Tag Archives: health care bill

Watch Who You Invite To Dinner–They Might Eat You

That old saw about being careful what you ask for because you just might get it is often really true.   This can be especially true with the direction and power of government “we” claim we want to embrace.  They always start off with promises of help; they are coming to the rescue and will help you with a particular problem that seems to big for you to manage on your own. 

At the beginning of the 5th century the Roman empire was in the last stages of its decline.  It had withdrawn at this time from Britain where it had ruled supreme for over 350 years.  Britain during that period was as much a Roman province as any other.  But the Empire was in decline and the last of its troops left for the Continent to fight the rear guard actions against the advancing Barbarians who were nibbling at every border of the Empire.  You may recall the movie about King Arthur made a few years ago where it was implied that Arthur was in fact one of the last of the Roman commanders and that he rose from the ashes of the Empire in Britain.  A romantic notion but there is no historical evidence to support that theory.  But we do know for a fact that in the mid 5th century that a local king named Vortigern gained a precarious control of most of southern Britain.  As usual he was having trouble with the Scots and even with many of his nearer neighbors who weren’t completely on board with the idea of a single government ruling the land.  He had rebellions locally and outright threats of invasion from the Scots.  The Scots had been troublesome for centuries.  That is why the Romans built Hadrian’s Wall during the reign of that Emperor.  It is quite impressive.  It is not as large as the Chinese Wall but very vast nonetheless.  It was erected along the border with the Scots specifically to keep them out.

Vortigern’s armies, if you could even call them that, were relatively small and had lost all their cutting edge after the departure of the Romans.  His rule was tenuous.  So he looked around for some help with his domestic discord and lack of military prowess.  He turned to the Saxons of coastal Germany.  He sent envoys to negotiate with them to come as mercenaries to bolster his arms.  Terms were reached and the Saxons came.  At first it was a very small group  estimated to be no more than a few boatloads of them to the east coast of Britain.  The leaders of this first band of Saxons were Hengist and Horsa and they liked what they saw.  They were given small encampments for their men and then their families plus they got supplies.  It worked for a while and the Saxons suggested even more troops and a permanent settlement near the Picts to thwart any advances by them.  Soon it was thousands.   Soon the Saxons realized that they really didn’t need the permission of the Brits to come there.  They liked the land.  More came and soon they were doing pretty much as they pleased and were not under the control of any Britain,
Vortigern or any other. 

Over a period of a century or so others came.  The Angles joined the slow conquest of the Isle.  They gave the name to the language we speak today.  The Jutes came along also.  There never was a D-Day or a singular invasion like with William the Conqueror some 500 years later.  A local prince or chieftain would decide to move to Britain and outfit his fleet and equip the people and off they would go to another unoccupied spot in Britain.   They were promised land, slaves, and spoils of their local victories and they took advantage of those military victories.  Within a period of a century Britain was now an Anglo-Saxon domain.  They were not guest, mercenaries or even conquerors any longer, they were the people of Britain.  The were invited to dinner and decided they liked the house so much they just moved in and dispossessed the prior owners.

There is a lesson there.   Choose your direction and associates very carefully.  A promise of aid and assistance might lead to more than you bargained for.  Someone is always in charge–a dictator, a State, a people.  Our secret in western civilization is that mostly we have had the people in charge.  Ever instance of a dictator or State being in charge has ended badly.

Wow, you can jump with glee.  You soon will have 16,500 new folks with the Federal government to help you.  That is the number of new IRS agents to be hired under the health care bill to enforce the taxes and penalties imposed on individuals and companies.  I didn’t realize it was such a big jobs bill.  Gosh, I can’t wait to give them even more money to ride our backs.  http://www.olcranky.wordpress.com

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Boomers And Health Care Reform Costs

Those unintended consequences of all major Federal social legislation will always emerge from the woodwork.  The recent health care reform is no different.  Regrettably those unforeseen consequences always cost more money, never less money.  If someone has an example where it cost less I am all ears.  Inform me.  There will be many that will arise from the health care that will carry an enormous financial burden.  It is hard to say what all of them will be but there is one that is there already that will add billions and billions to the costs for the health care and the health insurance companies and the government obligations undertaken with the new bill.  Just like with Fannie and Freddie the government has given an implicit guarantee of the costs even if not directly.  As insurance companies fold the company will take them over or bail them out to keep the program in place rather than letting it fail.  It is a program “too big to fail”.  Consider the consequences for the elderly and those Boomers quickly reaching the age to go on Medicare.

