Category Archives: Obamacare

Needs of the many?

Shortly after the Supreme Court’s ruling on the PPACA (Obamacare) case came down last Thursday the world of Facebook exploded in a firestorm of cross fired epithets both praising and decrying the ruling. Frankly I’m just a bit burnt out on it all, as it would seem everything that could be said has been said ad nauseam (and yet I’m writing this article!) I think both sides believe or hope their words can persuade those on the other side, but for the most part it is a futile exercise. The Facebook community and its ilk are no different than Congress or the President; everyone is just talking past each other and no one is listening. In order to persuade you must listen and understand why they hold their beliefs or ideology, otherwise for the most part they will just hear your words but not understand the meaning. My goal in writing these articles has always been to inform and thus persuade. I’d like to think I’ve done a good job at this however I recognize the reality that I’m likely preaching to the choir while being ignored by the congregation.

If you have read this far and you are a pro-Obamacare person then congratulations for being willing to have an open mind. In order for me to have a ghost of a chance of possibly having you consider that socialized healthcare is perhaps not the best route to help people in need, I need your help. I need to understand why you support Obamacare. Please consider the following questions and feel free to respond at the contact info below.

1. Is healthcare a right? If so, why?

2. If healthcare is a right then is there any moral distinction between securing a negative right (i.e. a right secured only through the inaction of others) vs. securing a positive right, such as healthcare (i.e. a right secured only through the action of others)? Stated differently, is it moral to compel other individuals to act on one’s behalf under threat of state sanctions because one’s needs are deemed greater than those from whom the compulsion is placed upon? I believe all major world religions teach to receive help one must ask, not demand?

3. If you believe the needs of some outweigh the rights of others, then do the ends justify the means? If you agree that normally positive rights are by definition amoral, then are violations of morality justified if it might save a human life? (i.e. progressive taxation is theft but is it justified because it might be used for some useful purpose)?

4. If the ends should not justify the means (as this premise can justify any action), then do you believe that with healthcare we can make an exception because people’s lives are on the line? If yes, then why is it ok to violate some rights (property, contract, liberty) but it is not ok to violate other rights (life, privacy) in pursuit of possibly saving a life? Or is it? Would it be ok to euthanize a healthy person if their organs could save the lives of 10 people? Clearly the greater good is served by this action, so why is this wrong yet theft to possibly save a life is perfectly fine? Both involve a “taking” of property.

I understand the desire to help others; all of us on both sides of the debate want to help those in need, we merely disagree on the best course toward achieving that end. If you’re willing to look at the history (see  these articles) you will see that it is government, through regulation and subsidization (Medicare) that has caused prices to spiral out of control. Prior to 1965 (Medicare established) healthcare prices were stable and low and those in need were never turned away owing to the charitable nature of the American citizenry and her doctors. To suggest those in need were not helped is to slander the American people as implicit in the charge is that we are an uncharitable bunch that can only do “good” when forced to do so by our government.

RIP United States of America 7/4/1776 – 6/28/2012 – Obamacare upheld

Below is the body of a letter I sent to my employees today informing them of what they can expect now that Obamacare has been upheld as “constitutional”

All

Today June 28, 2012 the United States of America ceased to be a constitutional republic and is now a fully democratic fascist* oligarchy in which a tyrannical majority elect conceited tyrants that impose their will on all.

What does this mean for you as a Seachem employee? It means quite simply that health insurance rates will continue to skyrocket year over year at a 25% clip and that our only recourse is to continue raising deductible’s on the few policies we are even allowed to offer in order to keep premiums anywhere near close to affordable. To prepare for this you will be well advised to begin setting aside 10% of your gross income each paycheck into a separate account to build up a fund to cover the very high deductibles you will need to maintain in order to have some semblance of being able to afford coverage.

This is not a requirement – I am merely offering you my suggestion as to the most logical course of action to protect your own self interest given that government mandates and subsidies do nothing but drive cost of out of control (housing, healthcare, tuition – oddly all 3 have out of control costs and oddly government meddles in all 3, a coincidence? I think not). This is not opinion, this is simple economic fact that those in power simply refuse to believe, preferring to close their eyes, stamp their feet and repeat the mantra “yes we can, yes we can, yes we can” –

it is no different than jumping out of an airplane sans parachute and willing yourself not to crash into the earth… until you actually hit the earth you might believe it is working… but then reality hits you all at once.

