Where was this reporting in 2009 before the Obamacare catastrophe was enacted???
Category Archives: Obamacare
Misadventures In Socialism – Bending The Health Insurance Cost Curve Upward
The New York Times cannot fathom why health insurance rates for small businesses and individuals are soaring when Obamacare promised to “bend the cost curve down” and save the average household $2,500 a year:
Health insurance companies across the country are seeking and winning double-digit increases in premiums for some customers, even though one of the biggest objectives of the Obama administration’s health care law was to stem the rapid rise in insurance costs for consumers.
Particularly vulnerable to the high rates are small businesses and people who do not have employer-provided insurance and must buy it on their own.
In California, Aetna is proposing rate increases of as much as 22 percent, Anthem Blue Cross 26 percent and Blue Shield of California 20 percent for some of those policy holders, according to the insurers’ filings with the state for 2013…
In other states, like Florida and Ohio, insurers have been able to raise rates by at least 20 percent for some policy holders. The rate increases can amount to several hundred dollars a month…
Under the health care law, regulators are now required to review any request for a rate increase of 10 percent or more; the requests are posted on a federal Web site, healthcare.gov, along with regulators’ evaluations….According to the federal analysis, 36 percent of the requests to raise rates by 10 percent or more were found to be reasonable. Insurers withdrew 12 percent of those requests, 26 percent were modified and another 26 percent were found to be unreasonable.
It never occurs to the Times that Obamacare mandates are in large part driving the health insurance cost curve upward.
This is only the beginning.
Over a half trillion dollars in Obamacare taxes started hitting consumers on January 1. When the taxes the Democrat Congress imposed are not enough, the Obamacare bureaucracy unconstitutionally imposes new taxes and calls them “fees.”
Next year, Obamacare mandates that businesses and individuals either buy government designed health insurance or pay hefty fines.
The best laid plans of mice and socialists…
Rationing Socialism – Part II
Socialized health insurance always ends up imposing care rationing because offering care for below cost or “free” creates an artificially high demand the government cannot afford. In my book Never Allow A Crisis To Go To Waste, is discuss how Obamacare rations care to the elderly by imposing a cap on Medicare expenditures and then tasking an unelected board – the IPAB – to decide what the government will and will not pay for. After insurance premium inflation spiked from 2.5% in 2010 to 9% in 2011, the same folks that brought us Obamacare proposed to ration all health care in the United States:
Under the proposal, the major public and private players in each state would negotiate payment rates with service providers such as hospitals. The idea is to get away from paying for each individual test and procedure. Negotiated rates could be based on an entire course of treatment. Payments would have to fit within an overall budget that could grow no faster than the average rise in wages.
The spending limits would be enforced by an independent council, but crucial details need to be spelled out. In Massachusetts, for example, budget-busting providers will be required to file plans with the state laying out how they’ll amend their spendthrift ways.
The plan here is to have the government direct American health care like a giant HMO – paying providers a flat rate per patient and then depending on the providers to ration care to keep their own expenses under control. The difference between this proposed government HMO and a private HMO is that you could buy additional insurance in a free market, but cannot under a government global spending cap.
Rationing Socialism
GOP presidential candidate Mitt Romney’s campaign spent much of this week attempting to distance the candidate from his signature achievement as governor of Massachusetts – Romneycare. It is no wonder. In my book Never Allow A Crisis To Go To Waste, I detail how America under Obamacare will quickly begin to resemble Massachusetts under Romneycare – soaring health care costs and health insurance premiums to pay for it, with a government defunding its other functions to pay for soaring numbers of Medicaid dependents.
In an attempt to fix the market consequences of the Romneycare mandates, Massachusetts has enacted another law seeking to impose a cap on the amount of health care medical providers can provide Massachusetts citizens. In a word – rationing:
It will establish a commission to monitor the growth in spending and require that health care providers or insurers explain themselves if their costs rise above the target growth rate. If there is no valid reason, the commission can demand that an organization submit a plan to bring its spending back in line. As a last resort, the commission can impose a $500,000 fine if it finds that the organization failed to make a good-faith effort. Many analysts expect the state will have to become increasingly aggressive in demanding cost cutting by providers and insurers if savings do not materialize.
All socialist health insurance systems inevitably end up rationing health care to contain the costs of state mandates. Massachusetts arrived at that point less than a decade into its Romneycare experiment. Unless Obamacare is repealed, the rest of America will join Massachusetts in short order.
Don’t Get Mad, Get Even
The Tea Party is in full boil over Chief Justice John Robert’s cave and vote with the four progressives on the Supreme Court to find Obamacare constitutional as a tax. However, it would do Obamacare opponents well to recall the classic Delta fraternity motto: Don’t get mad, get even.
Despite the smug certainty of Democrats that their monstrous creation has the immortal life of the undead, libertarian and conservative voters can kill Obamacare in three easy steps:
1) Fire President Obama and elect Mitt Romney as President.
2) Fire at least three Democrat senators and replace them with Republicans. With a GOP Vice President casting the tie breaking vote, the new GOP Senate caucus will have a 51 vote majority.
