The Thelma and Louise Healthcare Bill

A 1966 Ford Thunderbird convertible is an awesome ride (…or so I’m told), but if you drive one off a cliff you’ll quickly find it makes a horrible airplane.  Similarly, our government was designed to do a few things well, but when we ask it to do other things, it’s like asking a car to fly.

That’s what happened with Obamacare.  Democrats duct-taped some wings on a car, and then drove it off a cliff with all of us onboard.  Republicans will ultimately fail if their fix is merely an improvement on that flying-car model.  That seems to be where they're headed.  

Instead, Republicans and Democrats should scrap the flying-car model entirely and perform a complete separation of car stuff from airplane stuff.  Then they should allow the people who design and build the best cars to do their job, and allow their counterparts in the airplane business to do theirs. 

Of course, I’m not suggesting Boeing or GM be involved in replacing Obamacare.  The point is, there are some things the public sector must do, and everything else should be left to the private sector. Any healthcare bill that continues blending those two dissimilar functions will be as successful as Thelma and Louise.  

Healthcare, being a dynamic, complex, service-oriented market is precisely the kind of thing governments are ill equipped to micro-manage.  Like an airplane, healthcare markets are moving at breakneck speed, must be able to change course instantaneously, and are operating in turbulent three-dimensional space.

On the other hand, providing a safety net, which is essential in healthcare, is precisely the kind of thing the public sector must do.  But like a car designed by bureaucratic committees, the public sector is perennially underpowered, overweight, low on fuel, and operates on a one-way dirt road that only allows direction changes every four years.  Public sectors work best if they keep things simple, realistic, and have a clearly defined mission.

Obamacare was nowhere near our first foray into the flying-car model.   We've been moving in that direction since WWII when Democrats under Franklin Roosevelt allowed the tax code to subsidize employer paid insurance while allowing no such subsidy for individuals.  Democrats under Lyndon Johnson in the 1960s made the next big misstep by creating socialized healthcare for seniors and the poor known as Medicare and Medicaid.  The only thing Obamacare did was to take those not covered by the existing socialized healthcare system, and put them under a new poorly designed government micro-managed system.     

The reason these socialized healthcare systems are unsustainable, especially in the U.S., is the same reason Thelma and Louise couldn't fly: our form of federal government was designed for other things. 

For any airplane to fly safely, there must be an instantaneous response from the controls to the flight surfaces.  Similarly, for markets to function there must be an instantaneous response from buyers to sellers.  Nothing like that can happen within our federal system of checks and balances and constitutional limitations.  

Since Obamacare, every single American covered by health insurance has at least two thick layers of bureaucracy between them, the buyers (patients), and the sellers (doctors, hospitals, providers).  All told, about 95% of Americans get their health insurance from either the government (federal, state, and local) or their employer.   That leaves only about 5% of the population that actually buys their own health insurance.  Thanks to Obamacare, even those in the individual market are now smothered in thick bureaucratic layers.    

Unless and until health care and health insurance become primarily consumer markets, something the vast majority of Americans pay for on their own, there will never be a true functioning market.  As long as there are a minimum of two levels of bureaucracy between buyers and sellers, price, quality, speed, access, and satisfaction will all suffer.

But that doesn't mean government cannot provide a proper safety net while allowing a functioning individual free market.  In fact, it points to the solution.   

You see, the idea of direct linkage applies to cars as well.  Like airplanes, cars must have instantaneous response to steering, brakes, and power, or they too will crash.   

When the federal government provides a safety net there is a critical break in the linkage between buyers and sellers.  The reason is, the federal government has access to what appears to be free money.  Having access to the world’s reserve currency makes borrowing and printing dollars deceptively easy.  Politicians can over-promise and under-fund without negative short-term consequences. This is an illusion that eventually backfires on every society that's ever tried it long term.

To avoid this problem states must be the safety net providers.  States are forced to be more realistic, more practical, and more skilled when providing safety nets.  They are closer to the facts on the ground and cannot access money without repercussions. If states want to provide a high-cost safety net, they must be willing to tax their citizens accordingly.  That forces a discipline that the feds can too easily cheat their way around.

In its current form, the AHCA slated to be voted on tomorrow, is a capitulation to the flying-car model. GOP leadership claims this is necessary because Senate rules place certain provisions of Obamacare out of reach due to the threat of Democrat filibuster.  Ted Cruz has put that excuse to rest by pointing out that VP Mike Pence, who is the President of the Senate, can overrule the parliamentarian.  Repeal and replace can be done through reconciliation in one fell swoop based on existing law.  

The real reason the GOP won't do this is that they do not have enough members who believe in the efficacy of free markets!  The GOP is NOT a majority free market party.  Despite that sad reality, here is the way to once-and-for-all end the Thelma and Louise approach to healthcare.  

