It Appears Obamacare was Designed to Fail so they could give us a Single-Payer System

Posted by PITHOCRATES - March 23rd, 2014

Week in Review

The Democrats have longed for national health care.  Because if the government controls health care they control one-sixth of the U.S. economy.  Which means one-sixth of the U.S. economy would flow through Washington.  That’s a lot of money.  And a lot of that can flow into politicians’ pockets.  Allowing them to spend more than they ever had before.  And the best thing about it is that once they get control of it they can scare the people into raising taxes.  “Unless the people tell their Congress members to raise tax rates we will have to make cuts in the national health care budget.  Which means some people won’t get the tests they need.  The treatment they need.  Or the surgery they need.”  Imagine the fear that’ll put into the American people.

So when President Clinton entered office his administration tried to give us national health care.  Hillarycare.  But the people said in no uncertain terms that they didn’t want national health care.  By voting Republicans in everywhere during the 1994 midterm election.  That was the end of Hillarycare.  And President Clinton moved to the center.  While the Democrats noted that if they were going to pass national health care into law they would have to be devious.  Which is what Obamacare apparently is.  A devious plan to get us to a single-payer system against our will (see Why Is the ObamaCare Mandate So Toothless? posted 3/19/2014 on Investors).

Health Care: Some think Democrats designed ObamaCare to fail so they could get to a single payer system. Seems a bit extreme. But it does help explain why they made the individual mandate so easy to avoid…

In fact, of the 30 million uninsured expected in 2016, 19 million will be exempt from the individual mandate, according to the Congressional Budget Office…

On top of this, ObamaCare includes various “hardship exemptions” — some of which appear to be so laughably easy to qualify for that it’ll be a shock if any uninsured pay the tax penalty…

The form even encourages people who “aren’t sure” to “ask for an exemption…”

What’s more, those who don’t qualify for an exemption could avoid the penalty simply by not paying it. Democrats specifically barred the IRS from charging civil and criminal penalties, imposing liens or seizing assets and bank accounts to collect unpaid ObamaCare penalties. It can take it only from a tax refund…

This leaves the question of why Democrats would make a key pillar of the ObamaCare structure so incredibly weak.

Were they worried about the political consequences of making the unpopular mandate too strict, not realizing it would undermine their reform? Or did they know that an ineffective mandate would ultimately wreck ObamaCare, hoping its demise would push the country toward a single payer system?

In other words, were Democrats dangerously incompetent or unbelievably cynical? Neither is a particularly good defense, but each underscores the need to scrap ObamaCare entirely and start over.

The health insurers were all for Obamacare.  At first.  Mandatory health insurance?  Cha-ching.  Easy money.  The government forcing people to buy their policies?  It’s like they died and went to insurance heaven.  But government is full of devious bastards.  The health insurers let their greed cloud that fact.  And now they may pay the ultimate price.  For with all of these mandate exceptions the young and healthy aren’t buying health insurance they won’t use.  Only sick people who will use that health insurance are buying it.  So the health insurers have far too much going out in claims and far too few premiums coming in.  Which won’t help a health insurer stay in business.  But, then again, that may have been the plan all along.

www.PITHOCRATES.com

Share

Tags: , , , , , , , , ,

FT197: “Global warming insurance would probably sell as well as Obamacare.” —Old Pithy

Posted by PITHOCRATES - November 22nd, 2013

Fundamental Truth

The Scam of the Ponzi Scheme is that there is no Investment

A Ponzi scheme is a pyramid scheme.  An investment scam.  Here’s how it works.  Say three scammers build an investment fund that they promise will return an 18% return on investment.  A pretty good return these days.  If they have 100 investors who invest $25,000 each that brings in $2.5 million into the investment fund.  Now here’s where the scam comes in.

They pay each investor an 18% return each year.  So their $25,000 returns $4,500.  A return they can’t get anywhere else.  An investment just too good to be true.  Some take that $4,500 check and spend it on something special for themselves.  Others leave it in the fund.  While others beg to get into the fund.  Of course they wouldn’t do these things if they understood what happened to the $2.125 million that the fund didn’t pay out to investors.  That went into the pockets of the three scammers.

That’s the scam of the Ponzi scheme.  There is no investment.  The scammers collect the money people invest.  Put aside some money to pay out as a generous return on investment.  While keeping the rest.  These scammers sit on top of the pyramid.  And the more people that join the investment fund the wider the base of the pyramid gets.  Pouring more money into the scam.  Providing more money to pay out even higher returns on investments.  Getter ever more people begging to get into the fund.  While burying the scammers under an avalanche of cash.

Our Aging Population is sending the Health Insurance Industry into a Death Spiral

All Ponzi schemes share these characteristics.  And one other one.  They all fail.  And the scammers go to jail.  Why?  Simple.  The scam works as long as the base of the pyramid continues to grow greater than the top of the pyramid.  As the base grows larger the scammers spend more money, though.  Because there is more money to spend.  And spend they do.  Putting down deposits and paying on large mortgages and loans.  Buying very costly things that have a voracious appetite for cash.  So over time more money flows out at the top of the pyramid.  Which isn’t a problem until money stops flowing into the bottom of the pyramid.  Or begins to flow out.  Because people want to use their money for something else.  Like for a down payment on a house.  And once the money flowing out of the bottom of the pyramid exceeds the ‘return’ on investment the fund pays those high returns on investments shrink and disappear.  Exposing the scam.

