What should replace Obamacare?

What should replace Obamacare?

The Republicans can’t seem to agree upon the principles for replacing Obamacare.  You may have heard that some conservatives want to base the replacement on “free market principles” and “competition.”  What does that mean?  The problem is that medical care costs continue to spiral out of control because we are insulated from the real costs, two layers deep.  Those two layers make thinking about free market reforms confusing.  The first layer is medical insurance insulating us from the costs of medical care.  The second layer insulates us from the costs of insurance—by having others buy it for us. Eliminating those two layers of insulation and creating a free market in medicine would give us more control and actually make healthcare more affordable.  Here’s how we could get there from here.

First, fix the way we pay for insurance.  (The Republicans are afraid of embracing this change, but it is essential.)  Having the employer or the government pay for health insurance as a “benefit,” means that most people assume that the more expensive their health insurance is, the better it is. WRONG!  We should turn employer-provided health insurance premiums into salary instead.  Let employers admit that the cost of health insurance is really salary, and free everyone to buy their own health insurance.  This would allow us to keep our health insurance when we change jobs.  (Some day we’ll think, “My God, what a stupid idea that was, to tie health insurance to your job!”)

Second we should be able to buy whatever health insurance we want—without mandating what it covers.  So start with eliminating the federally imposed mandates on what health insurance must cover.  Second, we should be able to buy plans offered in other states—eliminate those fences between the states.  Some states don’t have expensive coverage mandates in their policies.  Buying from other states means we could buy cheaper insurance policies that don’t cover things we don’t want to pay for.

Third, we need to bring everyone into the situation of choosing their own private health insurance so the free market can provide a lot of options to choose from.  Seniors on Medicare should get money equal to the average amount now being spent on health care for seniors, and then they should be free to purchase health insurance coverage with that money.  People on Medicaid should do the same thing.  If the amount they are given is equal to the average cost of their medical care, it will be enough to buy insurance to cover the services they are currently getting.  (That’s the basic idea behind insurance—the costs averaged out over many people.) It would just be an offer to give them the money and allow them to choose their own insurance, but within a short period of time, the options in the free market would offer more for the same money.

Young and healthy people who don’t want to buy health insurance would be encouraged to buy health status insurance that guarantees the right to buy health insurance in the future without being rated or denied for a medical condition.  People who are healthy and can prove it should be able to buy insurance less expensively.  People who have a pre-existing condition should be able to buy health insurance but at higher cost.  We may have to help them.  If there was a 100% tax credit for all contributions to charitable health organizations, those organizations could assist with medical costs for people with really expensive pre-existing conditions like cancer and diabetes.  But people who bought their health insurance early (remember fire insurance) while they were healthy could be guaranteed a steady premium even when they do get sick.  (And they wouldn’t lose it when they change jobs!)

The first layer of insulation would now have been peeled away.  Everyone would be paying for their own health insurance with money they could spend in other ways.  We would now have an incentive to look for ways to economize on the cost of health insurance, just as we do with car and fire insurance now.  The best way to economize on health insurance is to choose high deductible insurance with a health savings account.**  High deductible health insurance is so much cheaper that the consumer can put the savings into a health savings account (HSA) which would be more than enough to pay medical costs up to the deductible.  With more saved in the health savings account, a higher deductible can be chosen, lowering the premiums, and allowing for more savings in the HSA.  Perhaps a “high” deductible in the first year would be $4,000, but it could climb over the years to $20,000 or more. [Another innovation that would come along is to make the deductible like it is in auto insurance where it is “per claim.”  So you might have a $1,000 per claim deductible so that you don’t even turn in a claim unless it is over a grand–and then you can spend your HSA without having to accumulate records of all health insurance expenses.] 

