Here’s why healthcare (a.k.a. sick-care) costs cannot be reduced; the entire system is based on vast pools of “free money”: The corporate-America or union/government employee who goes to the doctor pays a few dollars for a visit and drugs; the “real cost” is of no concern. Ditto the “real costs” charged to Medicare and Medicaid.

The link between the “consumer” of healthcare and the provider has been broken for decades. There is no “free market” in healthcare–there isn’t any market at all. We live in a Kafka-esque nightmare system in which “some are more equal than others” and hundreds of thousands of dollars are lavished on worthless tests, procedures and medications for two reasons:

1. Because there’s “free money” to pay the bills

2. So-called “defensive medicine” in which worthless tests are administered to stave off random (sometimes valid, sometimes nuisance) malpractice lawsuits.

There is a solution so simple and so radical that it is “impossible” (and of course you’re reading it here): shut down insurance and all government entitlements, and return to the “golden era” of the 1950s when everyone paid cash for healthcare. Here are the costs of childbirth as of 1952 at one of the finest hospitals on the West Coast, The Santa Monica Hospital:

And here are the obstetrical rates:

Having a baby cost $30, which is today’s dollars is $244. A private deluxe room cost $23 or $187 in today’s dollars. According to the Bureau of Labor Statistic’s inflation calculator, $1 in 1952 is $8.14 in 2009 dollars.

What does it cost to have a baby now? $10,000? Or is it $25,000? Who even knows?

I know all the reasons why “costs had to skyrocket”: we’re getting so much better care now, right? Actually, as measured by death rates and any other metric you want to select, there is simply no way to justify a 40-fold increase (or is it 100-fold?) in medical care costs. The returns on all the “miracles of modern medicine” are in fact exceedingly marginal– but nobody wants to talk about that.

In 1952, if something awful happened and a patient died, here was the response: “We’re very sorry.” Families weren’t outraged; they expected people to die and interventions were not expected to be miraculous every single time. Doctor Kildaire and all his imitators on TV had not brainwashed the public into reckoning that if someone died, a mistake had been made. They also hadn’t been brainwashed by the mental disorder known as “the American Legal System” into thinking that in every possible circumstance in life, there is liability, and the only question is where to pin it for the big bucks jackpot.

Stories about people suing doctors and hospitals for 5 times the value of a house ($1 million in today’s money would have been $120,000 in 1952, when you could buy a nice house for $20,000) simply did not exist in the 1950s. The cultural mindset that someone somewhere must be at fault and it’s a “right” to go after them did not exist. Since insurance was limited, there was no “free money jackpot” to go after, either.

I know you’re probably outraged at the suggestion that “modern safety nets” of insurance and entitlements are the cause of our ills, but follow this idea through:

With no insurance or government program to bill vast sums, then every clinic, doctor and hospital in the U.S. would instantly go broke. Someone would pick up the pieces for $1 or whatever the auction price happened to be and start charging people $50 for a visit to the doctor–not a “co-pay” which was accompanied by a bill for $500 or $1,500 or $15,000 to an insurance company or the government, but $50 cash–that would be the total cost. People might decide they did not need to see the doctor every time they got the sniffles. They might ask the doctor if an MRI was really going to help diagnose their problem or if it was gilding the lily.

As for malpractice, maybe the clinics/hospitals would be non-profits. Go ahead and sue the bejabbers out of them–they have no insurance and no cash. Go ahead and win a huge settlement: you’ll never collect because there’s simply no money. The non-profit folds and another one buys the clinic for $1. With no giant pot of “free money” to pillage, the pillaging goes away. Hospitals which sought stupendous profits would presumably charge more, and hence would have fewer customers. It would be up to the consumer.

The solution to malpractice is information, not lawsuits. Based on my conversations with the M.D.’s who frequent this site, here are some simple policy/regulatory steps which would have very low end costs:

1. License all M.D.’s nationally so they don’t need to go through the absurd waste of time and money being licensed in multiple states.

2. Make all information on clinics, hospitals, surgeries, etc. public on the Web. Those doctors willing to take on the very ill will have more patients die than those who avoid the risky cases; it will be up to consumers to sort out the track record of the people who they choose to hire to attend to their health.

Something magical would happen to prices: they would drop to what people could afford to pay cash. Yes, those wonderful folks in the pharmaceutical industry could list their drugs for $10,000 a dose, but few would be buyers. Just as in other countries with no “free money” to tap, the price of that drug would quickly drop to $50. That, or the pharmaceutical companies can go bankrupt and let others fill the vacuum.

What would happen is simple: marginal care would vanish because few would be willing to pay for it. The cost of an MRI in China is a tiny percentage of the cost of an MRI in the U.S., and the machine and training of the technicians is the same; so why does it cost 25 times more for an MRI here? Because there’s a pot of “free money” available to tap.

If the entire system collapsed and everyone paid cash, the cost of an MRI would be $100 or so, regardless of any other conditions. Or, the owners of the MRI machines could declare bankruptcy, sell the machines at auction and let someone else provide the service to those who decided it was worth the expense.

But what about the “poor people” who can’t afford medical care now? Well right now they have to stand in line at emergency rooms–the most wasteful, inefficient system possible. Even “poor people” can afford a few dollars–there’s endless excuses provided yet how many “poor people” have cell phones, eat costly fast food, do costly illegal drugs, etc. etc. Everybody has choices; we’re not all deranged, and for those who are deranged, then clearly the government will have a role in their care when it exceeds the capacity of their family or if they have no family.

Everybody’s got an excuse in our current system, and perhaps that’s why it is morally and financially bankrupt. The U.S. (and certainly not Santa Monica) was not a Third World nation in 1952; people did not feel their healthcare was deficient or poor. There was simply no money to pursue marginal returns except perhaps for a few millionaires seeking exotic treatments. Fine, it’s their money; most died right along with the rest of us and at about the same lifespan.

As for “overall health” of the populace: what with the “diabesity” epidemic out of control due entirely to lifestyle changes, it’s hard to say we’ve gotten 50 times healthier as a result of our healthcare costs rising 50-fold.

When it comes right down to it, the current system is based on this premise: the average American is too dumb to figure out healthcare for themselves and so we need a gigantic structure of “experts” to figure out what should be done and what it should cost. It’s not even really “insurance” because everyone gets old, ill and then dies.

This has resulted in the most brutally inefficient and even cruel system possible, one in which the very elderly are milked for hundreds of thousands of dollars of “healthcare” in the last days or weeks of their lives while tens of millions get no care at all except at the emergency room. Since no one takes responsibility for their own health or healthcare costs, then people take poor care of themselves and thus many of our ills are self-inflicted. People save little to nothing for emergencies because they’ve learned to expect someone, somewhere, to pay for their healthcare. (It’s a “right.” Really? At whose expense? The Chinese who buy our debt?)

I know, I know–going to a market/cash system is “impossible.” But the irony is that’s where we’ll be in a few years, regardless of what anyone thinks or wants: “healthcare” in its present incarnation will bankrupt the nation just as surely as the sun rises.

Regards,

Charles Hugh Smith

Healthcare Solution: Go Back to Cash was originally featured on Whiskey and Gunpowder. Visit Laissez Faire Books for the best selection of libertarian book titles.

Market prices are described by Mises as reflecting an “equilibrium of demand and supply.” It is on this basis that Mises views any government interference with market prices as a disturbance to the equilibrium that will, in general, produce results that are worse than the conditions the government wished to improve. Government intervention in the provision of medical goods and services is a perfect example.

