The Healthcare Gecko III

A misleading piece made a splash today about how Warren Buffet wanted to scrap Obamacare and start over.  Unfortunately, it was old news based on comments he had made in 2010.  In honor of Warren Buffet's call to scrap Obamacare, old news though it is, and in light of the constant refrain from the Left that there are no proposals on the Right to replace it, I offer this practical, logical, cost-free, elegant, and effective solution.  Unfortunately, like so much of what we bloggers do, it is but a fart in a hurricane:

The Healthcare Gecko      (originally posted 11/19/09 - perhaps Mr Buffet read it?)

Here’s a question for you: Why is there no healthcare Gecko? (Of course, Warren Buffet owns GEICO...) 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!  

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 not always appropriate.  President Obama 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.  State mandates only apply to the liabilities you may incur while harming others.   There are no such liabilities involved in health insurance. 

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! 

Short of turning doctors into slaves, here’s a way out of this mess led by the healthcare Gecko:  

Step one: Eliminate the tax deduction for all employer paid health insurance.   

Step two: Offset the tax consequences with a reduction in payroll taxes for both the employer and employee. 

That’s all it would take to establish an individual market and begin the healing process.

Here’s how these two simple steps would restore an individual market:   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 on both sides.  The aggregate change 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.  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 money available to buy insurance due to lower payroll taxes. 

To be sure, there are issues other than cost that an individual market cannot address.  Suffice it to say that once voters are made the masters of their own healthcare destiny, other issues like long-term pre-existing conditions,  tort reform, and portability will get addressed through subsidies and legislation, or politicians will pay at the polls. Currently, politicians are insulated from these issues;  voters blame their employer or the insurance company they are stuck with, and this suits the politicians just fine.   (I call this the "Healthcare Palestinian Tactic", after the arab countries tactic of keeping palestinians in refugee camps to keep them radicalized, rather than allowing them to assimilate into arab countries.)   

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, effective, 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 the best 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 that they can get something for free, and because of that, Obamacare is a fait accompli.  (Remember, this was written before Obamacare became law.)

Obama Don't Care

Grand Ayatollah Roberts

When Obamacare, arguably the most invasive legislation in the history of our nation,  passed the Senate with not a single Republican vote, I likened it to being raped and posted the "Stages of Adjustment" a rape victim goes through.  Here are a few examples:

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.

The list goes on to include the later stages: PLEA-BARGAINING, DEPRESSION, ACCEPTANCE, and ASSIMILATION.  Here's the full list. 

If you felt abused by the original passing of the bill, it might feel like you've had to deal with a second assault, as if the judge made you re-enact the rape in the courtroom. 

Moreover, this SCUTUS ruling is akin to trying a rape case in a Sharia court.  According to Islamic Sharia law there must be four male eye-witnesses in order to convict a rapist.  Lacking those four eye witnesses or a confession, the rape victim is found guilty of fornicating or adultery and given 100 lashes or stoned to death.  Yes, that's right, the victim is guilty despite eye witness testimony.  John Roberts would fit right in there.  Maybe we should just call him Grand Ayatollah Roberts? 

(Note that this case even had its four male eye-witnesses! Scalia, Thomas, Kennedy, and Alito.  Nevertheless, the Grand Ayatollah prevailed.) 

The Tragedy of ObamaCare

Forget the politics. What matters to me, and should matter to everyone, is that ObamaCare has always been a shit-sandwich and it remains so today.  The only two things we learned from today's Supreme Court ruling, we already knew: ObamaCare was deceptively sold, and anyone looking for salvation from the Supreme Court is looking in the wrong place.

The debate all along on healthcare was flawed. The debate focused on the visible: your costs, your choices, your doctor, your insurance, and the constitutionality of the mandate. That’s understandable. Voters relate to what they can see. But what makes modern healthcare so dynamic is not the visible, and that is what will atrophy under a federal top-down system.

Virtually all the advances in healthcare we have come to take for granted: X-Rays, MRIs, arthroscopic surgery, pharmaceuticals, surgical devices, implanted defibrillators, and all the high-tech gadgets and substances one sees in a hospital, are produced by private industry. The more involved the federal government gets, the harder it becomes to make and improve these things. We won’t notice the slowing pace of advances right away. It will happen slowly and inexorably. Years from now, we won’t even realize we are dying from routine diseases which a private health system could have cured.