Using high deductible health insurance and our own HSA money to pay the first several thousand dollars of medical costs peels away that second layer of insulation between the customer and the cost of medicine.  This puts us in the position of wanting to save on those first dollar costs of medical care.  Why use a brand name prescription at $100 a month, when there is a generic for $10 a month?  Why not have a $70 EKG instead of the new, fancy treadmill EKG for $3,000?  Amazingly enough, most of us can keep our medical costs under a couple of thousand a year if we have a reason to do so.  Once we are asking questions about the prices of things (because the costs are not being paid by a third party), doctors will have to be prepared to discuss cost with us.  One we are spending our own money we can switch to a different doctor’s office to get something at a cheaper rate.  We can drastically bring down the cost of our medical care the same way we bring down the costs of other things—by paying attention to the price.  That’s the basic idea of free market competition in health care.  This is the solution to the problems of Obamacare. All of these reforms have to be put into place at once to achieve the lowering of costs, but these are what should replace Obamacare.

**Note: The effect of allowing people with “pre-existing” conditions to buy health insurance has driven up the cost of health insurance a huge amount.  The costs went up much so that they put in high-deductibles on all the policies.  High-deductible policies used to be really inexpensive and will again, once the Obamacare regulations are lifted.

Posted by donc1950@gmail.com in Medicine, 0 comments
Why not just “fix” Obamacare?

Why not just “fix” Obamacare?

People are beginning to say, “Well, can’t we just fix the bad parts of Obamacare, and leave the good parts?”   When you ask about what they think are the good parts, they usually name the fact that people can’t be denied health insurance for pre-existing conditions and they can’t be charged more for their insurance because of pre-existing conditions.  Unfortunately, the bad part, the high prices that are going through the roof, are a direct result of the good part.  So we can’t lower the cost of medical insurance if we want to have these “good parts.”  Let me explain.

Let’s talk about fire insurance on your home.  We usually understand that we have to pay for fire insurance year after year, even though we don’t have fires, so we will pay enough to the insurance company so they have the money to pay to replace our house if it does catch fire.  Now imagine if we decided to put the “good parts” of Obamacare into our fire insurance policies.  So the rule would now be that you can buy fire insurance at any time, even after your house catches fire, and you can’t be asked to pay more because of the fact your house is on fire.  (Not to mention that everyone pays the same regardless of the size of their house–e.g., community rating.)  As you could predict, if people could wait to buy fire insurance until after their house caught fire, everyone would skip paying for years on fire insurance policies and call the minute the house caught on fire.  The insurance companies would have to pay thousands every policy, and the prices would go through the roof, and/or fire insurance companies would go out of business.  That is exactly what is happening in health insurance now as a direct result of the “good parts” of Obamacare, and for the same inescapable economic reasons.

Many people will say, “But health insurance is more important than fire insurance.  It is not fair to require people to pay more for health insurance if they get sick through no fault of their own.  People need to have access to health care or else they could die. We are a rich country.  We can’t let so many people go without medical care and the insurance to pay for it.”

Regardless of how important something is someone has to pay for it.  Medical care does not become free because we really want it.  It does not even become “affordable” if someone else pays for it or other taxpayers subsidize it.  Medical care is no exception.  Every medical procedure, prescription and practice has to be paid for in real money.  We want to have a system where “price is no object” and everyone can have anything they want.  The problem is that humans have unlimited wants, even when it comes to medical care.  This demand is driving up the cost of medical care.  This is the cause of the fact that the prices for medical care and medical insurance have been rising, even faster than inflation, as we have all noticed.  In fact, the prices will keep going up until we cannot afford to pay them.

The cost of Medicare and Medicaid and Obamacare and all medical insurance are all going to keep rising until we put on the brakes and say, “No we don’t want to pay for that.”  In other words the value of medical procedures has to balanced against the cost.  If the price is too high, the customer has to say, “It’s not worth it.”  Well, actually the government is already trying to do that somewhat with Medicare and Medicaid by limiting what they will pay for.  Everyone is incensed by this denial of the procedures and services they want, but it is the only way to stop the rising costs.  If we want the government to pay for our medical care, so we don’t have to, then the government must ration what healthcare we are going to receive.  Medical care is either going to be rationed by price (only buy what you can afford) or by government edict.

