Friday, February 4, 2011

So what's really the problem with Obamacare?

In light of recent news, (see Feb. 1, 2011 post), some of you may undoubtedly be asking, "So what's the big deal with the 2008 'Patient Protection and Affordable Health Care for America Act?' " (i.e. "Obamacare").  After all, isn't it going to improve primary access to our health care system, cover 30 million more people, and reduce health care costs?"  Well I'm sure you haven't heard this before, but if you believe that I've got a bridge in Brooklyn to sell you! (Cheap!).  lol.  But seriously, for those who honestly seek to follow wherever the facts lead regardless of their own biases and ideology, (a rare thing nowdays), for all those who wish to engage in actual discourse and honest debate, I offer the following:

Sausage and law: Examining the corrupt processes behind the making of Obamacare

 We wish to stress at the outset that the problem we have is not with the well-intentioned "goals" of this behemoth 2800+ page legislation, (which Democrats in the U.S. Congress passed without any bi-partisan support), but the fact that there is not one shred of evidence that the means utilized will achieve the ends proffered(while the potential negative repercussions to our health system and indeed, our very form of government, are truly endless, see below).

 More to the point, besides denying the common sense truth that the government can't simply sprinkle magical fairy dust and provide coverage to more people for less money, the historical facts bely the slick national sales pitch and political arm twisting we all were subjected to in order to pass "Obamacare" into law.   Indeed, from promises that this "health reform" law would do everything from cure infant mortality to, incredibly, "reduce the national deficit," many have begun to question why, if this bill was "so good" as the Adminstration kept repeating, sleazy political tactics were needed to twist the arms of Democratic members of Congress in order to secure its passage, see here and here.  Indeed, such dead-of-night tactics as the infamous "Cornhusker Kickback" and the "Louisiana Purchase", (see also here) disgusted not only Republicans and Independents but even some Democrats as well, (some of whom, like Senator Ben Nelson of Nebraska, facing the wrath of even home-state voters upset by the image of their senior senator's "back room" dealings plastered repeatedly on their evening news, subsequently "gave back" the preferential treatment he received for Nebraska in exchange for his vote, see here.                                            

 Nevertheless, as interesting as these political sausage-making observations are, of more concern to us are the resulting financial consequences to our country (and the effects of our out-of-control spending and subsequent massive national debt, 14 trillion dollars strong and growing!)  So in order to aid those among us with short-term political memory, (a sad byproduct of our "soundbite" society), it may prove beneficial to review the economic track record of other "landmark" legislation passed over the last 100 or so years of our nation's history and their effect on our country's finances and national debt.  Before we do so however, and to put things in context, that requires a brief primer in economics and a frank assessment of the stark economic realities we currently find ourselves in that, if left uncorrected, will saddle us and untold generations to come with crushing taxes and economic depression that will make the current state of affairs look like a walk in the park.

National threat of insolvency: The staggering costs of Obamacare and the unsustainable national debt required to pay for it

At the outset, the "national debt" is not to be confused with the nation's annual "budget deficit" by which we spend more than we can afford to, (in similar fashion to the way someone maxed out on their credit cards might open another credit card account so they can keep on charging).

The latter, while a serious problem, is actually a separate problem defined by what we spend in a given year versus what the federal treasury takes in, (although the two are related in that by living year after fiscal year beyond our means such that we are forced to borrow from foreign powers certainly and inevitably increases our long term national debt).  In short, they are two sides of the same coin sapping and saddling our economic vitality more and more each year we refuse to confront our spending and fiscal problems.
The national debt however is the amount we already owe from years of accumulated borrowing (as opposed to just the annual budget deficits which contribute to it), and is agreed by most economists to pose an especially critical and distinct threat to our very way of life. 

Our nation's U.S. debt clock,, by its keeping up-to-the second track of our growing national debt broken down by categories of federal spending, (such as defense, social programs, medicare and medicaid, etc.), is a stunning illustration of the scope of the problem which concerned citizens can see with their own eyes.  In shockingly graphic form, the constantly flipping numbers show our national debt is growing at a rate of more than 3 million dollars a minute, documentation and currently exceeds over 14 trillion dollars, (which represents approximately $45,544 dollars for every man, woman and child in America! See here).

