Tuesday, September 29, 2009

Health Care Without Doctors -- The Obama Plan

Investors Business Daily recently polled doctors on their future plans if Obama's health care "reforms" pass. The result: 45 percent of all doctors polled said they would seriously consider retiring and/or closing their medical practice. That's a resounding endorsement!

None of the bills before Congress expand the number of doctors and nurses that will provide Obamacare and the trend is in the other direction. Every day that passes more and more doctors refuse medicare and medicaid patients. Why? The $ 500 billion that Obama claims that he will save in Medicare and Medicaid will leave more health care practitioners to look for better paying patients or simply leave the health care profession entirely.

Obama is truly a magician. He can somehow improve our healthcare by bankrupting the nation and lowering the numbers of doctors and nurses at the same time. He may well be successful in bankrupting the nation and lowering the number of doctors and nurses, but it is doubtful that this will do much for the nation's health care.

Monday, September 28, 2009

10.9 Million and Counting

The Urban Institute study of Medicaid and SCHIP (that's the so-called Children's Health Insurance Program) estimated that 10.9 Million people, eligible for these programs under the law, failed to sign up for them in 2007. That accounts for more than twenty percent of the people that "don't have insurance." Why haven't they signed up? You think that that many people are not aware of their eligibility? Why doesn't the Congress check into that? I didn't notice Senator Baucus commenting on that particular problem. Who is to say these same folks are going to sign up for Obamacare, when they don't bother to sign up for its current equivalent?

Almost 20 million people who don't have health insurance currently have income that is twenty five percent higher than the average income in America. Why don't they buy insurance? Should we tax the average American to pay for folks who have twenty five percent more income than they have?

For many, not bothering with health insurance is a perfectly rational decision. Those currently with health insurance want to keep what they have. What is the point of the Obama push to nationalize health care?

Saturday, September 26, 2009

Aftermath of the G20

Obama is definitely the king of the photo-ops. But after the champagne bottles are hustled into the garbage bins, what is left from the G-20 conclave this week in Pittsburg? Nothing.

The American economy is mired in stagnation. Housing is at a dead end with nearly seven million unsold homes on the market. Home prices have stopped falling in most markets, but significant increases in new construction are nowhere in sight. Businesses have no interest in adding to their work force, especially with Obama's war on capitalism in full throttle.

The only thing really going up is the national debt and it is definitely roaring right along. Future deficit estimates are way, way understated for two reasons: 1) The Obama administration is vastly overestimating the future tax revenues that the economy will generate; and 2) The Obama administration is vastly underestimating the future cost of their ambitious agenda, some of which, no doubt, they will get passed in Congress.

So, after all the fun times with the international jet set and the adoring media, it is time for the US to face its rather bleak future. Obama is a classy guy, who would have made a great late night TV host. It's really a shame he didn't pursue that career.

The US needs a leader who understands that the economy is going nowhere and the national debt is out of control. Obama doesn't seem to understand what's really going on in the US. (Maybe he should go back to Harvard and take an Economics course or are we too late for that?).

Tax Health Care Benefits

Under current tax law, employer-provided health care is a tax free benefit for the employee. This should be changed. Employer-provided health care should be taxed as ordinary income to the employee. Treating this benefit as tax free is the reason that employer provided insurance is not really insurance at all. Instead, employer-provided health care insurance is inevitably some form of "comprehensive insurance," which provides payment for "predictable" normal and routine health care services.

What this means is that employer-provided insurance is similar to a car insurance plan that pays oil and gas purchases, tire changes, inspection fees, and routine car maintenance as well as accident and liability coverage. No rational person would purchase a "car insurance" plan that includes all of these routine, predictable expenses. Instead, they would purchase "catastrophic" insurance and pay the routine, predictable expenditures on their own. How do we know that? Because that's what folks do when they pay for their own car insurance, because Americans pay directly, not indirectly for their automobile insurance.

Employees, if they pay for their own insurance would never buy insurance that covers routine and predictable expenses. Why? Because it is cheaper in the long run to pay predictable expenses on your own. The only need for insurance is for large, unpredictable expenses. That's what insurance is. Insurance "insures" you against the unknown, not the known.

Eliminating the tax exempt status of employer-provided health care would push the cost of health care onto the employee (the employee currently pays it anyway in lower wages, but the employee doesn't realize that). If the employee pays for their own health care insurance directly, instead of indirectly, they will buy catastrophic policies instead of comprehensive policies. That reform alone would dramatically slow the pricing pressure in health care.

