Right Wing Nut House



In researching my latest AIP article on health care co-ops, I must confess that I wanted to like the idea. I didn’t know much about them but what I had heard was pretty good.

Here’s a reasonable analysis from the Heritage Foundation that finds some things to like but much more to fault with regard to health insurance cooperatives.

For myself, I am a firm believer in the concept of “simple is best.” All things being equal, whether it is in my personal life, or a government program, the less complex the idea, the better chance it has of working. This may sound stupidly simple but if you look at the way many people live their lives, they could benefit greatly by following that advice. Too often, we unnecessarily complicate our lives by overthinking, or overdoing.

With government, it is simply a matter of scale. Trying to serve 300 million people is, by definition, an enormously complex undertaking. So it would be with co-ops.

The plan is so nebulous at the moment that no one is really sure how co-ops would work in practice. Ideally, you would have 50 separate co-ops serving people in the various states. Some smaller states might band together to form regional co-ops to increase their marketing and distribution opportunities. The federal government would provide $3-4 billion in seed money to get the co-ops off the ground (perhaps more) and an administrative infrastructure for each co-op would either be set up by the state or contracted out.

Participants (”shareholders”) would sign up and purchase insurance through these pools. Policies would not be underwritten by private companies but by the co-ops themselves. It is assumed the government would grant generous tax subsidies to businesses and individuals to sign up with the co-ops and make them a going concern. Decisions on what to cover, and reimbursement rates would ideally be made by all the shareholders, but when you are talking about a statewide co-op, that will probably not be possible.

Would it work? Would the co-ops be able to compete with private insurance companies, forcing them to lower premiums while giving shareholders quality care at a reasonable cost?

The answer is almost certainly no. First of all, there is the titanic complexity of setting up so many co-ops in the first place. By definition, they would have different rules, different coverages (although guidelines from the federal government would help there). They would conduct business in 50 different ways.

Coverage would be wildly uneven and quality would also vary. Some - perhaps many - might not make it or be so poorly run that the government would have to take them over (The Washington, D.C. co-op was forced to sell itself to Humana it was so mismanaged.) There were many health care co-ops during the Depression that all ended up failing. And the record of co-ops begun in the last 20 years is very uneven with some succeeding, some failing, and some just limping along.

I think part of the answer is a matter of scale. The successful co-ops in Seattle and Minneapolis are small enough to be well run and large enough to spread the risk out over as many people as possible.

But what happens when you try and graft that model on to a statewide co-op? It won’t take for the simple reason that what is simple at the local level becomes devilishly complicated when you go from insuring 100,000 people to several million. Also, several questions would have to be raised; who elects the directors or would the governor appoint them? How can decisions on what coverages and how much that would be affecting a million or more people be made? Would politics enter into the running of these co-ops?

Co-ops would not adequately address the problem of insuring those with chronic or pre-existing conditions. And forget portability. Nor would they necessarily insure more of the currently uninsured. It’s hard to see how people would see a co-op - which after all, is competing with private insurance carriers - as any more practical or a better deal than anything they are presented with now. Without an individual mandate, there will be millions who simply refuse to buy insurance regardless of how cheap it is or how generous the subsidy.

Heritage’s Edmund F. Haislmaier thinks that there might be a minor role for co-ops in health care reform:

In the case of health insurance markets, there are two areas where the co-op model could conceivably be applied.

The first is with respect to entities that might organize the buying and selling of health insurance, such as employer purchasing groups or state health insurance exchanges. The second is applying the cooperative concept to one or more of the insurers selling coverage in the market.

The idea that businesses could pool themselves and purchase health insurance is an excellent one and is already being tried with liability and other forms of insurance on a micro basis in several industries. This also would be a complex undertaking but much less so than trying to set up statewide co-ops.

In short, the more I read about co-ops the more convinced I became that on a nationwide basis, it would never work to deal with the problems they would be set up to address and may, in many cases, make matters worse. It is possible that eventually, the federal government would be forced to take most of them over anyway.