A better way is to let us decide what we will pay for and what we won’t.  That is how the marketplace works best.  Prices can come down when individuals decide what they are willing to pay for and what they are not willing to pay for.  But we have to be deciding this with our own money, not someone else’s money.  No one is very careful or frugal with someone else’s money!  That’s why if we want to help poor people we need to give them more money not free health insurance.

In some areas of our economy, notably where government subsidies are absent, and government regulation and micromanagement is minimal we see competition drive down the actual prices of things.  Computers, cell phones, TVs, and clothes at WalMart have all gone down in price.  They are today more affordable than they were 20 years ago.  Even “non-covered” medical costs like the cost of Lasik or cosmetic surgery have dropped.  These things have become more affordable.

How do things like computers become more affordable–actually come down in price?  The people with less money to burn don’t buy the newest computer at the high price.  When the computer manufacturers have sold all the computers they can at the high price, they then lower the price.  They’ve probably covered their startup costs or perhaps have learned ways to make their product more efficiently.  If they haven’t figured it out, their competitors probably will.   However it happens, the producer sees that with a lower price it is possible to keep selling more and keep making a profit.  So the price comes down as the volume goes up.    As the computer becomes really more affordable, more and more people can buy it.

Just the opposite happens when something is made “affordable” by subsidizing.  Nobody is saying “That’s too expensive,” and refusing to buy it.  [This is happening with college tuition as well.] In turn, the provider has no incentive to lower the price and, in fact, research into new and more cost effective methods of delivering product will slow down to a crawl.   So the goods or services never really become affordable.  They will have to be subsidized at higher and higher rates forever.  Economically speaking subsidies are an addictive drug.

Medical care costs continue to spiral out of control because we are insulated from the real costs, two layers deep.  Those two layers make thinking about free market reforms confusing.  The first layer is medical insurance insulating us from the costs of medical care.  The second layer insulates us from the costs of insurance—by having others buy it for us. Eliminating those two layers of insulation and creating a free market in medicine would give us more control and actually make healthcare more affordable.  See “What should replace Obamacare?” for how we get there from here.



Posted by donc1950@gmail.com in Medicine, 0 comments
What is the right direction?

What is the right direction?

The right vs. the wrong direction on 9 topics

Why can’t we end the gridlock in Washington, make some sensible compromises and get the Congress to solving some of our most important problems?   The reason is that there is no way to “compromise” or “negotiate” with someone who is advocating going in the exact wrong direction.  Most of the major problems our country faces have been created by us going in the wrong direction for too long.  The problems will not be solved by continuing the failed policies that have caused the problems in the first place.  Instead, there must be a complete change in direction which cannot be achieved by compromise with the wrong direction.  Here are nine major ways we are going in the wrong direction.