This is what has happened to Social Security and Medicare.  Thanks to an aging population.  Women are having fewer babies than they did during the baby boom generation.  So today we have fewer taxpayers entering the workforce who pay the taxes that pay for Social Security and Medicare.  While the baby boomers are retiring and leaving the workforce.  And living longer into retirement.  Consuming far more money than they ever paid into these entitlement programs.  So there is far more money flowing out of the top of the pyramid than is flowing into the bottom.  Inverting the pyramid.  And putting these programs onto the path to bankruptcy.

Health insurance is little different.  It just covers so much these days that insurance premiums have soared to pay for this ever expanding coverage.  And the aging population just makes a horrible situation worse.  The elderly are living longer and consuming the lion’s share of health care services.  Further raising the cost of health insurance.  Making it unaffordable to many.  So people simply choose not to buy it in their youth when they are young and healthy.  And wait to buy it later in life when they need it.  Such as when they start raising a family.  At which time they’ll try to find employment somewhere that has good health insurance.  When they start consuming health care services.  Creating adverse selection.  Where only those who consume health care services buy health insurance.  While those who don’t consume health care services (i.e., the young and healthy) don’t.  Creating a death spiral.  As there are no non-consumers of health care services subsidizing the high cost of the large consumers of health care services.  So premiums rise.  To allow fewer people pay for more.  More people drop their insurance because they can no longer afford it.  Shrinking the insurance pool.  So premiums rise.  To allow fewer people pay for more.  More people drop their insurance because they can no longer afford it.  And so on until the cost of health insurance equals the cost of the health care services.  And the insurance market goes the way of every Ponzi scheme before it.

When Reality hits People in the Pocketbook they tend to Lose their Idealism

Enter the Affordable Care Act and the mandates.  Forcing the young and healthy to buy insurance they won’t use.  So they can use their premiums to pay for the old and sick.  The greatest generational theft in history.  Something the young and healthy see.  And don’t like.  For they are not running out and buying health insurance on the health exchanges.  In fact the majority of the people to enroll thus far are the high consumers of health care services.  Which is basically the opposite of the goal of Obamacare.  The young and healthy may have supported President Obama and the Affordable Care Act but that was only in generalities.  Yes, we should help those who don’t have insurance.  And, yes, we should do something to save the environment.  We should stop discriminating against the LGBT community and let them get married.  In the abstract these are all noble goals.  But when the reality hits their pocketbook then it’s no longer an abstract thing to feel good about.  Especially when they can’t get a job with their college education because they had the misfortune to enter the workforce during the worst economic recovery since that following the Great Depression.  The Obama recovery.

This is when youthful idealism turns into skepticism.  As reality settles in hard.  This isn’t raising taxes on the rich.  Something they won’t have to deal with until much later in their career.  This is in the here and now.  When they stop hearing inspiring words from the president about what we can do if only we implement his policies.  But only hear B.S. and lies.  For if they had that youthful idealism they would be rushing to the health exchanges to buy health insurance to make the world a better place.  But they’re not.  And this has the left worried.  Not just about trying to fix the broken Obamacare website.  But will this skepticism spread to other items on their liberal agenda?  Such as the fight against manmade global warming?  They still want their carbon tax.  And they’ve worked hard to get kids graduating from high school convinced that we’re destroying the planet and need to make polluters pay.  If the young lose their faith on Obamacare they may just stop fearing global warming to the point that they may start driving big SUVs again.

In the abstract the youth will support many things.  Until it starts hitting them in the pocketbook.  And if we make the fight against global warming hit them in the pocketbook they would quickly become indifferent about manmade global warming.  Even becoming manmade global warming skeptics.  Perhaps even noting that the glaciers once stretched down from the poles to near the equator.  And moved back towards the poles.  Before there was any manmade global warming.  Something that probably bothers them today but they’re not yet ready to question the left about manmade global warming.  But if we made them buy insurance to protect themselves from the ravishes of global warming they probably would.  The prognosticators can run off a list of calamities that will befall us from unchecked global warming.  So actuaries should be able to put a cost on that.  And set insurance premiums to cover the cost when the calamities of manmade global warming hit us.  Putting these premiums into a Save the Planet from Manmade Global Warming Trust Fund.  Just like the Social Security Trust Fund that has nothing in it but government IOUs.  Let the youth start paying a monthly premium to save us from manmade global warming and see how soon they become global warming deniers.  If we did this global warming insurance would probably sell as well as Obamacare.  Because when reality hits people in the pocketbook they tend to lose their idealism.  And this is the biggest fear the left has.  Because they count on that youthful idealism to win elections.  For once people lose their idealism they tend to vote Republican.

www.PITHOCRATES.com

Share

Tags: , , , , , , , , , , , , , , , , , , , , , , , ,

The Soft Tyranny of National Health Care

Posted by PITHOCRATES - November 14th, 2013

Politics 101

Nazis and Communists acquired Power by Promising their People a Generous Welfare State

Adolf Hitler did not tell the German people that he wanted to wage world war.  Install an oppressive police state.  Or commit genocide.  Joseph Stalin did not tell the Russian people that he wanted to install an oppressive police state.  Starve millions of his people to death.  Or export communist revolution around the world.  Fidel Castro did not tell the Cuban people that he would make life so unbearable for them that they would rather risk dying in the ocean to reach America than staying in Cuba.

These dictators did not say these things.  And if anyone ever asked them of their true intentions they lied.  Especially to their people.  They lied about wanting to brutally oppress their people so they could expand their power.  Instead they told them they were going to take care of the people.  Unlike the evil capitalists.  Hitler’s National Socialism was going to give the people everything they could possibly want.  A job.  Mandatory vacations.  And national health care.  A person would be a fool not to want to give Hitler more power as he was going to make their lives so much better.  Freer.  And more pleasant.  Like a welfare state is supposed to be.

