The unemployment rate dropped .4% from 9.4% to 9.0% in January. After first glance this appears to be great news. But only 36,000 net jobs were added, so why was there such a large drop? It is because the number of people dropping out of the labor market increased. People are just giving up looking for jobs and they are no longer counted. The full picture of unemployment if you account for those who are underemployed is around 18.9%. I wonder what it would be if we counted those who have just given up. It is hard to fathom that nearly 1 in 5 people who want to work are not working or are working part-time. I can’t image how hard it must be for them. I am sure they had great hope in the promises of the stimulus.
The graph below compares what the current administration promised us in order to justify the $900 billion stimulus plan vs. what they actually delivered. When I see how well the ‘experts’ in Washington are at predicting outcomes, I realize that we really can’t trust any of their predictions. Think about the promises this same administration has made in light of the impact of ObamaCare will have on our deficit and economy.
We really can’t do any better than this? The 2,000 page Affordable Health Care act passed last year is the best our country can do? Creating more regulations that we can’t possibly understand, an Individual Mandate (evolving into the Individual Responsibility provision now) and giving more control over our health care into the federal governments hands, is the answer to the problem? I am continually amazed at the desire of so many to put our health care into the hands of our government. I am among the first to admit that we need to reform our health care system. But turning it over to the government is not the answer. We don’t have to follow other countries examples to solve our problems. We are an innovative, creative country that has always found free market ways to solve hard problems. This does not mean that the government does not play a role in the reform, it should provide the framework to allow a free market solution to prosper.
Let me begin by saying that any reform needs to address pre-existing conditions and expand coverage to those currently not covered. I am not a cruel and heartless conservative schilling for health insurance companies. I just want a system that continues to provide the incentives for innovation and creativity while addressing some of the major flaws in our current system.
We also need to be realistic about reform. Turning our system over to the government does not mean there are limitless funds available to pay for everyone’s healthcare. Creating entitlements does not work some strange magic that creates money to fund them. Someone has to pay the bill, there has to be real money paid by real people to fund the program.
Government is not really very good at running anything
Why anyone would use medicare and medicaid as examples of successful government programs is beyond me. They are broke and creating huge unfunded liabilities. Why do we want our government to make promises that can’t keep, which cause huge deficits and in the end can’t deliver?
The 2009 Social Security and Medicare Trustees Reports show the combined unfunded liability of these two programs has reached nearly $107 trillion in today’s dollars! That is about seven times the size of the U.S. economy and 10 times the size of the outstanding national debt.
The unfunded liability is the difference between the benefits that have been promised to current and future retirees and what will be collected in dedicated taxes and Medicare premiums. Last year alone, this debt rose by $5 trillion. If no other reform is enacted, this funding gap can only be closed in future years by substantial tax increases, large benefit cuts or both.
We want more of this? This is logical and reasonable? We think that this makes sense? To learn most about this disaster of an entitlement, read here, http://www.ncpa.org/pub/ba662 or here http://www.forbes.com/2009/05/14/taxes-social-security-opinions-columnists-medicare.html The Forbes article indicates that all taxpayers would need a permanent 81% tax increase to cover the unfunded liabilities. I’m sure all of you would have no problem with that. All the wishful thinking and emotional handwringing will not make this go away and no matter how compassionate you are you can not justify making things worse by adding another entitlement.
New attitudes are needed
We need to examine our attitude towards paying for our health care. I find that we expect our insurance to pay for all of our health care expenses. We don’t want to pay for anything out of our pockets. Insurance is not and should not be a replacement for personal responsibility. Insurance should cover catastrophic expenses, not normal checkups, colds, flu, prescriptions, etc. Think about our auto and home insurance. We purchase this type of insurance to cover the big ticket items or the major accidents. We don’t expect insurance to cover oil changes, tune ups or tire changes. But when a tree falls on the house or our car, we expect our insurance to handle this. Our premiums could be reduced if we had larger deductibles and planned for and expected to pay for routine medical expenses.