The effect of this staggering national debt caused by the years of out of control and now accelerated spending policies of Washington acts, like a millstone around the neck of a long distance swimmer, as a perpetual drag on all economic growth and activity in our nation for several reasons.

 First, it decreases the value of our national currency.  This is the natural outcome of domestic and foreign investors' lack of confidence in our national ability to "make good" on our economic promises and obligations, (which of course becomes more and more in doubt as our national debt continues to increase beyond sustainable levels).  This not only reduces confidence of investors, it cuts down on the willingness and ability of businesses to expand by opening new factories, investing in capital, upgrading equipment and, yes, hiring U.S. workers.  (For a chart showing the accelerated increase in the level of federal spending under the Obama Administration click the following underlined link, here.)

Secondly, it increases inflation in the national economy, (i.e. the paying of higher costs over time for the same goods and services).  This is so because as the government borrows and/or prints money to finance spending it cannot afford it "competes" with private business for the money available in circulation and thus increases demand for capital, (which increases monetary scarcity).  In turn the rising "price" of increasingly scarce money which businesses and individuals themselves could invest in economic activity of their own choosing results in rising interest rates, (that is, the interest rates in our open market for everything from your checking and savings account rates of return at your local bank to the cost of home mortgages goes up).  This rise in interest rates in turn makes it more expensive to do business for everyone and results in further retarding of economic growth and a downward economic spiral leading to recession and potential "stagflation," (combined job losses with high inflation and a prolonged period of lessened economic activity).

"Ok, all this is well and good," you may say, "but we run the banking system, why can't the federal government just print the money it wants to spend?" Well, I'm glad you asked!

The Gross Domestic Product vs. the value of money (i.e., "inflation")

As alluded to above, since the supply of money in a nation is tied to that nation's total value of all goods and services it produces, (i.e., its gross national product, or GNP), if more money is printed to represent what in most times is, all things considered, a relatively stable GNP, (or, in good times, a slowly but steadily rising one), the "value" of the money in circulation which represents the gross national product is necessarily reduced to offset this reduction in value.  Moreover, since the value of our total GNP as represented by our currency trading on the open market (with the exception of China) against other industrial nations' currency and the value of their goods and services, there is really no way of escaping such effects, (we are, like it or not, in a "global" economy).

The effect of the subsequent inflation makes everyone, workers, businesses and consumers alike feel the pain and think twice before entering into any economic activity, (whether it be building a home or buying a latte at Starbucks).  Indeed, everyone who spends, invests or consumes anything in our economy must ask themselves before doing so if inflation will so sap their remaining cash that they will not be able to afford other necessities later in the month, (or week, or, in really bad cases like the Weimer Republic in Pre-world war two Germany, the day, google 'Germany Weimer Republic inflation').  This ensuing hesitance to take otherwise normal economic activity in turn saps the health of our economy even more.  (In today's economy it also can mean foreign carmakers and others who we depend on for thousands of manufacturing and other jobs established here on American soil in order to save shipping and transportation costs may cut back on hiring and expansion, thus reducing income tax receipts and further exasperating economic problems).

The long and short of all this is often high levels of joblessness and crippling double-digit inflation such as we saw develop in the late '70's under the Carter Administration, (dire economic consequences indeed! For more info on this era of American political history and just how bad it was click herehere or here).

 Now that we have a general understanding of inflation and the dire economic peril that the national debt and current spending practices of Washington D.C. could be placing us and our posterity, let us proceed to look at some examples of actual effects of other "landmark" legislation from recent political history to see if our concerns are all "hype" or actually grounded in historic fact.

The historical growth and economic record of 80 years of government "entitlement" programs

 In 1965 the much touted "Social Security" program cost 3 billion dollars annually and was estimated by the House Ways and Means Committee leading up to passage of this new government "program" to cost less than 12 billion a year by 1990, (including allowances for inflation).  The actual cost of social security in 1990?  67 billion for "Part A" coverage, (proof here) and a whopping 107 billion for the social security program overall!  (See here.)