I don’t necessarily buy the idea that co-ops are a Trojan Horse for a public option but certainly the potential is there for a de facto government takeover. It’s not the only reason to oppose their creation but it should be weighed with the rest of the complex problems that co-ops would create for both government and the consumer.



Filed under: Government, National Health Insurance, Politics, health care reform — Rick Moran @ 7:30 am

That $1 trillion is a number the Congressional Budget Office is looking at right now. Estimates by others have used $1 trillion as a starting point and go up to $1.5 trillion.

Please recall that our president “budgeted” only $637 billion for health insurance. But that number presupposes that almost everyone who is not now insured will buy the subsidized package. The only way to realize the $2 trillion in savings Obama needs to make the plan work is for nearly everyone to be on board.

But the CBO says that’s a crock as The New Republic’ s Jonathan Cohn points out in his exclusive look at the early CBO estimates:

So what does CBO think this time around? Late last month, after weeks of working overtime to keep up with the huge domestic agenda, CBO began delivering some prelimiary estimates on health reform. According to several sources familiar with the estimates, it’s something of a good news/bad news story:

The good news for reformers is the CBO’s determination that expanding health-insurance coverage would cost a lot less than many outside experts had predicted. Instead of a politically daunting $1.5 trillion, the CBO figures the price tag will be closer to $1 trillion, at least under certain parameters. But the reason for the lower estimate is a bit unsettling. Even with a requirement that everybody obtain insurance–a so-called individual mandate–the CBO assumes a that between a quarter and a third of the uninsured still wouldn’t have coverage. That would leave the country short of universal coverage, the goal Obama and his allies have repeatedly cited.

What Cohn doesn’t mention is that the reason Obama needs almost everyone on board his health insurance boondoggle is that the uninsured are one of the major reasons for skyrocketing health care costs. No one knows the true number of uninsured in the country. The Democrats like to throw around the number 48 million but that is too high by almost a factor of 4. Many of those 48 million are between jobs and will get health insurance when they are employed again or there are other factors as this AP article, summarized by The National Review Institute makes clear:

  • The Census Bureau itself says that “Health insurance coverage is likely to be underreported…” (See Appendix C of THIS report) For example, “16.9 percent of people with an MSIS record indicating Medicaid coverage reported…that they were uninsured.”
  • According to Sally Pipes of the Pacific Research Institute, “as many as 12 million uninsured Americans are eligible for Medicaid and the State Children’s Health Insurance Program-but they haven’t signed up.”
  • More than half of the uninsured are between 18 and 34 years of age, a group which has relatively few expensive health issues and for whom self-insuring (paying their own medical bills) makes sense. Only 14% of people over the age of 55% are uninsured.
  • Over 9 million of the “uninsured” have household incomes over $75,000.
  • Roughly 30% of the uninsured are without insurance for less than 6 months (though this statistic will likely worsen during the current recession).
  • And finally, estimates are that between 7.5 million to over 10 million of the uninsured (15% of them or more) are illegal immigrants.

A more cautious estimate of the uninsured is perhaps 12 million - most of them young and single. And that’s not the only myth about health care that the left has been promoting:

The top three myths are: 46 million Americans have no health insurance and therefore no health care; an individual mandate will lead to universal coverage; and socialized systems such as those in Canada and Europe are cheaper and more efficient than ours. If I were to write the book today, I would add another myth: that America’s health-care system puts our employers at a competitive disadvantage and hurts our economy. No less an authority than the Congressional Budget Office has debunked this myth, noting that it is employees who pay the tab, not the company, as it’s merely a substitute for wages. Yet this is a major selling point in the Democratic push to government health care.

The more uninsured, the higher the cost of health care. The higher health care costs will mean a larger subsidy for health insurance. This is exactly what they are finding in Massachusetts where the state subsidy has skyrocketed.