By now you are familiar with the mandate provisions of the health reform act.  If you don’t have health insurance you are subject to a fine of $695 or 2.5% of your income whichever is greater.    For now we will assume that provision passes Constitutional muster which it should not under the Tenth Amendment, the commerce clause and the Fifth Amendment.  There has already been substantial discussion that  the young and healthy will opt to pay the penalty rather than the cost of insurance which is indeed a very good assumption because it will be cheaper.   Soon the act will eliminate all pre-conditions for acceptance by the insurance companies.  The young will simply wait until they get sick or have an accident and then make a quick call and sign up for coverage.  After their treatment they will drop the coverage again and go back to paying only the penalty.   This behavior will have a very negative effect on the revenues and profits of the insurance carriers.  If it depletes the revenues so badly they no longer can make a profit then what is the point of being in the insurance business?   They will bow out and in walks Government, Inc.  
The young doing this by themselves might not be enough to bring down the insurance companies but they are small fry compared to what will be happening with the elderly and the Boomers.

At age 65 you sign up for Medicare.  You are dumb not to because they have taken your money for years for the program and you are “entitled” to it.  As I have said before I would be happy not to be involved with Medicare at all if the government would simply give me back my money at only 2% interest for the 40 plus years I have been paying into the damn thing and I will take care of my own health insurance needs.   When you sign up they also will automatically take the premiums out of your Social Security check.  You have no choice in the matter it is automatic.   The result is that all these old folks have medical insurance and are not subject to the penalty of the new act.  They are not required to do anything else.  The overwhelming majority of these people also have a supplemental policy to cover those expenses not covered under Medicare.  That market is huge, very huge.   In case you haven’t noticed the elderly have many more medical problems than the young and their medical expenses are astronomical compared to the 30-somethings.   We are expensive to maintain in the health system.  The most expensive demographic group by far.

When the program is fully implemented in a couple of years you will see millions of the elderly do just what I am going to be doing.  They will immediately drop their supplemental coverage.  They will have their Medicare and suffer no penalty.  When me or the little lady gets sick and needs one of those $50,000.00 pacemaker surgeries, we will immediately call the insurance company and sign up on the way to the hospital.  We’ll pay about 2 or 3 months of premiums.  When the surgery is complete we will drop the coverage again.  We pay a few hundred dollars in premiums and get that expensive surgery with the Medicare and the supplemental policy.  Even when they cut back on the Medicare benefits we’ll have the coverage under the supplemental policy.  It should come as no surprise that not just a few but millions of people will be doing this.  Of course will all the Boomers coming along the numbers will be staggering.  The insurance companies won’t be able to sustain those losses for long.  The losses will be big.  The insurance companies will stop offering supplemental coverage.  Then who will take up that slack?   Good ole Government, Inc. again.   I mean what politician is going to allow old grandma to expire for lack of a pacemaker?   If you doubt what I have posited I suggest you check out the bill and use your own common sense about the way human nature works.  Who is going to pay for years maybe for supplemental coverage when they are guaranteed to get it on the way to the hospital or after the doctor has given the bad diagnosis.   I don’t know how this issue will be handled but it won’t be pretty and it sure won’t be cheap.  Someone should get the CBO to score that one.  To think it won’t happen is delusional.  I for one will cancel my supplemental the month after I am guaranteed coverage regardless of whether or not I am in the hospital; they have to take me.  Like to see the business plan that projects profits on that kind of model.

It should give everyone pause to realize that in the last couple of weeks that the credit worthiness of the US has plummeted so low that some large corporations are paying less interest for their borrowed funds than the US.  The two-year US treasury bill now pays more interest than Abbot Labs, Berkshire Hathaway, Johnson and Johnson and a few others.  Think about that one for a while.  The implications are not good.   http://www.olcranky.wordpress.com

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2 Cents Worth On Politics, Economy And Life

Ok, I understand a lot you might not think these wanderings of a wandering mind are worth even that price.  But even in today’s economy you can afford the 2 cents and we’ll kick in a 1 cent rebate if you fill out the application form and mail it in within 2 days. 