 By any measure such "actual expenditures" represent an extraordinary cost "overrun" that, according to a joint Senate Economic Committee report citing the original actuary who estimated the future costs in 1965 was "even after conservatively discounting for the unexpectedly high inflation rates of the early ‘70s and other factors, ... '165% higher than the estimate.' ” (see here for full quote.)    
But "Surely," you say, "this is too ancient of an example to provide us any guidance today," or, perhaps for those tempted to think such examples may be perhaps limited to periods of time in which just one party, (say the Democratic party), has controlled our government. Overlooking the fact that most "landmark" entitlement legislation (such as social security cited above) was passed with "bi-partisan" support, the facts quite plainly show that government waste and out-of-control spending is an Equal Opportunity Employer.  But again, to help those among us with short term memory issues, let's "fast forward" to the 2000's.
The modern example of Medicare 'Part D' prescription drug coverage

In 2003 The Medicare "modernization" act providing "Part D" prescription drug coverage to seniors that was promoted (and signed into law) by Republican President George W. Bush was estimated to cost 534 billion dollars by the Administration for the first ten years.  The actual cost for the ten year period beginning with full implementation in 2006 through 2015?  1.2 trillion dollars, see here, (and yes, that's trillion with a 'T,' or in more manageable terms, one thousand two hundred billions! Not sure "manageable" is the right term to describe this sum but used it nonetheless for lack of a better word.  NOTE: This is the same and oft used "ten year" period used to estimate the cost of "Obamacare" beginning in 2014, surely this is starting to sound familiar?).
Finally, lest some say this is due to the "unusual" cost pressures inherent in "health care" and that such increases would have been reflected in private health care spending anyway due to an aging "baby boomer" generation's increasing need for drugs and health care generally, (a plausible argument), a look at the increase in government spending on other government programs, say, welfare benefits generally, might be instructive.
The road to surfdom: The history and unmitigated growth of government "welfare" programs

 At the time of passage of President Lyndon Johnson's "great society reforms" at the center of his "war on poverty" and the more than 70 government programs it spawned that were designed to provide a "floor" for the basic needs of society's poorest through government programs, the total annual outlay of such "welfare" benefits was about 9 billion dollars, (adjusted for inflation that equals about 42 billion in "todays dollars").  The total annual cost now?  436 billion dollars! see here.  (To put a more "human" face on this we are talking about aid like TANF grants, i.e.,Temporary Aid to Needy Families, and programs providing such things as "cash" assistance, food stamps, government housing and the much ballyhooed and popular Women, Infants and Children program currently in the crosshairs of Republican cost cutters in their haste to enact necessary budget cuts during this time of unprecedented economic downturn (see here).

 Though we leave for another day the efficacy of such programs, (and, in the current economic environment, the pros and cons of cutting them), such a staggering level of expenditure growth represents no less than a ten-fold increase from the amount spent by President Johnson at the beginning of his efforts to "eradicate poverty" and create his so-called "great society."

In any event, and more to the point for our purposes here, there can accordingly be no doubt that once implemented, landmark government "programs" like these don't simply stay within initially projected costs but always end up costing much, much more.

I don't like being a "party pooper" any more than the next guy, but at a time when we as a nation are looking at projected budget deficits as high as 14 trillion dollars and are already burdened with the cost of ongoing entitlement programs that in just a few years will overwhelm and exceed the entire federal budget with red ink we couldn't pay for before passage of this legislation, to saddle our children and grandchildren with yet another program we have no way to pay for is not only unwise but reckless.  Indeed, passage of further such "entitlements" can only lead to national insolvency and a defaulting on America's general obligations to both our citizens and foreign creditors alike which would trigger an unprecendented panic and financial crisis of such epic proportions that it would make the 2008 economic "crisis" and Modern Europe's recent problems pale in comparison!

 And while we could certainly debate WHY government can never seem to limit the growth of such programs once implemented, (see below), it is abundantly clear the plain fact is, leaving aside the motives of those who push the idea of expansion of government as a method of cost savings in the health care arena, no government entitlement "program" has ever failed to cost much more than originally envisioned.  We believe this is so for several reasons.  