The communist promised that there would be no bourgeoisies exploiting the working man.  Instead everyone would be equal.  A utopia where everyone was each other’s brother.  Or comrade.  There would be no private property.  The people would own everything.  And there would be national health care.  This is the communist utopia Stalin promised his people.  And what Castro promised his people.  Neither meant it.  As no communist dictator meant it.  But by promising the people these things they were able to acquire power.  And the more power they acquired the more the people suffered.  This is why dictators and dictator wannabes lie.  To get the people to give them things the people would never give them if they told the truth.

The Affordable Care Act is a Pathway to the Soft Tyranny of National Health Care

The American left has always wanted the Holy Grail of the socialist state.  National health care.  For it gives them massive power.  As a person’s health is the most important thing in their life.  And once dependent on the state for their health care there is no new tax they won’t approve.  If it’s for their health.  This is why the left wants national health care.  This is why all dictators give their people national health care.  It makes people dependent on government.  And it makes people fear their government.  For if the government doesn’t get what it wants they could withhold health care.  Which could result in their death.

Now the Hitlers, Stalins and the Castros of the world don’t need to withhold health care to kill their people.  Their people feared them because they know their leaders could kill them outright.  The kind of thing that just doesn’t happen in Western democracies.  Which is what makes national health care so attractive.  For it offers a soft tyranny.  For you heard the left’s dire predictions of what would happen if the Republicans shut down the government.  But national health care?  Imagine the fear they could put into the people the next time the Republicans talked about tax cuts. 

The Affordable Care Act (i.e., Obamacare) is a pathway to this soft tyranny.  National health care.  While Canada and the United Kingdom struggle under the weight of their state health care systems the American left thought long and carefully of how to bring that same failed system to the American people.  With the health care industry totaling one-sixth of the U.S. economy that was just too great a tax hike to impose on the American people.  Even Democrats would be reluctant to impose such high taxes on people they needed to vote for them.  So they couldn’t go that route.  At least, not yet.

President Obama breaks the Law Again as he Tells Insurers they can still Sell Policies the People Liked

There is one thing standing in their way.  The private health insurance industry.  For with this there is an alternative to massive new taxes.  Which makes massive new taxes politically unattractive.  So they have to destroy the private health insurance industry first.  By lying to them.  Teasing them with government mandates that will give the health insurers a lucrative windfall of business.  While actually sealing their demise.

If you like your health insurance plan you can keep it.  Period.  That was the big lie.  Because you can’t.  Secretary Sebelius quickly wrote out the grandfather clause in the Affordable Care Act.  Especially for the individual market.  Where a lot of young and healthy people had only catastrophic policies.  Because they are young and healthy.  If the government was going to mandate the insurers pay for everything under the sun from free birth control to senior care they needed these young and healthy to lose their current policies and replace them with more costly policies with higher deductibles.  Basically forcing them to pay for costly health insurance but never using it because of those high deductibles.  Which transferred the cost of senior care to the young and healthy.  Something the young and healthy would never have been onboard with if the Democrats had told the truth.  Which is why the Democrats lied to them.

With the implementation of Obamacare the lies have become real.  They’re touching people’s lives.  And not in a good way.  Millions of individual policy holders are losing their insurance.  And those with employer-provided insurance will start losing theirs next year.  They’d be feeling the pain today but President Obama broke the law and ordered his administration not to enforce the employer mandate of the Affordable Care Act.  Giving the employers a year reprieve until they, too, have to drop their non-compliant health insurance policies.  But being caught in the lie the year before the 2014 midterm elections has caused the president and the Democrats a lot of heartburn.  So much that the president is once again breaking the law.  And telling health insurers that they can still offer the health insurance policies the people liked.  When it is virtually impossible for them to do.  For they spent 3 years preparing for Obamacare and calculating insurance premiums based on the mandates bringing in enough money in premiums to pay for everything under the sun they now must cover. 

If they reinstate the old ‘substandard’ policies the young and healthy will buy these instead of buying the more costly Obamacare policies.  While the old and sick will buy the far more generous Obamacare policies.  Which will be a bargain for them as they will consume far more health care dollars than they pay in premiums.  But without the young and healthy subsidizing these policies the insurers will go bankrupt quickly as their benefits paid will far exceed their premiums collected.  Forcing them to increase their premiums to pay for the higher than expected benefits paid.  Until health insurance is so costly no one is buying it.  Putting them out of business.  So they can’t do this and hope to remain in business.  And, therefore, they will not reinstate the old ‘substandard’ policies.  Which is what the president wants.  For he gets to blame the insurers.  While accelerating the demise of the private health insurance industry.  By bankrupting them as planned.  AND getting the people to hate them even more.  A win-win for the Obama administration.  As they lie that they care about the people they are harming to expand their power.  Just like every other tyrant and tin-pot dictator has done throughout history.

www.PITHOCRATES.com

Share

Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

Job Stewart called the Lying Kathleen Sebelius a Liar

Posted by PITHOCRATES - October 13th, 2013

Week in Review

Young people get more of their news from The Daily Show than they do from Fox News.  And no wonder.  Jon Stewart is funny.  Witty.  Smart.  And he has some of the best writers working in television.  But he doesn’t understand economics.  All he knows is the Keynesian nonsense he was taught by schools interested in empowering the state.  For that’s all they teach now.  They don’t teach the Austrian school.  The Chicago school.  Not even the classical economics that made the United States the number one economic power in the world.  Which is probably why Stewart believes the government is good and righteous.  There to help people.  And not make a ruling class.  Like governments everywhere use Keynesian economics to do.