In a previous article, I suggested that government intervention, not market failure, is responsible for today’s out-of-control healthcare costs. There are a multitude of reasons why this is so, but the most important, in my opinion, is the loss of consumer sovereignty brought about by government intervention, which would not have occurred under market conditions.

Prior to the advent of Medicare and Medicaid, individuals paid for the majority of medical goods and services out of their own pocket (Figure 1) and utilized health insurance as a rational tool for mitigating financial risk posed by catastrophic events. During this time a real market existed for the vast majority of medical goods, and services and prices were reasonable. However, after the advent of these programs, third-party spending on routine medical services increased, and out-of-pocket spending fell dramatically.

Figure 1. Sources of personal health expenditures

To match the coverage of these government programs, especially Medicare, the private-insurance market took a reactionary turn for the worse, which was encouraged by earlier legislation that allowed health insurance to be purchased with pretax dollars from an employer. The move to third-party payment was further accelerated by passage of the HMO Act of 1973.

The act gave HMOs greater access to the employer-based market, providing for the rapid expansion of managed care. Finally, as Thomas DiLorenzo has pointed out,

Layers of regulation plague every aspect of medical care and health insurance in America… each state imposes dozens of regulatory mandates on health insurers, requiring them to include coverage of everything from massage therapy to hair implants.

A colleague of mine, who practiced before and after this dramatic shift occurred, and whom I will not name due to his academic affiliation, neatly summarized how third-party payment for routine medical services has led us to the current situation we are in with regard to healthcare costs. He wrote to me:

I have lived through those times when the patient and the doctor each had a sense of responsibility regarding the patient’s health. There was, in effect, a “contract” between the two that resided in the awareness that the doctor was the expert and would do the best he/she could for the patient and the patient, in return would pay for those services. There were no guarantees but an expectation of ethical behavior by both parties. Healthcare costs were reasonable and in those instances where payment was beyond the reach of a patient’s resources, arrangements could be, and were usually made.

The system worked and worked well. Enter third party pay and it all went to hell in a hand-basket because it now became possible to charge whatever the system would bear.

Because of this change, medications, tests, and procedures that in many cases provide only marginal benefits are now widely used despite the fact that they may cost much more than the procedures they were intended to replace.

In a real market, many of these “breakthroughs” would simply not be viable. But because the test of viability in America’s government-managed healthcare system is not consumer sovereignty, we have a situation where Medicare, Medicaid, and politicized private-insurance companies pay hundreds of dollars a month more for a drug that decreases total event rates by a few percentage points compared to whatever that drug replaced or was intended to augment.

The following is an example of a real and very popular drug that I use on a routine basis that I will call drug X. Drug X works by inhibiting blood clot formation (when a blood clot forms in a vessel in the heart, one can have a heart attack). Drug X and drug Y work together by acting on different substrates of the clot-formation process to ultimately effect the same outcome — stopping clots from forming. Drug X costs on average $141.82 per month. Drug Y costs a couple of dollars per month over the counter at your local drug store. What does the data tell us about the two?

Multiple studies have been performed to answer the question: Does drug X improve cardiovascular outcomes compared to drug Y alone after a patient has had a major cardiovascular event or a stroke? The answer, unequivocally, is yes. By how much? The answer is a few percentage points, give or take. Does it eliminate the risk all together? The answer, unequivocally, is no. It should also be noted that drug X in addition to drug Y confers a minor increase in the risk of having a major bleeding event.

So the question is: How many people, in the appropriate clinical setting, knowing this information, would buy drug X for $140 per month? Probably not nearly as many who take it now for nothing or for a small copay. Leaving aside the issue of brand names and patents, under conditions of market competition, do you think the company who makes drug X would lower the price to entice more buyers? If they did not lower the price, or simply could not lower the price due to production costs, I would venture to guess that drug X would not be marketable outside of a small niche of patients.

Now ask yourself, is the doctor who recommends drug X the bad guy? Of course not: drug X does provide a benefit beyond drug Y itself, and furthermore, if he didn’t offer it and the patient had a heart attack (which could happen despite being on drug X) the doctor could be at risk of losing his medical license. After all, drug X is part of the standard of care. Is the patient the bad guy? Of course not: if you were offered the chance to take a drug that had a defined benefit and wouldn’t cost you that much, you’d be silly to reject it. Is the pharmaceutical company the bad guy? No, they have a responsibility to their shareholders to make a profit, so they should sell their product at the highest price possible.

So who’s to blame? The answer: a system that has been developed by government intervention to interfere with consumer sovereignty and make every individual pay for every other individual’s medical expenses so that the individual consuming the care does not bear the full price at the point of utilization. We should not conclude from this example that the run-up in healthcare costs is solely due to increased spending on pharmaceuticals, for this situation applies to everything from doctor visits to laboratory tests to diagnostic studies to minimally invasive and full surgical procedures. Very simply stated, consumers now use many medical services that they would simply reject if they had to pay for them out of pocket — and truthfully, in most cases, they would be none the worse off for rejecting them.

The RAND Health Insurance Experiment was a prospective social experiment (and to this date, the only social experiment) in which health insurance with different levels of benefit coverage was randomly assigned to individuals, and subsequent health outcomes were compared across experimental groups. The results showed that while spending increased as benefit coverage increased, health status and health outcomes did not improve. There was very little evidence to demonstrate that having a high level of benefit coverage improved population health on average. The RAND Health Insurance Experiment debunks the idea that patients are not capable of being prudent consumers of medical goods and services.

So what does all this tell us about solving the current problem with healthcare costs? I think the answer is relatively straightforward: if we returned purchasing power to patients — in effect, restored consumer sovereignty — healthcare spending would decline dramatically and prices for medical goods and services would reflect the true value to consumers in a competitive market.

Under free-market conditions, would there be a role for health insurance? The answer is clearly yes, but health insurance would much more closely resemble the rational/catastrophic model that developed spontaneously before the onset of serious government intervention into the healthcare industry. Can we get back to that model? Yes, in theory, but it would require that we abolish all government insurance programs, deregulate the system at the federal, state, and local levels, and get rid of all the existing tax deductions, exemptions, and subsidies for the purchase of health insurance.

The main objection to restoring consumer sovereignty as I have described is the progressive appeal to social justice. Paul Krugman tried to make the case for this in a recent editorial entitled “Patients Are Not Consumers” in the New York Times. Krugman’s logically flawed and contradictory arguments can be boiled down as follows:

1. Healthcare is a right and the doctor-patient relationship is sacred; therefore, patients should not be viewed as consumers.
2. Doctors and patients cannot be trusted; therefore, a third party must intercede in the decisions made between the patient and his or her doctor, because somehow, without any personal knowledge or previous interaction whatsoever, the third party knows what the patient needs better than the other two connected parties (doctor and patient).

(If you think these two points are contradictory, you are not alone.) Krugman writes,

Here’s my question: How did it become normal, or for that matter even acceptable, to refer to medical patients as “consumers”? The relationship between patient and doctor used to be considered something special, almost sacred. Now politicians and supposed reformers talk about the act of receiving care as if it were no different from a commercial transaction, like buying a car — and their only complaint is that it isn’t commercial enough.

What has gone wrong with us?