Why government programs can never be more efficient than free-market solutions

 First of all, government, by it's very nature, is not prone to efficiency.  Contrary to a true free-enterprise system which ordinarily pits independent company against independent company in a fight for efficiency that results in benefits to the consumer-- a good example is how competition among cell phone providers has resulted in better rates and even now the unlimited talk and data "prepaid" cell providers that have become so popular-- the government has no incentive to "raise its profits" by competing efficiently in order to please its "stockholders" (thus "driving up its stock"), as the government, by its very nature and tendency to monopolize, has no competitors.  I mean, who can compete with any heavily subsidized alternative?  (Especially when you set the game rules!)  The "smart money" will always flow downhill, thus consumers (and companies) would naturally choose "lower cost" (at least to them) government options that are subsidized thus driving from the marketplace more expensive alternatives.   (From a perspective of health insurance, that would be every other company which was not subsidized, i.e, private insurance carriers).  Which brings us to a very important point.

 We often hear President Obama and other "health reform" supporters rail against the "evil" insurance and health care companies, (usually with sad and emotionally-manipulative stories of someone's grandmother or kid sister dying prematurely when the mean, nasty insurance company denied treatment for some lifesaving and necessary medical procedure).  Essentially a variation on the "class warfare" we have become accustomed to hearing in economic debates on tax policy out of Washington, this method of argument is at core a "fairness" argument that seeks to obscure rational thought and actual problem solving with tear-jerker stories that, in the context of Obamacare, make you sound "heartless" if you support its repeal and replacement with other more limited and market based alternatives.  To this, I have only one question. 

Who will regulate the regulators?- The faulty premises behind government health care

  If we make government, the current regulator over fair health practices into a health insurance provider or player itself, (as Obamacare ultimately does), who will regulate the regulators?  Right now there are already laws against health insurers denying care wrongly, and if necessary, the people's representatives can pass new ones, as the Democratic process allows...

 Accordingly, if you feel you have been wrongly denied care, that is what government regulation is for, and you can (and should!) appeal denials of care to the government through procedures already in place and required by law.

 However, if the government itself is the provider of your health care, if they have the first and final say establishing what care you should receive and the government itself denies your claim, who are you going to turn to then?  Indeed, by making government itself a stakeholder in the outcome, rather than the government merely being an impartial referee which applies the same rules to all, the entire system is rigged from the getgo against you and turned on its head.

"I'm from the government and I'm here to help."

 Go ahead, dig deep down to that place inside that values truth and common sense and ask yourself why Obamacare will be any different than other areas where government has gotten involved.  Indeed, it doesn't take an "expert" from a government agency to tell you what you already know instinctively, namely, that involvment by the federal government in almost anything invariably mucks it up and results in it being a lot more expensive and complicated than it otherwise would be, (indeed, simply recall the revelations in the 80's of the federal government wasting taxpayer dollars on five hundred dollar toilet seats and fifty dollar screws that one could get for a dime at the local hardward store, and if you're not old enough to remember this just google it).

Simply put, there is a reason the famous (or infamous) line that "I'm from the government and I'm here to help" and the old joke that "a stamp costs 44 cents, a nickel for postage and 39 cents for 'storage' " remains so funny, (modified to reflect modern postage prices).  It's precisely because, we just know instinctively, (or perhaps, sadly, from personal experience), that anything the government does it invariably screws up.  For those of you who disagree I welcome you to name one example otherwise, (just post it in comments below succinctly and, yes, politely please). 

From education to taxation to road repair, the government proves again and again that almost anything it can do private interests can do better, (which is probably one reason our Founders so carefully enumerated and limited those tasks that the Federal government is to be responsible for).

But for those still unconvinced I offer one final example, and that is the U.S. mail.  Indeed, in a year in which the U.S. postal service alone is projected to lose over 10 billion dollars, the proposition that government is the least efficient method of delivering services hardly seems controversial; indeed, at least to our way of thinking, such is elementary and should be beyond question by any fair minded person.  (If you have ever had to deal with any ridiculously non-nonsensical governmental zoning (or other) rule or even something so "simple" as having your vehicle registration returned from your State Department of Motor Vehicles for some picayune paperwork snafu or tiny ommission I am sure I don't have to convince you of the merits of this fact). 