So Stewart may be ignorant about things economic.  But he has integrity.  Which is why he called Kathleen Sebelius a liar (see Jon Stewart accuses Kathleen Sebelius of lying to him about Obamacare by Jamie Weinstein posted 10/8/2013 on The Daily Caller).

Health and Human Services Secretary Kathleen Sebelius likely thought her interview with Jon Stewart on “The Daily Show” Monday night would be an easy setting to pitch the Obamacare exchanges to young people. Instead, she ended up getting accused of being a liar by the popular comedy host.

During his interview with Sebelius, Stewart repeatedly sought an answer from the secretary on why big businesses got a delay in their Obamacare mandate to provide affordable health insurance to their employees, while individuals did not get a delay in their Obamacare mandate making them purchase health care or face a penalty.

In a rare monologue at the end of the show, Stewart said he remained confused and that he suspected that the secretary may have been lying to him.

Stewart is a card-carrying liberal.  He wants to support Obamacare.  He wants to believe everything the government says.  But he’s smart.  He sees what’s going on.  And he sees the unfairness of Obamacare in regard to the mandates.  Even during the interview he said the administration was making it difficult for people like him to support them.  Which is why he called Sebelius a liar.  Even though it was painful to do.

www.PITHOCRATES.com

Share

Tags: , , , , , , ,

The Democrats have refused to Raise the Debt Ceiling for Republican Presidents

Posted by PITHOCRATES - October 8th, 2013

History 101

The Democrats opposed Raising the Debt Ceiling for Republican President Dwight Eisenhower

President Obama and the House Republicans are at a standoff.  At the center of the debate is Obamacare.  The House Republicans want to defund Obamacare.  They didn’t like it when it cost $1 trillion over ten years.  And they like it even less now that the CBO has revised its cost to $3 trillion.  It has frozen hiring.  And pushed people from full-time to part-time.  President Obama has also revised the law.  Taking on legislative powers that the Constitution gives only to Congress.  With the one year delay for the business mandate being especially galling to Republicans.  As well as the 75% subsidy members of Congress and their staff get.

The House Republicans have reduced their demands to basically giving the president a continuing resolution to fund all of government if he would only give the American people what he gave to his friends in Big Business.  A one year waiver of the individual mandate.  Infuriating the president.  Saying he will not negotiate with terrorists taking the American people hostage.  However, he said he will negotiate with the Republicans.  After they give him everything he wants.  Including raising the debt limit.  For shutting down the government is one thing.  But messing with the full faith and credit of the United States is another.  With the Republicans having the gall to demand spending cuts before raising the debt ceiling.  This was just unprecedented.  Never before did anyone use the debt ceiling to bully a president before.  In the past Congresses always raised the debt ceiling whenever a president requested.  Whistling a happy tune in the process.  Except, of course, in 1953 (see Can Debt Ceiling Debates Be Useful? History Says Maybe. by Joseph J. Thorndike posted 8/28/2013 on the Huffington Post).

The idea of using the debt ceiling for leverage is not new. Indeed, the nation’s first debt limit crisis hinged on it. In the summer of 1953, President Dwight Eisenhower asked Congress for a modest boost in the debt ceiling. When austerity-minded lawmakers refused, it prompted a crisis that brought the nation to the brink of default – or to its fiscal senses, depending on your point of view…

Eisenhower didn’t believe that spending cuts would be sufficient to keep federal debt under the cap. “Despite our joint vigorous efforts to reduce expenditures,” he told Congress, “it is inevitable that the public debt will undergo some further increase.” On July 30, Eisenhower asked Congress for an increase in the debt ceiling from $275 billion to $290 billion…

Sen. Harry F. Byrd, D-Va., took the lead in fighting the increase. Raising the limit would be “an invitation to extravagance,” he declared. Keeping the present cap, moreover, would encourage much-needed economy. “It may be that the administration would be forced to operate on a very prudent and conservative budget in order to avoid an increase in the debt limit,” he predicted.

A host of senators joined Byrd’s campaign to reject the increase. The New York Times reported that Democratic opposition was “almost solid,” and many Republicans were also prepared to break with the president…

As a leverage goes, it was pretty effective. Almost immediately, Eisenhower told his department heads to cut their spending. “It is absolutely essential that you begin immediately to take every possible step progressively to reduce the expenditures of your department during the fiscal year 1954,” he told them.

So it started early.  And it started with the Democrats.  Holding the debt limit hostage to get what they want.  And in 1953, the Democrats got what they wanted.  They forced President Eisenhower to make spending cuts.  Just like the Republicans asked for in 2011.  And will ask again now.  But President Obama was not as reasonable in 2011 as President Eisenhower was.  And he is saying he will be even less reasonably now.

The Democrats opposed Raising the Debt Ceiling for Republican President Ronald Reagan

So was 1953 an isolated incident?  Were the Democrats more accommodating at other times when a president asked them to raise the debt ceiling?  As President Obama would have us believe?  Well, they weren’t very accommodating in 1984.  When President Ronald Reagan asked Congress to raise the debt ceiling (see In 1984, debt debate looked different to Biden, GOP by Stephen Dinan posted 7/19/2011 on The Washington Times).

With time running out on a looming debt crisis, the president and his allies in the Senate are fighting to win a raise in the government’s borrowing limit, only to be stymied by a minority insisting that a spending freeze be part of the deal.

