sector, and the lack of competition effectively prevents "one stop shopping" for home insurance, with finger pointing between private sector home insurers (responsible for, say, wind damage) and the government. Of course, the government was looking to EXPAND coverage (i.e., recovery caps), even though the program is $18B in the hole and barely covers its costs in a typical year.
Finally, not only has the federal government nationalized the student loan business, but it wants to subsidize half the interest costs, a fact that exacerbates the college bubble, lowering the costs to riskier students whom may drop out and/or eventually default on those loans at the expense of the taxpayer or whom may buy more college than they can pay back in the long run.
Okay, the regular reader knows what I want to do with these little piggies: I want them to go to the (free) market.
To make things EVEN WORSE, to cover funding (because renewed existing fees/taxes don't cover all the spending):
the bill raises new revenues from companies by making changes to the way corporate pensions are calculated, and by increasing premiums paid to the Pension Benefit Guaranty Corporation.Let us remember the PBGC (in not-so-good company with its similarly "independent" cousins, like Fannie Mae, Freddie Mac, and the USPS):
Designed as a backstop for failing pension plans back in 1974, SBGC now has promised more than 1.5 million retired and soon-to-be-retired pensioners $107 billion as a result of pension plans that were underfunded or were the residue of company bankruptcies. Unfortunately SBGC only has $81 billion in the bank, leaving the agency with its worst deficit in 37 years: $26 billion. According to a study done back in 2005 (long before the PBGC found itself in such trouble) by the Congressional Budget Office, the CBO said:Raising rates so that…the present value of expected future losses would equal the present value of premium income would require…the annual premium[s] to be increased by a factor of 6.5.Recall Paul Ryan's point during the ObamaCare debate about double-counting costs? Um, using probably insufficiently raised premiums to cover costs of totally unrelated programs? The fact that some Republicans enabled the "I haven't seen a tax dollar I can't spend 10 different ways" Democrats in dysfunctional tax, spend, and regulate "government as usual" Washington politics totally nauseates me. Can my thumbs go down any lower on this nonsense? (As a side note, my thumbs' down are more equal than others, because I have relatively rare double-jointed thumbs: my thumbs bend backwards at near right angles...)
Political Humor
For several minutes after the ruling, CNN was mistakenly reporting that the Supreme Court struck down President Obama’s healthcare law. In response, CNN was like, “Thank God no one watches us.” - Jimmy Fallon
[In related action, the Supreme Court also struck down the law of supply and demand and the principles of free markets, which the Obama Administration has argued are unconstitutional.]
"According to a poll by National Geographic, 65 percent of Americans said President Obama would better handle an invasion by space aliens than Mitt Romney. Well sure, once the aliens landed they'd see there's no jobs and they'd go home." - Jay Leno
[That's because the DHS under President Obama does not recognize any extradition treaty with the United Federation of Planets, the Klingon Empire, the Romulan Star Empire, the Cardassian Union, the Borg, or the Dominion and hence will release any space aliens pulled over by Arizona Sky Patrol under the Presidential Directive. (President Obama, whose own mother had a Close Encounter of the Third World Kind, recently won the first Nobel Intergalactic Peace Prize, narrowly beating out Jerry "Moonbeam" Brown.) On the other hand, the voters worry that Mitt Romney will resurrect Reagan's "Star Wars" program and attempt to shoot down Darth Vader, starting an interplanetary war with the Galactic Empire.]
Musical Interlude: My Favorite Groups
Tom Petty & the Heartbreakers, "King's Highway"