 Ok now that we've established beyond reasonable doubt the inefficiency of government, perhaps it's just me, but I would much rather deal with an insurance company which at least has a profit incentive than a government bureaucrat for whom I am just one more "number" in the system and who can't lose his job no matter how bad he might, as a bureaucrat, screw up my request or claim (no matter how simple). 

 At least with the insurance company the rules are clear and they know if they violate the law and/or unfairly deny me treatment they risk 1) A potential lawsuit,  2) Losing me as a customer, and/or  3) The blackening of their reputation and the time-consuming and labor-intensive process that an appeal to the government may entail, (which can and likely will further cost them money in penalties and loss of other customers who learn of their way of "doing business" and then seek another insurer, hospital, etc. to meet their health needs in an open and free enterprise system).   What's that you say, there are no other competing insurers in your area?  Exactly my point.

Obamacare: Throwing out the baby with the bathwater?

 Instead of keeping an inefficient system of health delivery (i.e. Obamacare), a boondoggle which actually does nothing to increase competition and quality of care at the cost of turning over complete control of our health system to the federal government from whom no appeal is likely to succeed in a reasonable time frame, (if at all, remember, they will have no incentive if they are actually your health provider), this rather underscores the merits of the common sense and market-based ideas of allowing people to buy health insurance across state lines, (an idea which the Democrats would not allow Republicans to introduce when "Obamacare" was being debated).  Indeed, such relatively minor modifications to our health system, along with giving people true "ownership" of their health care and therefore a stake in reducing costs, frivolous law suit (i.e. "tort") reform and the companion idea of full disclosure of health insurers and providers' denial rates and medical liability errors would in all practicality go much further in actually reducing costs of health services to the consumer, (i.e. the taxpayers), both in reduced cost inflation and lower operating costs, (i.e. taxes).

Moreover, not only would such policies likely reduce costs, but it would have the added bonus of causing truly malevolent insurance companies and poor providers of health care alike to eventually go out of business and be replaced by better ones who would take more seriously their obligation to provide excellent health care to their clients at a reasonable cost, (by way of the above-alluded competition which would increase efficiency).  And why shouldn't people be allowed to "take their healthcare with them" like they do 401k accounts when they simply switch jobs? (Instead of having to "start all over" often with new exclusionary periods, annual deductibles, and the like).  In today's mobile world this, again, just seems like commons sense to us; in fact, we can think of no rational reason not to at least try such reforms for five years and see what happens.  Indeed, it's about time that "true reforms" like this were given a chance, (regarding which, contrary to the President's claims, Republicans have been trying to pass such reforms through Congress for years).  But before we can do any of this we must first do whatever it takes to repeal Obamacare. 

Why fix it if it aint broke?

 Recent surveys have shown that the vast majority of Americans are happy with the health insurance coverage they have, regardless of source, click herehere or here.  Moreover, the vast majority of Americans (approx. 85%), are currently covered by some sort of plan, (most provided through their work, see here).  Indeed, there is a reason that myriads of people from all over the world come to America for their health care when they need it the most, (from Canadian citizens to Mid-East Sultan's to illegal immigrants who steal across our borders to give birth in our emergency rooms).  It is because, while undoubtedly not the world's cheapest, the health care system that we have (and are now hastily dismantling under Obamacare) has produced the most cutting-edge medical treatments, the most effective life-saving medicines and the best quality of care of any country in the world, bar none!

 So the question arises, why not deal with the relatively minor problems of cost and need for wider availability instead of create another huge governmental bureaucracy that can only reduce our quality of care?  Just describing this or talking about it in philosophical terms can only partly explain just what we are talking about here.  To really get the full picture you have to see the following graphical flow charts showing the hoops every American Citizen will have to jump through if/ when Obamacare is fully implemented just to get care.  See chart here, or download a different and slightly more organized variation in pdf form here.  For examples of the Obamacracy's expected effects on your health decisions, covered medicines and your ability to access care unfettered by government regulators click here and here.

And one other thing that comes up in this whole "health care debate" confuses us that, while perhaps slightly off topic, we find apropos to the matter at hand.  