I take this to be Krugman’s variant of the social-justice argument — because healthcare is a right and the doctor-patient relationship is sacred, patients have a right to whatever they and their doctor agree to; they should not be forced to pick and choose. Of course, healthcare is not a natural right, as natural rights define what somebody else, including the government, cannot do to you. They do not oblige anyone to act on your behalf, and they do not oblige you to act on the behalf of anyone else, except to respect the fact that others have the same rights as you. If a right to healthcare were recognized, it would necessarily enslave each of us to everybody else’s healthcare needs. But Krugman does not really believe healthcare is a right, as the next part of his argument reveals. He writes:

About that advisory board: We have to do something about healthcare costs, which means that we have to find a way to start saying no. In particular, given continuing medical innovation, we can’t maintain a system in which Medicare essentially pays for anything a doctor recommends. And that’s especially true when that blank-check approach is combined with a system that gives doctors and hospitals — who aren’t saints — a strong financial incentive to engage in excessive care. …

[T]he point is that choices must be made; one way or another, government spending on healthcare must be limited.

As the above passage makes clear, to Krugman and progressives like him, healthcare is not really a right, and the doctor-patient relationship is not really all that special. Instead, healthcare is a privilege to be granted at the prerogative of the ruling class. Progressives do not reject the idea of consumer sovereignty because it is economically or ethically flawed, but rather because the act of being a consumer requires that an individual’s natural rights be fully protected. The recognition of such rights represents a check on arbitrary power, and as such it is the enemy of the state and ruling elites like Krugman, who have an insatiable lust for power and control over the rest of us.

Regards,

Andrew Foy

Andrew Foy is a medical resident at Thomas Jefferson University Hospital in Philadelphia, PA. His writing was featured in Jonah Goldberg’s recently edited book Proud to be Right: Voices of the Next Conservative Generation.

The Medical Marketplace, Free and Unfree was originally featured on Whiskey and Gunpowder. Visit Laissez Faire Books for the best selection of libertarian book titles.

If you’re a supporter of the bill, you’d point to its benefits: Poor adults will get Medicaid. Low-income families will get federal subsidies to buy insurance. Small businesses may get tax credits. Kids will be able to stay on the parents’ policy until they turn 26. Seniors get additional prescription drug coverage. People with pre-existing medical conditions can’t be denied or dropped.

While no one is really against any of those things, the elephant in the room (or boa constrictor in the bed) is how those things are going to be paid for. Here’s how: the “wealthy” will pay higher taxes; businesses with 50 or more employees will have to insure them or pay a penalty; individuals will have to pay a fine if they don’t buy insurance; premiums will rise for many who already have insurance; and seniors with Medicare Advantage policies could lose those plans or pay more to keep them.

Regardless of how you feel about the bill, the fact is that taxes are going up, and not necessarily just on the “wealthy.” The healthcare plan will cost $940 billion over the next decade, almost $100 billion a year.

I haven’t read the 2,407-page bill (almost twice as long as the Gutenberg Bible), but there are plenty now who have. Here’s a summary I compiled, from various sources, that outlines the tax ramifications of what is now the law of the land.

Assuming the Senate passes the package of changes, the biggest tax increases will be in Medicare payroll taxes. Those take two forms, both starting in 2013:

• Singles earning more than $200,000 and couples earning $250,000 will pay 0.9% more on wages and self-employment income.

• All investment earnings will be taxed an additional 3.8%. This includes capital gains, dividends, and interest, the first time in history the Medicare tax is applied to them.

But keep in mind that the Bush tax cuts expire at the end of this year, which will push the Medicare tax on capital gains to 23.8% in 2013 on these earners. Dividends, currently taxed at the top rate of 15%, will be taxed as ordinary income, with the top rate scheduled to rise to 39.6% (from 35%).

This means that the tax on dividends could go as high as 43.4% when the new Medicare tax goes into effect in 2013. (Obama has proposed a top dividend tax rate of 20%, so if Congress enacts his proposal, the top tax rate for dividends would “only” rise to the 23.8% level in 2013.)

You may think you’ll escape this tax if you’re not “rich.” But it’s those darn Unintended Consequences politicians never seem to think about that could still sting you. For example, the 3.8% Medicare surtax could snag you if you happen to sell some real estate for a big gain.

The other major tax increase is the one imposed on health insurance plans that are more generous, the so-called “Cadillac” health plans. And this tax increase doesn’t just apply to high-income earners; those state and union workers that lobbied for better health coverage instead of big pay increases are going to find they’re included with the “rich” in a new excise tax. Starting in 2018, family insurance plans valued at more than $27,500 ($10,200 for individuals) would pay a 40% tax above that level.

Ouch.

And there’s other ways you’ll be taxed, particularly through the magic of “passing it on to the consumer.”

For example, pharmaceutical manufacturers will pay an annual fee based on their market share starting in 2011; same for health insurers, starting in 2014. A 2.3% excise tax on the sale of medical devices will start in 2013. A 10% excise tax on indoor tanning services goes into effect this July.

How will all these businesses afford the additional tax? They won’t. You’ll pay it, through higher prices.

Further, were you one of those who incurred medical expenses above 7.5% of your income, thus allowing you to deduct them? That ceiling will be 10% starting in 2013. (It remains 7.5% for those over 65.)

There’s more, most of it in the form of greater restrictions, increased penalties, and higher fines on various entities, businesses, health plans, or individuals. But what I especially cringed at was this: the bill vastly expands the responsibilities of, and gives greater strength to, the IRS. The agency will hire as many as 16,500 additional auditors, agents, and other employees just to enforce all the new taxes and penalties.

Specifically, the bill will empower the IRS to do the following: verify citizens have “acceptable” health care coverage; impose fines up to $2,085 or 2% of income (whichever is greater) for failure to purchase “minimum essential coverage”; confiscate tax refunds; and increase audits.

The upshot is that this will force many taxpayers to be more conscientious of monitoring their income and tax withholding.

Perhaps most damaging to the government’s plans is if the bill leads some to ask the Ayn Rand/Atlas Shrugged questions: What if I just stop being productive? What if I stop working once my income approaches the threshold? What if I invest less so that I stay under the limits? [Your editor has already started asking these very questions and wonders why anyone with the means doesn’t prepare a potentially permanent residence outside of the U.S.—ed.]

And last, here’s the time bomb that could trump the tax concerns: none of these taxes are indexed to inflation. Since the bill fails to index to inflation the exemption threshold for the Medicare taxes on both earned and unearned income, it’s almost certain many taxpayers will get to these tax levels a whole lot quicker than they think.

What this essentially means is there is now more incentive on the part of the government that we have inflation. If inflation reaches 10% at some point, which is below the 14%+ rate it hit in 1980 and far below any hyperinflationary level that’s possible, the $100,000 earner gets to the magical $200,000 level in seven-and-a-half years. From the government’s perspective, it makes the printing of money a lucrative affair.

Regards,
Jeff Clark, Casey’s Gold & Resource Report
for Whiskey & Gunpowder

March 25, 2010

Healthcare Is a Tax Plague was originally featured on Whiskey and Gunpowder. Visit Laissez Faire Books for the best selection of libertarian book titles.