Sounds like present day, but it was October 1984 — when the partisan roles were reversed. Republicans controlled the White House and the Senate, while Democrats controlled the House. Democrats also could sustain filibusters in the Senate and were balking at raising the debt ceiling unless it was attached to big spending cuts…

One of the leaders of that 1984 Democratic revolt — a man who tried to impose a spending freeze and fought for a smaller debt increase than President Reagan wanted — was none other than current Vice President Joseph R. Biden, then a senator from Delaware and now President Obama’s right-hand man in negotiations with Congress.

“I must express my protest against continually increasing the debt without taking positive steps to slow its growth. Therefore, I am voting against any further increase in the national debt,” Mr. Biden said in a floor speech just before helping fellow Democrats defeat an increase of $251 billion on a 46-14 vote.

Once again the Democrat-controlled House refused to raise the debt ceiling.  So 1953 was not an isolated incident.  But the beginning of a pattern of Democrat willingness to risk the full faith and credit of the United States for political reasons.  To get their way despite losing the election to President Reagan.  Apparently back then elections didn’t have consequences.

How embarrassing it must be for the vice president.  Being part of an administration trying to do what the Reagan administration did when he stood in opposition.  Imagine trying to argue for something you argued against previously?  Thankfully, it was only the vice president that had such a hypocritical past.  Imagine how embarrassing it would be if the president had such hypocrisy in his past.

The Democrats opposed Raising the Debt Ceiling for Republican President George W. Bush

Well, as it turns out, another young Democrat senator went toe-to-toe with another Republican president over the debt ceiling.  And he just didn’t vote against it.  He made a speech.  On the record.  For posterity.  To prove he was no spendthrift.  At least, not when a Republican was in the White House.  That president was George W. Bush.  And that senator was, of course, Barack Obama (see Obama Really Wishes He Never Gave This Speech About The Debt Ceiling by Walter Hickey posted 1/14/2013 on the Business Insider).

In 2006, then-Sen. Barack Obama gave a floor speech defending his decision to vote against an increase in the debt ceiling under President George W. Bush…

Here are some of the key parts of Obama’s speech:

Mr. President, I rise today to talk about America’s debt problem. The fact that we are here today to debate raising America’s debt limit is a sign of leadership failure. It is a sign that the U.S. Government can’t pay its own bills. It is a sign that we now depend on ongoing financial assistance from foreign countries to finance our Government’s reckless fiscal policies.

[…]

Increasing America’s debt weakens us domestically and internationally. Leadership means that ‘‘the buck stops here.’’ Instead, Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren. America has a debt problem and a failure of leadership. Americans deserve better. I therefore intend to oppose the effort to increase America’s debt limit.

In the midst of the first debt-ceiling standoff in 2011, Obama was asked about his flip by ABC’s George Stephanopoulos. He chalked it up as a “political vote” and said his mindset changed as President.

Hypocrisy, thy name is Barack Obama.

Interesting.  It was okay for him to do what the House Republicans are doing now when he was in Congress.  When there was less debt.  And less of a debt crisis.  But it’s not okay for the House Republicans to do so now.  When there is more debt.  And a greater debt crisis.

So what is the right thing to do?  Well, if you’re President Obama the right thing to do is what he wants to do.  Not what is best for the country.  For if you argue both sides of the same issue at different times it means you’re more interested in what’s best for yourself.  Not the country.  Unless he evolved on this issue, too.  If so, perhaps we should ask for President Obama’s resignation.  For if he keeps evolving on issues he must be too ill-informed or naïve to be president.

www.PITHOCRATES.com

Share

Tags: , , , , , , , , , , , , , , , , , , , , ,

FT188: “When it comes to Obamacare the left is either ignorant or devious.” —Old Pithy

Posted by PITHOCRATES - September 20th, 2013

Fundamental Truth

People buy Insurance to pay a Small Fee to Insure against a Large and Unexpected Financial Loss

What is insurance for?  To help mitigate a large financial loss.  Crossing the ocean can be dangerous.  There are storms.  Wars.  Even pirates.  Shippers can lose very costly cargoes.  Most ships make it to their destination without incident.  Wise people noted this a long time ago.  And they came up with an idea.  Insurance.

Let’s illustrate this with an example.  Let’s say there are 100 ocean crossings in one year.  Each one of these crossings has cargo valued at $10 million each.  Let’s say of those 100 crossings only three sink.  A loss of $30 million.  A loss few can afford.  But there are only three ships that sink.  And at the beginning of the year no one knows whose ships will sink.  It could be anyone.  And everyone of the anyone has a very strong desire not to be the one losing a ship with a $10 million cargo.  So they are willing to pay a small fee to insure against a greater loss.

Here’s a general idea of how it works.  With 100 crossings valued at $10 million each that’s $1 trillion in total cargo.  Of that $1 trillion there’s a very good chance based on past history that $30 million of it will sink to the bottom of the ocean.  So if we divide that catastrophic loss by those 100 crossings that’s an additional $300,000 insurance cost to add to each of the 100 crossings.  So instead of a possible loss of $10 million a shipper will only have a definite ‘loss’ of $300,000.  Which is far less than $10 million.  And something they can plan for.  As they can add it to the price to their customers.

People don’t buy Health Insurance because a Larger Percentage of the Population doesn’t get Cancer or have Bad Car Accidents

Because of insurance none of these shippers will have to suffer a $10 million loss should it be their ship that sinks to the bottom of the ocean.  This is insurance.  Everyone pays a small fee to protect themselves from a great financial loss.  And that fee is far, far smaller than that potential financial loss.  This is the only way great things get done.  Great things require huge outlays of money.  And no one would risk those outlays if they didn’t have a way to mitigate their losses should their ship sink.  Literally.  Or figuratively.

