Dear Readers: Today, wisdom from Professor Athena (a highly placed manager in a large and prosperous financial institution):
Anyone who grew up in the 1970’s remembers this line. You would think most of Congress would also know it, since the majority of them fall into that age group. But Democrats at least appear to have a selective memory. They seem to be working an ongoing theme of apology. Most of us don’t want an apology on our behalf. We believe we are adults and can make our own apologies if needed.
Some of the apologies fall into the area of the ridiculous, such as those concerning America’s “torture” of enemy combatants. The majority of Americans understand what is and is not torture, especially when compared with how our private everyday citizens are treated in the hands of such terrorist combatants, much less our soldiers if captured. Like the ones to the entire Muslim religion for our lack of tolerance. Other apologies are much more subtle and undermine the strength of Americans’ ability to fight for our success and survival even when times are tough. Like the ones Democrats make with regard to being sorry we can’t extend unemployment checks indefinitely and being sorry loans in default cannot be modified fast enough and being sorry we haven’t already passed nationalized health care.
The Washington Times ran an article March 2rd that featured the fact that American reliance on government is at an all-time high. This as Republicans are balking at another stimulus-cloaked-as-a-jobs-bill. An important quote that relates to our economy and the enormous cost of federal entitlements from the article and link follows:
In particular, many workers who were nearing retirement age and got laid off started drawing Social Security benefits. The number of retirees taking Social Security at age 62 grew by a record 19 percent in the past year, helping to push up Social Security outlays by $100 billion. Analysts expect those spending levels to stay high and continue to increase as more baby boomers retire.
This is what fiscal conservatives are worried about. We are deficit borrowing at record levels. As the article highlights, Americans received more last year in government outlays than they paid in taxes. This on the cusp of what is a huge Social Security and Medicare “bubble”. When we should have saved for a “rainy day”, we are instead borrowing at record levels, and on the quest to borrow still more from future generations of Americans. Who issues the kind of promissory notes that come due to someone not yet even born? Our government in Washington, D.C. That’s who!
Economists’ view of the economic recovery at present is a lot like a patient in intensive care who has survived a heart attack. The patient is still breathing, but in critical care. You would think the administration gets this. Instead, main planks in their budget proposals seek to tax investment income along with the elimination of the home mortgage deduction for many homeowners. Another example of their lack of grasp of the obvious is their proposed financial transaction tax. Yet nothing in this administration’s long laundry list of apologies has quite initiated the response of their treatment of health care reform.
The “rollout” of the last ditch effort to keep this pig out of the ditch happened in the East Room, in a reprise of the initial announcement of health care reform and where white coats were no doubt passed out again by staffers. Opening the meeting was this comment by the President, “At stake right now is not just our ability to solve this problem, but our ability to solve any problem”. We could not have said it better ourselves, Mr. President.
Reforms needed in our present inflation of health care costs lies in the analysis of what drives pricing. We have several demographic factors present here which no amount of Congressional meddling will alter. We have a rapidly aging population, and the younger demographic is not enrolling in health care precisely because it costs so much. We have a massive entitlement already in place in form of Medicare and Medicaid, where price-fixing by the government and decisions about covered options for treatments, drugs, tests, etc. are set not by doctors and hospitals but by bureaucrats. Medicaid and S-Chip have been expanded to include many of the “working poor” (families making up to about 90k a year in fact). Note to Congress: if you want people to buy health care, stop giving it to them. The fact is that hospitals are going broke treating these types of patients. They are paid less for more paperwork and longer reimbursements, with cookie-cutter “one-size-fits-all” testing done that is by its nature costly and time-consuming. The ugly truth of our rising health care cost is that Medicare and Medicaid already in place are in no small part to blame. The only way hospitals and doctors can make money is to charge private insurance patients more to offset the very thin margin of treating Medicare and Medicaid patients. No small wonder that so many doctors are dropping these types of patients.
One of the “reforms we can all agree on” discussed in the recent “bi-partisan” meeting with Republicans and Democrats and (finally) televised on C-SPAN is the “can’t be dropped from treatment or refused for pre-existing condition” argument. The administration along with many in Congress seem to feel high-risk patients who fall into this category should not only be covered, but here is the rub: they want to mandate coverage at the SAME rate as patients with much lower risk factors, AND they are willing to allow the sick or injured to wait all the way up to the point of riding to the hospital in the ambulance to call and buy insurance. Kind of defeats the definition of “insurance”, doesn’t it?
Which brings me to the reforms that some Republicans in Congress have outlined, and why they will work. We need to drop the income tax exclusion for employer-carried insurance group plans. We need to instead offer portability through individually-carried plans which can be purchased across state lines and over the internet from private insurance carriers who can offer an array of types of insurance and pricing in competition. In our “click-and-point” generation, only the government would be arrogant enough to believe we are not intelligent enough consumers to go to a website and figure out what we need and buy it at the best price. Especially if we are offered it as a tax credit. If you are say 25 and working and very healthy, you may opt for a “high-deductible” plan where it takes several hundred bucks for your insurance to kick in. Sure, you’ll perhaps have to pay a few doctor bills, but if you aren’t going to the doctor that often, you’ll save big bucks in premiums. The incentive should be a tax credit to help you purchase what you need, not a fine if you don’t. If you are 60 and nearing retirement, you may want a high-priced plan with a lower deductible. But at this stage, you can more likely benefit from the corresponding larger tax deduction. For those rare cases where a private insurance underwriter indeed would have to refuse coverage, a special high-risk pool should be created and administered by the state insurance commissions. Not by a newly-created federal insurance board suggested by President Obama, and which would assure yet another layer of federal bureaucracy that is already the primary driver for rising medical costs.
If we do not reform the massive Medicare entitlement system now and privatize it to allow both doctors and hospitals to make money again and to determine the best course of treatment for their patients, we will truly have failed in the REAL test of what health care reform should do for us. Precisely because of our aging post-WWII generation and the economic impact of health care costs on our federal budget, reform means phasing out the 1960’s-era Medicare option for seniors through time, not expanding it and its gargantuan costs into our future generations. Reform can come about only through fundamental changes in the way we structure and offer insurance in America. It can only come about by beginning to treat our health care providers as much more than private contractors to the government in Washington, D.C. It can come about only when we initiate fiscal budget reduction and spending restraint that will put our economy back on track, and along with it individual prosperity and income growth. Ending popular entitlements will bring no end of anecdotal stories and a few tears from leading Democrats who of late seem to be always sorry. Spare us the anecdotes, and instead pony up some serious budget reform and spending reduction. Stop raising our taxes to pay for expansions in the federal government contained in pork-laden bills even members of Congress don’t take the time to read. In fact, scrap the 2,000-page health-care-from-hell bill. And stop apologizing. A sappy movie from the 1970’s should have told you that much.
MUT Note: The threat of reconciliation to pass the Obama reform package reminds me more of a scene from the movie, “The Clash of the Titans”. Zeus, the King of the Olympians, orders the Sea God Poseidon to “release the Kraken” because a certain city has angered him. Chaos, destruction, and death ensue.