Long term (I’m thinking 2020-2030), the government will take over healthcare and we will move to a single payer system after the “private” market becomes entirely too expensive, so naturally the government must step in to save us all.

“Gee thanks for those crutches there, oh right, you’re the one that broke my legs”.

But at least by then you will have saved up enough for medical coverage so you might still be able to afford “private” health coverage on a for cash basis so as to avoid the several month waiting list to actually even see a doctor.

Unfortunately when government steps in to take over it will likely put us and other small employers out of business as I foresee the government simply mandating that employers contribute $40-$50k/year per employee for health insurance that would go to the government – that’s in ADDITION to pay, therefore in order to recoup the cost we would have to double or triple prices and those high prices will severely if not all but eliminate the market for us… whose going to buy a $75 bottle of Marine Buffer?

So start sharpening those resumes for the eventual government job we’re all going to have, because there won’t be any others around. Think I’m overstating the case here – just look at Greece… we’re getting a preview of what is to come to us in 10-15 years… that’s how all socialist/communist/fascist countries end up. We are well on the way on the road to serfdom ( http://goo.gl/m05az )

Greg

* please look up “fascist” for yourself… it does not mean “nazi” as so many seem to believe these days – it is a form of socialism in which there is putative private ownership of business however government directs most aspects of how business is permitted to operate, thus government truly controls the business infrastructure while maintaining the illusion it is otherwise

Carrots are good for your health (insurance)

The Supreme Court is expected to deliver its decision this week on the PPACA (“Obamacare”) so while we wait with baited breath I thought I might offer an alternate approach to achieving the goals of the “Shared Responsibility Payment” (“the mandate”), which is the core issue of the court’s upcoming decision. The mandate is structured as a disincentive (“stick”) against not buying health insurance. Constitutional issues notwithstanding, the mandate is just about the worst method to achieve that goal. The penalty by 2016 would be a mere $695/year or 2.5% of household income (whichever is greater). Considering that an individual policy costs anywhere from $3-$6k/year it is more costly to pay the fine than to buy insurance only for those who earn more than $180k/year (3.7% of taxpayers ). In other words, the mandate incentivizes 96% of taxpayers to drop their insurance in order to realize a financial gain. If the Supreme Court does not overturn the PPACA on constitutional grounds then, they should overturn it on sheer stupidity grounds.

Although libertarians are opposed to any government intervention in any market, IF it seems a foregone conclusion that our overlords will simply not stop until they’ve “done” something about healthcare then I suppose it is my duty to point out how to properly incentivize behavior. Incentives (“carrots”) work much better than disincentives (“sticks”). My solution uses our existing legal framework: contracts and government enforcement thereof.

Referees don’t make the rules, they just enforce them.

Health insurance should operate like life insurance. With life insurance you purchase a policy for X number of years. In so doing you enter into a contractual relationship with the insurer whereby you promise to pay them $X dollars per year for Y years and they promise to not cancel the policy regardless of changes to your health. If they break that contractual promise, then the government steps in and forces them to live up to their end of the bargain (lawsuit).

So in the case of health insurance there should be a “term-health policy” whereby you contract with the insurer for X number of years (typically one’s expected lifetime) and the insurer provides you a price structure that is guaranteed for the life of the policy. The “carrot” here is that the longer the term, the better the rate, so rates would be much lower than they are today. Pretty simple: you promise to pay for a long time, they give you a low rate and promise to not cancel. If either party breaks their promise then the government steps in and enforces the terms of the contract.