A large part of the problem with health care is the exorbitant cost. Even the most basic out-patient procedure is more costly than most people can afford. Any solution to the health care issue must address the problem with cost. The current insurance system offers no incentive for health care providers to lower cost and improve efficiencies to attract customers. We don’t ask how much a test or procedure is going to cost. We don’t shop around for the best price, we just go wherever our doctor tell us. We don’t operate this way for other services. Most of us take pride in getting the best price we can. Lasik is an example of how competition and removing artificial cost constraints can drive cost for health care down. Lasik is not covered by insurance yet it is a popular procedure. The cost of Lasik has not gone up like other medical procedures, rather is has decreased by more than 50% from a cost roughly $4,000 per eye in 1997 to an average of $1,800 per eye today. We can’t always shop for price in health care, but if we were incentivized to do so, prices would certainly drop making it more affordable (insurance premiums would also decrease).
Government regulations are part of the problem
Part of the problem with our current system is too much Government intervention. Now before you accuse me of the desire to abolish all government regulation, let me explain. I believe there is a place for regulation to protect consumers, I just think that we need to periodically examine these regulations to ensure that they are providing the value that was intended. Often regulations create unintended consequences. For example, the cost of providing insurance continues to increase because of government mandates for what must be covered in policies offered by insurance companies. This is not necessarily a bad thing (although I disagree with some of the elective procedures required to be covered) but the unfortunate side effect is that the cost to buy these policies becomes prohibitive. I’m not advocating the removal of these mandates, but rather more choice for the consumer regarding what coverages they include in their policy. What I would like to see is more flexibility in the types of coverage one can purchase similar to auto insurance. A simple example, I’m 45 years old, so is my wife, we don’t plan on having any more children, so I would like the ability to buy a policy that does not cover obstetrics so I could save money. If people want to pay more for a policy which covers addiction counseling, sex changes, cosmetic surgery, etc. more power to them, just give me the ability to opt out so I can save money.
I won’t go into too much more detail on regulations, but I would like insurance companies to be allowed sell across state lines to have greater economies of scale (requiring cooperation by the multiple state dept. of insurance). Also, allowing people to join together and purchase insurance as a group, much like a large employer, so they can negotiate discounts with the insurance carriers would provide two benefits. First, the insurance would not be tied to your employer so it would be portable and second it would provide opportunities for those that do not work for large companies. As an example, I am in the Software Development industry. If a group of developers, testers, managers could join together to purchase insurance, potentially be hundreds of thousands of buyers, would result in significant discounts. Current state and federal regulations prevent these ideas from becoming a reality.
The CEO of Whole Food offered some practical and in some cases ideas that are being practiced by his company. It is unclear to my why he was vilified by some on the left, but here is a link to his WJS editorial; http://on.wsj.com/g7r8UC
Nathan Sass does a nice job covering and alternative proposal that I think is pretty novel. Please take a look here; http://bit.ly/fl7dUX
Tort reform was left out of the AHCA. While I think that people who have been a victim of negligent medical care should be made whole and deserve monetary compensation in many cases the settlement is about punitive damages. Punitive damages are meant to punish the perpetrator of the offense so they won’t do it again. The problem in our current system is that health care providers can buy malpractice insurance which covers punitive damages awarded to a plantiff. They build the cost of the malpractice insurance into the the amount they charge for services, so it is the consumer who is punished not the doctor. I think that the best punitive action that can be taken against a negligent health care provider is to take away their license to practice. That is real and effective punishment that is not passed on to the consumer. It is no surprise that trial lawyers are against tort reform, they have everything to lose and nothing to gain.
I am interested in learning about other ideas about how the health care issue can be solved. Please feel free to post comments with ideas and links to others ideas. As much as I hope that the AHAC will be repealed, I also hope that we can quickly move forward with creative and novel ideas for solving the problem.