This is insurance.  Paying a small fee to insure against an unexpected and catastrophic financial loss.  Health insurance today doesn’t do this.  It pays for everything.  Including the routine things we know about and can budget for.  Things that are unlikely to bankrupt us.  Office visits.  Flu shots.  Physicals.  Breast exams.  Colonoscopies.  These are all part of living.  We know we will have these expenses.  Just as we know we have to buy groceries and gasoline.  But there is no grocery and gasoline insurance.  And thank God for that.  They’re expensive enough.  Can you imagine their costs if they went up like health insurance?

The reason why health insurance is so expensive is because it is not insurance.  It doesn’t just pay for the unexpected and catastrophic financial losses.  Like incurred from a cancer diagnosis.  Or a car accident.  It pays for everything.  In our shipping example that would be like those shippers paying a $10 million insurance premium to insure a $10 million cargo.  Which would never happen.  Because it would be less costly to lose the occasional cargo.  Because every ship doesn’t sink.  At most three may in one year.  Even if all three ships were yours it would be cheaper to replace $30 million in cargo than paying $1 billion in insurance premiums.  This is why a lot of people choose NOT to buy health insurance.  Because a larger percentage of the population doesn’t get cancer or have bad car accidents.

The Left learned after the 1994 Mid-Term Elections that they had to Lie to get National Health Care

Obamacare just makes everything worse.  Because it forces insurance companies to pay for even more routine and expected medical expenses.  Increasing the cost of health insurance even more.  Which in turn increases the cost of business.  Which provides most health insurance these days as an employee benefit.  With Obamacare mandates to provide more of everything the cost has grown so much that businesses have been dropping their health insurance benefits.  Or cutting back hours to escape the Obamacare mandates.  Making Obamacare a big part of the anemic economy.  For it is a great disincentive to creating jobs.  And hiring people.

Now, anyone with a rudimentary understanding of economics knows this.  If you keep raising the cost of business you will see less economic activity.  The left understands this when it comes to interest rates.  It’s why they want to keep printing money to keep interest rates low.  To lower the cost of borrowing so businesses borrow more to expand their businesses.  So they do understand at least one cost of doing business.  But they seem to be completely ignorant when it comes to taxes and regulatory compliance.  For while they worry about rising interest rates hurting business they don’t have any concern about rising taxes or regulatory compliance costs.  Why?

Because they are truly ignorant?  If so they shouldn’t be anywhere near the economy.  Or they are devious?  And lying through their teeth to deceive the American public to get something they want?  Well, they may be ignorant.  But the smart money is on devious.  For the left has always wanted national health care.  But the people don’t.  When President Clinton tried it he lost the House in the 1994 midterm election.  And the left learned a lesson.  To get national health care they had to lie to the people.  Which is what Obamacare is.  A big lie.  It will do nothing President Obama said it would do.  All it will do is destroy the private health insurance industry by placing regulatory compliance costs on businesses and the private health insurance industry that will simply put the private health insurance business out of business.  As we are seeing.  Leaving uninsured people that the government must step in to insure.  And once they do they’ve got their national health care.  While giving the American people the middle finger.  “Say no to our national health care?” they’ll say.  “Well, [deleted expletive] you.”  They will say this figuratively, of course, with their actions.  For they will never let go of the lie that Obamacare is about lowering costs and insuring the uninsured.  And not the truth that it is nothing but a means to advance their agenda.

www.PITHOCRATES.com

Share

Tags: , , , , , , , , , , , , , ,

President Obama has given us the Worst Economic Recovery since the Great Depression

Posted by PITHOCRATES - March 10th, 2013

Week in Review

The president’s economic policies have done nothing to improve the economy.  The labor participation rate continues to fall.  As more people give up finding a job.  Because there are none to be found.  And it makes one wonder.  Why?  Why are things so bad in the economy?  The last 4 years have been the worst economic recovery since the Great Depression.  And what has been the common denominator these past 4 years?  President Obama.  And his anti-business policies (see The Cruel Things President Obama Is Doing To The Labor Market by John Goodman posted 3/7/2013 on Forbes).

President Obama’s proposal to increase the minimum wage and the health insurance employer mandate will combine to destroy job opportunities for young, unskilled workers in cities and towns across the country.

With respect to the new health law, the Congressional Budget Office estimates the cost of the minimum benefit package that everyone will be required to have will be $4,750 for individuals and $12,250 for families. That translates into a minimum health benefit of $2.28 an hour for full time single workers and about $3 an hour for someone working 30 hour a week. For family coverage, the cost is $5.89 an hour for a 40-hour-a week employee and $7.85 an hour for a 30-hour-a-week employee.

These are not small changes. They can double the cost of labor in some cases…

Employers have four ways to reduce this burden: (1) the mandate doesn’t apply to firms with fewer than 50 workers, (2) the mandate doesn’t apply to employees who work fewer than 30 hours, (3) the employer doesn’t have to offer or subsidize family coverage and (4) rather than provide health insurance, the employer can pay a $2,000 per (full-time) worker fine.

There are going to be lots of firms that fail to grow beyond 49 employees. But be warned: If an individual owns, say, two or three fast food franchises, the IRS has signaled that it will treat their combined operations as a single business. Also, in calculating the number of full time workers, the IRS is going to count “full-time equivalents.” That means that two workers, each working 15 hours a week, will count as the equivalent of one full-time (30 hour) worker.