So, how would this work in practice? Consider the following: If you cancel a policy there would be penalties, however (and here is the key) if you later want to reinstate coverage you would be required to bring your premium payments current by paying all the premiums you would have otherwise paid during the lapse in coverage OR you could obtain a brand new policy with premiums that reflect your current health status and shorter term period, so they would be exponentially higher.* This “discount-incentive/payback-disincentive” system eliminates the free rider problem because (a) in general people prefer to pay less now rather than more later and (b) you gain nothing by not carrying insurance and only trying to get it when sick. By removing government regulation we would see market driven solutions like this one, where the only limit is human imagination rather than bureaucratic fiat. Insurers should be permitted to figure out the best way to incentivize people to maintain their polices IF they must be straddled with the legal requirement that they may not deny coverage.** Those insurers that figure out the best methods will be copied thus improving compliance over time. However insurance companies often seem as inept as the government (bureaucracy is the same everywhere!) so I thought they could use a nudge in the right direction.

We, free individuals in a free market, should make the rules amongst ourselves (contracts) – it is government’s job only to enforce, not make, those rules. Referees don’t make the rules, they just enforce them.

* If an insurer went out of business the law could specify that as long as you had a policy in place it could be transferred to a new insurer irrespective of your current health condition. A more free market approach however would be to take out insurance against the insolvency of your own health insurer, so if they do go out of business your policy would provide you a lump sum payment to establish a new policy elsewhere. In such a system the insolvency premium would reflect the relative risk of your health insurer, i.e. a new upstart carrier might offer really low rates but carry a high risk premium and thus the cost of the health premium + insolvency premium might be the same as a more established carrier. Because those insurers insuring against insolvency have a vested interest in not paying claims they will be the ones to “regulate” the solvency of the health insurers through auditing and such. The insurers would permit this regulation because they will know that few people would buy their health policies if no other carriers will issue insolvency policies that cover them.

**In order to transition to this new system, we should dismantle Medicare (which currently covers wealthy old people) and Medicaid and use those funds to establish a new temporary program that would subsidize the premiums of the unhealthy AND destitute, i.e. those that truly need help as opposed to those whom the premium might merely be inconvenient or difficult. In the long run the “pre-existing condition” issue would go away as the market would incentivize parents to purchase life-term health insurance for their children at birth (these policies would be so inexpensive even the “poor” could afford them). The parents would pay the premiums until age 18 at which point the child would “inherit” the policy with an excellent rate. They would have a huge incentive to never cancel as “lifer” policies would be the ones with the lowest overall cost since they have the longest guaranteed term. 

Playing the odds…

Is insurance gambling? It feels like we have “won” if we suffer a loss and it is covered. In point of fact, insurance is not gambling. In gambling you start in a position of low probability of a loss (money safe and secure in your wallet) but move to a high probability of loss (once you lay your money down the odds are very good you will lose it). You move from a “more-sure” to a “less-sure” state. With insurance, however, you move from a “less-sure” to a “more-sure” state. Without insurance you have a non-zero chance of a bad event occurring (less-sure state) that will result in a loss, but with insurance you have reduced that non-zero chance of a loss to zero – so you have moved from a less-sure position to a more-sure position.

Health insurance in its current form (laden down by numerous government mandates) is not insurance anymore but rather is simply prepaid consumption.

Likewise the insurance carrier is not gambling because they actuarially know for a given number of insured that they will experience losses of $x/year, so they simply set rates high enough to ensure all claims can be paid and they can still make money and thus build up a reserve for those years where the predictions are off. Insurance costs scale directly with the likelihood and magnitude of a covered loss. That’s why a several million dollar liability policy can be had for only a few hundred dollars per year but a health insurance policy costs several hundred dollars per month and pays only a fraction of what the liability policy would pay. Health insurance in its current form (laden down by numerous government mandates) is not insurance anymore but rather is simply prepaid consumption.

For an event to be insurable it must be statistically unlikely (e.g. theft, fire, being sued, etc). Health insurance covers events that are statistically guaranteed (routine exams, drugs, contraception, pregnancy, etc). Why are routine events 100% covered? Government mandates. For example, as we have all learned recently, Obamacare requires 100% contraception coverage. <sarcasm> Apparently women who desire contraception are unreasonably barred from obtaining this essential human right due to a burdensome $30/month cost barrier </sarcasm> and so it is mandated that all of society must subsidize this cost. This and many other mandates drive up cost. A catastrophic health policy would be relatively inexpensive. For example last year I investigated the cost of a non-group health plan for my family and discovered that simply removing pregnancy coverage cut the cost of the policy in half! But a group plan cannot remove this coverage and thus most pay for a coverage they can never use. As an employer I’m not even allowed to offer more than three health plans. Why? Government mandates.