Coupled with tort reform and removing the restrictions on interstate insurance sales, eliminating the tas-free status of employer-provided health insurance would solve the vast bulk of problems with our current health care system. A government take-over, the Obama solution, will simply make our health care system emulate the worst of our public schools at catastrophic expense to the taxpayer.

Friday, September 25, 2009

Obama Starts a Tariff War

The tariff hikes on tire imports that Barrack Obama foisted on the US economy two weeks ago has led to major retaliation, not just from the Chinese. German steel tariff hikes have now added to the momentum for protection. It is no accident that Obama has encouraged the Congress not to move forward with reciprocal trade deals that would improve international trade, long stalled in the Democratic Congress.

This moves Obama further and further from the FDR analogy. Recall that Hoover was the great believer in protection. The Smoot Hawley tariff was Hoover's idea. It was passed by Congress in 1930 and signed eagerly by Hoover, who never stopped defending the Smoot Hawley tariff even long after he left office.

It was FDR that gradually moved the US back toward free trade. Obama is a Hoover repeat. He thinks not trading with other countries will be good for us. It won't be good for us and it won't be good for the rest of the world either. For a US economy that remains mired in a major recession, the Obama policies continue to put roadblocks in the way of recovery.

Monday, September 21, 2009

Mankiw Gets to the Heart of It

Greg Mankiw is a Professor of Economics at Harvard University. His article in Sunday's NY Times is profound. Professor Mankiw imagines that a medical process is found that costs $ 150,000 annually with the power of extending life for the user by one year.

Who can use this process?

In a free market, the answer is obvious. The users will be those who can afford it. The result: a limited number of relatively affluent folks will pay $ 150,000 annually and live another year (eternally in principle).

What happens in Obamacare? Using the principle that all citizens have an equal right to health care and that medical care should not go to the highest bidder, then the answer is obvious. No one will get to use this process that can extend life. It will be outlawed. It has to be under Obamacare. If anyone gets to use this process, then all must get to use it. All will want to use it. But society cannot afford it. Therefore, no one gets to use it.

Think about that for a moment. Expensive medical procedures, if they have the possibility of improving life chances for all of us will be outlawed, because, in the aggregate, under Obamacare it breaks the budget.

Put another way, if we decided that cars should not go to the highest bidder, but that all Americans should have the right to own the same car as everyone else, the result would be the lowest common denominator. We would all be driving cheap cars -- no more Lexuses, no more Mercedes (maybe GM would make a comeback!).

This is where Obamacare will take us. Since everyone must have access to identical health care, anything that is very costly and could, in principle, be widely used will simply be outlawed. If you want expensive, life enhancing health services, you will have to move to another country that permits free market health care in order to get such services.

In a free market, you could buy insurance that would provide the money to have the very expensive life enhancing procedures if you so choose. Under Obama's bills in Congress, such insurance policies will be illegal.

Not only do you lose the freedom to have the care you want and need, an insurance company that sells you a policy to provide for that care will be breaking the law.

The free market is the best allocator of scarce resources. Under a government allocation scheme, either the government must pick and choose who gets a limited resource and who doesn't or the government must outlaw that resource so that no one gets it. That's why the free market is the right answer for health care, not Obamacare.

When is a Tax Not a Tax

Once again, the President believes that only he knows the meaning of words. When asked on Sunday if his nearly $ 4,000 "fine" for families who cannot afford his Obamacare is a tax, he answered that the $ 4,000 penalty is not a tax, it is something "good for people." I wonder if Americans can make that distinction. A stunned Democrat George Stephanopolous would not accept the Obamaism and pointed out that by Webster's Dictionary definition of a tax, Obama's fine of $ 4,000 per family would be a tax. Obama's response: "..that' stretching it.."

The stretch, according to Obama, was to consult a dictionary for the meaning of a word. Obama believes we should only consult Obama for the meaning of words (in this, he and Bill Clinton seem to be on the same page. Recall the famous Clintonism: "...that depends upon what the meaning of the word 'is' is....)" So, according to Obama, dictionaries should no longer be consulted because Obama can tell us which things we pay the government are taxes and which things aren't.

Now, I understand Obama's pledge that "...middle class taxes will not be increased." All you have to do is redefine what you mean by a "tax." This guy really is clever. But, I don't think he's really fooling anyone but himself.

Saturday, September 19, 2009

FHA and FDIC are Broke

It always sounds good to say that you are going to "help" homeowners and "help" those who ........ But such "help" is not free. Someone is doing the "helping." Who? You! and future generations of unborn Americans. That's who picks up the tab on the trillions of dollars now being wasted by the FHA and FDIC. Congress will, no doubt, soon provide them with more dollars to waste.