As noted, employers are already reacting to ObamaCare. In fact, there was a huge shift to part-time employment in the fast food industry beginning in January. The reason: ObamaCare will employ a 12 month “look back.” That is, in deciding whether a worker is full-time or part-time next January (when the mandate becomes effective) the government will look at the average weekly hours worked in the previous year…

Bottom line: employment opportunities are being curtailed by the imposition of ObamaCare. Things will be even worse if a 24 percent increase in the cash minimum wage is heaped on top of it.

Economists have traditionally believed that an increase in the minimum wage (as well as mandated benefits) causes unemployment. However, a study by David Card and Alan Krueger found very little employment effect in the fast food industry in Pennsylvania and New Jersey.

You wonder if economists ever talk to employers when they do these studies…

If government imposes higher labor costs on this industry, the restaurants will try to make it up by raising their prices. However, if the customers won’t pay the higher price — as may be the case in poorer neighborhoods — the restaurant will have to close.

Moreover, in order for prices to rise in one market there must be a corresponding decline in other markets. For the economy as a whole, employers can’t raise prices on the average with no change in the money supply.

Anyone with a rudimentary understanding of economics knows these policies don’t help business.  They don’t create jobs.  And if they aren’t helping to create jobs is it any wonder we’re in the worst economic recovery since the Great Depression?  Of course not.  And we’re back at that question.  Why?

Well, we have two possible answers.  Because the Obama administration is just incompetent and doesn’t understand economics.  Or they know exactly what they’re doing.  And if they do there would be but one explanation for their anti-business policies.  They are purposely trying to make businesses drop their health insurance as paying the fine is less costly.  Leaving the door open for the federal government to step in.  And be the insurer of last resort.  A backdoor way to national health care.  The Holy Grail of the Left.

So is the Obama administration incompetent?  Or devious?  It is one or the other.  And neither choice bodes well for the country.

www.PITHOCRATES.com

Share

Tags: , , , , , , , , , ,

Australia taxes their Rich People far more than the US but it’s still Not Enough to Pay for their Welfare State

Posted by PITHOCRATES - November 10th, 2012

Week in Review

With President Obama’s reelection some are saying it is a mandate to raise taxes on the rich.  Because he said all along that he wanted to tax the rich more.  And he won reelection.  Ergo, ipso facto, mandate.  But we should be careful about raising taxes.  For it seems our government is always raising taxes.  Or demanding that we need to raise taxes.  So the question is where does all this tax-raising end?  A new carbon tax?  A GST?  Well, Australia has both.  Yet they’re still talking about raising taxes (see States to eye online shopping for GST boost – Sydney Morning Herald posted 11/10/2012 on Canberra Hub).

State treasurers will this week consider calls to cut the GST-free threshold for goods bought from overseas online stores, in an attempt to bolster flagging revenues from the tax.

Under current rules, products costing less than $1000 that are privately purchased from overseas are not subject to GST, sparking complaints domestic retailers face an uneven playing field.

State governments – which receive the revenue raised by the GST – also miss out on about $600 million a year due to the threshold, and this foregone revenue is projected to rise as online shopping takes off…

NSW Treasurer Mike Baird, who wants the GST-free threshold to $30, will raise the issue as a “key consideration” at the meeting, a spokeswoman for Mr Baird said…

The simplest way to resolve the situation was to require foreign retailers selling into Australia to charge GST, he said.

Mr Greiner has also called for a debate on raising the GST’s rate from 10 per cent or broadening its base, but this was ruled out on Monday by the Treasurer, Wayne Swan.

Australia’s top marginal tax rate is 45% on incomes over $180,001 ($187,021 US).  They tax companies at 30%.  And capital gains, after some discounting and adjustments, they tax as income.  Whereas in the US the top marginal tax rate is 35% on incomes over $388,350.  The corporate tax rate is 35%.  And a capital gains tax of 15%.  Apart from the higher corporate tax rate, the Australians tax individuals far higher in Australia than the US taxes their individuals.  And yet it’s still not enough.

On top of these higher tax rates are additional taxes.  Like the carbon tax.  And the goods and service tax (GST).  Which they are currently discussing ways of increasing to generate more tax revenue.  There’s an important lesson to learn here.  No matter how much government taxes their people it will never be enough.  For the unsustainable rising costs of a welfare state for an aging population will always exceed the tax revenue from an aging population.  Higher tax rates and new taxes are inevitable.  And for those states with national health care, cost cutting, longer wait times and service rationing are also inevitable.  Because however much they tax it will never be enough.

This is the future in America.  Because we’ve just added Obamacare even though we’re already suffering record budget deficits under the Obama administration.  And 4 years of anemic economic growth.  Which will only become more anemic with higher tax rates.  And new taxes.

The only way a state will ever pay for its welfare state is if they have a population that is getting younger such that there are always more people entering the workforce than leaving it.  Or by reducing the size of the welfare state to a size the current population growth rate can fund.  So the United States has two paths to solvency.  Start having a heck of a lot babies.  Or start slashing state benefits.  Or both.  Which would be a third option.  But the current option, increasing state spending with a declining birthrate, will not work.  No matter how much you tax rich people.

www.PITHOCRATES.com

Share

Tags: , , , , , , , , , , , , , , ,

The Medicaid Expansion included in Obamacare may prove to be its Achilles Heel

Posted by PITHOCRATES - July 15th, 2012

Week in Review

Part of Obamacare includes an expansion of Medicaid.  The state’s health care programs for the poor.  As we know health care is very expensive.  Which has been the driving force behind Obamacare.  To cut these high costs.  And they’re going to do this by transferring a lot of these costs to the states.  Which has got them really nervous.  Because health care is very expensive (see Governors divided over Medicaid expansion by Michael A. Memoli posted 7/14/2012 on the Los Angeles Times).