The estimate of $9.3 trillion in deficits the budget will run over the next decade has to be increased - perhaps by as much as $800 billion. Here’s Robert Samuelson writing in Investor’s Business Daily:

It’s true that since 1961 the federal budget has run deficits in all but five years. But the resulting government debt has consistently remained below 50% of GDP; that’s the equivalent of a household with $100,000 of income having a $50,000 debt. Adverse economic effects, if any, were modest.

(Note: Deficits are the annual gap between government’s spending and its tax revenues. The debt is the total borrowing caused by past deficits.)

But Obama’s massive, future deficits would break this pattern and become more threatening. At best, the rising cost of the debt would intensify pressures to increase taxes, cut spending - or create bigger, unsustainable deficits.

By CBO’s estimates, interest on the debt as a share of federal spending will double between 2008 and 2019, from 8% of the total to 16%. Huge budget deficits could also weaken economic growth by “crowding out” private investment.

At worst, the burgeoning debt could trigger a future financial crisis. The danger is that “we won’t be able to sell it (Treasury debt) at reasonable interest rates,” says economist Rudy Penner, head of the CBO from 1983 to 1987. In today’s anxious climate, this hasn’t happened.

At risk in this fiscal crisis is spending on national defense. At a time when our military must reassess its priorities due to the changing nature of enemy threats, it is likely we will be hamstrung by the massive deficits. Since most experts believe we have to increase the size of the army, Marines, and Special Forces, it is difficult to see where the money will come from - especially since cutting entitlements is off the table with Democrats in charge.

More likely, Obama will take a meat cleaver to our defense budget, cutting modernization and perhaps even cutting benefits to defense personnel. There are several vital programs that will likely see the ax, including the F-22 fighter and a drastic cutback in the number of next generation destroyers for the navy.

Samuelson guesses that the reason that few are speaking out about these catastrophic deficits and piling up of a massive amount of debt is the severity of the recession. But given the stratospheric budget deficits being run by Obama, any recovery will be stillborn as interest rates will have to be raised significantly to entice people to purchase Treasuries in order to fund the debt while inflation is likely to take hold as the trillions in bail out monies dumped into the economy by the Fed means too many dollars will be chasing too few goods and services.

Even a Keynesian can understand those basic economic principles.

We are in for a very rough ride for the next several years. It will take someone with courage and leadership ability to call for making tough choices. Obama has said time and time again that such choices are “false,” that we can have it all by only raising taxes on the rich.

When that chicken comes home to roost, it will probably be too late to stop the disaster from occurring.



Filed under: Government, National Health Insurance, Politics — Rick Moran @ 1:47 pm

The state health insurance plan passed by Massachusetts back in 2006 was supposed to be a model for the rest of the country. It was touted at the time as a solution to both covering the uninsured and improving services.

Spare us, please.

This editorial in the Examiner shows the nightmare that mandated health insurance systems can be, fulfilling all the dire predictions ever said about them:

To much fanfare from both right and left in 2006, Massachusetts became the first state in the nation to require all residents to buy health insurance. A new state health insurance clearinghouse was created, with taxpayers subsidizing those who couldn’t afford to buy coverage. Then Gov. Mitt Romney, a Republican, promised that “every uninsured citizen in Massachusetts will soon have affordable health insurance.” Yet just two years later, Romney’s much-heralded “solution” - touted by many as the model for a national program - has become an embarrassing flop.Just a year after the universal coverage law passed, The New York Times reported, state insurers were already jacking up rates to twice the national average. According to Dr. Paul Hsieh, a physician and founding member of Freedom and Individual Rights in Medicine, 43 mandatory benefits - including those that many people did not want or need, such as invitro fertilization - raised the costs of coverage forĀ  Massachusetts residents by as much as 56 percent, depending upon an individual’s income status. So much for “affordable” health care.