As Ronald Reagan used to say, “There are simple solutions - just not easy ones.”  The following specific proposals are not meant to be what’s easy, just what’s simple: 

• Repeal Obamacare entirely.     
• Repeal Medicaid entirely.   
• Repeal Medicare entirely.  
• Give states a year to come up with their own solutions to provide coverage to those unable or unwilling to obtain care in the private market.  Until then, provide fully funded closed-end block grants. Give insurers a year to establish new plans.

These changes will place the safety net at the state level where it belongs, while at the same time allowing for the transition.  Federal taxes will go down and state taxes will necessarily go up, but overall, costs will go down because there will be less waste, fraud, and abuse when states are in- charge.  

• Make the playing field between employer paid and individual paid insurance tilt towards the individual.  

This can be done by providing refundable federal tax credits to individuals as the AHCA does, and/or, change the tax law so that employees must declare the value of their health insurance as income for tax purposes, and/or, disallow companies from deducting healthcare costs and lower payroll taxes by a commensurate amount.  These changes will establish a competitive, individual, free market for health insurance and health care.  Costs will go down, people will be able to buy what they want, providers will be free to practice as they wish,  innovation will flourish, drug prices will go down, medical care will improve.  

• Repeal The McCarran Ferguson Act.  

This will allow insurance to be sold across state lines.

• Provide private insurance to replace the VA system.
• Convert the vast VA system into a "caregiver of last resort" during the transition for anyone who falls through the cracks of the state safety nets.  After the transition, the states can use and fund their VA facilities in any way they wish.        

This will establish a "safety net for the safety net" during the transition and give the states valuable real estate and medical facilities. 

Those are the simple things we can do.  The problem is that we have two parties and two incompatible visions for the future of healthcare. 

Democrats have been dreaming of a federal government healthcare takeover for over a century.  Republicans tend to prefer a free market with a safety net, but they have capitulated to the idea that healthcare is a "right".  That impasse is how we’ve ended-up with the worst of both worlds - the flying-car healthcare system.

It’s time to be honest and separate the two functions.  Let the free market function in healthcare, and let state governments transparently tax and spend to provide a proper safety net.  Let planes be planes, and let cars be cars.

I never said it would be easy, but it really is quite simple.

Why Not a Healthcare Debate on TV?

The Obamacare bill, plus regulations, amounts to a stack of paper taller than a man.  When government takes over and tries to micro-manage a fifth of the economy, it becomes an unknowable tangle of interrelated moving parts that is a case study in complexity and Murphy's Law.  Unravelling it can be just as impossible.

Paul Ryan loves the new bill, Rand Paul hates it, Chuck Schumer hates anything Republican, and the president says it's great, but probably hasn't read it.  (Can't blame him though. I tried to read it, and it is literally unreadable by a mortal.  It's like trying to read hexadecimal computer code.)  

Now that the bill is out there, and the critics have come out, I say have a broadcast debate among the experts.  Pick two critics and two fans from both parties, politicians and experts alike, and have them debate the bill and the options.  Have some prepared questions and some unprepared ones.  Maybe have a series of them with various people on various platforms.

This is big.  Let's get it right.  Obamacare was rammed through and there was never a televised debate until Bernie Sanders and Ted Cruz squared off last month, in February of 2017!    

Remember when Ross Perot debated Al Gore over Nafta?  It was memorable and enlightening.  We got that great line about "that big sucking sound"!  Let's repeat that sort of thing for healthcare.      

Obamacare Replacement: How to Succeed in Three Simple Steps

A Ferrari is a superb automobile (…or so I’m told!), but if you drive one off a cliff you’ll quickly find it makes a horrible airplane.  Similarly, our government is designed to do a few public sector things well, but when we ask it to do private sector things it’s like asking a car to fly.

That’s what happened with Obamacare.  Democrats strapped some wings on a car, and then drove it off a cliff with all of us onboard.  Republicans will ultimately fail if their fix is merely an improvement on that flying-car model.

Instead, Republicans and Democrats should scrap the flying-car model entirely and perform a complete separation of car stuff from airplane stuff.  Then they should allow the people who design and build the best cars to do their job and allow their counterparts in the airplane business to do theirs. 

I’m not suggesting Boeing or GM be involved in replacing Obamacare.  The point is there are some things the public sector should do, and there are others the private sector should do.

Healthcare, being a dynamic, complex, service-oriented market, is precisely the kind of thing governments are ill equipped to micro-manage.  Like an airplane, healthcare markets are moving at breakneck speed, must be able to change course instantaneously, and are operating in turbulent three-dimensional space.

Conversely, providing a safety net, which is essential in healthcare, is precisely the kind of thing the public sector must do.  But like a car designed by committee, the public sector is perennially underpowered, overweight, low on fuel, and operates on a one-way dirt road that only allows direction changes every four years.  Public sectors work best if they keep things simple, realistic, and have a clearly defined mission.

For a long time, even preceding Obamacare, we were using the flying-car model and our designs were poor for both functions.

For an airplane to fly well there must be an instantaneous response from the controls to the flight surfaces.  Similarly, for free markets to function there must be an instantaneous response from buyers to sellers.  In both cases a direct linkage is essential.  Nothing like that has existed in healthcare for decades. 

