I just can't take it anymore. I think I have been transported into an episode of the Twilight Zone!!!This week there have been developments with the Health Care Reform bill that have raised resentment toward politicians, Congress, and the Obama presidency to new highs following the announced parliamentary tactics that Democrats would employ in order to pass the Health Care Reform Bill. When combined with the arrogance and abhorrence of the Democrats in power and their willful disregard of the will of the American people, the sleazy tactics have many Americans calling for the heads of Democrat leaders regardless of their positions.
What has me most befuddled, however, is that there are still some people out there who are defending these liberal jokers. Now, I realize that the jokers that elected Obama as president, and elected other Democrat leaders, at least the far-left Democrats who are pushing the President's agenda, would stand by their decisions because they simply don't know any better - trust me in this situation it is better for them to feign ignorance rather than to try and defend their position because that will simply make them look stupid. But, after scanning a great deal of comments attached to the news articles that have been coming out of the past few weeks, I realize that there are a great deal of uneducated Americans.
It seems to be the consensus on the left that the Health Care Reform Bill will insure over 30 million uninsured Americans, decrease the national deficit, cut the cost of insurance premiums, and allow private insurance companies to remain in business. I look at these statements and I think, "wow, politicians are really telling me this? The statements alone show that they are either naive, lying, or, they simply do not understand simple economics."
So, like every other news reporter, blogger, and generally anyone with a venue and an opinion on the matter, I will now offer up my own analysis of the bill.
These are the Health Care claims taken directly from the White House website :
"The Administration believes that comprehensive health reform should:
- Reduce long-term growth of health care costs for businesses and government
- Protect families from bankruptcy or debt because of health care costs
- Guarantee choice of doctors and health plans
- Invest in prevention and wellness
- Improve patient safety and quality of care
- Assure affordable, quality health coverage for all Americans
- Maintain coverage when you change or lose your job
- End barriers to coverage for people with pre-existing medical conditions"
A Brief Overview of Supply and Demand Economics
The bottom line is that a business will charge as much as they possibly can while giving up as little as they can get away with so that they can maximize their profits because that is how capitalism works. Supply and demand economics keep a business in check by allowing customers the freedom to choose between competitors in order to get the best deal, and therefore play a part in the price of these goods and services.
Supply and Demand Economics and Health Care Reform
Now, to see the folly in the Health Care Reform Bill that the Obama administration is trying so desperately to pass one need only apply the simple rules of supply and demand economics to the claims being made by the presidency.
"Reduce long-term growth of health care costs for businesses and government"
If the President intends to limit in any way the growth of a company, then the President intends to put a company out of business. Lack of growth in a company is exactly why companies fail. A company must continuously grow in order to remain competitive. Growth allows companies to diversify and increase their products and services in order to keep up with market fluctuations and changes in the market. In the insurance industry, companies grow by making more safe bets than bad bets or claims paid out. Insurance companies create member pools where customers pay into a pot that they use in order to pay against claims. Essentially, the insurance company bets against the fact the cost of any claims within a pool will outpace the revenue brought in by the members of the pool. For this reason, insurance companies hedge their bets by insuring those who are least likely to get sick or injured and draw out of the pool allowing the insurance company to stockpile money to cover claims since claims are not taken out by those who continuously pay into the pool. At the end of the year the good bets are counted against the bad bets, so to speak, and the remainder is the companies profits. Profits equal growth. Growth allows an insurance company to cover more patients since greater profits means an increased chance of reinvestment which therefore allows for higher risk members into the member pool. More revenue into the pool means less of a disaster when claims are raised by members of that pool so long as the amount of the claims are less than the revenue generated by the members in a pool. The claim that the federal government will reduce health care cost to businesses and government implies a limiting of an insurance companies ability to grow and therefore make profits, or, that there will be an increase in the number of suppliers in the health care industry. In fact, the policies within the bill aim to do just that. Both possibilities will be devastating to the insurance industry and to people's health care insurance. By limiting the profits of a company the government limits a companies ability to do business. Moreover, by limiting a companies ability to do business the government will eliminate insurance companies who are in business in the insurance market since risk will outweigh the rewards.