I tried to read the Reconciliation bill yesterday on health care.  The problem is that to truly understand it you have to also have at your side the Internal Revenue Code, the Social Security Act, the Senate Bill that was passed, the Medicare statute and the Medicaid bill at a minimum.  Almost every paragraph makes a reference to another piece of legislation and amends it and without that other statute before you it is hard to translate the reconciliation bill.  Reading a Chinese instruction manual to assemble a child’s toy would be easier.

The reconciliation bill does provide that employers with less than 30 employees are exempt.  Why is anyone exempt if it is such a great idea?  What employer that it is right on the brink of that number at say 29 or 30 would want to add any extra employess and subject his company to the burdens of the new taxes and mandates?  He won’t and there goes job growth.

When you think you have it rough take a moment and find an old salt who was in the US Navy at the end of WWII and was on one of the many ships that brought our POWs home after their release from the Japs.  They were skeletons and were given ice cream, mashed potatoes and every luxury item the Navy could provide so they would gain a few pounds before getting home.  They all did.  It took several weeks to make the trip.  Sailors are notorious complainers but none complained then about the favored treatment of those POWs.

Is anyone going to ask the question publicly about putting the debts of Fannie, Freddie, AIG and GM and Chrysler on the books of the US as a debt?  They aren’t there now but we all know too darn well that they are obligations of taxpayers and the shortfalls will have to be paid with tax dollars.  Why doesn’t that debt show up on the balance sheet?  I bet you can figure that one out.

It took only about 5 years to build Hoover Dam.  One wonders how long it would take to build the same project today.  It would take longer than that to obtain the permits from government and Lord only knows how long the litigation would last.  Then the actual construction with union delays and work rules would drag forever.  Could we build such a dam today? 

Everyone should spend at least a few days during their lifetime working on a farm or ranch.  I mean really working not some dude ranch deal.  Dig some post holes with a hand-held digger and string the wire or help birth a calf by pulling its hooves out of the mother to help her.  Walk beside the tractor with a flat bed trailer attached to it and pick up and stack the bales of hay in the field for a few hours.  Those bales are heavy.  You think of hay as being light and fluffy but when it is still green and wet in the field it weighs a ton–especially that 300th one you pick up in one day.

Plumb bobs and levels have been around for centuries. But I am always amazed at how those guys got every so even and true when they build St. Paul’s or Winchester cathedrals.  Those pieces of twine to mark and keep all the work straight were very precise as you can tell from the finished product. If I had been in charge I am afraid they would be more like the leaning tower of Piza.

Would anything be scarier than trying to land a jet on an aircraft carrier with a runway that is only a few hundred feet long?  I guess trying it at night might the ultimate challenge of nerves.

Under the latest iteration of the mortgage bailout for individual homeowners that Government, Inc. has on the table you can actually get paid to abandon your house.  When first announced in late ’08 or early ’09 it caused an outrage because it punished the prudent and rewarded the spendthrift.  Now they will pay $1000.00 each to the mortgage holder and the loan servicer and get this, they will pay $1500.00 to the homeowner as “relocation” assistance for going along with a shortsell when the value is less than the mortgage.  So, if you were going to dump the property anyway and take a walk now you get to do it with 1500 bucks in your pocket.  Is this a great country or what?

The latest version of health care does have the individual mandate to buy health insurance.   You must do it or be fined or taxed whichever you want to call it.  In addition to other Constitutional issues that can and will be raised one wonders if the Fifth Amendment argument will be made by some to oppose it.  It reads in part “,nor be deprived of life, liberty or property, without due process of law; nor shall private property be taken for public use, without just compensation.”   The 16th amendment allows the Feds to tax income, not a status (insured or uninsured) but they aren’t taxing income.  Your money is “property” being taken for a public purpose, to with: a national health insurance program.  Where is the due process to take your money when you are being taxed on a status?  Merely passing a law doesn’t make it due process.  The takings clause also doesn’t allow your money to be taken since it is not income they are taxing.  Those legal beagles need to get to work. It will make an interesting case.

And goodnight Mrs. Calabash wherever you are.  www.olcranky.wordpress.com

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Electronic Controls, Health Care and Military Worries.