 Whenever the subject of reasonable limits on abortion come up in our national body politic or when some state legislature wants to enact reasonable laws to safeguard both mother and child in this incredibly momentous "decision" (such as laws requiring expectant mothers considering abortion to simply view an ultrasound of their developing babies in utero) or that require a teenager for whom it would be illegal to provide an aspirin in public school without requiring parental consent to notify at least one of their parents before having an abortion we are treated to Now and Planned Parenthood's usual hysteria of the dangers of government "interfering" in the abortionist, er, I mean "doctor"- patient relationship. Yet when we are talking about the wholesale imposition between a patient and their medical care and/or doctor of an entirely new bureaucracy of the federal government, that is somehow considered a reasonable imposition on their privacy and right to family and health care "access" (even as we cast aside heretofore settled prohibitions on forcing people who don't believe in abortion to pay for others' abortions, now there's some "tolerance" to freedom of conscience!)  Curious indeed!

The true cost of health care "reform" (a la Obamacare!)

 In a somehow perverse (and re-assuring?!) way however this is no more senseless than, with the exception of a few certainly needed reforms, (like allowing people to take their health insurance when switching jobs much like their 401k's, outlawing denying coverage for most pre-existing conditions, allowing competition across state lines and allowing full deductibility of health premiums on their personal or small business income taxes), taking an entirely good health care system that is the envy of the world and completely embarking on an "experiment" that might help an additional 30 million people, (out of 315 million) at the cost of ruining the whole system.   I mean, why not rather fix the problems that exist instead of create whole new ones?  Especially at an incredibly expensive cost that our government in times of huge deficits can ill afford!)

 Such targeted reforms that get at the root of the actual problems with our health system, at least to us, makes much more sense than the government stepping out of its usual role of oversight to actually mandating the exact health plans people should buy and ultimately, becoming a provider of health benefits itself, (because, as we have seen, this causes a loss of all incentive to provide services in an efficient way which will therefore result in increased, instead of decreased, heatlh care costs).  The reasons for this are manifold and fraught with philosophical difficulties which strike at the heart of our expensive but world-class health care system.  

The inescapable law of unintended consequences.

  Indeed, not only does such the prospect of the government establishing exactly what can or can't be offered in everyone's health insurance plan as Obamacare will when fully implemented make no sense and raise the incredibly the constitutionality of forcing private citizens to buy such a personal product as health insurance on penalty of law just because the government "thinks they should and its good for them," (basically the basis on which Obamacare has recently been struck down as unconstitutional, see Feb 1, 2011 post on this blog), but such a complete takeover of health insurance and/or care by the Federal government raises many pragmatic, logistical problems by "crowding out" the competition from private insurance companies and thereby raising the cost to all, (what we like to refer to as the immutable law of unintended consequences).  Moreover, the only way a government "program" can prosper is, like a cancerous tumor, continuing to grow and feed its own bureaucracy at the expense of those it purports to "help."

 Indeed, by creating a whole class of then "entitled" citizens and government workers with cushy benefits paid for by tax dollars who are enlisted to "administer" the new program "benefits"-- government workers who I may add are often unionized and then, naturally, agitate to solidify their "job security" by pushing for even further expansion of the government program for which the work, better salary, better benefits, etc., all mind you at taxpayer expense-- such "programs" provided by the government create a perverse and "built in" self-aggrandizing effect that our Founders warned would be undermining to our very Republic and result in its economic destruction, see Federalist number 51.  If ever there were a day when we were seeing this unfold before our very eyes in almost prophetic fashion, in our age of trillion dollar deficits as far as the eye can see this is surely it.  (It is also the reason our nation's 40th President, Ronald Reagan, whose 100th birthday we celebrate on Sunday, Feb 6, famously once said "Government cannot solve our problems, it is the problem.")

The fraud of government inefficiency and its inevitable impact on Obama care

As a result, and as one might imagine, because of its non-necessity to compete and its tendency to favor bureaucracy over efficiency, the government, were it to be ranked by the percentage of every dollar that actually reaches those who need it, (the gold standard of ratings which the vast majority of non-profits live by), would have to be considered an absolute fraud. 

