Alex Hankins

Dems’ Health Care Bill Looking Weaker by the Day

by Alex Hankins on July 27, 2009

in Economy, Healthcare, Insurance, Personal Liberty, Politics as Usual, Regulation

For the Democrats still supporting the health care overhaul, the blows just keep coming. As if the financial problems I described in a previous post were not enough to deter this fiscal suicide, the Congressional Budget Office has now said that a plan to offset the massive costs by putting an outside panel in charge of budget-cutting for other government health care programs will amount to savings of only about $2 billion over 10 years — practically negligible in comparison to the final price tag, which is already expected to exceed $1 trillion.  For those who still consider this legislation financially feasible, that is a discount of 0.2%.  Oh boy, I can’t wait to cut out the coupon!

When the Congressional Budget Office announced its cost assessment of the health care bill, Senator Chuck Schumer (D-N.Y.) called the estimate “wacky” and accused the CBO of omitting the savings he inexplicably expected the plan to reap after full implementation. This new statement from the CBO directly counters that claim and casts even further doubt on both the viability of the bill and the credibility of leading Democrats.

Yet, instead of heeding the advice of their own budget analysts, Democratic lawmakers are still charging forward and losing Blue Dog support in the process.  Senate Majority Leader Harry Reid has already acknowledged that the bill will not come to a vote in the Senate until after the recess.  By then, the bill likely will have lost so much support due to increased awareness of what it entails that it will either disappear entirely into obscurity (along with the last of Obama’s invested political capital) or be diluted down into a politically innocuous and much less  economically threatening shell of its former self.

The latter is the safer and more probable option for the administration to choose. Its rush to pass this legislation may be related to its desire to have some major policy accomplishment of which it can boast in time for the 2010 midterm elections, the inevitably disastrous effects of which will not materialize until well afterward.  Obama has a lot riding on this.  Given his rock-star status and his party’s dominance of Congress, Obama will look embarrassingly weak if his prized health care initiative fails to pass.  He and the leaders in Congress must quietly cut away much of the spending from the bill or risk halting their already ebbing momentum.

Senator Jim DeMint (R-S.C.), who compared the prospect of a defeat for Obama on health care to Napoleon’s career-ending battle at Waterloo, may turn out to have been right on the money.  Obama’s victories so far have been enabled by confidence in his personal leadership and still-unfulfilled promises — so if he cannot deliver on the crown jewel of his policy agenda, he will be vulnerable to a catastrophic loss of both the necessary support in Congress and the iconic status that has served him so well until now.

Obama Rejects Reality as “Politics of the Moment,” Embraces Politics of Fear

by Alex Hankins on July 21, 2009 · 2 comments

in Healthcare, Insurance, Personal Liberty

Listening to President Barack Obama and other top Democrats on the subject of health care, one could be forgiven for thinking commercial medicine itself is on the verge of collapse, and that most of us soon will be completely unable to access decent medical treatment.  In response to criticisms from GOP lawmakers and gloomy CBO projections, Obama re-emphasized what he insists is a need for immediate, drastic reform.  He dismissed the illumination of the fiscal insanity of his prized health care plan as the “politics of delay and defeat” and “politics of the moment” and said, “The need for reform is urgent and it is indisputable.”

It is impossible to arrive at the conclusions Obama apparently has reached on health care reform without blanking out reality and ignoring a host of contradictions.  Sure, health care is expensive.  How did it get so costly?  Blank-out.  Whose responsibility is it to provide health insurance?  Blank-out.  Who will pay for this massive overhaul?  Blank-out.  How will this legislation accomplish its stated goals?  Blank-out.  How have similar programs in other countries fared?  Blank-out.  What incentives does government have to provide and maintain quality health care?  Blank-out.  Whose “need” is really served by this behemoth of a bill?  Blank-out.  What does the bill even say?  Blank-out.

Still, even Obama recognizes that time is against him.  With his approval ratings falling, his stimulus package failing, the ugly details of the bill leaking out, and the economy already suffering enough, he knows that it’s now or never.  That is why he is determined to convince the country that without major action by the great and glorious State, health care costs will climb forever, eventually pricing everyone out of affordable care.  Never mind the fact that costs cannot rise out of consumers’ reach without bankrupting service providers.  Blank that out, too.

Former President George W. Bush was roundly criticized for employing the “politics of fear” to expand the police powers of the executive branch.  During his administration, terrorism was the great goblin to be fended off by our benevolent bureaucracy.  If the government did not get greater surveillance and detention powers, it was reasoned, terrorists could execute another massive attack, killing thousands or even millions of Americans.  We were urged to be vigilant and trust increasingly powerful law enforcement authorities to guard against evil outsiders sneaking in and attacking us once again.  Stand with your country, or the terrorists will win.