None of this was necessary. Every problem we have with health insurance today is already caused by government: It comes through your employer because of tax laws that allow deductibility only for employers. You can’t buy insurance across state lines due to a law called McCarran Ferguson. Medicare rate controls guarantee high inflation for non-Medicare patients. There are no limits on malpractice awards. State monopolies force residents into high-cost plans. You can’t even be charged with theft if you drive up to a hospital in a Ferrari, demand to be treated, and then refuse to pay!

ObamaCare was never about fixing those problems. ObamaCare has always been about control and power for the Democrat Party. Democrats know that once the government controls your healthcare, they control you.

This has been and still is the tragedy of ObamaCare.

Magic Bullets Part IX

Ruth Bader Ginsburg unwittingly said a most ironic thing during the oral arguments this week regarding ObamaCare: 

"It's a choice between a wrecking operation … or a salvage job," groused liberal Justice Ruth Bader Ginsburg. "And the more conservative approach would be salvage rather than throwing out everything."

Apparently Justice Ginsburg has never tried to renovate a run-down building.  Anyone who has, knows that demolition and starting from scratch are always the most conservative ways to end up with a building that meets the need at the lowest cost.  The only reason to salvage a run-down building is for nostalgia or coercion.   

The healthcare bill known as ObamaCare was itself an attempt to salvage federal control over a mess of tangled laws and regulations dating back at least to the 1940s:

 

• WWII wage controls sparked the practice of employer provided health insurance, which killed the individual market.  Businesses could deduct health insurance for tax purposes, and to this day individuals cannot.
• The McCarran-Ferguson Act of 1945 effectively allowed states to prevent the purchase of out-of-state health policies, giving insurers state monopolies and further trapping individuals. 
• Then came Medicare, which placed half the medical industry under a socialized system and forced all the profits to come from the other half, driving up costs and largely creating the current “crisis”. 

In other words, “a salvage operation” is what got us into this mess in the first place!   At some point we must stop adding new construction on top of an old run-down building and commence with a “wrecking operation” and then construction of a new modern structure. 

The Supreme Court may give us that opportunity.  If they do, here are some Magic Bullet solutions to fix the healthcare market and solve each of the major problems we have today: 

Question:  Why don’t Americans buy their own health insurance, and why does everyone think health insurance is someone else’s responsibility?

• Re-establish an individual market by allowing individuals to deduct their health insurance expenses in the form of refundable tax credits.   (With refundable tax credits, lower income individuals who do not qualify for Medicaid, AND don’t make enough to pay taxes, would get a check.  This is only one of many ways to undo the damage from the uneven tax treatment which has gutted the individual market:  See The Healthcare Gecko )

Question:  Why is it that you can buy almost anything you want from another state except health insurance?

• Repeal The McCarran-Ferguson Act and allow health insurance to compete across state lines.  (Follow the “commerce clause” as it was intended!)

Question:  If Medicare was an outgrowth of everyone getting their health insurance at work (After all, how could we ask retirees to enter the healthcare market for the first time at age 65?) and it shortchanges providers, is rife with fraud, and is bankrupt, do we need it anymore?

• Repeal Medicare and phase it out for younger Americans who will be accustomed to insuring themselves in the new individual interstate market. 

Question:  Why is it that if you walk into a grocer and steal food, it is an obvious crime.  Yet, if you drive to a hospital in a Ferrari, demand to be treated by a team of doctors, and then refuse to pay, it is not?

• Make theft of Medical Services a crime. 

Question:  How can we prevent insurance companies from dropping coverage for high risk individuals? 

• How do we prevent car companies from selling dangerous or inferior cars?  Of course we can’t, but the market, the courts, and some level of regulation do the job quite well. 

Question:  What can be done about pre-existing conditions? 

• Medicaid must be a viable option for those who become ill while uninsured, or refuse to obtain insurance until after they become ill.  Part of Medicaid’s role should be insurer-of-last-resort, but it should not be free to those who can pay.  

Question:  What about the poor? 