Transcript of then candidate Obama from a 2008 appearance on CNN.
OBAMA: Let’s break down what she really means by a mandate. What’s meant by a mandate is that the government is forcing people to buy health insurance and so she’s suggesting a parent is not going to buy health insurance for themselves if they can afford it. Now, my belief is that most parents will choose to get health care for themselves and we make it affordable.
Here’s the concern. If you haven’t made it affordable, how are you going to enforce a mandate. I mean, if a mandate was the solution, we can try that to solve homelessness by mandating everybody to buy a house. The reason they don’t buy a house is they don’t have the money. And so, our focus has been on reducing costs, making it available. I am confident if people have a chance to buy high-quality health care that is affordable, they will do so. That’s what our plan does and nobody disputes that.
I couldn’t agree more with your position President Obama, so what changed and how can you look us in the eye and argue the other side of the point now?
Nice article here on the decision yesterday by Judge Vinson;
It did not take long for issues and concerns that conservatives and libertarians expressed about the Health Care act to come to light. Late last year news that several large companies had requested that the Obama Administration grant waivers to allow them to opt out of the provisions of Obamacare. This was a cause of concern, but I didn’t spend much time digging into the details. Today, it was announced, rather quietly, that more companies and organizations were granted waivers. The total now exceeds 700 companies and 2.2 million employees.
I began to question the process of granting waivers and wondered if this process was part of the bill. Why are these companies asking for waivers? Who are they? What is the criteria for granting these waivers? What I learned is that the law of unanticipated consequences (okay I’m being optimistic that this wasn’t intentional) quickly came into play.
The original company that received a lot of press over this issue was McDonald’s. They indicated that they would have cut out their “mini-med” program for about 30,000 of their low-paid workers because of the burdensome administrative requirements of the new program. HHS stepped in and offered a one-year pass (waiver) on complying to the law’s regulations. I suppose that it would have been an embarrassment to the Obama administration if McDonald’s did indeed drop their coverage for 30,000 workers, since this is quite the opposite of what was promised with the passage of this law. Of course, once the proverbial seal was broken, companies lined up to get their waivers.
A quick survey of a list of those granted waivers reveals that many of laws biggest proponents and the President’s biggest financial supporters, primarily labor unions, have been granted waivers. It also is clear that the health care law does not have provisions for these waivers, so it is up to politically appointed bureaucrats to grant these waivers. And this is the realization of many of our worst fears. Our government passes a law to gain more control over our health care system. The law has burdensome requirements for employers and insurance companies that are costly to implement. A complex bureaucracy is created to administer this new law. The bureaucracy is empowered to the extent that they can decide whom the law applies to and whom it does not. Coincidentally, those who supported the law are granted waivers, seemingly for arbitrary reasons.
This is the case against any government involvement in health care. We cannot grant our government this type of power, it will invariably be abused. The government cannot be allowed to pick winners and losers and apply laws based on crony-ism or other arbitrary means. It is too easy to abuse this power to punish opponents or reward benefactors. This is why I am adamantly opposed to any government involvement in matters as important as healthcare. The government needs to create a climate that allows the free market to solve the issues with our current system. Reasonable regulations to prevent abuse and provide coverage for the most needy are also acceptable to help solve the issues with out current system. But it is obvious that we cannot and should not entrust our government with this much power.
Another point that the waivers bring to light is that issues with the bill have been brought to light almost immediately. This is sure indication that this was a poorly written law, that was not throughly vetted and was rushed into passage. Granting waivers is an admission of this and points to the need to repeal the law and start over again.
I agree with the current attempt to repeal the Health Care law known as Obamacare. I won’t go into the reasons now, but suffice it to say, I believe in free market solutions. I ran across this alternative proposal for changing our current system to a more market driven approach. Take a look and let me know what you think. http://thedinnertableblog.wordpress.com/2010/08/28/hcr-2-0/