The politics of fear are even more pronounced under the new administration, and arguably more insidious.  Our sworn enemy during the Bush years at least was tangible and defined, and fighting it was basically a matter of fulfilling one of the few proper functions of government:  defending the homeland.  In the age of Obama, the enemy is privation itself–invisible, yet ever-present; undefined, yet understood and feared by all; not a prescribed province of government activity, yet action on which is demanded and welcomed by a fear-stricken populace.  To fight this enemy, we are presented with an ultimatum:  turn choice in health care over to the government, or risk losing medical coverage for our families.  We are asked to grant the state a new level of authority, the gravity of which is surpassed only by its ambiguity.  A 1,018-page bill, rammed through with little debate and against all informed judgment?  So much for that transparency we were promised.

The urgency Obama conveys in his push for universal health care coverage reflects his own concerns about his dwindling political capital, not the dangers of rising health care costs.  He knows as well as Congress does that the more time we have to examine the bill and consider the veracity of the claims made to justify it, the more likely we are to hold him accountable for the unprecedented and unacceptable power grab this really is.

Stepping Up the Class War

by Alex Hankins on July 7, 2009

in Economy, Energy, Environment, Global Warming, Healthcare, Personal Liberty, Regulation

On both of the most salient issues of the day, health care reform and climate change, proponents of the corresponding legislation are setting their sights on the rich to pay for these expensive measures.

The massive government health care bill in the House involves a very expensive restructuring of the health care system in the United States–so expensive, in fact, that Democrats are proposing a tax increase on the rich, that is, in addition to the one that will occur when the Bush tax cuts expire in 2011.  They are calling it a “surtax“–a yet-undetermined slice of the incomes of those earning over $200,000 per year, which would be used to help pay for the implementation of the health care overhaul.

At the same time, a study just released by the National Academy of Sciences calls for governments to target their wealthiest citizens for carbon dioxide-cutting regulations and taxes.  As opposed to the Kyoto Protocol, which sets emissions standards for countries, the authors of this new report recommend tracking and restricting emissions on an individual basis.  The rationale is that since wealthy people expend more energy and give off more CO2 than the less prosperous, they should be held to an international cap on CO2 emissions and taxed if they exceed it.  Surely, this is music to populist politicians’ ears, and it comes just in time for the cap-and-trade bill that faces a tough fight in the Senate.

So the idea, judging by this latest volley against the rich, is to convince people that enjoying a higher standard of living than most others is leading to Armageddon, while simultaneously drawing upon the richest members of society like human ATMs to pay everyone else’s medical bills.  The classic political formula–providing benefits to the many at the expense of a few–is in full employment, which is much more than one can say of either the American or European economies in the foreseeable future.  The realization of today’s dominant political agendas will see to that.

Obama’s Call for Light Bulb Regulation Not a New or Bright Idea

by Alex Hankins on June 30, 2009 · 3 comments

in Environment, Global Warming, Nanny State, Personal Liberty, Regulation

Eager to sustain his regulatory whirlwind, President Obama is now calling for efficiency standards for household and business lighting.  As if the climate-themed energy rationing bill that just blew through the House wasn’t enough, the White House now wants to force lamp and light bulb manufacturers to make their products use less energy.  This plan appears modeled after the ambitious fuel efficiency standards applied to the now decimated auto industry and Obama’s order to the Department of Energy to mandate increased efficiency for household appliances.  It’s almost funny — the government, of all entities, telling private enterprises to be more efficient.

Are these the winds of change we’ve been anticipating?  Something is floating on the breeze, but it smells disappointingly familiar.  That’s because all this has been done before, and by the administration of George W. Bush, no less.  In late 2007, then-President Bush signed an energy bill into law that established long-term efficiency standards for automobiles and household appliances and ordered a phasing-out (ban) of the incandescent light bulb by 2014.  For all his hot air about changing the country’s direction and breaking from the strides of the previous administration, Obama hasn’t even shown originality in his determination to send the economy into a tailspin.

As with his predictions regarding jobs and unemployment, Obama’s stated expectations for this new light bulb bill are, quite frankly, hogwash.  He says consumers will save up to $4 billion annually in energy costs, erroneously assuming away the greatly increased energy and light bulb prices that would result, which would drive down purchases.  Also, any replacements that do take place would be piecemeal — replacement and installation costs alone would be enough to encourage most consumers to hang on to their incandescent bulbs and older appliances for as long as they can.  Why pay and risk more for light when you can avoid it?

The biggest problem with this legislation, as with most government intrusions into the economy, is its total disregard for business incentives and consumer self-interest.  Businesses fully recognize that efficiency, especially energy efficiency, is consistently in high demand throughout the market, so any serious drive toward boosting profits must necessarily focus on innovations that they can use to entice cash-strapped consumers.  An added benefit brought by the resulting savings is that consumers have more money to spend.  So the incentives are there.  Improving technology is a win-win situation all around, but only if it is voluntary.