— President James Madison

As the United States travels down the long road from the first limited government republic model of our Patriot Founding Fathers to a Washington style form of fascist national socialism, both health insurance and our private retirement system will eventually be nationalized and much of our retirement wealth confiscated all in the name of protecting us. But in a democracy, unlike total fascist and communist systems, great pillage and wealth attacks by government does not happen over night like Kristallnacht in Nazi Germany against Jewish wealth and property. The same can be said for Stalin’s starvation of the Ukraine and forced collectivization and confiscation of all private property and farms. By necessity in a democracy, it is a slow, incremental step-by-step process and this provides the means for American investors to protect and defend their retirement assets.

There is little chance to stop the coming health and retirement plan nationalization because both systems certainly don’t work for the benefit of most Americans. The needs of the American people have been circumvented by the politicians of both parties, the legal system and the greed of Wall Street and the American insurance industry due to their special interest control of Congress. Only a fool would say either the health or retirement system works well or that they represent the best of free-market capitalism. Both industries are simply regulated monopoly interests and the GOP propaganda to the contrary is self-serving rather than a real attempt to fix the problems.

Because of public opinion and the risk of voter outrage like we see today with the Tea Party movement and Ron Paul’s Campaign For Liberty, the ultimate wealth confiscation goal is the same in our special interest controlled debt democracy as in a totalitarian system but the confiscation time frame is far longer. The population must first be prepared and a number of real or contrived crises must follow to give the excuse for incremental government actions over a number of years.

But Will Americans Never Learn?

Fool me once, shame on you. Fool me twice, shame on you.

For example, the income tax began in 1913 with taxes starting at around 1% of income on an equivalent income of around $65,000 in today’s dollars. The graduated tax rate went up to 6% on annual incomes over $10 million.

Social Security started in 1935 with a 1% tax on the employee and employer and only half the workers were covered at inception. Roosevelt promised the funds would go into an independent trust fund rather than the General Operating Funds of the government. Oh and yes, your Social Security benefits were originally not considered taxable income to recipients.

The Federal Reserve was created in 1913 and promised to promote economic stability and stable prices. The Great Depression followed in 1929 as did Franklin Roosevelt’s confiscation of the entire private supply of gold in the United States. The stated goal was stable prices and low inflation. But check out the graph below and see the actual results of the Federal Reserve System and don’t forget we are now in the middle of the greatest financial crisis since the Great Depression.

More Incremental Theft

The coming retirement trap I write about in “Get Ready For the Obama Retirement Trap” and the new mandatory retirement system proposed by the Obama Administration known as the “automatic IRA” is just more Washington theft. It is the same for the eventual nationalization and confiscation of the majority of retirement benefits from successful Americans as their funds are forced into breach of a flood tide of forced liquidations of treasury debt. Their retirement funds will benefit many lower middle class, unemployed and government employees at the expense of the productive Americans who saved for retirement in the first place.

The coming nationalization of private retirement plans and IRAs will be the greatest government theft and wealth transfer scheme in the history of the world but it will be opposed only by a small minority of productive Americans who have worked in the private sector and who have saved for their retirement years. These Americans who have saved a substantial amount for retirement will lose wealth and retirement security while the groups who have spent their entire lives feeding at the public trough will continue to come out ahead as usual in the largest theft in history.

Remember, everything out of Wall Street, Congress and Washington on retirement planning is all about generating money in the form of dramatic government tax revenues for Washington and not about building real retirement security for Americans.

For other groups listed below, the retirement trap will be a winning proposition for them as funds from successful Americans will be used to fund their retirement benefits.

The Usual Tax Feeders Will Continue to Pig Out at the Expense of Productive Working Americans

The Winners

• State government employees
• County and municipal employees
• Federal employees may be bailed out along with state and local government employees who have dramatically under-funded retirement programs.
• The unemployed
• The underemployed
• Those who simply don’t work
• Participants in most under-funded union plans

And The Losers in the Retirement Trap: All productive, working American in the private sector who have trusted the government and politicians to keep their world and saved a substantial amount of funds in qualified plans and IRA accounts.

The Timing

The timing of the steps to retirement plan nationalization and confiscation are a very difficult proposition first because of an uncertain political situation. While I fear both political parties will move in the direction I’ve outlined below to retain political power, historically the Democrats have moved faster in this direction than the Republicans. But now with the revenue needs of Washington totally out of control, which side of the two-party monopoly in control of Congress and the White House may not matter in the future. Second, most of the probable causes of the next financial or foreign policy crisis depend more on what China, Japan, Iran or Israel may do than on Washington. I believe the ultimate confiscation conclusion of the Retirement Trap will take place within ten years and I have a suggested time limit for each step to help you in your retirement planning.

Regards,
Ron Holland, LewRockwell.com
for Whiskey & Gunpowder

March 23, 2010

Nationalizing Healthcare and Retirements was originally featured on Whiskey and Gunpowder. Visit Laissez Faire Books for the best selection of libertarian book titles.

My corner of Baltimore seems like a good place to ride out a storm. After all, innumerable cars are plastered with Obama bumper stickers, and windows display signs like “Universal Healthcare Now.” In essence, it’s a very liberal neighborhood in an extremely liberal state. What better neighborhood to be in times of need, right?

The architecture ranges from early 19th to early 20th century row homes, which as a result demands parallel parking. This isn’t a great inconvenience most of the time, but with the snow, it’s an absolute nightmare. First the clouds drop forty inches. Then the city snow plow piles another mountain from the street onto your car.

Successfully liberating the vehicle from its icy prison can take hours. After leaving the spot, anyone can take the laboriously freed space. Restoring regular parking conditions quickly requires everyone chipping in for the common good.

During this street clearing process, my neighbors sorted themselves into four groups:

1.    The Saint (1% of the neighborhood) — Every couple of blocks resides a truly amazing human being living to serve others. He’s shoveling out his neighbors’ cars, dumping bags of rock salt down the whole street, and passing out shovels like he owns a hardware store.

2.    The Good Citizen (15% of the neighborhood) — A caring person doesn’t just shovel enough snow to drive away. He carves out the front and back. After leaving his spot, someone else can parallel park without digging. If everyone did this, normal parking would resume in a day — if not less.

3.    The Self-Interested Person (70% of the neighborhood) — This guy doesn’t really care about helping anyone. He carves just enough in the front to get out. The next person must dig before parking.

4.    The Malicious Creep (14% of the neighborhood) — Instead of shoveling snow to the curb, the creep stacks snow onto his neighbor’s car. This saves the creep approximately fifteen minutes while adding an hour to his neighbor’s work.

While my neighbors love Obama and universal healthcare, they obviously aren’t such good socialists on their own block. This is no surprise; everyone on earth is an armchair Mother Theresa. We all have noble thoughts at the coffee shop or over beers. But when the snow shovel has to come out, so does the truth.

So let’s face it. Universal healthcare supporters are much like the folks on my street. There are a couple of saints, a few good people, and a large chunk who are either self-interested or just plain selfish. Most support it either because they will benefit directly, or they think the tax burden will not be placed on them.

According to a recent Gallup poll only 34 percent believe that healthcare reform will personally increase their costs. Gallup also points out that most don’t think healthcare reform will benefit them personally — hence they are supposedly altruistic. But it’s not altruism when only 34 percent believe that they will do the shoveling.

You don’t think this is true? Just look at the Republican Party’s anti-universal healthcare campaign. The GOP hasn’t appealed to morality or fairness, but instead to selfish elements among universal healthcare supporters. The message is that the plan will cost more for everyone and your healthcare will get worse. So far the campaign has worked.