Since WWII there has been a huge tax advantage for employers to provide health insurance to their employees.  As a result, for the vast majority of Americans covered by private health insurance, there are two thick layers of bureaucracy between buyers (patients) and sellers (doctors, hospitals, etc.).  

All told about 95% of Americans get their health insurance from either government (federal, state, or local) or their employer.  Obamacare has only made it worse.  That leaves only about 5% of the population that actually buys their own health insurance.

Unless and until health care and health insurance become consumer products, something the vast majority of Americans pay for on their own, there will never be a true functioning free market.  As long as there are two levels of bureaucracy between buyers and sellers, price, quality, speed, access, and satisfaction will all suffer.

The idea of direct linkage applies to cars as well. 

When the federal government provides a safety net there is a critical break in the linkage between buyers and sellers.  The reason is, the federal government has access to what appears to be free money.  Having access to the world’s reserve currency makes borrowing and printing dollars deceptively easy.  Politicians can over-promise and under-fund without negative short-term consequences. This is an illusion that will inevitably backfire on our descendants.

To avoid this problem states must be the safety net providers.  By definition states are forced to be more realistic, more practical, and more skilled when providing safety nets.  They are closer to the facts on the ground and cannot access money without repercussions. If states want to provide a high-cost safety net, they must be willing to tax their citizens a commensurate amount.  That forces a discipline that the feds can too easily cheat their way around. 

Ronald Reagan used to say, “There are simple solutions - just not easy ones.” By that he meant that the solutions to seemingly complex government problems can often be quite simple, but implementing them is another matter in a divided government with checks and balances.

The following three specific proposals are not meant to be what’s easy, just what’s simple: 

1.  Separation of public and private functions

·      Government should not be in the business of providing healthcare or insurance, but instead must be there to provide a safety net in the form of vouchers or cash.

·      This should be how Medicaid, Medicare, subsidies, insurance for pre-existing conditions, etc. all should be handled.

·      The private sector free market should provide all healthcare and health insurance.

·      Thus, the private sector handles all the services and products, and the public sector provides money for the safety net. 

2.  Linkage of buyers and sellers

·      All Individuals, whether self-sufficient or in the safety net, should be the buyers of their own healthcare and health insurance.

·      Tax policy should change to favor individuals over employers.

·      One possible tax change would be to dis-allow health insurance deductions for employers, and at the same time increase wages and lower payroll taxes by a commensurate amount to transfer the tax advantage and premium dollars to individuals. This would result in no net changes to anyone, but it would shift the market to individuals.  

·      Individuals should be free to form groups (marathon runners, vegans, non-smokers, etc.) to help them save on premiums. 

·      Individuals should be able to take their plans with them wherever they go.  (see below regarding McCarran Ferguson)

·      Medical providers and insurers should be free to advertise, disclose prices, and compete openly.

·      The government safety net should be voucher or cash based so that recipient individuals can make their own choices. 

3. Safety net by the States

·      There should be a transition to state funding of the safety net by starting with closed-end block grants, as some current GOP proposals seek to do with Medicaid. (Medicaid is currently managed by the states but funded in large measure by the feds with an open-ended commitment.  This creates a situation whereby states have no incentive to eliminate waste, fraud, and abuse because the feds will always kick in the necessary cash.  This has made Medicaid a runaway train-wreck of inefficiency.  If the states fund and run their own safety nets, it will eliminate this problem.)

·      Federal taxes would plummet and state taxes would rise commensurately, but there would be a net savings in improved efficiency since states are better run overall than the federal government. 

·      The safety nets should provide for the essential needs of the poor, the sick (pre-existing conditions), and the incompetent.

·      Each state should be free do what’s best for their population in terms of how they structure their safety net.

4. (optional)

·      Overturn McCarran Ferguson. 

(One of the issues we hear a lot about is the inability of health insurance companies to sell policies across state lines.  This is because of an old law called McCarran Ferguson that exempts insurance from federal regulation and the commerce clause.  As a result, insurers cannot sell across state lines, must maintain separate corporations in every state, and must answer to fifty state regulators. 

Without McCarran Ferguson insurance would be portable, national, and cheaper.  

But McCarran Ferguson is not a deal-breaker. That law also covers auto insurers who appear to compete just fine.  The reason is, unlike health insurance, 95% of the auto insurance market is individual.  That’s why you cannot go a day without seeing a GEICO or Progressive ad.  So yes, it would help to get rid of this outdated law, but the individual market is the real key.) 

Those are the simple things we can do.  The problem is that we have two parties and two incompatible visions for the future of healthcare. 

Democrats have been dreaming of a federal government healthcare takeover for over a century.  Republicans tend to prefer a free market with a safety net. That impasse is how we’ve ended-up with the worst of both worlds - the flying-car healthcare system.