"End barriers to coverage for people with pre-existing medical conditions"
President Obama and Democrat supporters intend to eliminate that which insurance companies rely on in order to make a profit, the safe bets! The president intends to force insurance companies to cover more bad bets than they already do while simultaneously removing their ability to increase the cost of coverage. The president believes that the influx of members to the pool will increase the demand which will drive the supply up and therefore decrease the price. What the president doesn't seem to understand is how insurance companies work. By increasing the number of bad bets in a member pool the insurance company could potentially incur more claims than revenue in a pool. Furthermore, by increasing the supply of insurance companies member pools will decrease in size as more insurance companies acquire more and more of the market share. The result of this transition will be, at least, two-fold. First, insurance companies will have to increase premiums in order to offset the increased risk in their member pools or face possible bankruptcy. Bankruptcy will lead to claims going unpaid and the insured being denied benefits as a result. Since companies will be denied the ability to increase premiums, as the claim suggests, insurance companies will likely face bankruptcy on a month-to-month basis. Second, an increase in the number of suppliers in the health insurance market resulting in smaller member pools will lead to increased failure of insurance companies since start-up insurance companies could potentially loose all capital with one bad member pool. Again, members will lose benefits as the result of the bankruptcies that will be filed after these insurance companies fail. Moreover, the increased start-up costs that will result from the increased risk of failure will price start-ups out of the game leading to a government mandated monopoly either by private insurance companies capable of weathering bouts of bad claims, or, by a government run insurance plan. A government run insurance plan or a monopoly on private insurance will lead to an increase in the cost of insurance and the government's financial responsibility. A government run insurance plan will increase cost simply because of the governments inability to operate efficiently in any endeavor it carries out due to the bureaucracy involved. A monopolized private insurance, which is what some argue is in place today, will allow insurance companies to charge whatever price they want therefore increasing the cost of insurance for businesses and the government.
"Protect families from bankruptcy or debt because of health care costs"
This statement is purely wishful thinking or an all out lie. Regardless, the statement does not hold true if insurance companies do not honor claims brought forth by their members as the result of bankruptcy. In order for this statement to be true the government must take into account the contingency for reimbursing hospitals, doctors, etc. for services rendered to recipients of unpaid claims, otherwise these families will suffer the full brunt of the cost of any procedures or services they receive rather than the reduced cost that they would have enjoyed under their insurance plan.
"Guarantee choice of doctors and health plans"
I'm not even sure what this statement means but I think it means that you will be able to choose any doctor you want under any health plan that you want. This could only be true if the government controls health insurance. To guarantee anything means that you have the control to ensure that it will happen. Therefore, in order to guarantee which doctor someone chooses the government must control both the doctors and the insurance companies. This creates an even higher risk to insurance companies since insurance companies will be required to follow the standards imposed on doctors that are set forth by the federal government. Given the inefficiency of the federal government, the responsibility of keeping doctors current will be a responsibility that the government will be unable to satisfy, especially without incurring higher cost than the private sector. In addition, insurance companies will then be stripped of their ability to choose doctors that operate in their best interest (i.e. provide only necessary care and procedures) potentially leading to an increase in claims. Any increase in claims will lead to a loss in profits which would be normalized by an increase in premiums but since an increase in premiums will be forbidden it will lead to an increase in insurer bankruptcies or loss of profits.
"Improve patient safety and quality of care"
The first part of this claim makes no sense to me. Were patients in some kind of peril previously? Isn't that a contradiction of terms; health care and patient peril? Anyway, I think that they are trying to say that there will be more safety in one's insurance claims being paid but as we have already seen this will not be the case, at least not with the other provisions within the bill. The second part of the claim is just a joke and, again, as has already been pointed out the inefficiency of the government will inevitably lead to lower quality health care.
"Assure affordable, quality health coverage for all Americans"
This claim, yet again, is a contradiction of terms. Once the government takes over the insurance companies health care coverage quality will drop because the government won't be able to pay the amount necessary or provide the growth and development necessary to remain competitive with the private sector. The private sector will likely drop out of the market, at least until the government steps out, resulting in an inefficient government run health care system. If the government believes that the private sector will remain in the health insurance industry following passage of this bill, then the claim is outright false since the private sector will inevitably increase the price of premiums in order to offset the cost of increased claims and to protect against higher risks therefore making private health insurance less affordable leaving only the lower quality government run health option to remain. The government run option may be more affordable to the individual but certainly it will not be of higher quality than private insurance and it will certainly be more costly to the government and the American people by extension.