One can speak sweet nothings while pleasantly sitting around a warm fireplace. But in the end, a snowy day and a shovel will always reveal the selfish nature of a socialist underneath.

Regards,
Vedran Vuk, Casey Research
for Whiskey & Gunpowder

March 2, 2010

Snowstorm Recovery Reveals Truth About Socialism was originally featured on Whiskey and Gunpowder. Visit Laissez Faire Books for the best selection of libertarian book titles.

Ok, so we get the point. Pundits portrayed this as an opportunity to revive the “Hope and Change” which had mysteriously disappeared. But let’s face facts. All the speeches in the world, no matter how good, or how inspiring, are not going to effect the change that is really needed.

These do-nothings could not even pass the economy-reshaping healthcare bill. What happened there? Did they really want to pass it at all? How could a democratic president, with majorities in both houses of Congress, fail to pass what would have been landmark legislation? A defining moment of the current Presidency and our “dear Aunt Nancy.”

The populace be danged. We have a chance to make history here. Who cares how fired up some know-nothing rednecks might get at town meetings. Here was a chance to do something “for the people” who are obviously too stupid to know how good it would be for them. This is just the kind of power play the Nanny-Statists love! And they had all the “power” to do it. But they let the “moment” slip through their fingers…thank God.

Just as the healthcare plan failed, so is will the presidency. Last week a Wall Street Journal NBC Poll showed that voters held a 61% no confidence view on the president’s plans. Failure. Humiliation. Defeat.

How else can you describe the healthcare flop?

But let’s move on from a review of recent history, to a prediction of the near future.

It has been noted that the president moved from pushing healthcare to creating jobs. Good move, Mr. President. The simple smoke and mirrors approach of Washington Politics…cover a failure with blowing smoke (“Those stinking Republicans thwarted my precious healthcare agenda…”) then shifting the mirrors to reflect what troubles folks most about this economy…jobs.

Several years ago, there was a best selling business book entitled, “Who Moved My Cheese?” I hear they are coming out with a sequel, “What Happened To My Job?” That is going to be enhanced by the Hollywood film blockbuster, “Honey, They Shrunk My Income!”

Now, all tongue in cheek aside (well, at least some tongue in cheek) let’s get to the “issue du jour” on the revamped presidential agenda. Because let’s face it, if the economy doesn’t make a turn for the positive…if there aren’t signs of real success that the media can parlay into a picture of a wise and benevolent administration, we will be looking at the first one term president that the US has had in a very long time.

It has long been a major tenant of this shot drinker at the Whiskey Bar, that the Government does not create jobs. Sure they can give a man a shovel. They can have him dig a hole. They can pay him for that with inflated money. Then they can have him fill in the hole. They can pay him again. And that’s what appears to happen time and again.

The problem with government jobs is generally two-fold. First, we know that they are expensive. Second they are not productive. Thus, the very nature of government work, is to funnel money from the private sector to pay for these jobs, and then to see that little or nothing is produced. Where nothing is produced, nothing is sold. Where nothing is sold, no income is created. Where no income is created, there is a fiscal loss.

But not for the government. They have no bottom line. They have no “mandate” from the masses to produce a profit. The current “mandate” from the electorate has been “Give me a job.” Or “Subsidize my healthcare.” Or, “Give me a cheap mortgage.” Ignoring all the basics of economics…scratch that…ignoring the ONE basic of economics, government is not required by the “masses” to produce a profit.

Sheesh…they haven’t even been required to BREAK EVEN!

Certainly we can see that the speech last week did not highlight this point…Balancing the National Budget. We will just continue to spend our way to prosperity. And nobody will care, just so long as in our spending, we are creating jobs…

The President, in his acknowledgement that government should do something to help “create jobs”, also stated that 70% of all jobs in the US are created by the private sector. To that end, the Admin introduced a tax break for small businesses who hire people this year…$3,000.00. Whoa! “Hey there, Big Spender!”

What kind of economic sense does that make? How in the world is a business going to benefit from a $3,000 tax break, when his cost of hiring a worker is likely in excess of $25,000? It is true, if his business is expanding and he needs to hire workers, this benefit will help him. But no business is just going to go out and hire workers at a $22,000 per annum loss. In short for this to work, we need businesses that are e-x-p-a-n-d-i-n-g. Unfortunately, should Obama be lucky enough to preside over an expanding economy, he won’t be looking to tax cuts, but tax increases. Does the term bass ackwards ring a bell around here?

Nevertheless, the prevailing theory is that “…the government can create circumstances which create jobs”—this was actually stated in the speech last week. And I suppose that this tax incentive is what they deem as creating the circumstances that create jobs. But the truth is, the circumstances for creating jobs already exist on their own.

They exist without government help.

They exist without government subsidy.

They exist without government entitlement.

The work of business is an arena completely outside the sphere of government altogether and has nothing to do with it. Interference by trying to “improve” such circumstances only backfires in the end.

For example, the “Cash for Clunkers” program which was supposed to stimulate sales and keep auto jobs alive here in the US, provided a spike in sales temporarily. It was deemed a Government/Business success. But what is rarely reported is how it nearly destroyed the used car sales business in certain portions of the country. In my own area here in the mid-Atlantic, my car dealer contacts have been forced to close their lots, because they cannot get inventory (since the infinite wisdom of the “C4C” programs’ designers was to destroy the old trade-ins). I have good friends, who have been in the business for years, now being forced to leave their line of work, and go job hunting. Thank you, Barack the Beneficent.

The best thing the government can do for job creation, is to get out of the job creation business entirely. Do not offer tax incentives, just stop taxing altogether. The income tax reaches everyone, so leave it at that! The less the government does to “help” business, the better off every one is.

Just ask our friends in American Samoa. On a remote island in the South Pacific, far west of the Hawaiian Chain, we have attempted to extend our omniscient and all kind influence once again. Here on this happy island, where the average income is just $4,000.00 per year, 80% of the economic activity was provided by two separate tuna canneries.

In their infinite wisdom, Congress decided to “help” the Samoans by instituting the minimum wage policy. Happy Day! They’ll all be rich in no time. And the dirty, filthy, stinking canneries will that have kept these fine people so long in virtual slavery and penury will finally get their come-uppance!

Oh how well this has worked in our own land, sacrificing jobs and creating unemployment! Only the most obstinent and ill informed still maintain that the minimum wage increases the standard of living.

The effect on American Samoa?

One of the tuna canneries has already left, and the remaining one is looking to other shores. Great job, Congress. The average annual income should drop below $1,000.00 per year thanks to your creating better circumstances.

Here is a prime example of what happens when the Nanny-State attempts its improvements. In such a simple economy as you would find on this tiny island, with very few other factors to wrestle with, and no other influences to calculate, the soft glove of the State covers an iron fist. Not content destroying lives on our own shores, we have to spread our infectious foolishness to the destruction of others.

Let the prayer of our Revolutionary Forefathers ascend loud and long from the bar, “Good LORD, deliver us!”

Regards,
Bill Jenkins

February 2, 2010

Government Cannot Create Real Jobs was originally featured on Whiskey and Gunpowder. Visit Laissez Faire Books for the best selection of libertarian book titles.

