A plan for disaster

The Bacaus health reform plan has some serious flaws. One of the big ones is that it forces everyone to buy insurance. If they do not buy insurance they will pay a fine that is reported to be about $1,000 give or take. Insurance premiums are expected to be $4,000 to $5,000. This does not include other "out of pocket" expenses such as co pays and the like.

The math here does not compute!

Knowing that an insurance company will no longer be able to deny someone health insurance, who in their right mind would pay the $4,000 to $5,000 for insurance when they are not sick?? Why not just pay the $1,000 fine, wait until you are truely sick, then sign up for insurance?  The insurance company cannot deny you! You will save lots of money.

Young people, who think they are indestructible, will no doubt see the difference.
This is where the recently released study from the insurance industry determined that premiums will skyrocket under this plan. Of course those in support of this reform claimed it was false, and that the insurance industry was trying to "scare" people. Yet, on at least this point, the logic in the study seems quite correct.
This is what would be called an "un intended consequence".

Another consequence of this plan, although very intentional, is that in order to stay under the trillion dollar mark and be so called defecit neutral, its revenues are front loaded and its expenses are back loaded.

This means that cuts in medicare reimbursements to providers, new taxes on "cadillac" insurance plans and the other host of revenue generating features will happen right away, yet on the expense side, like expanded insurance coverage are not fully implemented until years later(some nearly a decade), so as to allow the reform to build a surplus making it "appear" to be under a trillion dollars and defecit neutral. This is pure gimickry.

Another point on "cadillac" insurance plans is that the government, to generate revenue, calculates that the use of these plans will continue to increase over time, yet that flies in the face of economics 101. When you increase taxes on something, you get less of it, not more. So this is another area that will likely contribute to the reform plan exceeding planned expenses.

As it is now, many doctors refuse Medicare patients, does anyone think this situation will improve after the government cuts reimbursement rates even further?

I am in favor of reform, but only reform that makes sense. This does not make sense!

Health Care Reform

I have often posted about what I don't think we should do to reform health care in the U.S. I think I should post on what I thinnk we COULD do to reform health care.

First lets define the problem. Roughly 50 million people in the U.S. have no health insurance. But lets first put some context to that number. Lets subtract the following from it:
1. Illegal Aliens--15 million
2. People who could afford(make over $75,000) insurance but choose not to purchase it--10 million
3. People who are eligble for Medicare/Medicaid and do not sign up for it--10 million

That leaves about 10-15 million peopole who, through no fault of their own, cannot get or afford insurance. Some would claim it closer to 5 million.

Tort reform would be on the top of my list. It is easy to do. Estimates run from 3-10% of every dollar spent on health care goes to lawsuits. This does not even include the millions spent on defensive medicine. Remember though that tort reform is to limit puative damages, not compensatory damages. This means that a person injured by malpractice will still be able to sue for millioins of dollars, if that is what is needed to pay forthier medical care. They will only be limited in how much they can get in as punishment from the doctor.

Pre existing conditions are a tougher nut to crack. I know a person who bought a boat, but didn't buy insurance on that boat....until they day he crashed it. You can't wait until you get sick to buy health insurance. Unless of course you want the insurance companies to go out of business. The only way to get rid of pre existing conditions is to require everyone to have insurance. If we would go to this kind of model I think it should be based on people being required to have catastrophic insurance that pays after the first $5,000 or so of medical expenses. The government could subsidize people who could not afford this.
It goes without saying though, that insurance companies should NOT be able to rescind your insurnace when you get seriously ill becuase you forgot to mention on your application that you had acne when you were 20.

Insurance is part of the problem
If you have insurance, you are not the actual customer in the economic sense. You don't care what it costs. If your doctor wants a test every hour on the hour, you have no incentive to even question it. Think if car insurance covered oil changes, and regular maintenance.....how much more would insurance cost?

This is what I like about HSAs and other types of catastrophic insurance.
With High Deductable Health Plans(HDHP) you are put back in the economic equation, yet if you get seriously ill or injured, you are still covered.