  1. Stop making stuff “free” for people.  First, a basic economic fact we must understand.  In our well-intentioned efforts to spare people the indignity of not being able to afford things such as health care or college, we drive up prices by subsidizing them. We pay for the service for them or give them vouchers that can only be used for that purpose. Prices will never come down when we are doing this.  Prices only come down when customers say, “No.  I won’t buy that because it is too expensive.”  The more money that taxpayers (through the government) make available to pay for health care or college tuition, the less the high cost matters, and the higher the prices are able to go.  The only way to help people and keep prices down is to give them cash they can spend in other ways if they wish.  Then they won’t waste money on things that are too expensive and that they don’t value because they are “free.”
  2. Stop buying health coverage for people.  When it comes to medical care, our goal should be to empower customers to drive prices down through free market competition rather than to try to insulate everyone from having to pay anything for health care.  More subsidies and more coverage paid for by the employer or the government keep making the problem worse.  That is the wrong direction.  Instead we have to move towards paying for more of it ourselves so we all become more sensitive to the price of health care.  If we keep going in this wrong direction, the price of medical care will grow until we can no longer afford it as a nation, and instead will have to rely on the government to ration care so it isn’t so expensive.  Again, if we gave people the money that they could spend in other ways they would begin to economize.
  3. Stop buying college for people.  When it comes to college tuition, our goal should be twofold: 1) to increase competition and alternatives to traditional college education and 2) to reduce the various government subsidies that drive up the cost of college.  If people could gain entry to various professions through other means, the colleges would have to compete for customers.  College tuition costs would have to come down if they weren’t being subsidized.  So making college “free” for students is the exact opposite of the direction we need to go.  If instead of scholarships and grants, we gave money that the recipients could spend however they want, e.g., to start a business or on any type of vocational training they wanted, the price of college would go down.
  4. Stop providing in-kind benefits.  In our well-intentioned efforts to help poor people, we put in place more and more programs and benefits that are available only while they are dependent.  When the poor make an effort to become self-supporting by earning money with a job, they lose as much or more than they gain.  That makes dependency a trap.  Most of what is being lobbied for when it comes to the poor is in the wrong direction. Give them money they can spend any way they wish and they can keep as they start earning money.
  5. Re-instate the starting rungs on the career ladder.  When it comes to poor people, our goal should be to help them become self-supporting and to make sure there are more rungs at the bottom of the ladder and strong incentives for getting off the dole—rather than supporting programs that trap them in dependence.   More rungs at the bottom of the ladder include eliminating the minimum wage, eliminating licensing requirements in most occupations, and eliminate all barriers to starting your own business.  Strong incentives for self-sufficiency means more private charitable help that can be flexible, fewer programs and services for the poor and more direct payments that do not cut off abruptly when you get a job.
  6. Eliminate the government monopoly in education.  When it comes to K-12 education, our goal should be to unleash creativity and innovation through increasing school choice options rather than to give more money to the teacher’s unions or more power to educational bureaucrats.   Top-down mandates from even the most well-intentioned officials, while they attempt to ensure social justice, can only stifle needed innovation.  One-size-fits-all governance cannot possibly drive schools, teachers or pupils towards excellence—only the freedom to try new things can do that.  The right direction is to allow and encourage a variety of forms of school choice so that parents can decide what is best for their own children.  And Education Savings Accounts enable families to be frugal with their dollars to help drive down the costs of K-12 education.
  7. Eliminate regulations and barriers to new business formation.  When it comes to creating jobs, our goal should be to remove barriers that inhibit new business formation.  Our economy stagnates because of the innumerable obstacles to entrepreneurship that has depressed the development of new businesses to its lowest rate perhaps ever.  The free market has sufficient incentives to foster new business formation if government rules, regulations and taxes were gotten out of the way.  The more rules and regulations that are imposed on businesses by government agencies, the fewer businesses will be started.  The more rights and benefits that are mandated for every job that is created, the fewer jobs will be created.   More rules, regulations, rights and benefits mandated by those who mean well are the exact wrong direction.  Instead, we need to be dismantling those as rapidly as possible.
  8. Free trade unilaterally.  When it comes to trade we have to realize that trade is the driver of our prosperity.  Trading freely with whomever we wish is the key to getting the most out of life.  While some people do lose jobs and some businesses fail due to competition from abroad, it only impoverishes all of us to erect trade barriers that attempt to protect us from that competition.  Instead, we need to ensure that our economy is vibrant, active and growing so that there are ample opportunities for those whose jobs are lost in one industry or another.  Change is an inevitable component of growth, but a healthy economy can find plenty of places for people who are displaced by change.  See above for how to ensure that adequate numbers of jobs are created.  Erecting barriers to trade is the exact wrong direction to go.
  9. Balance the budget.  When it comes to our increasing government debt, we have to reduce spending below what we are taking in so we can reduce the debt.  Continuing to spend more that we take in is the wrong direction.  We need to reduce spending, reduce programs, go to zero-based budgeting and keep cutting until we are generating surpluses that can pay down the debt.