Yet, when it comes to reforming healthcare OBAMA DEMANDS WE RUSH. Instead of doing it right, he demands we do it fast. Even if it means an incompetent, bumbling, hapless, and corrupt federal government might take over 17% of the U.S. economy. Even though government-run Medicare and Medicaid already threaten to bankrupt America with waste, incompetence, theft and corruption. Even though the federal government has never before run anything successfully, efficiently and profitably. What kind of madman would rush this decision on adding trillions in new spending on a risky unproven scheme in the midst of the worst depression since 1929 (and in my opinion it is getting worse)? If there was ever a decision needed to be made right, rather than fast, this is it.

So why the rush? Obama knows anyone with common sense that has time to think about this plan (let alone read the actual bill), would never support it. Certainly not now in the midst of economic Armageddon. That is why Obama, Pelosi, and Reid are demanding Congressmen and Senators vote on it before they read it…and before we (the voters) hear about the details – the massive new taxes, the onerous new mandates, the rationing, the criminal penalties, he dramatic expansion of Big Brother in our lives.

The vote must happen before the average distracted American voter realizes they will be forced to buy health insurance or be fined $15,000 or sent to prison; before Americans realize 50 million patients will be added to an already overloaded, overburdened healthcare system – while adding no new doctors, or worse yet, causing tens of thousands of doctors to retire rather than work for lower wages, higher taxes, and heavier workloads; before anyone realizes that you don’t save money by spending an extra trillion dollars; before anyone realizes that government “experts” have always far underestimated the cost of every new proposed government program – in order to sell it- often by 10 times or more.

Do you need to know anymore about the reason Obama is rushing this pig of a bill through Congress? But there is more. Obama is afraid that Americans will realize the Senators and Congressmen, who are being threatened and bribed to vote for universal healthcare, know it is so bad that they themselves REFUSE to live by it. They have their own healthcare plan – no rationing or higher taxes (or both) for them.

Obama must rush the vote before anyone realizes he will not dare tax the top-of-the-line private health plans that could actually pay for this big government boondoggle – because those plans belong to the union members that supported Obama for President. Obama is owned lock, stock and barrel by the government employee unions, teachers unions, and auto unions.

And finally, Obama wants to rush through universal healthcare before anyone realizes that the taxes and surcharges to pay for it will cost millions of jobs and huge tax increases on EVERYONE!

The definition of a Ponzi scheme is to steal from one group of suckers to pay another. Eventually all Ponzi schemes fail – when you run out of suckers. In this case, the suckers are American taxpayers. Obama says only the rich will pay – don’t believe it. A program this big and corrupt will hit everyone, regardless of income in their pocketbook. The rich will certainly be hit. Some will retire; some will move offshore; some will go underground; some will cut back on hours because the reward is no longer worth the risk; and many will go out of business under the new burdens. Obama will learn that you CAN kill the goose that laid the golden egg.

The damage done to the rich will reverberate in deadly fashion to the middle class. First, jobs will be lost by the millions. Yes, millions MORE jobs than we’ve already lost. As my father used to say, “I’d love to hate the rich, but I’ve never gotten a job from a poor person.” And, when the tax revenues necessary to fund universal government-run healthcare fail to appear (because the rich have gone out of business, or refuse to work), Obama will turn to the middle class to pay the bill. It may take 5 years of massive, unimaginable budget deficits, but soon enough the middle class will be asked to pay dearly.

Disaster looms. Don’t say you weren’t warned. The only bright lining is that the end of Obama and Pelosi’s reign looms too. From now on, let’s call a vote for universal healthcare “Nancy Pelosi’s Congressional Death Panels.” Political suicide awaits the Democrats foolish and arrogant enough to pass this bill.

So, now you can clearly see why Obama can wait with a decision regarding Afghanistan (while our sons and daughters are fighting and dying), but he has no choice but to rush a vote on universal health care. Many of you may think it’s because Obama and his minions are inept. Well, they may be, but they are also disastrously devious and know the way to get “the worst bill in the history of America” passed is by rush, rush, rush, and what better time than when Americans are distracted by the Christmas holidays.

Regards,
Wayne Allyn Root

November 23, 2009

The Damage We Can Expect from Obama’s Rush to Universal Healthcare was originally featured on Whiskey and Gunpowder. Visit Laissez Faire Books for the best selection of libertarian book titles.

If you have a house which is falling down from termites, has a leaky roof, iron plumbing, stopped up septic tank, or whatever, and you approach a home insurance company, wanting full coverage for your house, and they say “you’ve got to be kidding,” should the D.C. Gang force the insurance company to issue you a homeowners policy? If you never cut your grass, never paint, never shovel snow off your sidewalk, and your neighbors consider you a menace, would any insurance company issue you a policy? Both Dems and Repubs might want big daddy government to force them to issue it, assuming the health care thing goes into effect. Why not throw pre-existing conditions out the window for home coverage?

Currently, there are scads of auto mechanical insurance policies advertising on the TV channels. If you have a true clunker which knocks, smokes, and leaks, would you expect an insurance company to issue you a policy? If the health care proposal for no pre-existing conditions considerations, why not for cars too?

If you were an alcoholic, with dozens of DUI’s, and a host of traffic accidents charged to you, would any insurance company issue you any coverage for any price, if they had their head screwed on correctly? If no pre-existing conditions can keep a health insurance company from insuring your health, why not force insurance companies to insure your driving habits, regardless of the risks?

Insurance companies as well as all businesses are in it to make a profit, and that’s the way it should be.

If you need a loan and go to a bank, shouldn’t they check your credit rating? If you have a credit rating of 100, have defaulted on lots of loans in the past, have no savings, your credit cards have been revoked, and there are tens of thousands of dollars still owed on them, would a banker loan you a quarter if he was in his right mind? If insurance companies can’t use pre-existing conditions to deny you health coverage, why not force the banks to loan you money, regardless of your credit rating?

If the Dems and Repubs have their way, along with Obama, and you have advanced cancer, Hodgkin’s, melanoma, kidney failure, or whatever, they want insurance companies to have no choice but have to insure you. In other words, by law or bureaucracy, the D.C. Gang in both parties wants to insure the death of insurance companies.

It seems to this amateur, that if you have a serious, incurable disease, or severe health condition which either can’t be fixed, or to fix it would cost several hundred thousand dollars, an insurance company wouldn’t really be interested in covering you for a hundred bucks a month. One of my best friends is in such bad health that he has cost his medical insurance company probably a million dollars already, and he is still living with myriad health problems. Bud is probably 150 pounds overweight, has never cared for himself, smoked for decades, has very high blood pressure, and did tons of drugs, in addition to being diabetic and having had several heart attacks. He is still covered because unless he misses a payment, his insurance can’t be cancelled. Believe me, he’ll never miss a payment! His insurance company is on the hook with a certain loser, but when he took out the policy, the insurance company thought him to be a fair risk.  They were wrong, and are paying for it.

Denying pre-existing conditions as an excuse for not issuing a health policy, sounds just wonderful to the un-thinking boobs who occupy those offices on Capitol Hill. Do they ever really THINK?

Actuaries are in business to do risk assessment for insurance companies. They go over statistics, figures, probabilities, and risks. If the Demos and Repubs have their way, you can forget actuaries, because the D.C. Gang will force insurance companies out of business. The point is, once again, that both parties have destroyed America with stupidity, greed, and that ever-present ego governing us, when we need laws only to protect us from our enemies, and not ourselves. With every vote over the last 75 years, it seems as though each vote drove another nail in our collective coffins. The Tea Parties have plainly demonstrated that we have had enough of both parties, and we should throw them both out with a couple of exceptions. The Democrats are worse than the Republicans, I’ll admit, but there are far too many office holders who haven’t a grain of common sense, and I have had enough of both of them. I am no longer proud to be a registered Republican, but have not yet re-registered as an independent. Local Republicans are fine.