Real insurance competition.
In the U.S. there are about 6,000 health insurance companies, yet Americans are severly restricted as to which ones they can choose by the state they live in. Open up the whole country to all of the insurance companies.

Allow insurance tax deduction
Allow insurance to be tax deductible. This will help to lower the costs of insurance.

Public Education, why not Public Health Care?

Lauren had asked me what I thought about the differences between free public education(k-12) and free public health care. She writes....

“I've been trying recently to figure out the difference between public taxpayer-bought education (k-12) and public, taxpayer-bought health care. Both have (or will/may have) flaws both in spending and results, and both are a public service that a libertarian could argue are unnecessary excesses of large government. However..."

It is an interesting comparison to be sure. Education, she pointed out, is something you can pay for your self. In fact many people already do so. She pointed out that public education is not perfect and it is likely that the health care reform will not be perfect either. The perfect should not be the enemy of the good. So why one but not the other?

Lauren further states.....

"Through government, the taxpayers now give all children a free education UP TO 12th grade, and though admittedly flawed in many ways, I doubt you'll find a whole lot of people who think the US should be without public education. If you want more than that (ie college) then you get to pay for it with money - which not all people have."

As I stated in my quick reply to her comment, I don't think you can lump all "government" together. One of the characteristics of our government is that is a federal style of government. Think of a cake with three layers. One the top is the U.S. Federal government. Below that is the State governments. And on the bottom are the local governments. Now you still don't really know what kind of cake you have....it could be a marble cake where the federal layer reaches down into the state level and the state level mixes into the local level.

When you think about how our government was formed, it was from the states agreeing to give the federal government certain duties, and those only. The state itself was formed from local governments who relinquished certain rights to the state and in turn local governments were formed by the people giving certain powers to the local government. This way the most power was retained by the people, not the governments.

Personally I think we have a marble cake. I can only hope all three layers are chocolate!

Regardless of which view you take, each layer of government has specific areas of responsibility. The Federal government is limited in its powers by the U.S. Constitution. The U.S. Constitution specifically reserves all powers not enumerated to the federal government to the states and or the people.

This is part of the reason why the Federal government does not run education. Education is run primarily by local school boards that are elected by the people they serve. Yes, the Federal government does play a part in education, but it is a very limited one, but like all things that government does its role is increasing. Over the last decade, federal spending on education is up more than 50% from roughly 5% to over 8%. I'll just add that the quality of our education system has not gone up 50%. In fact most people might agree that our education system is in big trouble despite the near doubling of federal money. Hint, hint.

Lauren goes on to say:

"Right now, when I try to translate the US's health care system into public
education, it seems like NOBODY has a "right" to be given the opportunity to
learn to read or do basic math. If there's someone in your life to teach it to
you or your family has enough money to pay for a private school, good. If not, looks like you're going to be illiterate and unable to do basic math like balancing a checkbook, and you'll probably be broke and undereducated for your entire life. Which is something that I know some people would argue in favor of. I wouldn't be one of those people."

Most states require, by state law, attendance to some type of school. Children and parents alike can be issued citations for not attending school. In fact the Nevada State Constitution directly addresses education in its "Bill of Rights". Here is a relevant section:

"Sec: 5. Establishment of normal schools and grades of schools; oath of teachers and professors. The Legislature shall have power to establis [establish] Normal schools, and such different grades of schools, from the primary department to the University, as in their discretion they may deem necessary........"

In my old state Michigan, the Michigan State Constitution also mandates "free public education" as shown here:

2 Free public elementary and secondary schools; discrimination. Sec. 2. The
legislature shall maintain and support a system of free public elementary and
secondary
schools as defined by law. Every school district shall provide for
the education of its pupils without
discrimination as to religion, creed,
race, color or national origin.

I doubt there is a state that does not address education.

I think that translation fails because of different powers granted to the federal government and the state government. It would be more appropriate for a State government to require health insurance and several already have. All states already mandate insurance for cars.

That is the best reason as to why a national "universal public health care" plan has never evolved in this country.

That leaves the issue of Medicare, Medicaid and Social Security. These are three programs that are federal and universal.