Small businesses with more than 10 employees were required to provide health insurance or pay an extra fee to subsidize uninsured low-income residents, yet the overall costs of the program increased more than $400 million - 85 percent higher than original projections. To make up the difference, payments to health care providers were slashed, so many doctors and dentists in Massachusetts began refusing to take on new patients. In the state with the highest physician/patient ratio in the nation, some people now have to wait more than a year for a simple physical exam.

The irony is that Massachusetts officials reluctantly admitted that, despite increased enrollment, the state is still far from universal coverage - the original goal of the landmark law. To make matters worse, Massachusetts is grappling with a multibillion-dollar deficit while Democratic Gov. Deval Patrick desperately tries to slow down those still-spiraling health care costs, which he said last week were “not sustainable.”

If this sounds just like Canadian-style socialized medicine, that’s because it is. Massachusetts residents now pay more for less access to health care, yet their state still has an uninsured problem!

Imagine this boondoggle tried on the rest of the country. When even a liberal Democratic governor says the increases in costs to the state or “not sustainable” you can imagine the nightmare of an Obama plan.

Most of the plans circulating on Capitol Hill require mandated participation in the system - that is, the government will force you to buy health insurance whether you want to or not. The Democrats swear that this will result in lower insurance premiums and better coverage but how is that possible? Unless the government takes enforcement seriously - which means employing the IRS as collection agent for healt insurance premiums - the chances that millions will still be uninsured regardless of any mandate are pretty good.

You also place doctors and hospitals in the position of being agents of the IRS as any citizen seeking health care who is not insured will have to be reported and forced to purchase the government plan or some private plan. Already buried in forms, you can imagine how much doctors and clinics are going to love that.

Eventually, of course, such a system will require the rationing of health care and price controls - a big step toward a complete government takeover of the health care system. The Democrats will swear until they are blue in the face that this will never happen. But one look at what is going on in Massachusetts will convince anyone that the Democrats plan to nationalize health insurance will only lead to skyrocketing costs and a loss of choice by health care consumers.



Filed under: Liberal Congress, National Health Insurance, Politics, conservative reform — Rick Moran @ 11:43 am

Every once and a while, even smart people say or write stuff that makes them look stupid.

Why, even I myself have fallen victim to these little intellectual hiccups. You don’t write on a blog everyday for 4 years and not, on occasion, come up with some really, really lights out, eye poppingly, drop dead clueless, monumentally ignorant stuff. Any blogger or writer who tells you differently is either a liar or so full of himself that the power of their egos would probably light up Chicago. It is an occupational hazard and is impossible to avoid. (I can’t think of anything offhand but I’m sure there are some intrepid commenters out there who would help me out.)

Of course, there are some bloggers and writers out there who make a career of writing brainless, fatuous, jaw droppingly doltish stuff. Village idiots like TBogg or the folks at Sadly No have taken bathroom humor, playground taunts, and pre-teen sex jokes to a level unseen by most adults. I would add the pathologically bigoted writings of Debbie Schlussel and just about everything written by Robert Kagan as examples on the right of writers who make a living penning witless missives, dopey treatises, and uninformed balderdash.

But even very smart, very witty people can fall victim to the Stupid Virus. Take the delightful CNBC host and commentator James Pethokoukis, who also writes a money blog for US News and World Report. He really caught a virulent form of the disease with his post entitled “How Tom Daschle might kill conservatism.”

The GOP strategist had been joking about the upcoming presidential election and giving his humorous assessments of the candidates. Then he suddenly cut out the schtick and got scary serious. “Let me tell you something, if Democrats take the White House and pass a big-government healthcare plan, that’s it. Game over. Government will dominate the economy like it does in Europe. Conservatives will spend the rest of their lives trying to turn things around and they will fail.”