Individualized prepaid consumption (saving) is an effective method to address intermittent but regular events. However aggregated and shared prepaid consumption is a terrible method. It has the effect of actually raising costs. In order to understand this, just imagine that we had “food insurance”. The premium would be equal to the total of all money spent on food in a given time frame divided by the population. For some the premium would be more than they would have spent on their own. In those cases there would be an increase in consumption (so as not to get short changed). That increase in consumption increases demand, and hence prices. Additionally, the “food insured” won’t be directly paying for any of their food thus they’ll have no inclination to restrict their intake (why buy ground beef when you can get grade A sirloin). This overall increase in demand will drive up prices. Insurable events can’t be “over consumed” because they rarely occur. Prepaid events can be over consumed because they occur regularly and thus there is ample opportunity. Just imagine what would happen to auto insurance costs if the government mandated that it had to cover the cost of oil changes, brake pads, and other routine maintenance.

Who will speak for me?

All too often violations of liberty by our government upon its citizens occur silently, sheltered from the bright lights of the Fourth Estate as it were, because the victims are singular. Abner Schoenwetter was sentenced to 8 years in federal prison for violation of the Lacey Act because he imported seafood from Honduras in plastic bags rather than cardboard boxes. Civil asset forfeiture incidences are on the rise, such as the case of the Motel Caswell in Massachusetts wherein the local police are attempting to seize an entire hotel from its owner under federal law (the police get to keep 80% of the value of seized property under federal law but only 50% under state law) because over the last 20 years 0.05% of guests had been arrested for drug offenses. These repugnant violations of civil rights occur every day as a consequence of the over bearing government that now exists in this country. The president can laugh all he wants about “spilt milk” but these are real people with real lives that are destroyed due to the passage of thoughtless laws whose “unintended” consequences could have clearly been seen by Ray Charles.

If you’re going to point a gun at someone you can’t cry foul when they grab that gun and point it back at you.

Oh, but I must chuckle when I hear the howls and screams from the large indignant organizations who have recently become ensnared in the briar patch that is our Federal government. Oh, the humanity! We cannot permit such violations of our basic freedoms (because now those violations affect us!) A few weeks ago it was the SOPA flap. Nearly the whole country stood arm in arm with the big Internet companies (Google, Wikipedia, etc.) to fight back against government intrusion. Why? Because it affected them. When government violates other people’s rights nobody cares, but when it affects us, well that we cannot stand for! Likewise the Catholic Church was rather upset that Obamacare will force them to provide health insurance that covers contraception. This requirement would force the church to violate one of its core beliefs. I would argue it is not so much a 1st Amendment issue as it is rather an issue of “the government has no right to tell anyone how to spend (or not spend) their money.” The Church is right in their opposition. But what is humorous is that the church in the US was a proponent (3/23/10) of Obamacare  (except as it related to coverage for abortion). What’s the saying…“If you dance with the devil, you will get burnt.”

Although both groups are absolutely correct in their stance in proclaiming that the government is violating their rights, they are both somewhat hypocritical (and please don’t accuse me of Catholic bashing, I’m Catholic, all right). The internet companies are all too happy to push for “net neutrality” regulations that employ government force to compel others to behave the way they want, yet they don’t like it when such force is turned on them. Likewise the Catholic Church is equally happy to endorse laws that restrict civil unions or outlaw state recognition of homogender marriage, yet they don’t appreciate that same force being turned on them by people who find their stance on contraception as archaic. If you’re going to point a gun at someone you can’t cry foul when they grab that gun and point it back at you.

When violations of liberty are perpetrated we must all stand together at all times, not just when it affects us. The lessons of political apathy were summed up well in the words of Martin Niemöller (a German pastor who initially supported Hitler but then opposed him and was jailed for that opposition) – “First they came for the communists, and I didn’t speak out because I wasn’t a communist. Then they came for the trade unionists, and I didn’t speak out because I wasn’t a trade unionist. Then they came for the Jews, and I didn’t speak out because I wasn’t a Jew. Then they came for me and there was no one left to speak out for me.”