Medicare, Social Security, and Medicaid are broke as well. So, lets expand them. Why not double down. Obama's health care plan is a double down strategy. As the country tips into bankruptcy why not expand our vision. If we are going to go broke anyway, why not splurge on the way down.

The seems to be the Obama strategy for now.

Friday, September 18, 2009

Obama Could Win Over the Republicans

Yes, surprisingly, the Republicans in the House and Senate would give Obama plenty of votes and cover for his health care plans if he would retreat on tort reform. The enormous costs of litigation involving medical malpractice could easily destroy the American health care system regardless of what that system is like. If Obama would simply agree to let America have the same limits on medical malpractice suits that are in place everywhere else in the civilized world, then Republicans would eagerly jump on board his health care bandwagon.

But, he won't do it. These trial lawyers, like John Edwards -- a paragon of virtue, that one -- are his mainstay supporters. Obama will not cross the wealthy trial lawyer crowd even to get his health care goals accomplished. He likes his rich people, he just doesn't like your rich people.

In the end, Obama won't get much and the voters will take away his huge majorities in the House and Senate next Fall. Voters don't like any of this and, once enacted, they will know fairly quickly who was telling the truth and who wasn't. Obama's Congressional allies are in deep, deep trouble in the Fall 2010 elections, no matter what finally passes, if anything.

Wednesday, September 16, 2009

Judge Rakoff is Right

US District Judge Jed S. Rakoff has hit the nail on the head in the $ 33 million settlement between the SEC and Bank of America. The issue is the payment of 2008 bonus payments to Merrill Lynch employees without accurately informing the acquiring firm's shareholders -- the shareholders of Bank of America. As Judge Rakoff correctly notes, the shareholders of Bank of America are the victims. Why should the victims be hit with a $ 33 million fine?

Why hit the shareholders, asks Rakoff and he is absolutely right? What did the shareholders do wrong in this case? They were the injured party. It is typical of the SEC to complain about inadequate disclosures to investors and then turn around and penalize those self-same investors with a fine. Who would pay the $ 33 million settlement that the SEC has levied on Bank of America? The shareholders, of course.

This is typical policy that extracts payment, not from the guilty party, but from the innocent victim. Why? The innocent victim has a deeper pocket and an inability to protest this outrageous settlement.

Three cheers for Judge Rakoff

Tuesday, September 15, 2009

It's Not About Poor People

Obama has shifted the focus of his health care reform to the assertion that government works better than the free market. Obama is no longer concerned about the provision of health care, but instead is mainly interested in the provision of health insurance. He feels the necessity to subsidize families whose income is above the national average -- a sort of reverse-Robin Hood plan whereby the average taxpayer subsidizes wealthier people because these wealthier people somehow can't afford health insurance. Sounds like a plan.

Meanwhile, the Obama plan, as he said on TV last week, will slice $ 800 billion out of medicare in the next ten years. That, of course, will dramatically reduce the actual provision of health care for those over 65 currently dependent upon medicare.

The poor are receiving health care -- the best in the world. They don't need Obama or anyone else to improve their health care. They are already getting it. Medicaid covers the truly poor and no hospital turns anyone down.

So, what is Obama really doing, if not helping poor people. He's creating a government run health care program, because Obama does not believe in free markets -- whether in health care, financial services, auto, tires, or anything else.

Obama's arguments for taking over the health care industry can be extended to all other industries -- certainly to food, transportation, financial services and the entertainment industry. Why have any free markets? That must be the question that Obama asks himself when he is truly alone.

Friday, September 11, 2009

Tax This, Tax That

People mistakenly assume that the "burden" of a tax rests on the payer. Not so. For example payroll taxes by employers are actually paid by employees in the form of lower wages. If there were no payroll tax, employees would be paid this money. The same is true of employer provided health care and any other employee benefit. Even workplace litigation is ultimately borne by employees as employers are forced to hire fewer employees at lower compensation because of the threat of workplace litigation.

Who pays cigarette taxes, beer taxes, gas taxes? You guessed it. You do. Who pays the big settlements in lawsuits at big corporations? You guessed it. You do. The majority owner of big tobacco, big oil, big insurance is the pension fund of the average worker. So, when you slap a tax on insurance companies, you are taxing workers..they own the companies. When you slap windfall profits tax on oil, you are taxing workers...they own the companies.