And it turns out that the fearsome harbinger of free-market doom is the mild-mannered ex-U.S. senator with the little, red glasses, Tom Daschle. He’ll be the guy shepherding President Barack Obama’s healthcare plan through Congress via his probable role as secretary of health and human services. At the core of Daschle’s thinking on the subject is the creation of a “Federal Health Board that would resemble our current Federal Reserve Board” and ensure “harmonization across public programs of health-care protocols, benefits, and transparency.” (Forget secretary of state, Hillary Clinton should shoot for chairman of Fed Health and run one seventh of the U.S. economy.) And the subject of that “harmonization” would be a $100 billion to $150 billion a year plan that would let individuals (and small businesses) buy insurance from private companies or from a government plan.

Daschle and the Obamacrats certainly have the momentum: a near-landslide presidential election victory, at least 58 Democratic votes in the Senate, and a nasty recession that will make many Americans yearn for economic security. Already the health insurance companies seem set back on their heels. The industry’s trade organization now says it would accept new rules requiring them to cover pre-existing conditions as long as there was a universal mandate for all Americans to have health insurance. On top of all that, Obama clearly wants to make healthcare reform a priority in his first term, as evidenced by the selection of a heavy hitter like Daschle. And even if he wasn’t interested, Congress sure is, with Max Baucus and Ted Kennedy readying a plan in the Senate. A few observations:

1) Passage would be a political gamechanger. Recently, I stumbled across this analysis of how nationalized healthcare in Great Britain affected the political environment there. As Norman Markowitz in Political Affairs, a journal of “Marxist thought,” puts it: “After the Labor Party established the National Health Service after World War II, supposedly conservative workers and low-income people under religious and other influences who tended to support the Conservatives were much more likely to vote for the Labor Party when health care, social welfare, education and pro-working class policies were enacted by labor-supported governments.”

Passing Obamacare would be like performing exactly the opposite function of turning people into investors. Whereas the Investor Class is more conservative than the rest of America, creating the Obamacare Class would pull America to the left. Michael Cannon of the Cato Institute, who first found that wonderful Markowitz quote, puts it succinctly in a recent blog post: “Blocking Obama’s health plan is key to the GOP’s survival.”

I’ll go even further and say that passing Obamacare would turn the US from from being the world’s only superpower into a second class backwater with little more influence than France on the world stage. This may happen anyway thanks to the financial meltdown and the subsequent $2 trillion and rising in bailouts. Let’s face it; trillion dollar deficits and half a trillion dollar defense budgets are an impossibility. They cannot exist in the same universe. You can’t cut entitlements in a deep recession and since there is only around $35 billion in real discretionary spending to be cut, something has got to give somewhere. With Democrats in charge, it will be the defense budget.

But would Obamacare “kill” conservatism? That’s something of a nutty idea considering that it comes from an analysis given in a journal devoted to that wildly successful political philosophy known as Marxism. In a deterministic world where we are all happy little Commie robots, we would “vote our interests” and cast our ballot for the politician who promised us the most goodies. Democrats and liberals have been whining for years that Americans in flyover country have been hypnotized or fooled by Republicans into actually voting against politicians who will give them everything necessary to make their lives easier.

But determinism is dead, killed by the reality that people simply don’t act the way the Marxists say we should act. If they did, I guarantee you the old Soviet Union would still be with us while the United States would have gone the way of the Dodo bird. In the aggregate, people do not make decisions for themselves or their families based on what is best for their “class” or even care much about how their lives might be improved at the margins by voting for big government liberals. It has never been that way in America when voting for president and is only partly true when voting for Congressmen and Senators.

A study done earlier this year and published in the Journal of Leadership Studies revealed some of the real reasons people choose one presidential candidate over the other - and it ain’t because one of them will shower them with gifts from the government:

An article to be published in the new Journal of Leadership Studies (Wiley Periodicals, Inc.) on February 28th discusses results of researching and analyzing data from the seven most recent U.S. presidential elections comparing Democratic and Republican Party candidates who were successful in securing votes. The analysis reveals what tipped the scales with voters and how perceptions of leader intelligence, feelings of pride and hope, as well as feelings of fear and anger, were found to impact the decision process, rather than the issues that candidates present.