It’s time to be honest and separate the two functions.  Let the free market function in healthcare, and let state governments transparently tax and spend to provide a proper safety net.  Let planes be planes, and let cars be cars.

I never said it would be easy, but it really is quite simple.

What’s All This Fuss About Vets and Healthcare?

As Emily Litella would say, "What's all this fuss about about vets and healthcare?"

I made one phone call yesterday and got an appointment with a top neurologist in under 24 hours.  That is incredible service by any standard.  Of course, in this case I paid cash, the provider was in private practice, and the doctor was the vet not the patient.  The patient is expected to make a full recovery and will soon be back to eating voraciously, running around, and wagging his tail.

To those like Paul Krugman, Ezra Klein, Nancy Pelosi, and Barack Obama who told us that vets had the best healthcare system available and it should be a model for the whole nation, I say they were looking at the wrong vet system.  Veterinarians are the only doctors working in a totally privatized system today.  Theirs is the best healthcare model in terms of quality and service in the US, and in fact on the entire planet. 

So while our military vets are dying on VA waitlists, while all citizens are now subject to the bureaucratic nightmare that is Obamacare, while the poor suffer on substandard Medicaid, and while the aged are herded into the socialized system that is Medicare, our pets are enjoying state-of-the-art medicine in the best private healthcare system in the world.  Heck-of-a-job America.  

Obamaball

Have you seen the movie “Moneyball” or read the Michael Lewis book by the same name?  To make a long story short, it is a true story about winning baseball games without superstars by taking a deeper look at the statistics and analyzing them in a better way.  Baseball and economics share a fondness for statistics so the question arises, could economic statistics reveal a similarly undiscovered strategy for the economy like what Oakland General Manager Billy Beane did in “Moneyball”?  Moreover, could the President's economic plan ,“Obamaball”, be that strategy?  

Baseball stats and economic stats are not all that comparable.  In baseball there have always been nine members on a team, ninety feet has always been the distance between bases, sixty feet six inches has always been the distance from the mound to the plate, the bat is always wood, there are three outs, three strikes, four balls, nine innings, and so forth.  Therefore, an ERA has always been an ERA, an AVG has always been an AVG, and R, H, and E have always been R, H, and E.   

If only things were as simple in economic statistics, especially since the big ones all come from the government.  Unlike baseball, the government is always changing how they measure and what they measure.  Sometimes the statistics change because of an unintended consequence from a change in a law.   Sometimes it is for practical reasons.  And sometimes it just seems political.   After all, government economic stats come from the very government they sit in judgment of!

Here are four key statistics which form the basis for much of the economic rhetoric heard today.  In all four cases these statistics fail the baseball test.   

•       Inflation (CPI)– Not only has the Bureau of Labor Statistics changed the way it measures inflation over the years, notably in 1980 and 1990, but they cannot avoid relying on prices for manufactured imported goods which tell us more about foreign labor markets and regulations than they do about our own currency.  When these changes are backed-out, the actual inflation rate is about 2.5% higher than what is reported.  What makes inflation so problematic is that all other measures of economic performance are “inflation adjusted” and thus dependent on an accurate inflation number to start with.  Even corporate earnings must be weighed against an accurate inflation measure.

•       Economic Growth and Recession  (GDP) – GDP numbers are all adjusted for inflation too and thus suffer the effect of any inflation inaccuracies.  That is why a 2.0% annual growth rate based on a “GDP Deflator” which is under-measured by 2.5% feels exactly like, well, a -.5% growth rate.  That is how GDP can be reportedly rising by 2% yet polls can show most people believe we are still in recession.  The people are probably right.

•       Unemployment (U3) – You’d think that “unemployment” would be a cut-and-dried statistic:  “The number of people not employed as a percent of the labor force”.  But that’s not how the government does it.  In fact, if every single person in the US was collecting unemployment, disability, welfare, food stamps, or some other form of assistance but not actively seeking a job, the official unemployment rate in the US would be…0%!  The way we measure, we could have no one working and still have zero unemployment.  If we corrected for just this issue and undid the error back to Barack Obama’s inauguration, the real unemployment rate would be 11%.  If all the nonsense is removed, the actual number is close to 23%.    

•       Income Inequality (1% vs. 99%) – Much of the recent rhetoric about the 1% vs. the 99% is based on a CBO report from October of this year, which has numerous issues.  In order to measure income inequality, the CBO used a government measure based on income tax returns from 1979 to 2007.  Not 2010, which should have been available, but 2007, right before the financial meltdown in the midst of a bubble!  Second, many returns in the top brackets include corporate pass-through income, which is a recent phenomenon and makes income tax returns meaningless for measuring changes in personal wealth.  Moreover, tax rates changed constantly from 1979 to 2007 making any trends difficult to discern.  These are just a few of the problems making this CBO report useless for analyzing trends.

And then there’s the economic analysis.  Here are four big economic issues and the current administrations analysis along with some questions.    