Lets begin with Social Security. In a nut shell Social Security was originally designed to keep older poor or disabled people from starving. Although many people consider it a retirement plan, they will find it very lacking in that regards. You get enough to survive.

Where I used to work we had people that pulled in over $100,000 of earned income a year, collecting Social Security!!! That is just not right. It should be for people who cannot take care of themselves. I think that would fall in line with the U.S. Constitution.
Personally, I would like to see Social Security severely restricted though. Financially, it is a disaster. By the time I will be able to retire, you will need to be 90 years old to collect it and will be lucky to get $.50 for your trouble. The eligibility age keeps going up. That's how they try to solve the financial mess that is Social Security. They also lower benefits and raise the FICA tax.

With respect to Medicaid/Medicare they also increase premiums, raise the cap on earnings subject to Medicare withholding. And lets not forget that they also plan to cut reimbursements to doctors, hospitals and such. That's where the $500 billion in savings to pay for "health insurance reform" comes from. Medicaid is in way worse financial condition than Social Security. Medicare and Medicaid, unlike Social Security, target specific groups like the disable, poor, and elderly. That makes it easier to see them as part of a federal plan.

Anyways, I hope some of this made some kind of sense.

Twice the price

Today I was listening to a town hall meeting with a Democratic Rep and Howard Dean today.
The crowd seemed more or less a mixture of views.

They originally booked it for a place that held 500 people. They switched to a place that held 3,000 people, and still, not everyone got in. Anyone remember when you couldn't get 20 people to a town hall meeting???

A couple of points I'd like to bring out that they discussed.

1. Out of pocket expenses, under the House Bill 3200, will be limited to $5,000 per person or $10,000 for a family. So not only will I NOT be able to keep my insurance plan that I am VERY happy with, I will have the pleasure of paying TWICE the amount I currently pay. Thats a SWEET deal if you ask me!

2. President Obama has made insurance companies the "enemy" in this debate after realizing that "health care reform" didn't poll well because most people are happy with their health care. Yet, the insurance industry SUPPORTS the reform! Thinking people will ask WHY? It is because the insurance industry is looking at additional premiums from the government to insure 47 million more people.

3. Again today they tried to tell the people that this plan is just like Medicaid/Medicare or the Federal Health Care Plans for Federal employees. If thats so true, why not put everyone in it? Or why not just sign everyone up for the Federal Employee plan. Think of all of the savings to be made from not having 3 or 4 separate bureaucracies to administer health care! If its good enough for the American People, why is it not good enough for Federal Employees and the rest of the government? Because they wouldn't stand for it.

It was nice to see how popular Howard Dean is these days......

Some other broader points to consider:

1. We do have a shortage of doctors, esp primary care, in this country. Who, exactly, is going to care for these other 47 million people?

2. The claim is made that illegals will not be covered. But does the bill say that anywhere? Does it even address the issue at all? NOPE. This bill is, even at 1,100 pages, written very broad, and vague. No doubt, somewhere down the road, an un elected government bureaucracy somewhere, will determine that illegals should be covered. Then it will be too late.

3. Nowhere does this bill address TORT REFORM! Not in the least. Not even mentioned.
Just because we have Doctors, who we are short on, closing their doors because they can't afford malpractice premiums, doesn't mean we need tort reform! Nope, not even a little bit of it!

Now for an analogy...of sorts. Your mileage may vary.

I bought a bird feeder the other day. This bird feeder represents the "health care system". The birds, of course, are "health care consumers". The bird seed is "health care".

Now this is a pretty big bird feeder. It holds a lot of seeds. There are also many, many birds around here.

so I go and fill up my bird feeder with seed and hang it in a place to give birds easy access to the feeder. Then I sit in my chair and watch the birds eating the seeds and think to myself, "this is great".

So I come back the next day and my feeder is "EMPTY". I think back, yes I did just fill it up yesterday. So I fill it up again. The next day, again its empty.