America’s governors have long used their semiannual gatherings to lock arms in opposition to dreaded unfunded federal mandates and emphasize a pragmatic approach to problem-solving in stark contrast to a hyperpartisan, even dysfunctional Washington.

But the makings of a real divide loomed over the summer meeting of the National Governors Assn. here, as state leaders grappled with the fallout of the Supreme Court ruling that granted unexpected leeway with regard to a key component of President Obama’s landmark health law: whether to accept billions of federal dollars in return for expanding coverage for the poor through Medicaid…

But a greater number of governors on both sides approached the unexpected ruling with caution, largely out of concern for the long-term effect on state budgets that had been stretched to the brink by the economic downturn.

Through the Affordable Care Act, the government is set to spend an estimated $1 trillion over the next decade to help states insure Americans who make less than 138% of the poverty line, or about $15,400 annually, through an expansion of Medicaid. The provision was expected to extend coverage to about 17 million people, on top of the approximately 50 million Americans who are currently covered by the program…

But other governors are worried that already struggling states may be left in the lurch in the future.

It’s clear why these governors are wary about this Medicaid expansion.  An increase of Medicaid patients from 50 million to 67 million is an increase of 34%.  States are slashing other spending to cover their Medicaid spending.  As the Medicaid rolls are already overwhelming some states.  And the thought of increasing their Medicaid spending by 34% is making them very nervous.  For anything can happen in Washington.  Including the cutting of federal subsidies.  Which could leave some states with spending obligations they just won’t have the ability to pay.

Could this be part of some grander design?  Well, of course.  The proponents of Obamacare wanted a full-fledged taxpayer-financed national health care system.  Something the people vehemently rejected.  So they introduced a personal and an employer mandate to put the private insurers out of business.  More and more people will drop coverage because the fine will be cheaper to pay thus forcing insurers to raise premiums on the fewer remaining policy holders.  Which will encourage more people to drop their coverage.  And so on until the last private insurers shut their doors.  Leaving the federal government as the health care provider of last resort. 

The expansion of Medicaid will force states to spend more than they can afford to.  Requiring ever more federal assistance.  It will be just a matter of time until the federal government will have to step in and be the health care provider of last resort.  And before you know it they will have their full-fledged taxpayer-financed national health care system.  While the taxpayers stand in shocked disbelief wondering what just happened.  And muttering “government for the people my ass.”  Unless the states refuse this power grab by Washington.  And say ‘no’ to that federal money and not expand their Medicaid programs.  Perhaps making the Medicaid expansion the Achilles Heel of Obamacare.

www.PITHOCRATES.com

Share

Tags: , , , , , , , , , , , ,

Obamacare will Bring the IRS into our Lives like Never Before

Posted by PITHOCRATES - July 14th, 2012

Week in Review

You wanted free health care?  You think you got free health care?  Think again (see Constitutionality of Healthcare Law Is Still in Question by Nina Owcharenko posted 7/10/2012 on U.S. News and World Report).

Not only is the IRS expected to enforce the employer mandate, it must also make a complex tax calculation including household incomes for each employee, and collect the individual mandate tax (based on each month a person is uninsured or otherwise fails to satisfy the HHS guidelines for coverage). At a time when lawmakers on both sides are advocating for making the tax code simpler, these provisions only make the code more complicated.

Health care isn’t free.  Obamacare just changes who pays for it.  Either by forcing people to buy health insurance policies.  Using the IRS to delve deep into the personal lives of everyone living in your household to see if you have health care.  If you or the other people in your household can afford your health care.  And if you or someone else in your household can afford it but didn’t buy it for you look out.  You will be paying the penalty.  If you can’t afford it then the government will force someone else to pay for it.  Really little different than the way things are now when you go to the emergency room without insurance.  The only difference being the IRS colonoscopy.  And that part about the federal government forcing you to buy something.

So what’s the incentive here?  To show you and everyone living in your household cannot afford to buy a health insurance policy.  That way you get around the federal government forcing you to buy something.  And all you have to endure is the IRS colonoscopy.  Which shouldn’t be too painful if you don’t work and only live on the kindness of government benefits.

Of course this may be the calculated plan all along.  When you factor in a lot of small business planning to drop their health insurance and pay the fine instead because it’s less costly you have a noticeable trend.  A decline in people buying private health insurance policies.  While the private health insurers have to pay more benefits (such as covering preexisting conditions for someone who never owned a health insurance policy before).  While they collect fewer premium dollars to pay for those benefits.  So what must they do?  Raise their premiums on the few people remaining who are still buying their policies.  Thus encouraging more people to drop their insurance coverage.  Because the penalty will be less costly.

Of course this can lead to but one end.  The end of private health insurance.  Forcing the government to do what they wanted to do all along with Obamacare.  Transform it into a full-blown, tax-funded national health care service.  Including the high taxes, the long wait-times and the rationing of services common to all national health care systems.  And the death panels.  Where some government bureaucrat decides whether a person is worth spending health care resources on.  And having that bureaucrat telling you “no” will be a rather unpleasant experience.  Even worse than that IRS colonoscopy.

www.PITHOCRATES.com

Share

Tags: , , , , , , , , ,

« Previous Entries