•       Arguably the biggest economic issue of our time is the financial crisis of 2008 and its aftermath.  According to President Obama’s analysis, greedy fat-cat bankers largely caused the whole thing.   Isn’t that like blaming a plane crash on gravity?  Aren’t gravity and greed constants?  Are bankers today greedier than they were, say, in the 1950s?  Were there any sub-prime loans back then?  Where did sub-prime loans come from?  Wasn’t the President part of the chorus demanding sub-prime mortgages in the 90’s and didn’t he then protect and subsidize the dangerous practice through his support of Fannie Mae and Freddie Mac as a US Senator?

•       Once the analysis points to greedy bankers, it’s a short leap to blaming the continued malaise on the same class, which the President has made the theme of his re-election campaign.  So what has prevented Obama from stopping the greedy and the rich from continuing the malaise?  Didn’t he have two solid years of filibuster-proof control of the entire federal government?  Didn’t they pass Dodd-Frank?  How then can he explain MF Global and Jon Corzine (D-NJ), the newest example of greedy fat-cat banking failure?  Why did Obama and the Democrats keep the Bush tax cuts “for the rich” back in 2010 when they were set to expire?  How does this all add-up?  

•       If greedy bankers caused a financial crisis, what better way to fix it than to go on a 5 Trillion dollar spending and borrowing binge, right?   Who will pay for the extra 5 trillion in borrowing? Does that even matter as long as the inevitable collapse is timed to occur after the Obama reign?  Can “the rich” possibly make-up the difference if the top 10% of the country earn 40% of the income and pay 70% of the income taxes already?

•       If the financial crisis was due to greedy rich bankers, then the healthcare crisis must also be caused by greedy rich insurance companies and greedy rich doctors, right?   What better way to fix it all then to put the federal government in-charge of the whole thing?  Aren’t Medicare and Medicaid both disasters from a sustainability standpoint?  How can putting the same government in-charge of the entire industry be a good thing?  How can Obama claim the “free market” has failed in healthcare when it hasn’t been involved in healthcare since WWII when employers got to deduct premiums but individuals did not?      

So this is it in a nutshell:  President Obama, the General Manager of our team, has looked at the statistics, done his analysis, and believes he has saved us from a Great Depression, free markets don’t work, greedy rich people caused all the problems in the first place, the government’s job is to re-distribute wealth, and borrowing 5 trillion is OK as long as it blows-up on someone else’s watch.  

Welcome to “Obamaball” where all the stats are rigged and all the analysis is wrong.

STAGES OF ADJUSTMENT AFTER A COUP D’ETAT

The following post is copied from it’s origin text except the words rape and rapist have been changed to coup d’etat and offender. I hope this helps with the adjustment.

Oh, and to all those optimists who believe Obamacare repeal is possible? Ask any rape victim if that is an option! (Also, to any rape victim, I apologize for stretching the analogy.)

STAGES OF ADJUSTMENT AFTER A COUP D’ETAT

Every person going through a crisis (regardless of the type of crisis) progresses through stages of emotional adjustment. The following information is a simple guideline for understanding what a coup d’etat survivor may experience during the period of adjustment after a coup.

There is no set time-line. Adjustment is an individual, personal process; it varies from person to person, and situation to situation. Some may spend a great deal of time in one stage and only touch lightly on another. The survivor may also encounter a spiraling effect while passing through a number of the stages over and over again, each time experiencing them with a different intensity.

Anyone close to the victim may also experience these stages as s/he, too, adjusts to the crisis of a coup d’etat.

•SHOCK—Numbness
Offering information to the survivor during this stage is not helpful, as s/he will likely remember very little, if anything, about what occurs during this time period.

•DENIAL—“Not me, I’m fine.” “This can’t have happened!” “It’s not that bad.”
Not yet able to face the severity of the crisis, the survivor spends time gathering strength. The denial phase serves as a cushion for the more difficult stages of adjustment that follow.

•ANGER—Rage, Resentment… “What did I do?” “Why me?”
A survivor’s anger may be the result of having experienced a loss of strength or loss of control over her/his life. The anger may be directed toward the offenders, a doctor, the police, or anyone else, including her/himself.

•PLEA-BARGAINING—Rationalization… “Let’s go on as if it didn’t happen.”  “I should be finished with this by now.”
This is another form of denial wherein the survivor sets up a bargain: s/he will not talk about the coup d’etat in exchange for not having to experience further pain. The other half of the bargain is that friends and relatives will also stop talking about it and pretend that it never happened. In so doing, s/he continues to deny the emotional impact the coup d’etat had on her/his life.

•DEPRESSION—Denial no longer works… “I feel so dirty, so worthless.”
If the survivor is warned of this stage ahead of time, s/he may not be so thrown by this experience. Though painful, this stage signifies s/he has begun to face the reality of a coup d’etat. As s/he allows the negative emotions to surface, s/he should be reminded that these feelings are normal and will not last forever. S/he should, however, be aware of symptoms of severe depression during this stage, for example: drastic changes in sleeping or eating habits, compulsive rituals or generalized fears taking control of her/his life. Professional counseling may be advisable.

