Monday, October 12, 2009

What do Social Security and the New Health Care debate have in common?

Looking at the tumult of the health care debate, it bears noting that the central dependency for its "success" will be a tried and failed policy of inclusion for all. Where have we done this before? Try Social Security.
The driving justification for Social Security when it was enacted was the premise that the relatively younger population explosion after WWI would distribute the costs associated with paying for the benefits of the older Americans who would begin drawing on the system immediately. Based on the cost projections, the coffers of the Social Security Trust fund should swell and be able to get enough money to be self-sufficient and be tax neutral to the treasury with respect to other government programs.

What the engineers of that system did not take into account was that the life-expectancy might increase, or that a spike in population growth (after WWII) might create a long-term unsustainable drain on the trust, significantly out-pacing revenues.

A similar failing is beginning to emerge in the new health care debate. There is a multi-pronged tax strategy to pay the hundreds of billions of dollars that will be required by:

  1. Require insurance to be paid by all persons who can affordit
    1. The government will determine if you can pay it
    2. The government will fine or jail you if you can pay for it and choose not to
  2. The government will tax medical devices that could save your life, such as pacemakers, heart defibrillators, Ventilators and other manufactured health implements
    1. Condoms and Tampons are exempted
    2. The government says the taxes are placed on the manufacturers, but the reality is increased costs are always passed on to the consumer of the goods or services so taxed.
 This strategy will be used to attempt to shore up the monies necessary to withstand the tide of increasing costs that the CBO has projected to place the plan in deficit spending just five years after it begins to actually pay benefits. Recall from earlier press reports that the plan will not actually pay any benefit to any American until 2013. The rate of deficit actually accelerates in the second ten years based on the rate at which baby boomers begin to hit the golden years where health care expenses are typically higher.

Seem familiar? The CBO has projected a small deficit savings based on a conceptual bill supplied by the Senate last week. Latching on to this glimmer of hope, the Obama administration and members of Congress are rushing to get the Senate bill passed so they can get it into conference with the House Democrats before the American people understand what burden is being placed upon them.

Unless something is done about the structure of the Health Care Reform plan (the Max Baucus Bill), the long term viability of it will be suspect. Americans will be assured that the costs they will pay for this ponzi scheme will be more, especially when you factor in a slightly higher costs over a much longer period of time. All bets will certainly be off, if the same calculations on life-expectancy are altered to say 80 years old. I know that is a lot of condoms in the age of Viagra, but at least they won't be taxed (unless there is a rising demand for the product).

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