The people who advocate these taxes think that big oil is owned by some lazy, mean-spirited, right wing, rich slob. Nope. That's not the case. You own it. Do you have a retirement plan? Then you own it.

So, the next time you hear that only half of the country pays taxes, think again. Maybe only half pay federal income taxes, but all of these other taxes fall disproportionately on low income folks. Obama's tax on insurance companies will fall on lower and middle income folks. They own the insurance companies.

The average American is in worse financial shape today than twenty years ago, even though the cost to an employer of an employee has rocketed out of sight. How can that be? The disposable income of a worker is ultimately reduced by payroll taxes, health care provision, family leave provisions, expected litigation costs from anti-discrimination laws, workmens compensation taxes, unemployment compensation taxes....should I go on. Protecting workers makes them much more expensive to employers. At the end of the day, employees pay these costs not employers.

Only in the very short run, does the employer pay these costs and what the employer does is immediately attempt to reduce his workforce. So, in the short run Obama health care schemes will cost workers their jobs. In the long run, employees will pay for the Obamacare that he says is being paid by employers and insurance companies. Obama is not telling it straight.

Thursday, September 10, 2009

Obama Addresses the Congress

This was a very strange speech. At least a third of the speech was devoted to arguing that his critics are: 1) liars; 2) misinformed; 3) disingenuous. Wonder why all the polemics and anger?

Should critics not question the $ 600 billion that Obama claims he will save in medicare spending? Does that level of savings, while cutting no services, sound even remotely plausible? Should critics not wonder how one keeps their present insurance if their employer decides to get rid of it and go for the 8 percent penalty or the public option? Should critics not wonder how adding a government option improves the competitive landscape? Should critics not wonder why the current malpractice lawsuits, not permitted in any other developed country in the world, should not be curbed? Should critics not question "panels" whose job is to recommend medical processes for "end of life" care as mentioned in several of the current bills before Congress? (Perhaps there is a nicer expression than "death panels," but the meaning is obvious). Should critics not question how you provide 55 million people with health insurance, add numerous costly provisions to everyone's health care (whether they want it or not), and still have no federal budget impact?

Are all of these critics guilty of bad motives? At what point does Obama face the facts that a 20 vote margin in the US Senate and a 70 vote margin in the House of Representatives means the Democrats can pass whatever they want, even if there a few Democratic dissenters. Obviously, his problem is much larger than opposition Republicans and a few Democratic dissenters. All the polls now show that the public is overwhelmingly opposed to Obama's health care plan. In fact, recent polls are now showing, for the first time, that a majority of the public is now opposed to Obama himself -- not just opposed to his programs. Look for Obama's situation to deteriorate.

Ad hominem arguments from Obama cannot change the cold hard facts. The country does not need or want Obamacare. The country wants and needs economic recovery, not Obamacare.

Obama should stick to arguing his position and quit questioning the motives of those who have legitimate disagreement with his poorly thought out agenda.

Wednesday, September 9, 2009

Obama's Senior Moment - Dick Morris's Analysis on Target

Dick Morris, former political advisor to the Bill Clinton White House, has correctly analyzed Obama's growing problem with Americans over the age of 65:

"The Democratic Party, led by Obama, is systematically converting the elderly vote into a Republican bastion. The work of FDR in passing Social Security in 1937 and of LBJ in enacting Medicare in 1965 is being undone by the president's healthcare program. The elderly see his proposals for what they are: a massive redistribution of healthcare away from the elderly and toward a population that is younger, healthier and richer but happens, at the moment, to lack insurance. (Remember that the uninsured are, by definition, not elderly, not young and not in poverty - and if they are, they are currently eligible for Medicare, Medicaid or SCHIP and do not need the Obama program.) The elderly see the $500 billion projected cut in Medicare through the same lens as they viewed Gingrich's efforts to slice the growth in the program in the mid-1990s."

Morris has hit the nail on the head. To repeat Morris's most significant observation:

"Remember that the uninsured are, by definition, not elderly, not young and not in poverty - and if they are, they are currently eligible for Medicare, Medicaid or SCHIP and do not need the Obama program."

Hard to argue with that one.

GM Bailout -- Money Down the Drain

The Congressional oversight committees are now owning up to the fact that the bulk of the auto bailout money will never be repaid. This money was simply poured down a rathole to preserve the rich pension and health care benefits of a small group of union auto workers. Meanwhile, millions of workers lost their job and will be asked to pay even higher taxes to support Obama's bailout for his political allies. The auto bailout will cost more money than the Iraq war this year. No doubt, Obama will ask for more. Soon the Iraq war will look cheap compared to Obama's gifts to his political allies. These people have no shame.