Regards,
Don Stott

September 11, 2009

Pre-Existing Conditions? was originally featured on Whiskey and Gunpowder. Visit Laissez Faire Books for the best selection of libertarian book titles.

This is in response to remarks you made yesterday with respect to health care reform on Kansas City’s Morning News with EJ & Ellen.

First, here’s a bit of context for your consideration.

·    The United States does not have a unitary “health care system.” Instead, there are multiple providers and competing methods of paying for care (Commercial Insurance, Blue Cross/Blue Shield, PPOs, HMOs, Medicare, and Medicaid, for example). Freedom can be a messy thing and the results are certainly uneven, but the variety of choices and the absence of centralized bureaucratic control have always been among the strengths of the American approach.

·    Health care and insurance coverage are not the same thing. It is claimed that 46 million Americans are uninsured; the implication being that those 46 million Americans cannot obtain health care. That implication is simply false. Millions of people, mostly young, have simply decided not to purchase health insurance. A very large number of the alleged “46 million” uninsured are illegal aliens (or, if you prefer, “undocumented immigrants”). When these two categories of the uninsured are removed from the calculation, the number remaining without coverage is relatively small and it cannot be claimed that they have no access to care. American hospitals and physicians voluntarily provide millions of dollars worth of uncompensated charity care every year. In addition, almost every hospital in America is required by the Emergency Medical Treatment and Active Labor Act (EMTALA) to provide care to anyone needing emergency treatment regardless of citizenship, legal status or ability to pay. The law applies to all patients and they can be discharged only under their own informed consent or when their condition requires transfer to a hospital better equipped to administer their required treatment.

·    Hospital care, medical care, and health care insurance have all become very expensive, but price increases for individual services and the increases in total health care expenditures are not the same thing.

·    Government intervention, government regulation, federal program cost shifting, and unnecessary litigation are the primary causes of hospital and medical care price increases. These are the very things that the most vociferous advocates of “health care reform” refuse to address, primarily because their policies caused them in the first place!

·    Increases in total health care expenditures are caused by all of the things described in the previous paragraph, plus increased demand for service spawned by first dollar insurance coverage and the provision of “free” or subsidized health care through government programs. Providing additional “free” or subsidized coverage to the uninsured under a public option will produce increased service demand and, consequently, produce even greater increases in total health care expenditures.

Although the mandatory end-of-life counseling requirement has reportedly been removed from at least some pieces of draft legislation, that provision is not the greatest threat to treatment access for the elderly ill. The Medicare program already refuses to pay for physician-ordered treatment that it deems “inappropriate” so the mechanism for a government agency to effectively override a personal physician’s judgment is already in place and is used on a daily basis. However, at the moment the patient retains at least potential options because Medicare is not a universal program. Fears that the public option will potentially threaten that option are well founded.

Here is what the President had to say on this subject just one week ago in Portsmouth.

President Barack Obama, “Town Meeting,” Portsmouth, NH, August 11, 2009

“…The idea is actually pretty straightforward, which is if we’ve got a panel of experts, health experts, doctors, who can provide guidelines to doctors and patients about what procedures work best in what situations, and find ways to reduce, for example, the number of tests that people take — these aren’t going to be forced on people, but they will help guide how the delivery system works so that you are getting higher-quality care.  And it turns out that oftentimes higher-quality care actually costs less.”

The President’s remarks are disingenuous. The issue isn’t whether tests will be “forced on people.” The issue is whether treatment will be denied to people. If the public option insurer refuses to authorize payment for a physician-ordered treatment disapproved by the federal “panel of experts,” that refusal will certainly amount to denial of treatment for many, if not most, elderly ill.

The President and other public option proponents have characterized fears of care denial to the elderly ill as “outlandish,” but consider the President’s own thoughts on this topic just four short months ago.

President Barack Obama, April 14, 2009, New York Times Magazine Interview

“April 29 (Bloomberg) — President Barack Obama said his grandmother’s hip-replacement surgery during the final weeks of her life made him wonder whether expensive procedures for the terminally ill reflect a ‘sustainable model’ for health care. …“‘That’s where I think you just get into some very difficult moral issues,’ he said in the April 14 interview. ‘The chronically ill and those toward the end of their lives are accounting for potentially 80 percent of the total health- care bill out here.’”

If a public option is included in the final legislation to emerge from Committee, the strong probability exists that it will include “comparative effectiveness,” a dehumanizing and immoral rationing methodology, strongly favored by the President’s advisors. Comparative effectiveness literally grants to government the power to decide who lives and who dies. This rationing method compares the estimated cost of a particular treatment against the imputed dollar value of a specific patient’s remaining years of life and makes the decision to approve or withhold care based on that cost-benefit analysis. In other words, it substitutes a computer’s statistical calculation for the clinical judgment of a real physician treating an actual human patient, reduces the value of each human life to mere dollars, and treats each patient as a statistic.

In summary, the argument against a public option, quite apart from its prohibitive cost, is compelling.

·    No private insurance company can be price competitive against a public option that can operate indefinitely at a loss. Any public option will, in short order, become the only option.

·    Because the potential demand for free health care is potentially unlimited, the public option’s need to limit expenditures will result in denial of treatment to the elderly ill, just as it already does in the many countries that promise universal health care.

Mussolini wrote in Fascism: Doctrines and Institutions, “The fascist conception of life stresses the importance of the State and accepts the individual only in so far as his interests coincide with the State.” Comparative effectiveness elevates the calculated financial interest of the state over the value of a real human being’s life. This is the literal antithesis of traditional American thinking.

Sincerely,
Frank J. Brady
President, Brady & Associates
http://www.bradyinc.com

September 11, 2009

A Letter to a Senator on Healthcare was originally featured on Whiskey and Gunpowder. Visit Laissez Faire Books for the best selection of libertarian book titles.

You railed against what you called scare tactics and misinformation. Yet you then proceeded to misinform your audience with your own false assertions. Let’s review a few:

First you decried the so-called Death Panels. While that term has certainly been used, the real concern is that you want to pay doctors to discuss end-of-life options. Currently, doctors decide when to counsel patients as part of their overall care. Now you want to pay them to specifically tell older folks how to die? That’s just downright scary. You even promote a booklet for veterans which tells them how to die. Since when is this ANY of the government’s business?

During all the time you campaigned for President as well as since you were elected, you and your minions have repeated the number ”47 million” as representing the uninsured in this country. Suddenly last night, you changed that number to 30 million. Did we suddenly use government funds to insure 17 million folks yesterday? Did 17 million Americans suddenly get religion and buy health insurance on their own accord? No, Mr. President, you were simply forced to acknowledge that at least 17 million uninsured people currently inside the United States are illegal aliens and you had already promised not to give them any benefits. Yet you continue to give them benefits. To wit:

The law mandates that any person seeking medical services at a hospital may not be turned-away because they have neither insurance nor money with which to pay for those services. Doesn’t that mean that EVERYONE is automatically medically insured? Don’t we taxpayers already pay for the so-called uninsured? So what’s the problem? From our point of view, the problem is that we do not choose to pay and pay and pay for people who are too lazy to care for themselves. We’re most charitable to occasionally help those folks who find themselves upside down. We’re not interested in providing perpetual welfare.