How many times has your computer “froze up” on you?  No matter the brand or type sometimes these little electronic wizards just have a mind of their own and won’t comply with the commands you give them or if they do it takes much, much longer than you wanted or expected.  Those tiny computers that are now becoming an integral part of all auto parts is concerning.  Toyota is at the top of the list now with worries about acceleration and braking but that is only the tip of a coming avalanche.  I really don’t want to be barreling down the road at 60 miles an hour and hit the brakes to discover they don’t work or else that there is a two second time delay.  Two seconds may seem like a really short time but at that speed you are covering couple hundred feet.  In an emergency you take less than a second to hit the brake.  It is a matter of life and death.  I think it is much safer to have well calibrated mechanical devices that respond directly to your body actions.  I am sure the chances of electronic failure or quite low but the brakes getting the wrong signal at the wrong time is a horrifying thought.  They now also have those keyless electronic starter systems.  First that will inconvenient as the devil when you can’t start your car and it has to be towed in just to replace a chip or reboot a system and worse what happens when you can’t get the car to turn off?  Newer is not always better.

If any form of the health care bill currently proposed by the White House passes it will lead to some truly epic Supreme Court cases down the road.   It will dramatically call into question anew the meaning of Article One, Section Eight and the interstate commerce clause.   How does my health impact interstate commerce?  Does my health status affect interstate commerce any more than my daily use of water?  Whether I use 10 gallons a day or 100 gallons does that affect interstate commerce?   If you think it does then the EPA or some other Federal agency could have the authority to specify exactly how much I can use and ration our water use.   Health and water are important matters and can have certain regulations and laws concerning their use or abuse.  But, but, but, it has been the States that have historically been granted the right to control such matters.  This is because of the limitations of the powers of Congress in Article One and the corresponding retention of powers of the States under the Tenth Amendment.  We have no national law regarding the ownership and transfer of ownership of real property in the US.  That is a matter of State law and each State has its own laws regarding real estate.  It takes no imagination to realize how important a topic property rights are.   Does my ownership of my home affect interstate commerce?  Some would probably say it does regardless of how nebulous it may be.  If anything and everything affects interstate commerce then we no longer have a Federal system of government but a centrally controlled government and the States become mere provinces of the central government, mere administrative tools for national policy to be implemented.  That was not the intent of our Founders and I don’t believe most of us would prefer that system of government.  There is also the little problem again of the Constitution.  Article Four, Section Four requires that the US shall guarantee to every State a Republican form of government.  Total control of our economy from Washington would destroy that provision’s meaning.

The Pentagon is going through another of its internal reviews about the nature and formation of our armed forces.  The general idea is that the traditional forces are not nimble enough to meet the demands of the 21st century.  The concept is to make the forces smaller in unit size and more specialized in their method of operations.  To review the military is always a good idea.  That old saw about the military always fighting the last war is a good one with lots of truth to it.  We all tend to go with what we know and the generals and admirals know what they did when the were younger officers and will naturally bend in that methodology when faced with a new challenge.  Often the old method doesn’t comport with the new facts on the battlefield and bad results can occur.  However it is best not to throw out the baby with the bath water.  Regardless of technical and tactical changes in battlefields there will always be the danger of the large scale clash with an enemy.  I do hope the military won’t abandon completely the formation and training of the traditional forces for large land and sea battles.  We will have the need for divisions, not only brigades and we will have the need for more ships in the Navy than just aircraft carriers and their escorts.  The Chinese are rapidly building their military power on both land and sea.  Who knows where their Communist leaders will want to expand their hegemony?  Especially in a few years when the demographers predict a serious decline in their population and an aging population that will be even more demanding on their economy than ours.  Battleships for example are considered very old school.  However as recently as the Iraq War of ’92 we used the old Missouri to good effect.  Both offensively and defensively there is something very intimidating and encouraging (depending on whether you are on the receiving end or benefitting from the salvos) about those huge 16 inch guns pounding away.  We don’t have even one of those today.  Cruise missiles are great but sometimes volume is more important than pin point accuracy.  Don’t believe for one minute we have “evolved” beyond the era when an all out bare knuckle conflict is possible.  Sadly, we aren’t there yet and for the moment the US is still the best hope for a better world regardless of our shortcomings.