3) Bypass the Democrat filibuster in the Senate by offering the repeal of Obamacare as a tax and spending measure in reconciliation of the FY 2012 budget.
Cut off its head, put a stake through its heart and burn it to ashes.
Now let’s get to work.
Size Isn’t Everything
Presumptive GOP presidential nominee, Mitt Romney, commented last week at a campaign event: “With Obamacare fully installed, government will come to control half the economy, and we will have effectively ceased to be a free-enterprise society.”
The LA Times’ Doyle McManus asked the Romney campaign to explain the candidate’s comment and was told:
In 2010, government expenditures for all purposes — federal, state and local, including Social Security benefits — amounted to about 38% of the U.S. economy.
By 2020, the Centers for Medicare & Medicaid Services project that government spending on healthcare, currently about 8% of GDP, will grow to about 10% — partly because of Obamacare’s coverage for some of the uninsured but also thanks to baby boomers signing up for Medicare.
So that’s an increase of 2%. Add it to 38%, and you’ve got a projection that by 2020, government spending will come to about 40% of the economy.
At this point, the Romney campaign indulges in what (depending on your taste) you might call a magic trick, a redefinition or just a subterfuge: It adds in all projected private spending on healthcare in 2020 — private health insurance, physician and hospital bills — to declare another 10% of the economy government-controlled.
“If we count that as under federal control, we get to 50%,” a Romney aide emailed me.
In the Introduction of my book Never Allow A Crisis To Go To Waste, I noted that the favorite GOP argument for why Barack Obama was a socialist is that he spent a lot of money. Both former Speaker Newt Gingrich and current Senator Jim DeMint advanced this argument at one time or another and Mitt Romney appears to be adopting it.
Unfortunately, the argument has no merit. While socialist governments are invariably large, not all large governments are socialist.
Socialism is the government directing the economy to redistribute wealth from those who create it to those the government prefers.
Obamacare itself is a faithful application of German Zwangswirthsaft socialism where the government leaves business in nominal private ownership, but abuses the government’s regulatory, taxing and spending power to achieve the socialist goals of affirmatively directing health insurance to redistribute wealth.
Obamacare’s socialist inefficiencies are likely to cost health insurance consumers a great deal more money than the program will cost taxpayers.
If GOP candidates are going to convince the citizenry that Mr. Obama is a socialist advancing socialist programs, the Republicans themselves need to understand the nuts and bolts of the ideology.
Trickle Up Redistribution Of Wealth
On the American left, raising the upper tax rates to redistribute income from the wealthy to the government is all the rage. President Barack Obama already imposed such tax increases in Obamacare and is now demanding more in his new FY 2013 budget. The left’s argument is that the wealthy do not pay their “fair share” of taxes. In reality, the United States inflicts the most progressively punitive tax system of any developed nation in the world – not because the wealthy pay very high rates, but because the middle class and especially the poor pay a mere trickle in taxes.
A 2006 Congressional Budget Office study of the U.S. federal tax code found:
The top 1% of earners earned 19% of total income, but paid 28% of all taxes under an effective total federal tax rate of 31%.
The top quintile of earners earned 56% of total income, but paid 69% of all taxes under an effective total federal tax rate of 26%.
The second quintile of earners (upper middle class) earned 19% of total income, but paid 16% of all taxes under an effective total federal tax rate of 17%.
The third quintile of earners (middle middle class) earned 13% of total income, but paid 9% of all taxes under an effective total federal tax rate of 14%.
The fourth quintile of earners (lower middle class) earned 8% of total income, but paid 4% of all taxes under an effective total federal tax rate of 10%.
The poor pay nearly no net taxes as government EITC subsidies cover most of their withholding taxes for Social Security and Medicare. The fifth quintile of earners earned 4% of total income, but paid 1% of all taxes under an effective total federal tax rate of 4%.
In sum, one out of every five of our citizens pays for nearly all of the federal government at shares far in excess of their earnings.
At The Atlantic, Clive Crook notes that the OECD in two studies entitled Growing Unequal and Divided We Stand unsurprisingly found that the United States has the most or the second most progressive tax system in the developed world. Crook further observes:
Is measuring progressivity straightforward? No. It’s difficult, because the underlying data are very complicated and hard to compare across countries. Another problem: expressing progressivity across the whole income range as a single number, so that one can say A is more or less progressive than B, can be misleading. Unfortunately, we all want to be able to say, A is more or less progressive than B.
Why, according to the OECD, is the US system so progressive? Not because the rich face unusually high average tax rates, but because middle-income US households face unusually low tax rates–an important point which de Rugy mentions and Chait ignores.
How does the picture change if you take indirect taxation into account? That would make the US system look even more progressive, because the US doesn’t rely on a flat consumption tax like most other governments.
A basic axiom of taxation is the more you tax something, the less you get of it. Similarly, the central insight of supply side economic theory is that the more progressively punitive the marginal tax rates on creating wealth, progressively less wealth will be created.
Given that the United States is mired in a Great Recession with very low wealth creation, perhaps we need to be discussing how to make our tax code less, rather than more progressively punitive.
