I have been on record for more than a year against the Democratic health reform proposal. I am not against health care reform as it is a system in dire need of modification. The proposals offered by super majority in the Senate and the House bill will ultimately not make the cost curve bend down, but will raise taxes on small business and adversely affect long term wage growth and employment (at a time we can ill afford a stymied rebound).
The recent attempt to circumvent procedure and use the so-called “deeming rule” is just one example of the desperation being floated in order to ensure the most costly measure ever attempted by the U.S. government passes Congress. Once passed, the bill will be signed into law and the tax increases will soon be collected. Nearly 16,000 additional IRS agents are to be hired as part of the enforcement mechanism that has at its heart a compulsory mandate to purchase individual coverage or face a federal government tax or fine. This provision, among several others is already being challenged with more than 30 states preparing legal challenges to the state’s right to regulate insurance practices. I don’t know if the provision to jail and fine people for failing to comply with the mandate is still in the bill being considered this afternoon, but I suspect millions of people will overload the legal system in a wave of civil disobedience unseen since the Rev. Martin Luther King, Jr. marched on Washington, D.C.
Those who support the bill argue that the ‘sausage making” of the legislative process is ugly and people should look at the intention of the bill. I say we should look at the unstated intention such legislation presents. It has been argued by respected economists such as Thomas Sowell that government intervention in any market tends to skew market forces toward the inefficient. It is a fact that since the first government interaction into the area of wages, the level of unemployment that is “acceptable” to achieve what is termed “full employment” has risen from 1.9% early in the last century to nearly 6% at its end. Those who study supply side economics understand that you can only charge what the market will bear. When the government with its relatively limitless supply of money (subject to astronomical inflation) intervenes in a market economy, the potential for inefficiency also approaches the limitless as well.
The health care bill before Congress will likely pass the House of Representatives in a vote that will not see agreement between the members of Democratic Caucus. Upon passage, it will make its way to the President’s desk and be signed into law faster than a DeLorean with a super-charged flux capacitor. If the bill becomes law it is supposed to cut waste and abuse out of Medicare to the tune of 500+ billion dollars. It will insure some 30 million more Americans than presently insured, provide tax credits to businesses to offset requirements to pay for insurance and tax the top 2% to the tune of some 500+ billion. Like all things in Washington, the devil will be in the details and the details for this bill read like a Stephen King novel.
Despite pledges from the president that no taxes will be raised on those making less than 250,000 per year, the taxes necessary to pay for the subsidies to low income people will assuredly come on the backs of small business owners. They will be among many who will be required to fund insurance though provided plans, or pay fees to the government if insurance isn’t provided. There is also no guarantee that the insurance you do buy will pay for the kind of care necessary to save your life, particularly in the area of catastrophic illness such as cancer. Eliminating pre-existing conditions overnight (well, in 4 years) would have enormous consequences on the industry and we have already seen what happens when one insurance company goes askew (AIG). There is significant doubt as to whether small business owners will be immune to the tax increases as many of them fall into the upper 2%, particularly if they are sole proprietorships. Furthermore, businesses that cannot afford insurance now, will likely cut salaries or jobs to fund the projected 8% tax. Polls conducted in the last several months have the vast majority of Americans saying they believe that the stated goals of the bill, in covering more people and reducing costs for premiums and overall health care.
Railing against the bill by pointing out the obvious tax increases that will require the new tax cuts being promised so as to make it more affordable are only illusory cost-shifting gimmicks that will take money out of the pockets of small business people and those who make more than 250,000 per year. The money that is to be saved by cutting fat in Medicare programs will most likely never be realized, yet the costs projected for covering so many more Americans will push the cost of health insurance to the point that private, business-provided insurance will slowly fall by the wayside.
The sadder truth is that once this bill becomes law, and starts paying significant benefits, it will become as intractable as the so-called third rail of American Politics. Social Security is a program that people expect to draw from, mostly since they have paid into it all their lives. Attempts to discuss the financial problems with the system are shoved off into dark corners, as lawmakers rightly understand that cutting benefits or raising taxes will surely mean the death of their political careers. The same thing will happen with health insurance reform. It will cost more that we have been told, it will force employers out of business, raise prices on the goods of those businesses who survive and it will stymie investment by those who have the kind of income that permits the creation of companies and economic growth. It may cause the precarious and jobless recovery we are witnessing now to fall back into recession as companies struggle to deal with the cost reorganization of their businesses.
The impending passage of the new health care bill will make the impact of social security and Medicare look like walk in the park by comparison. The savings will not materialize; the costs will explode, especially since baby-boomers are now retiring in ever-larger numbers. The third rail will be joined by a forth one, with even larger voltage and current. The economy will slowly cease to project its massive power as if it were a boom box with ever weakening batteries.
Output will decrease, jobs will become harder to come by and the private insurance market will slowly die the death liberals’ have been seeking for years. More and more people will be forced onto government plans that will provide basic care, but will be unable to pay for major health problems. People will be told that they are too old for certain care, or that the maximum number of procedures that would save their life has been met and they should wait, until it can be made available.
Friends of mine who live in the UK and Canada tell of the nice things about socialized medicine. You get sick and you go to the doctor. If you have relatively simple ailments like colds or flu or a broken bone, the care works well. If you have special concerns, like major illnesses requiring specialized testing or very expensive surgeries, the outcomes are not so rosy. The tax rates are astronomical and the GDP for those countries is a fraction of what it once was.
The solution to the health care crisis is not one requiring government payments. In fact, by taking government out of the health care system, providers will find their way back to efficient ways of taking care of the patients who need care at costs that can be borne by the market. Years of government interference in payments and regulations have taken a market that was in balance in the 50’s and thrown it completely out of whack. As long as the government and its deep pockets seek to provide a solution, the cost of care will increase at rates that exceed normal inflation in the rest of the economy. The insurance companies, the conglomerate hospitals and HMOs will continue to pass costs on to the backs of the insured. People will be driven out of private insurance and the government will achieve the nanny state craved by liberals.
Our forbears fought against a tyrannical government that sought to increase its wealth on the backs of the governed. For many years, under both political parties, we have all been increasingly enslaved under the weight of more oppressive government. At no time in U.S. history has something so overwhelmingly opposed by the people been so stubbornly pushed forward by the political establishment. It is but one more example of a federal government that seeks to enslave its people, not overnight, but through the use of rhetoric and slick presentation, over a number of decades. The American people have looked the other way for far too long; we are finally on the brink of waking only to see we no longer have the power to resist. What then will the people do when their very soul has been taken from them to prop up those who have decided it was no longer necessary to worry about caring for themselves.
Say goodbye to Hollywood ... Say goodbye my baby.
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