Sunday, September 6, 2009

Who Will Get Hired and Who Won't

Various pundits have noticed that older folks are having serious trouble getting hired...disproportionately so. Why? The pundits seem puzzled. But, the answer is pretty straightforward: older folks are protected by anti-discrimination laws. In practice, such laws mainly serve to provide litigation costs whenever older (40 and over) workers are laid off. If 40 and over workers are more likely to sue you when they are laid off, then a rational businessman won't hire them. You can't hire them and pay them less, because that would violate anti-discrimination laws. So, the intelligent decision is to simply not hire them in the first place. The Obama Adminstration has signaled a willingness to strengthen the enforcement of all anti-discrimination laws. These policies will weigh heavily on their beneficiaries -- women, minorities and older workers. Businesses will simply avoid hiring these groups because of the high potential for litigation.

Another group that seems to be getting whacked in the US labor market are teenagers. Their situation was further aggravated by an increase in the federal minimum wage that took place this summer. Perfect timing.

One of the lessons from all of this is that you really don't want politicians to pass laws to protect you in the workplace. All this does is make you more expensive to an employer and less desirable as an employee. These laws hurt the most vulnerable members of our society and are an insult to common sense.

There won't be much hiring any time soon, thanks to the current Administration and Congress, but what little there will be will be concentrated away from women, minorities and older workers.

Saturday, September 5, 2009

The Jobless Recovery

The NY Times this morning has a lengthy article that suggests that the employment picture is not likely to improve, even if the economy shows signs of recovery. Typical of the NY Times, they suggest a variety of policy measures, none of which would add a single employee to private employer rolls. The people that write these articles must have majored in religious mysticism, certainly not economics.

Businesses decide whether or not to hire employees. That is the crux of the issue. What is largely irrelevant is: 1) the savings rate; 2) whether or not there is another $ 800 billion redistribution of wealth (the mis-named "stimulus package"). If businesses don't hire then unemployment is not going to get better. Is anyone at the NY Times listening? Is anyone in the Obama Administration listening?

Imagine that you had an orange tree and wanted to sell oranges? Would you encourage laws that required folks to wear space suits while eating oranges? Would you encourage laws that impose a tax on people that consume oranges? Would policies like that encourage people to buy your oranges? Would you encourage a law that would take money from doctors and give it to lawyers? Would that help your orange sales? What about considering a law that would make it more fun to eat oranges or perhaps a tax break for eating oranges? How would that affect your orange sales?

The NY Times and Obama Administration (these are flip sides of the same coin) seem to not understand who does the hiring in the economy. Their approach is to penalize anyone who would consider hiring anyone. Then, they are surprised that no hiring takes place and argue that another redistribution bill should do the trick. Even though the last two redistribution bills did nothing but add to the national debt.

You have to give them one thing -- they are consistent and persistent. Look for joblessness to remain a severe problem -- a problem the Obama Adminstration has no intention of tackling and the NY Times has no possiblity of understanding.

Wednesday, September 2, 2009

Some People Never Learn

Apparently, Obama has shifted his strategy for the upcoming Fall. He plans a major address on health care that supposedly reconciles the unreconcilable -- expanding health care coverage and reducing overall costs -- can't be done, but that may not prevent Obama from saying that it can be done. It's unlikely this will help much as voters have figured this charade out. But then, at this point, Obama is speaking mainly to members of his own political party, since that is where his biggest problems now lie.

The plan, then, is to emphasize "punishing Wall Street" this fall and letting "cap-and-trade" twist in the wind. Presumably "punishing Wall Street" is designed to offset the bailout image that this Administration has earned for itself.

At the moment, the economy needs credit. One of the things Wall Street does is provide financing for commercial and residential real estate and most main stream public companies. The supply of credit has been greatly reduced, as any person in business would gladly bear witness. You would think that the President would be concerned about credit problems and propose ways to provide more credit to the economy not less. Punishing Wall Street will reduce Wall Street's ability and incentive to provide the necessary credit for a modern functioning economy.

All of this simply re-emphasizes that this Administration does not know what's going on. We are in a recession. Lots of folks are out of work. Policies should be designed with the recession in mind. Nothing coming out of this Administration helps the country emerge from the recession and virtually every plan put forward by the Obama team actively discourages employers from hiring employees.

Obama needs to wake up and smell the coffee. The country needs jobs, not rhetoric, and not more attacks on the very people who are crucial to economic recovery.