• Once an individual interstate market is established, Medicaid will be less burdened and easier to rebuild into a better safety net. 

Question:  What about quality, cost, and availability of healthcare?

• A vibrant individual interstate market is the only way to insure high quality, low cost, and abundant healthcare services in the future.     

Of course, there is a limit to the building analogy when it comes to laws.  Unlike buildings, laws don’t exist as distinct stand-alone entities.  They are more like electricity grids with tentacles going into every aspect of our lives and interactions, and each branch has a vocal constituency demanding it be preserved as is.  Laws almost never get repealed. 

The wrecking operation is going to take a political revolution.  As for the new construction, the market will do that overnight.    

A Bumper Sticker for Our Time

What She Said...

"Three Cheers for Romneycare" by Ann Coulter

If I was Mitt Romney... Part 2

If I was Mitt Romney - I'd fire back at Romneycare critics and say, "Look,  everyone keeps citing similarities between Romneycare and Obamacare but this misses the point; it's the differences that matter.  Chimpanzees and humans share 90% of their DNA, yet no one would confuse a human with a chimp.  Romneycare and Obamacare do share some DNA but they are very different animals.  Romneycare was a plan to prevent freeloading, and that was its only purpose.  Obamacare is a direct line to socialized medicine, and was specifically designed for that purpose."  Game. Over.        

If I was Mitt Romney...

If I was Mitt Romney - I'd fire back at Romneycare critics and say, "Look,  Massachusetts is a little different.  Context is everything.  You try Governing a state made-up of Barney Franks!"  Game. Over.      

Mitt Romney - Birth of a Salesman

I watched the GOP debate in New Hampshire last night and thought something new happened:  Mitt Romney showed how talented he is as a salesman. Now, when I say “salesman” I don’t mean it in the pop-culture sense like “huckster” or “con-man”. No, I mean it as a huge mega-compliment.

I have the utmost regard for quality salespeople; the people of integrity who bring new products, services, and ideas to a reflexively skeptical audience. (Think Steve Jobs.) And boy are we skeptical when it comes to politicians!

The skills necessary to excel in sales are often misunderstood outside business circles. A good salesman does not trick you into buying something you don’t want. A good salesman does not convince you to act against your interests. No, a good salesman has the skills to understand what is important to you and then explain his product intelligently in those terms. Moreover, a good salesman must have a solid product, be knowledgeable, trustworthy, and likeable.

Selling is just a piece of making a good President, but selling is really important. What if a President had a truly decent product (agenda) but lacked the skills to implement it? Would that person make a good President? What if a President had a really bad product and managed to cynically convince us to buy it against our interests? Would that person make a good President?

Last night Mitt Romney passed the sales test for me in a way he hadn't before, but that doesn’t make him perfect. (No one’s perfect, except of course my wife!)

My problems with Mitt Romney are a bit different than the usual. You see, I’m actually OK with Romneycare. In fact, I’m OK with the individual mandate at the state level. The reason for this, as Mitt has explained, is that we’ve always had a mandate in health care, except it was one-sided. That mandate was always on the providers and it forced them to treat anyone who walked into an emergency room. That forced a reciprocal mandate on responsible, insured folks to cover the costs of those who refuse to pay. (Remember, those who are indigent are covered by Medicaid!)

The debate over Obamacare has been hijacked by the mandate controversy because the issue of constitutionality is seen by opponents as a way to kill it in the courts. That may or may not work, but I think it’s been a distraction. The real evil of Obamacare is that it nationalizes the remaining 50% of the health care market and that will kill innovation, access, quality, and life. I think Mitt Romney gets this and the Massachusetts plan was not a similar takeover.

I’m also OK with being pro-choice and pro-life, even though my views may differ from Romney’s at any given time. I’m OK with choice early in a pregnancy, but I define late-term abortion as taking a life. ‘Nuff said.

No, my problem with Mitt Romney is that he does not seem to understand Obama’s role in the financial meltdown. I’ve heard him say things like: “Obama did not cause this mess. He’s a nice enough guy. But he made it worse!” I find this a fundamental misreading of the biggest issue of the day. As much as any one man, Barack Obama did cause the meltdown in 2008 and has lied about it and blamed others ever since. He was known as the “Senator from Fannie Mae” for Pete’s sake! He worked with ACORN to force banks to make bad loans in the ‘90s. He voted for TARP. His fingerprints are all over this from the get-go. And yes, he did make it worse.