Of course health care premiums are going up again.  They will continue to do so until the States reform the process so that all of us become “shoppers” rather than merely users of health care.  Empowering the people to bargain for the best prices just as we do for cars or cereal will reduce prices quicker than anything.  http://www.olcranky.wordpress.com

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Health Care And Too Big To Fail

Since last fall we have had a great deal of discussion and debate concerning the phrase of too big to fail (TBTF) which was a newly coined term created seemingly just for this current economic mess.  That concept led to the TARP; it also produced the TALF program, remember that?  Likewise, a substantial portion of the Stimulus bill was indirectly to support the same idea that some companies were TBTF.   Additionally, we must recall the Federal Reserve has gone to extraordinary lengths to prop up those institutions with their 1.5 trillion dollar purchase of mortgage-backed securities, treasury bills and the simple act of printing more money and keeping the funds rate a virtually zero.  Yes, some of those actions and some of that money was for the general economy allegedly but huge bundles went directly to those TBTF concerns.

First it was Fannie and Freddie, they were followed by AIG and after Lehman collapsed they blinked again even worse and the major banks were brought into the fold along with GM and Chrysler.   The worst of the panic is over.   The economy is still hurting badly and will continue to do so for years to come especially if the current proposals for cap and tax and health care and the other tax increases all take effect.  The theory was that these TBTF’s went down or any one of them it would destroy the economy.  Well, I am not an economist but I have dealt with bad times and struggling companies during my 43 year career and have seen over pretty severe down turns.  The ’70’s were no picnic.  That entire decade was a downer for those of you too young to know about it.  Here is not the place to examine in detail the likely results if we had let those institutions go under or some of them.  If Fannie and Freddie went down there would still be a demand for housing and house loans and a profit to be made there.  The S and L’s made money for decades doing just that.   Lots of big investment houses, many foreign might have lost lots of money on an AIG failure but all those policies would have been honored which is much more important to my mind.  The decision to bailout GM and Chrysler and have them become Government, Inc. entities was clearly a political decision not an economic one.  New smaller companies would have emerged from a Chapter 11 and no one would have been left without a car if they wanted to buy one. 

We made a mess of things by allowing ourselves to be duped with that concept of TBTF.  Yes, things would have been difficult if they had gone down.  But I can argue just like the White House that but for those actions things would have been better by now, not worse.    They say everything would have been much worse if we hadn’t taken all those actions.  An argument can be made to the contrary very cogently.  Remember that only 350 billion of the TARP  money had been spent by inaugural day.  Everything else came after that date.  The GM/Chrysler bailout, the extra money to the institutions, Stimulus, TALF and all the buying by the Fed at the urging of the WH.   Whether you agree or not is not important, but I bet most of you would agree that it hasn’t been handled well.  It could have been done better.  I favor letting any failing company to fail, others would promote more government regulation and takeovers.  Guess a lot depends on your trust level in the free market system vis a vis Government.  Take your pick.  I will trust a businessman any day over a politician.

However we now will soon face another serious problem of the same ilk.  All the current proposals for health care reform will raise taxes greatly and will severely cut back on expenditures to hospitals, insurance companies and doctors.  There will be special taxes assessed against the medical device makers and pharmaceutical companies.  Hospitals do go broke in spite of what you may think about them making way too much money. I have represented three hospitals over the years in Chapter 11.  Yes, the insurance companies will get more customers but they will also have to add many new ones that carry much higher risks and thus larger claim payouts.  Doctors facing cutbacks will make choices.  Many will decide to move locations, probably to the larger urban areas.  Not many will quit practicing altogether but those moves will further deplete the need for medical care in the rural and outlying regions.  Many of the health insurance companies are affiliates or subsidiaries of life insurance companies.  If some of them go under because they can’t make sufficient profits then that will impact the life company they are affiliated with.  Those life policies will be endangered and those annuities that many people bought.

We need to think long and hard now on the front end how we are going to deal with those hospitals, insurance companies and drug makers that are TBTF.  Will we even acknowledge that concept for any of them?  What about the drug company that has promising research for a specific cancer cure but then goes under due to the weight of the new taxes imposed on it and the reduction in the tax breaks for research.  Trust me there will some of these entities that do go under as the Government, Inc. health program develops over the next decade.   They are proposing a 21 % cut just for the doctors.  Would you like a 21% cut in your pay today?  How would that effect you?  For some such a cut would produce bankruptcy.  If you live in an outer suburb and have only two hospitals and one goes under then you might have to drive 50 miles for medical treatment or wait inordinate amounts of time at the survivor hospital.    Are we going to simply bailout these failing hospitals, insurance companies, and pharmaceutical companies like we did GM?  Where is that money allocated in the CBO report.   www.olcranky.wordpress.com

“The lust of government is the greatest lust.”   James Harrington

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