So I try to figure out how to fix this problem. What to do?I go out and buy another bird feeder! I fill both of them to the very top. I think to myself, problem solved.
Since it is now beer:30 I dutifully crack one open and watch the birds eating away, thinking to myself that I should be good for a few days now!

In the morning, BOTH feeders are EMPTY!

After purchasing another feeder, plus one of those peanut butter type feeder, I think to myself, "This must fix the problem!"

I get up the next day to find ALL of the feeders EMPTY!

I have concluded that one of two things will happen:
1. I will go broke buying birds seed
or
2. I will have to start rationing the bird seed.

Which do you think I chose? More importantly, when faced with this decision, which do you think the government will choose? I guessing that, like me, they will choose the latter over the former.

While its true that everything in our economic system is rationed in some form or another, usually by price, very little is rationed by the government.
That is as it should be.

People who want to believe that we can have unlimited health care for everyone, for everyone, need to rethink that. It is not possible.

Mis information from President Obama:
1. You can keep your current insurance. NOT true. I won't be able to and I'm VERY happy with my insurance.

2. No health care rationing. Not true. Economics 101 should be enough to convince anyone that this is just not possible. Even today in this country, health care is rationed. But it NOT rationed in the way that other countries with "universal health care" ration it.

Dr Rawlins, who head the NICE in England said:

“be fair to all patients in the National Health Service (NHS), not just patients with macular degeneration or breast cancer or renal cancer. If we spend a lot of money on a few patients, we have less money to spend on everyone else. We are not trying to be unkind or cruel. We are trying to look after everybody.”

That is the truth of rationing in England. The problem is that there never has been, nor will there ever be enough money to provide unlimited health care to all people.
The only conclusion is that it will, in some form or another be limited.

England budgeted 6 billion dollars to build IT infrastructure to run their health system. It costs are now estimated at 30 billion and rising.
This goes to show how the government, theirs and ours, are often way off on the costs associated with its actions.

Another correction

After much protest, Britain will now treat Macular Degeneration before you go blind in one eye.



This is a pretty interesting video. At the end it describes how in Canada it can take a month or more to get an MRI.....unless your a cat or a dog. Pets can usually get them same day or next day!

I'd also like to point out again that the Democrats plan on cutting 400-500 billion from Medicare/Medicaid to come up with some of the savings to pay for this reform.
Also when the Democrats say that you can keep your insurance and your doctor they are not telling the truth. I have an Health Saving Account with Catastrophic Insurance Coverage. This type of plan will no longer be available under the reform plan!!! People with Flexible Savings Accounts(FSA) or Health Reimbursement Arrangement(HRA) will no longer be able to participate in those plans.

Also if you currently have employer provided insurance and lose it, you will be FORCED into the public plan or the public exchange by this new reform.

Health Care Blues

Because I think "health care refom" is so important I want to blog about it again.
I DO realize that health care is an issue in this country.

One often touted fact is that roughly 47 million people in this country lack health insurance. This fact is true. But lets add some context to this. This does NOT mean there are 47 million people in this country who are denied health care. They DO get health care typically provided at emergency rooms and free health clinics and the such. We , as taxpayers, already pay for this in the form of higher costs for proceedures and higher taxes in the form of government payments to hospitals for the treatments of indigents.

So really, we could solve this problem by insuring the 47 million. I'd say insure the 47 million, minus the 10-20 million illegals in this country.

Those of you that support this plan realize it includes illegals! Every dollar spent treating them is a dollar that will not be spent treating you and your family!

The bill also includes reductions in payments to medicare providers and a "government board" to determine what will and will not be paid for!

Britan has N.I.C.E.which is often described as not being very nice! It is the government agency that decides what treatments are available to whom based on things such as sex and age. A board simmilar to NICE will be comming to the U.S.

For example, if you have advanced breast cancer, you get no treatment. Macular Degeneration? No treatment until you go blind in one eye. Then they will treat your remaining eye.

Recently Paul Krugmen was at a "health care" conference. He asked if there were any Canadians in the audiance. 7 people raised thier hands. He asked if any were "un happy with thier health care?" All 7 raised their hands!!!!