•ACCEPTANCE—“Life can go on.”
When enough of the anger and depression is released, the survivor enters acceptance. S/he may still spend time thinking and talking about the coup d’etat, but s/he understands and is in control of emotions; s/he can now accept what has happened.

•ASSIMILATION—The coup d’etat is put into perspective.
By the time the survivor reaches this stage, s/he has realized her/his own selfworth and strength. S/he no longer needs to spend time dealing with the coup d’etat, as the total coup d’etat experience now meshes with other life experiences.

Constitutional Music

In 2008, the Supreme Court barely upheld the second amendment by a narrow 5-4 decision in DC v. Heller. The second amendment is all of ONE SENTENCE LONG and we’ve been debating its meaning for 220 years. It couldn’t be simpler. Yet it barely squeaked by with nary a vote to spare. A similar case, McDonald v. Chicago, is in the court right now and as usual, all bets are off despite that one, single, simple, clear, sentence.

Now we have a new “right to healthcare” paid for by others. This week, a President with no private sector experience along with his similarly inexperienced party, rewired 17% of the US economy with the stroke of a pen and a new 3000 page law. Remember, the second amendment is one sentence long! How are we going to interpret our new 3000 page right to healthcare? Of course, unlike the right to bear arms, which hangs from a thread, the right to healthcare is not in the constitution.

Nor is the “right” to Social Security, Medicaid, or Medicare, but the court has never done anything about them either. These programs are like “Deem and Pass” amendments, unofficial changes to the constitution that we have selfishly agreed to allow because, hey, we like free stuff. All the while, we shamelessly stick our kids and grandkids with the bill, but we’re worth it, right?

Roe v. Wade is based on another non-existent right, the so-called “right to privacy”. This right was based on a “penumbra” or weak shadow, cast by the bill of rights. Seriously, that’s how they justified it. The imaginary right to privacy was conjured-up by lawyers looking to find exactly what they needed in the constitution.  It is made-up. Yet that hasn’t stopped this law from surviving for some 26 years.

We just watched the spectacle of the President berating the Supreme Court in his State of the Union Speech because they had the temerity to uphold the first amendment in Citizens United v. FEC.  Again, that was a narrow 5-4 decision on the really complicated first amendment. (Another behemoth at one sentence long!)

In short, rights that really are there, in clear language, must fight to within an inch of their lives, while imaginary rights, like the latest one, are cheered through with parades and marching bands.

So I ask: If the constitution can mean anything, is it not really meaningless? Picture an orchestra warming up. There is no rhythm, no melody, no key, no limits, and no beauty. Just avant-garde, progressive noise. That is the music of our modern US constitution.

The Healthcare Gecko - Revisited

Here’s a question for you: Why is there no healthcare Gecko? Wouldn’t it be great if 15 minutes could save you 15 percent or more on health insurance? For that matter, where is the Progressive girl with the red lipstick selling health policies? Is it possible that this is the real problem? Is it possible that the reason this is a crisis is that there is no such thing as a true individual market for healthcare? The fact is, only about 5 percent of the insured buy their own health insurance. The other roughly 95 percent get their insurance from the government or their employer. For car insurance the numbers are reversed and there is no similar crisis in that market. Now that Warren Buffet, the other guy from GEICO, has spoken out on healthcare and recommended starting from scratch, perhaps he’ll push for an individual market. Then again, he would be accused of having a conflict of interest, so on Mr. Buffet’s behalf, allow me to make the belated case for the healthcare Gecko. 

First, how is it that we ended up almost entirely removed from our healthcare purchases? The original sin dates back to FDR and WWII when wages were frozen and companies found a loophole by deducting benefits. Like many loopholes, this one grew into the monster it is today and along the way it carved in stone the expectation that healthcare is someone else’s responsibility. That expectation has led us down a path towards distorted markets, rigid employer-paid insurance, ever increasing government involvement, and skyrocketing costs. Meanwhile, the car insurance market keeps innovating and improving.

Comparisons of car insurance and health insurance are of course not always appropriate. The President is fond of comparing mandatory car insurance with a mandate for health insurance. I suspect Mr. Obama knows the difference between mandated liability coverage, and a mandate to cover one’s self. These are not comparable. I’m not aware of any state that mandates insuring your car, only the harm you may cause to others. I suppose one could argue that society is harmed when a person receives medical care and doesn’t pay, but I would suggest that those who are indigent be covered by Medicaid and those who are not, pay their medical bills or be penalized. Ask any hospital administrator what it’s like collecting money from patients today. Then ask an auto mechanic. The latter has it much easier.

Some may say healthcare is way more expensive and complicated than car insurance and hence individuals can’t be expected to understand it or afford it. Did you ever try to read your auto policy cover to cover? And while car insurance itself is much cheaper than medical coverage, did you know that individual Americans spend on average four times more on transportation than they do on healthcare? Is your car really four times more important than your health?