We need to turn our country around to go in the right direction.  We cannot achieve that by compromising with the wrong direction.  Gridlock is preferable to going in the wrong direction.


Posted by donc1950@gmail.com in Political philosophy, 0 comments
The secret guide to social classes in Portland

The secret guide to social classes in Portland

Despite Portland’s reputation as an uber-cool, tattooed and egalitarian town, I have uncovered evidence of an unacknowledged, old-world-type social caste system. Far from being a utopian classless society, anthropological data shows five distinct social classes operating in this urban culture.  Not simply relying on informants, we anthropologists observe carefully the daily life of a people, and from that we glean the evidence of the actual social structure of the culture we are studying.  Proceeding as any good anthropologist should, by carefully observing people in Portland using the complex transportation system, I have discerned the true social classes that are implicit in this culture but not openly acknowledged.

At the top of the social structure are the very small number of people who are whisked about on the light rail carriages in Portland.  I’ve never met any of them personally, but here’s how I can tell that train riders have a social status equivalent to nobility.  As they go by in their carriages, everyone stops to give the nobility the right-of-way.  Commoners aren’t required to bow (as we were in the Middle Ages), but no matter how busy the streets, and no matter how few of the nobility are in their carriages, everyone else must stop and let them rush by.  In fact, commoners are required to give right-of-way to the nobility’s carriages, even when they are empty.  Special platforms, stairs and even cute little mini-stations are built for their convenience. Pictured above is one of the most ostentatious displays of status by the upper classes in Portland.  They had a special bridge built over the Williamette River for sole use.  This multi-million dollar bridge carries train riders and bus riders but the peasant class (those who drive cars) are not allowed on the bridge.  The obvious amount of money and effort needed to build and maintain this system for the train riders establishes them as the highest status people in the Portland culture.

Evidence clearly demonstrates the penultimate class in Portland to be bicylists.  In Portland there are special lanes for the bicylists, superseding the use of cars on certain streets. Also many streets have a bicylist logo painted on them indicating that they are to be shown special deference on these streets.  Bicylists also have special stoplights in some places, so the lower classes are stopped for their ease of passage.   Bus riders also have high status in Portland but here’s how we know that the bicylists have higher social status than the bus riders.  The buses are required to carry bicycles for the bicylists whenever they wish, and the bus, even when there are many people on it, must wait for the bikes to be put up in their place of honor on the front of the bus—or removed when the bicyclist wishes to resume riding the bike.  (See an example of a bicyclist asserting his social dominance over a bus full of bus riders in the picture above.) The bicylists clearly have higher status than everyone other than the train riders.  Some bicylists also flaunt their status in traffic by forcing the peasant drivers in cars to go slowly and stay behind them.  Of course, bicylists are not taxed for the streets they control, another sign of their privileged status.

Careful analysis shows that in Portland bus riders come next in the hierarchy.  We have seen how the train riders and the bicylists assert their dominance over the bus riders.  But bus riders have clear signs of status as well.  For example, their carriages have the right to crowd out all the peasants in their cars.  Buses do so in ways that are clearly designed to demonstrate their superior social status.  For example buses are often observed purposely not pulling over parallel to the curb to pick up passengers, but instead angling the bus to as to completely block the ability of peasants to go around the bus.  As another privilege of their status, bus riders have little homes built for them to use while waiting for the bus to arrive.  (See an example of one of the nicer homes for bus riders pictured to the right.) And of course, bus riders aren’t required to pay gas taxes.  Although they usually give the driver a token of some kind this seems to be some kind of ritual homage, because it isn’t nearly enough to cover the costs.