You insisted that not a single dime of extra money would be spent to provide this health care for all. You even said it with a “straight face.” Yet your own CBO (Congressional Budget Office) has clearly opined that this is NOT true. Your program would be out of money by the 8th year and that the subsequent decade would create still more severe cost overruns. Question: How do you cover additional millions with the same number (or less) of doctors and nurses without spending one dime or causing rationing?

In this matter of costs, you insisted that the entire program would be paid-for by savings you intend to achieve by making Medicare more efficient and by cutting the fraud and abuse in the system. If this savings is so obvious to you now, why wait? Why not IMMEDIATELY implement the improvements? Why, if this is so obvious to you, would you wait to correct such an obvious problem? Isn’t this what government is supposed to do automatically? Why does the elimination of fraud and abuse have to be conditional on passing government-run health care? As a petulant child, you refuse to do your job unless you get your quid pro quo?

You insist that a government option/co-op will be a small part of the overall health care system. Yet, one provision of the proposed bill states that a business will be fined 8% of payroll if they refuse to comply. Health insurance premiums typically exceed 8%, so if I’m a small business, my decision is simple. I quit paying more and simply pay the smaller government fine. Yet that decision ultimately results in putting government involvement in health care at close to 100%. You insist, however, that your goal is not to control health care. Who’s kidding whom?

Somehow, government is going to correct all the ills that private industry has created. Let’s take a peek at how the government has done in the past. Thanks to David Galland of Casey Research, I herewith submit his brief analysis:

“A Quick History Lesson

“The U.S. Post Service was established in 1775. So they’ve had 234 years to make it work. It is broke.

“Social Security was established in 1935. They’ve had 74 years to make it work. It is broke.

“Fannie Mae was established in 1938. They’ve had 71 years to make it work. It is broke.

“Freddie Mac was established in 1970. They’ve had 39 years to make it work. It is broke.

“The War on Poverty started in 1964. They’ve had 45 years to make it work. About $1 trillion of taxpayer money is confiscated each year and transferred to “the poor.” It hasn’t worked.

“Medicare and Medicaid were established in 1965. They’ve had 44 years to make it work. They are both broke.

“AMTRAK was established in 1970. They’ve had 39 years to make it work. Last year it had to be bailed out and today continues running at a loss.

“$700 billion bailout of 2008. It has yet to create a single new private-sector job.

“Cash for Clunkers in 2009 went broke after 80% of the cars purchased turned out to be produced by foreign companies.”

But… This time it’s different. This time the government will do a really good job. This time, government will make it work. This time, government will be efficient and make health care better and affordable. This time, government will stop the fraud and abuse that is typically inherent in all government programs. This time…

Still another objection you raised insisted that scare tactics have frightened folks. All the talk about rationing simply isn’t so, according to you. Yet all a person has to do is observe where people from around the world go when they need health care. Why do Canadians fly to the USA for medical treatment for which they must pay when they can get free health care in Canada? Could it be because of the long waiting periods that plague every medical procedure in Canada? Ditto England. Hmm. Why do Sheiks from the Arab countries come to the USA for their medical treatment? They have all the money they need to get medical treatment in their own country. Oh, the medical treatment just doesn’t exist in their country. Wonder why?

If you want to really talk about “scare tactics,” let’s consider the bailouts. Somehow it was absolutely necessary for your administration to pass all the Wall Street bailouts immediately or we’d have runaway unemployment. If passed, you promised unemployment would not exceed 8%. Gee, where did the latest 9.7% unemployment figure come from? Ditto health care. We just had to pass your government controlled health care by last July; then August; now September. Or? And why do you conveniently fail to acknowledge that the health care plan you’re trying to ram-through today will not become effective until 2013? If it’s so important, why must it be passed now but held in abeyance until 2013? But that’s not “scare tactics,” is it Mr. President?

One of the reasons current medical costs are so high in the USA is the threat of lawsuits for malpractice. Doctors feel obliged to request all sorts of expensive but otherwise unnecessary tests just so they can’t later be charged with malpractice by ambulance-chasing attorneys. I didn’t hear you say anything substantive about Tort Reform last night, Mr. President. Oh, I forgot. The legal lobby makes large contributions.

You also said last night that you had an open mind and would consider alternative plans. I’m here to call your bluff. Here is a far better solution than involving government in the very personal and private decisions (which I submit is the very reason you won’t consider this alternative). Put people in charge of their own health care and payment for their health care services.

Suppose every individual takes control of his/her medical costs and treatments. Instead of an HMO or the government deciding what costs they will pay, the folks would decide directly. This system already exists in the form of Medical Savings Plans, MSPs. You get immediate treatment and the doctor gets immediate payment. No forms to send to the HMO or Medicare nor a wait for months to then get reimbursed. The funds set aside for this purpose would be treated as tax-exempt thus encouraging everyone to participate. Cash and carry works.

That is not to say that insurance no-longer has a place in medical protection. In today’s market, those with insurance have what I call band-aide insurance. The programs pay for almost every minor problem. Financially, this is a very poor use of limited funds. The MSP savings would cover these types of expenses in the future and would be unique to each individual/family. Serious medical expenses would still be covered by what is called “Major Medical.” Once an illness exceeded some specified amount such as $25,000, the Major-Med would kick-in and cover the rest. This would provide the so-called bankruptcy protection feature. Major Med is- and has been available for decades, and it’s very affordable. The issuing insurance company knows that it will not have to pay anything until the costs exceed the stipulated amount. Therefore, the premium is amazingly small. That, I submit, is the correct use of insurance – any insurance.

But wait, you say. “I don’t know enough about medicine to be able to make my own decisions.” Then I suggest you learn. And the very, very sad fact is that very few in the medical profession “know” either, but that’s a topic for another article. Suffice it to say that when competence is demanded by the customer, the medicos that survive the scrutiny will become the best choices for medical services. No one is instant-smart and there will be a learning curve, but the effort will be well worth time allocated.

Recently, I read an in-depth article describing the treatments and costs-of-treatments between the cities of McAllen, TX and El Paso. The McAllen costs were virtually double those of El Paso yet the patient (read customer) results were almost identical. If the results were comparable, why spend twice the money for the same results? Again I submit that government mandated single-payer programs will double the costs even though they initially claim they will reduce costs. Can you say Post Office? Can you say Medicare? Can you say any government program in competition with a privately-run program?

Every article I write seems to be based on having to refute the claim that capitalism has failed. Private medicine has “failed” so now big government has to step-in and make it work is the basic message now being promoted. Nothing could be further from the truth. As I continue to maintain, we’ve never even had pure capitalism so how would we know whether or not it’s failed? Big government has had their sticky hands in every facet of our lives with rules upon restrictions upon laws upon mandates that contradict common sense. I would argue that no one has a higher interest in your health and wellbeing than you, no matter how sincerely others try. That being the case, why don’t you just trust your instincts and take charge of your health? Just say NO to Government Health Care.

Let me be perfectly clear: Health care is NOT a right and government has absolutely no business getting involved. You can pander to the voters, Mr. President, but you can’t justify that position to rational, thinking people.

Regards,
Tex Norton

September 11, 2009

The President’s Health Care Scare Tactics Exposed was originally featured on Whiskey and Gunpowder. Visit Laissez Faire Books for the best selection of libertarian book titles.