 Indeed, after paying for all the "overhead" such as government salaries, benefits, etc., it has been estimated that only little more than half of every dollar even makes it to intended recipients in the form of "services" provided by government programs, (with untold billions being lost to fraud, waste, and abuse, see GAO audit report re: Medicare dated March 2, 2011 which showed this one program was estimated to have lost at least 48 billion dollars in 2010 alone by clicking here and downloading appropriate pdf).  This stands in stark contrast to, for example, the American Red Cross, a private and well-run non-profit organization, (which has a steady track record of delivering almost 92 cents of every dollar to its intended recipients, see here).  In light of such realities, why would we want to hand over an additional 17% of the American economy to be governed in the same inefficient way?

 The theory we have been told that implementation of a wider availability of basic health care will drive down costs by reducing trips to the emergency room for "simpler" and more "common" health matters that those of us who are covered under some form of insurance end up having to pay for in higher insurance premiums and costs has serious problems with it.

 For one, due to human nature being what it is, some people who will always try to get something for nothing and abuse the "system," (something those on the left always insist is the case when it comes to Wall Street or Corporate America but seem blind to when it comes to governmental programs).  Therefore, it is just as reasonable to assume that people who gain "access" to such health care will overuse the system by running to the doctor for every little sniffle, costing additional funds for such "care" and overloading the whole system to the point of collapse.  (Indeed, and in this regard, we see no reason to completely change and possibly destroy an entire health care system that works for 80% plus of the population simply to possible destroy it for everyone in the name of "fairness" or "equal access.")  And as a matter of law, under the old (and still largely current) system no one, (including even those in the country illegally), can legally be denied needed health care, and the community health clinic/ medicaid system established to aid the poor and those who truly have need is working reasonably well.   So why throw the baby out with the bath water simply for an experiment that could have such drastically negative consequences?

 Indeed, while we applaud Affordable Health promoters for trying to make an argument based on the seemingly rational "free enterprise" principle of "economies of scale," this argument denies the most settled fundamental economic principle of all, that of supply and demand.

 Regardless of the well meaning and somewhat utopian intentions of supplying everyone with "basic" access to health care, the supporters of Obamacare do nothing to explain how, in a time of declining medical school enrollment, our country will supply the additional tens of thousands of health care practioner's that would be required for such an expansion of the health care system, (especially at a time when our now-retiring "baby boom" generation will itself need increasing care in the ensuing years as well).  The end result will inevitably be rationing of health care and/or higher costs for all of us in the form of draconian taxes, a reshaping of the entire American economic/governmental system, or both.  As much as we would love to naively believe implementation of yet another government "solution" to our problems will result in a lowering of health expenditures without a corresponding reduction in care (to say nothing of the much promised "reduction of the deficit" Obamacare is supposed to accomplish), simple economic realities and the lessons of history force us to admit the opposite will in fact occur.   

  Even taking supporters' of the bill at face value in their earnest and stated intentions to "reduce the cost" of health care, it seems to us that this bill, with its coverage mandates and necessary increase in the number of health practioner's to provide everyone "basic" access to primary health care can only result in the exact opposite effect as it denies an unavoidable maxim, the law of unintended consequences. (This is so as the consequent shortage of doctors to implement Obamacare's lofty requirements will inevitably result in medical costs increasing, not decreasing, which will in turn, absent further governmental intervention in the form of wage and price controls in the health industry, further reduce the numbers of those with the brains and fortitude to make it through the taxing and arduous years of medical school and residency who are willing to enter the medical field for dubious financial return.  This is especially so as long as the cost of personal injury malpractice insurance remains prohibitively high, (in some locales over 150,000 dollars a year and likely to stay there as long as the trial lawyer lobby can continue to prevent medical tort reform from being passed.  And this doesn't even fully count the costs to the health system of doctors practicing "defensive medicine," see here). 