"Maintain coverage when you change or lose your job"
In the crazy world that the president and other liberal Democrats live in this might sound like a good idea. However, businesses will certainly not enjoy this since they will have to pay health care cost for non-contributing employees unless employees are required to continue to pay for their health insurance plan. Now, this already happens with C.O.B.R.A. but ex-employees are usually required to pay an increased premium once they have lost their job and coverage options only last for a limited time following their termination of employment with the company. I'm not sure why they are required to pay an increased premium except for maybe it is due to the fact that the discount is considered a benefit of employment through a deal insurance companies struck with employers in turn for their business and the benefit of their employees to the insurance companies members pool. So, if that is the case, then a few things happen when the government requires insurance companies to keep ex-employees on insurance plans that result from these employment deals. One thing that happens is employers no longer get these deals, or the deals are modified, since insurance companies will lose profits as a result of lost revenue that could have been gained through private individual insurance plans. Insurance companies lose these profits since they will not be able to renegotiate the deal which the ex-employee may have accepted, especially if the ex-employee was unable to find a better provider under their new employer, or, unable to find a new provider at all. Again, cutting into the profits of the insurance companies results in increased premiums, and limits on the price of premiums either increases bankruptcies or increases the number of insurance companies that abandon the market.
"Invest in prevention and wellness"
This claim leads me to the age old adage that one can lead a horse to water but you can't make it drink. Like any investment there is always the potential for negative returns. What this means in the grand scheme of things is that the government can invest tons of money into prevention and wellness but it could all just be a waste of money. Sure it could work but the benefits could be negligible if there are any benefits at all. This fact is perfectly illustrated by legislation that is currently being considered by the New York assembly.
Democrat Felix Ortiz, I really didn't have to put democrat before the name since only a Democrat would be stupid enough to come up with such a boneheaded idea as this, has introduced a bill which would ban salt as an additive to meals prepared in New York restaurants. Yeah, I know. Everybody thinks it is a joke but it's not. Apparently, the New York assembly is actually considering voting on the bill, however after all of the bad press that has come as a result of its unveiling and the public condemnation and ridicule of the bills author(s) will likely result in this bill quickly being forgotten. But, it just goes to show why people are upset with the direction being taken by the liberal left. Invest in prevention and wellness means, to the liberal left, legislating the governments control over what you can and can't eat, what you must and must not do as far as exercise is concerned, and things of this nature. That is why the ideology behind the liberal left movement has produced ridiculous freedom stripping legislation of the past and attempts at new freedom stripping legislation (e.g. smoking bans, obesity claims, etc.) is causing such an uproar amongst freedom loving Americans.
The claims made by the liberal left regarding the health care reform legislation are no more ridiculous than the banning of salt in New York restaurants, and they are exactly why the nation is so polarized surrounding the debate of this issue - health care reform, not a salt ban; I think the entire nation, except for a few crazies on the left, are laughing at the hole salt ban incident. The assault on American freedom and the seeming support of liberal Americans is what has me saying that I a feel as though I am in the Twilight Zone. Things like the government taking control over the health insurance industry, banks, and auto industries, and things like Democrats trying to ban things like salt and tobacco while supporting the legalization of illegal drugs and having a president who smokes publicly have got me thinking that someone or something has stolen the brains of the "biggest political party in America." I feel as though I have somehow been sucked into an episode of the Twilight Zone where I am surrounded by mindless hypocritical zombies that are trying to control my day to day life. What's worse is that liberal or leftist Democrats seemingly take offense to being called socialist but how could they be called anything different when every move they make serves to strip Americans of their free will and their fundamental freedoms? It's crazy. I can't understand what it is that goes through their brains other than this is what they set out to do, destroy the country so that China and their allies can overrun it and turn it into the socialist country that they have always wanted - face it, if America is weakened enough China is the only country in any position to take the United States over. That notion is even crazier to me. Just thinking that someone would want to take the greatest free country on earth and turn it into the most oppressive country in the world is unfathomable to me. In fact, it is worse than any episode of the Twilight Zone. It is more like watching "Triumph of the Will."
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