Some may say that owning a car is a choice but healthcare is a right. Well if that’s the case, we should amend the constitution because that right is not currently there. Incidentally, It would be the first time since slavery that one person would have the explicit right to compel another to work for his benefit! In fact, if you think about it, any government entitlement not fully funded by its recipients, amounts to a claim on the labor of others. Most of the time, we accept that burden to help the needy, but too often we are just enriching ourselves and passing those claims onto future generations through deficits. Pretty selfish don’t you think? Is that the way you want to fund your perceived right to healthcare?

Short of that, here’s a way out led by the healthcare Gecko, and the cost is neutral to all parties involved: Step one: Eliminate the tax deduction for all employer paid health insurance, and Step two: Offset the tax consequences with a reduction in payroll taxes. That’s all it would take to establish an individual market and finally begin the healing process.

Here’s how it would work: Employers losing the deductibility of health insurance would be compelled to transfer the policies to their employees and gross-up their wages accordingly. The result would be marginally higher taxes for both the employer and employee which would then be offset by a commensurate drop in payroll taxes. It may not be exact for each individual, but the aggregate would be completely neutral.

TV commercials would begin running instantly showing piles of cash with googly eyes, cavemen, talking lizards, and girls with red lipstick. Employees would be able to control their own healthcare decisions and take full advantage of their positive lifestyle choices. If you are a tri-athlete working for a donut company, which group would you rather be rated with, the tri-athletes or the donut tasters? Those currently without employer coverage would suddenly have a multitude of offers thrust at them from companies clamoring for their business. They’d also have more money available to buy insurance due to the lower payroll taxes.

To be sure, there are other issues in addition to cost that an individual market alone cannot address, but those are subjects for another day. Suffice it to say that once voters are made the masters of their own healthcare destiny, the other issues like subsidized insurance for long-term pre-existing conditions, portability, and tort reform will all get addressed or politicians will pay at the polls. Currently, politicians are insulated from these issues because most people just blame their boss or the insurance company they are stuck with.

Of course, we would still have a subsidized public option called Medicaid for those unable or unwilling to participate in the individual market. But, as competition lowers costs and increases choice, we would likely end up with a much smaller and sustainable Medicaid. Wasn’t that one of the original reasons we were told this was a crisis?

Recall how we got here: It was a mistake; a loophole; an unintended consequence of a WWII wage freeze. Knowing that, wouldn’t undoing that mistake be a great place to start? The polls show that the people instinctively know this. Unfortunately, politicians have a long history of being able to convince enough people to stick the next generation with their bills, and because of that, Obamacare is a fait accompli.

Healthcare Palestinians

There is a piece in the NYT today about how Jordan is stripping citizenship from long time Jordanians who trace back to pre-Israel Palestine. The Arab countries have long believed that the best way to destroy Israel was to maintain an army of angry Palestinian refugees. Keep them poor, keep them in refugee camps, keep them oppressed, and don’t ever let them assimilate into the vast Arab lands surrounding Israel. To a frightening extent, this diabolical and inhumane scheme has worked wonders and the lesson was not lost on those in the US who seek to destroy any semblance of a free market in healthcare.

For decades, proponents of socialized medicine and enemies of free markets have known that tax policy was twisting the healthcare market into a nefarious monster which forced Americans into employer-paid coverage. They knew we’d be uncomfortably tied to our employer, forever in fear of losing our jobs, angry at insurance companies we did not choose, and unable to insure ourselves. The simple fix of ending employer tax deductions was never to be allowed lest the dream slip away. In short, we were forced into healthcare refugee camps for crass political purposes.

To a frightening extent, this vile scheme has borne fruit and we are about to witness its bitter harvest…

Healthcare Diagnosis

This one is for any fence sitters on Obamacare. I sympathize with anyone who is busy raising a family, earning a living, trying to catch an occasional movie, and somehow hoping to keep up with current events too. Who has the time to fully research a complex issue like healthcare and understand a 2000 page government make-over?

When doctors approach a health problem, they are careful not to confuse symptoms with underlying diseases. That holds for any complex system like economics, computers, rockets, or automobile accelerators. When things go wrong, separating the underlying causes from the resulting effects can be mighty difficult.

This past Tuesday, there was an angry rally outside a meeting of insurance executives in Washington, DC. Protesters called for the “citizen’s arrest” of insurance executives for alleged crimes against humanity. I saw one sign that read “The Market is the Problem!” I’ve heard this before from supporters of Obamacare. According to them, the “market” is the sickness; it has infected the healthcare system, and government control is the cure.

This particular protest, like many in favor of Obamacare, was sponsored by labor unions who desperately want direct access to the US Treasury’s printing presses and insurers currently stand in the way. I’m not suggesting every supporter of Obamacare is a union member, but unions are really motivated here and they are helping shape the debate. They need a scapegoat and insurers and “the market” are rich ones, especially in the wake of a financial market meltdown.

But is there really a functioning “market” in healthcare? Could a lack thereof be just a symptom of some other underlying disease?