Simply commanding progress does not make it happen.  If some imagined and desired technology does not exist, ordering people to work harder will not make it arrive faster.  It’s not as if any industry wants to lag behind technologically.  The incentives are there.  Sure, a business can seize upon an underdeveloped idea like, for example, a car motor fueled by something that produces water vapor as its only exhaust, and pour its resources into making the motor work, but the fact that the idea is still inadequately understood would mean inevitable waste and likely failure for the business.  Maybe it turns out that the motor has to be too big to make it worth installing in a car.  Maybe it depletes this clean fuel more quickly than current motors expend current fuel.  Maybe it’s more dangerous.  Maybe only a certain car model can effectively use this motor, and consumers don’t like its size or shape.  Maybe a better idea comes along, or the motor and fuel cost too much even for die-hard environmentalists to use regularly.  The bottom line is that taking such a leap is a huge risk that no savvy investor would touch with a ten foot pole.  Even if something profitable finally does come out of such an investment, so much money would be wasted in the process of developing, refining, and marketing this unfamiliar product that the business may go bankrupt by the time the car hits the market.

So it is with lamps.  Energy efficiency is great, but without market efficiency, any products that do come out of this forced innovation (there’s no shortage of oxymorons in government) will be dead on arrival.

Then again, the economic illiteracy of the aformentioned bills’ supporters is only part of the problem.  Without even trying to understand how such regulations would affect their constituents or considering the idea that private expenses are private matters, the government is already charging ahead with more controls, more limits on liberty.  The private sector has solid incentives to innovate.  The government does not.  That is why it should come as no surprise when this legislation, which is mystifyingly supposed to help prevent climate catastrophe, ultimately inflicts more damage on the United States than a category 5 hurricane.  At this point, any change in the winds would be welcome.

Hearings Open on Coercive and Counterproductively Costly Health Care Bill

by Alex Hankins on June 23, 2009 · 1 comment

in Healthcare, Insurance, Nanny State, Personal Liberty, Regulation

Congressional Democrats are pushing hard to complete their health care bill before next week’s recess, but their hopes for a quick passage and the fulfilling of Obama’s goal of signing by October look increasingly bleak–especially since the drafting was done without Republican input, leading, of course, to a political firestorm.  The bill would mandate health insurance coverage for all Americans at enormous taxpayer expense and require major employer contributions, though there is not yet full agreement on the specifics of the burdens that will ultimately be imposed on employers.  All that is clear so far is that these burdens will be massive.

The objectives of this bill ostensibly are to provide insurance coverage for the 46 million Americans who still lack it (though apparently not all of those uninsured are actually American citizens) and lower health care costs.  However, it likely will accomplish neither.  First of all, the plan won’t end up covering all the uninsured even when fully implemented, according to a preliminary assessment by the Congressional Budget Office.  It would leave as many as 36 million people still without coverage–truly pathetic, given the hyped ambitions of the plan.

Second, a new study published by the Pacific Research Institute points out that Medicare costs have actually grown much more than those of private health care, and that’s not even accounting for the additional costs imposed through the taxation that supports it and the distortion of the market that occurs as a necessary result of Medicare’s very existence.  This is particularly important (and ironic) because what sparked this health care debate in the first place was the huge rise in health care costs over the last 40 years.  So, in short, this government health care plan fails on its own terms.

To someone who believes in both the competence and goodwill of our government, this makes absolutely no sense.  Congress has been shown by its own budget experts, among many others, that this plan will cause an explosion of the already astronomical federal budget deficit, and that despite its massive spending, still will fail to insure most of the people it targets.  To make matters worse, this public health care program itself is by nature far less efficient than its private sector counterparts, so massive amounts of money will inevitably be wasted.  That provokes the question:  Why go through with this at all?  To answer, one must set aside the premise that this initiative is about insuring the helpless against financial catastrophe due to injury and illness.  This initiative is not about helping people.  It’s about control.  The more people become dependent on taxpayer-subsidized, (eventually) monopolized health care, the more voters there are who have a vital incentive to cast their ballots in favor of bigger government.

“Health care reform” is an issue today only because the political establishment has managed to pin all the blame for soaring costs on the private sector, despite the corresponding increase in cumbersome regulation over the years.  When this measure fails, as even the CBO assures it will, the blame will fall yet again on the private sector–or what’s left of it.

HHS Secretary: Health Insurance Industry Needs Competition… With Government

by Alex Hankins on June 17, 2009 · 4 comments

in Healthcare, Insurance, Nanny State, Regulation, Trade

In an AP interview on Tuesday, Health and Human Services Secretary Kathleen Sebelius called for competition in the health insurance market. No, not between private insurance providers free to set their own policies, but between the private sector and the federal government. Failing to understand (or acknowledge) that the top and proper priority of any private enterprise that intends to survive is profit, not service to others, she boldly claimed that the private insurance market “has really failed to provide affordable coverage to Americans.”

There can be no real competition in the market if one player makes the rules for the others and cannot run out of money. If (when) the government health care system fails to live up to its stated goals, it will not suffer downsizing or face bankruptcy. It will simply expand its scope of power further and extort or print more money to more vigorously continue to pursue its wrongheaded ends. Furthermore, the private sector and the government are competing for two very different things. The former seeks to earn money by selling something people are willing to buy. The latter, which can get all the funds it wants through confiscation and printing money, competes instead for dependency. In that race, no one else is running.

So what Sebelius really wants  is not competition between trader and trader, but the sad spectacle of a contest between armed mugger and disarmed victim. At least a mugger won’t try to convince his victim that the robbery is for his own benefit.