Researchers M. David Albritton, Sharon L. Oswald and Joseph S. Anderson used data from the National Election Studies (NES) division of the Center for Political Studies at the University of Michigan to expand upon previous work on voter attitudes, perceptions of leaders, and voter support. They found perceived intelligence, inspirational qualities, and charisma to be key factors in the formation of voter opinion. Instead of the varying positions on issues, voter’s perceptions of these key traits are found to be predictors of whether or not that voter will consider a leader to be of high quality.

How a candidate’s charisma as well as how fear plays into a voter’s evaluation was also examined. Intuitively perhaps, fear played a negative role toward a candidate. Individuals who generated stronger feelings of voter fear were considered “lower quality leaders.” However, fear also helped shape positive behaviors toward a rival candidate. Surprisingly, charisma, traditionally considered an asset, was often viewed negatively when framed in the context of manipulating others toward personal gain.

The vote for president is the most personal political decision most Americans make. Political pros have known for decades, thanks to several landmark social psychology studies, what goes into the decision making process of citizens when they choose a president. First, as with any politician, it is likability that is most translatable into votes. Next comes shared values or comfortability. The third is fear of the alternative. Ideology plays into the comfortability index while positions on the issues and campaign promises are almost always way down the list.

Voting for other federal offices is not quite as personal but for House members especially, it is not national issues as much as it is local concerns that determine competitive races - a dwindling number thanks to finely honed redistricting techniques. More than anything, what will keep Democrats in power will be how the new Congressional district lines will be drawn following the 2010 census.

The Senate is a different story but is still an electoral body dominated by incumbents thanks to their massive advantage in fundraising, name recognition, and their ability to build a sophisticated political ground game over their 6 year term. Here again, likability and shared values mean more than any specific issues.

In the kind of deterministic construct offered by those who believe that Obamacare and other proposed social programs will kill conservatism because people will be so overjoyed that government will offer them “security” that they will vote for big government liberals for the foreseeable future fail to understand that first, we are a different people than the Europeans despite what many on the left who have abandoned the idea of American exceptionalism are telling us; and second, such twaddle reveals a lack of understanding of basic political psychology.

America has been gradually adapting itself to the idea that health care is a right, not a privilege. I would say to my conservative friends that politically - and realistically - we have probably lost this argument. The issue plays to the people’s basic sense of fairness and despite their misgivings about government run boondoggles, would support some kind of national health insurance that guaranteed everyone’s access to at least minimal care.

But I would say to my friends on the left that this doesn’t mean Americans will support the kind of massive intrusion being planned by Kennedy-Baucus or the Obama Administration - especially after conservatives get through informing the public of just what it means to have mandates, “Federal Health Boards” and other cockamamie ideas that limit freedom and choices. There are alternatives - some free market options as well as a mix of government-industry proposals - that would accomplish the goal without having government get on the slippery slope of eventually controlling the entire health care industry.

But even if Kennedy-Baucus were to pass - highly unlikely at this point - would that mean the “death of conservatism?” If Marxism couldn’t be killed off by it’s massive, world wide failures it is extremely difficult to see how conservatism could be executed by the passage of a government program - especially one that would be amenable to alteration once its deficiencies were exposed by its application to the real world. Conservatives may not be able to get rid of national health insurance. But there is no doubt that they will be able to run against its failures by proposing sensible alternatives and reforms.

Conservatism is a philosophy. I have had many arguments with my conservative friends over how to make this philosophy into a real world, governing ideal in a 21st century industrialized democracy. I am unsure if on some level, that “governing ideal” hasn’t run its course and lost its way. Making conservative principles and a conservative approach to issues relevant again will take a careful study of where we went wrong and some fresh ideas of how to translate the principles and values of conservatism into concrete, programmatic proposals that can compete in the great American marketplace of ideas once again.

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