Think of markets you interact with everyday. Take food for instance. You use your money, even if you spend food stamps which are issued to you. You choose your items after inspecting them and reading labels. You choose your sources. You price compare. And finally you decide how to consume the items you bought. At every stage of the retail food market, there is direct linkage between the buyer and the seller and a direct exchange of value. Every market that functions properly has these same attributes and linkages.

In healthcare, the linkage has been broken since WWII, to the point that now, there is no direct exchange of value and no direct linkage between buyers and sellers . It started with an unintended consequence of a WWII wage freeze when companies were allowed to deduct health insurance while individuals were not. This seemingly innocent tax tweak, has rendered any discussion of a functioning “market” in healthcare ludicrous. There is no such thing. Thus, “the market” can’t be the disease if in fact, it was the first victim!

When was the last time there was any connection between a health service you received and the payment you made? That $25 copay? It doesn’t qualify. The $400 you paid for your kid being born? I don’t think so. The $5 prescription at the pharmacy? No. Even if you buy your own insurance, the linkage has been ripped away due to “first-dollar” coverage.

Once corporations were given an advantage over individuals, the race was on to maximize the value of the deduction. That led to “first-dollar” coverage instead of actual insurance. When that happened, the perception that healthcare was no longer the responsibility of the individual set-in. Medicare was just a logical extension of that mind-set. If your employer pays for your healthcare until you retire, how can you be asked to suddenly take-over at age 65?

After Medicare took over for those over 65, the market was officially dead. Between Medicare, Medicaid, and SCHIP, roughly half the medical services provided in the US are already socialized. Prices are distorted beyond recognition as providers must make all their profit from half their business. All but a fraction of the remaining “market” is paid for by your employer. The necessary linkages and exchanges for a functioning market are simply non-existent.

Those insurance company executives who were being threatened by the angry protesters, do not answer to individuals. They have not done so for over 50 years. They work for your boss, not you. That makes them a convenient scapegoat, especially for the union workers who see them standing in the way of the government trough.

Democrats, once they understand that there is no such thing as a functioning market in healthcare, need to ask themselves why it has not been fixed after all these years. For that, they need look no farther than the nearest mirror. Their mantra, at the expense of the American people has been; never let a good scapegoat off the hook!

The fix has been around for years. End the employer deduction, and offset the tax implications with lower payroll taxes. Companies would transfer the health policies to their employees, gross-up their wages, and pay lower payroll taxes in exchange. Employees would make more money, buy their own policies, and pay lower payroll taxes to offset any tax implications. This simple fix would restore a functioning market, at least for the remaining un-socialized half.

The poor would end up with an improved Medicaid, and the rest would have unprecedented access to health services through competition. Costs would be driven down and innovation up just like in any other market. Is your cell phone better and cheaper today than it was yesterday? How about your music player?

Would that be it? No. We’d still have to end Medicare, which would be much easier once everyone saw that they can easily and cheaply buy their own insurance. We’d still have to subsidize long-term pre-existing conditions, we’d still have to allow inter-state competition, and we’d still have to cap malpractice claims.

But the cost crisis would be over, and that would be a political waste for some. This is the underlying disease.

Best Thing I've Read on the Financial Meltdown

This is the best thing I've read on the financial meltdown, (Thanks Cato) and if you are brave enough to read it, I'd ask you to consider a similar line of thought on healthcare.  Start by going back to WWII and the freeze on wages when companies figured out they could add insurance, write it off, and still dodge the freeze, which eventually led to Medicare, which eventually led to rising rates, which eventually led to...

Hat Tip: Instapundit

Cato: Perfect Storm of Ignorance

Where Have I Seen This Before?

So Barack Obama wants to sit down with Republicans and talk about healthcare. Thirteen months into his presidency and after shutting them out for the entire time, he wants to open a dialog. What ever happened to: “We won. Sit down. Shut up. We will clean up your mess. But we don’t want to hear from those who made the mess!”? Meanwhile, over at the House, Nancy Pelosi has announced that they are just going to bend some rules and ram the Democrat health bill into law with “reconciliation”, a ploy meant for budgeting and not major social engineering. Meanwhile in the Senate, Harry Reid has his own plan for sneaking his bill into law. This begs the question for Republicans; who is really in charge, and is there a credible partner for negotiating?

All these shenanigans remind me of what Israel goes through with the Palestinians. The Israelis make a deal with the elected leader of the Palestinians, who winks and nods to the militants, and they go and blow up a pizzeria or a bus. This cycle repeats on and on until finally the Israelis realize that there is no point in talking because no one is in charge! But they have to talk, because if they don’t, world opinion will turn on them even more than it already has for being a prosperous nation amidst all that Arab poverty. Besides, they get blown up whether they talk or not, so they might as well talk.

The Republicans, if they stay true to the Constitution and keep winning elections, will have learned a lesson that the Israelis have known for a while; Talk softly, but carry a big friggin’ stick!