Indeed, we have already seen the rumblings of such "unintended consequences" in other ways even before full implementation of the Obama Administration's brand of "health reform."  Indeed, while the Administration is eager to talk about Obamacare's "benefits" such as elimination of pre-existing exclusions by health insurance companies and children being able to stay on their parents policies longer-- matters which just as easily and with much less risk to the entire system been effectively dealt with by the precision of a doctor's scalpel with carefully targeted legislation rather than the full autopsy-on-the-living approach that Obamacare clearly favors-- they are much less willing to discuss the complete dropping by health insurance companies of children-only policies they previously provided which gave care to many children living with their parents but which under Obamacare's regulations had just become too expensive for them to maintain.  (And this isn't even counting the hundreds of companies which, before the 730 or so "waivers" of compliance with the law that the Obama Administration has been forced to grant, were on the verge of cancelling tens of thousands of people's health care coverage due to Obamacare's regulations and resulting cost increases.  So much for the Adminstration's oft repeated pre-passage promise that people could "keep the coverage they have!")   

 Secondly, in the absence of other legislation allowing interstate competition between insurance companies and health providers and enacting law-suit reform health costs will continue to skyrocket, (indeed, some studies show that the high 2011 health care inflation costs of over 10% may be due by as much as 12.5% to frivolous law suits, see here.)  Needless to say, the trial lawyers lobby is one of the Democrat's most reliable political donors, see here, contributing a whopping 234 million to elections in 2008and-- no surprise with 76% going to Democrats, see here-- staunchly opposes all such "reforms" which could put some teeth in reducing frivolous law suits and likely serious crimp their contingency fees from the outrageously-high judgments in medical liability law suits, (2.86 million for lap burns for an alleged "too hot" cup of McDonald's coffee which a lady spilled in her lap comes to mind, see here).

  Thirdly, and contrary to the fact that in spite of those who insist upholding and fully implementing Obamacare will reduce costs there is in fact no evidence that this 2000+ page behemoth of a bill will do what such partisans claim; To the contrary, as above pointed out, there is significant reason, and now evidence, to fear the contrary.  

 Morever, and equally ominous, its effects on the overall health system that could result in a wholesale move away from the free-enterprise based system that has produced more beneficial drugs and health care innovation than any other country on the face of the earth to a socialist "one payer" model on the likes of Canada or Great Britain, (as many of its promoters publicly conceded in public debate on the floor of the U.S. House).  

  In this regard, there is a reason that leaders from all over the world come to America to receive health treatment and that, although expensive, our health care system is second to none.   (Of course, to partisans interested in promoting their political agenda the facts don't matter; rather, it is a matter of blind faith in their political ideology, the potentially devasating effects to the overall health system and the majority of their countrymen be damned).

The inevitable push for a 'single payer' European-style system

 However, the same cannot be said once Obama's Affordable Health Act is fully implemented. In fact, the basic premise of many who advocated for this expansion of government into the health arena, rather than being based on any desire to institute cost savings, has more to do with their desire to ultimately implement a "single payer" system that has less to do with the economic facts than with sheer political ideology.

In fact, the explicit goal of the most ardent supporters of Obamacare in the debates leading to its passage was and remains implementation of a "single payer" European-style health system, (and the reason passage was almost scuttled, as the progressive-left in the Democratic party did not want to pass the bill without a so-called "public option" see here).

 In coming days we will examine in more detail the negative effects of the huge bureaucracy that is Obamacare, (see chart here) as well as what those who live under completely governmentally-controlled systems such as Canada and Great Britain think about the quality of their health care.

 In the meantime, hopefully this post has given you some reasons and food for thought about what is wrong with the Obama Administration's top-down approach to "health care reform," (at least from our perspective here at the ACLP).

 As always however, unlike some sites and those with less open minds, we are open to hearing any well-thought-out and respectful opinions that may differ from ours if you can handle our response in return.

 To that end, by all means feel free, if you can, to controvert any of our reasoning and/or disagree with the above conclusions. After all, free and vigorous public discourse is the American way and one of the many things that makes our country great and exceptional among the nations.  Please however have the integrity if you comment to stick to specific policy arguments or positions in line with the blog's topic (whether pro or con) and refrain from abusive comments or insults that are inappropriate to proper decorum or that you wouldn't want posted publicly for any reason.  By sticking to the issues your contribution will hopefully make the debate productive and intellectually stimulating for all.  jp


  1. best you've posted so far

  2. Thanks for your comment. It means a lot to know that someone is actually reading these posts I work so hard on. :)