Observations establish that in Portland pedestrians are the next lower social class.  They appear to have status only over peasant car drivers, which they assert at every opportunity. No matter how busy the street in Portland, if a pedestrian steps out into the roadway, peasant drivers immediately stop to allow the pedestrian to cross without having to wait. This happens a fair amount, especially when there are many cars to be stopped.  In fact, peasants driving their cars have been seen to stop for pedestrians who are just thinking about crossing the street, just in case.  However, pedestrians are never seen attempting to assert their social dominance over bus riders or bicylists.  Pedestrians in Portland do not step out to make buses or bicyclists stop—a crucial clue to their place in the social hierarchy here.

Finally, come the peasant drivers at the bottom of the Portland social system, who travel in the lowest form of transportation, automobiles.  Peasant drivers are despised because, as everyone knows, cars cause pollution.  This is taught in elementary schools as well as by various other government propaganda sources.  Although riders on trains and buses cause pollution too, because of their higher social status, no one ever mentions it.  Unlike riders on trains and buses, peasant drivers have to purchase their own automobiles with their own money.  Peasant drivers also have to pay for their own gasoline, and that’s how they pay the taxes which fund the transportation system for the higher social classes.  There is not enough money left over from the gasoline taxes to pay for fixing potholes or to add more lanes on the roads used by the peasants, so peasant drivers suffer through a lot of congestion.  Peasant drivers pay all the bills, but give right-of-way to all of those who don’t—the most blatant evidence I have uncovered of the hierarchical social class system of this urban culture.

Posted by donc1950@gmail.com, 1 comment
Ignoring something obvious in Syria

Ignoring something obvious in Syria

There are terrible stories and pictures coming out of Syria.  Civilian women and children being gassed.  Innocent people being bombed by the Syrian regime.  All the media is proclaiming it a humanitarian crisis.  The Syrian government and its Russian allies continue to bomb and shell the rebels that are holed up in the ruins in various parts of the country.

All of these stories ignore something obvious.  This is a civil war.  The people who are rebelling against the government are fighting from amidst the rubble and among the civilians.  The rebels are surrounded and outgunned.  They have no hope of winning.  Why don’t they surrender and end the bloodshed?  Who hides behind innocent civilians and continues shooting at the stronger power—inviting retaliation against positions that jeopardize the innocent?  Who else fights wars from behind women and children?

Hamas and Hezbollah in Palestine and the Taliban in Afghanistan do that.  In fact, the world over, radical Islamists have no regard for innocent bystanders.  Whether they are attacking innocent people with bombs or driving into them with a truck or shooting rockets from the roof of a hospital, or shooting from the homes of civilians only jihadi soldiers have no regard for the distinction between combatants and non-combatants.  They know the west makes that distinction and they mean to use what they consider a weakness against us.

How can you win against radical Islamic fighters who will never surrender and who hide among the civilian population?  If they won’t surrender then you must kill them all.  If they won’t come out from behind civilians, you must kill the civilians too.  It is a terrible thing, but the fault lies with the radical Islamic fighters, not with the other side.  I’m not saying that the Syrian government forces are humanitarian heroes.  Perhaps if the rebels came out with their hands up, they would all be executed.  But if I was a soldier and my side was losing, I would surrender and face a firing squad rather than cause the deaths of innocent women and children around me.  I wouldn’t keep shooting from within a house, or a city, surrounded by women and children, knowing that I was inviting retaliation that would kill them as well as me.

Western mainstream media is being manipulated by radical Islamic forces.  They hide behind human shields and then get our media to show how evil their enemy is because of collateral damage.  Israel has known this double standard for decades.  If one side won’t surrender and hides behind innocent civilians, there is only one way to win against them.  The only way to win against this kind of enemy is to ignore the collateral damage, ignore the media outrage, and kill them all, combatants and non-combatants alike.  Unfortunately, radical Islamic fighters leave no other way.

Posted by donc1950@gmail.com, 0 comments