I realize the polls don’t agree with this assessment and Acade-Media-Wood have done a great job of covering Obama’s tracks, but I expect the Republican nominee to at least understand this. And once they understand it, I’d hope they can sell it in a general election.  Based on last night, Mitt Romney is half way there.

(I realize there were others at that debate and I thought Michelle Bachman was the other winner, but this post is limited in scope.) 

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.

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.

Magic Bullets Part V - Health Care (plus Climategate)

I like this little video I saw on PajamasMedia today.  It goes well with Magic Bullets Part III...
http://pajamasmedia.com/instapundit/89362/

Also, while at Instapundit, I saw this on Climategate.  PajamasMedia is doing great work every day!
Please support them by joining...
PajamasMedia, Hide-The-Decline! Video

Magic Bullets Part III – The Health Care Gecko

Here’s a question for you; why is there no healthcare Gecko? Wouldn’t it be great if 15 minutes could save you 15% or more in health insurance? For that matter, where is the Progressive girl with the red lipstick selling health insurance? Is it possible that this is the real problem with healthcare? In other words, is it possible that the real problem with healthcare is that there is no such thing as a true individual market? The fact is, only 5% of the insured buy their own health insurance. 95% get insurance from the government or their employer. For car insurance, the numbers are reversed and there is no similar crisis in car insurance. The difference is the Gecko. Give us a healthcare Gecko, and the crisis dissolves like magic.

Now I know what you’re saying, “Healthcare is way more expensive than transportation so there is just no comparison.” Consider this; Americans spend on average four times more on transportation than they do on healthcare. (Source: US Government, BLS)  Is your car more important than your life? Given this, why is there no demand for a public option in car insurance? Simple. There is a functioning free market (although regulated to the gills) in car insurance. Ever hear of Warren Buffet? He is a car insurance capitalist among other things; a slick profiteer making obscene amounts of money off the backs of innocent Americans who just need a little car insurance mandated by their government. Now I don’t buy into the tone of that last sentence, but that’s what the rhetoric about health insurance companies amounts to. It’s nonsense and it’s leading us down a Marxist class-warfare path.

Here’s the magic-bullet way out led by the Gecko, and the best part is, it is cost-neutral to employees, employers, and the government: Eliminate the deductibility of health insurance for employers and offset the difference with a reduction in payroll taxes. That’s it. Employers would instantly transfer their health insurance plans to employee ownership and increase wages to offset the costs. Tax implications for all parties would be neutralized by lowering payroll taxes across the board. End of story. It’s simple to explain and would set in motion all the other market forces like portability, availability, and cost which will solve this government-made crisis. Shouldn’t we try this before re-making one sixth of the economy in the image of the IRS and your local DMV? The only difference is there will be a healthcare Gecko within hours of this magic bullet. In Gecko we trust. Maybe Warren Buffet could explain this to the President?

(Remember, we’d still have a nifty public option called Medicaid for those unable or unwilling to “Go Gecko”.)

Optional Option???

Now that the so-called "public-option" is "optional" what's not to like?  Oh, I don't know, maybe all of it?   Let me get this straight; the helpful folks in Washington who have bankrupted Medicare, Medicaid, Social Security, Fannie Mae, Freddie Mac, Amtrak, The US Post Office, and every other entity they have ever meddled in, are going to avoid making the same mistakes by socializing medicine but allowing states to "opt-out" of this wonderful benefit?  Is Harry Reid serious?  Have you ever heard of a federal tax that you could "opt-out" of?  In other words,  the taxes and devalued currency to pay for this boondoggle will be mandatory for all Americans, but not-to-worry, the subsidized benefit is strictly optional.   Think of it like Mafia thugs coming to you and shaking you down for "protection money".  To stop the beatings, you pay up and as they are leaving, they wink and inform you that the payments must continue but you have the right to "opt-out" of the "protection" part of the deal.  Hey, "That's the Chicago Way"...