Month: August 2009

Health Reform Republican Plan

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Republican politicians and conservative talk show hosts have devoted plenty of time slinging arrows at Democratic health insurance reform proposals. Occasionally, I hear a talk show host or a Republican politician on a Sunday morning talk show mention the Republican health care plan but few or no details. Instead they continue to heap scorn on “Obamacare”.

When someone prefers to attack rather than explain their alternative, I get suspicious. Maybe the Republican plan sucks, I thought, and that’s why conservatives don’t offer summaries of the plan. If you, like me, would like to know what the Republican health care plan is, you can check out a Roll Call summary here on the Real Clear Politics website. It has some good features, notably the reduced government “footprint.”

As a small employer with several experiences with state insurance agencies, I am leery of government insurance solutions. In Colorado, Labor Dept employees seem to assume that the employer is at fault or lying, although a spokesman for the Labor Department would probably deny it.

An employee is taken at his or her word and it is up to the employer to prove that the employee is mistaken. Conversations with several other small employers in this state have confirmed this attitude on the part of state agency employees.

While there have been court decisions to clarify “reasonable grounds” or “reasonable suspicion” in criminal cases, there seems to be little precedent to stipulate what “reasonable grounds” are in civil and regulatory matters. If a state auditor feels they have reasonable grounds to believe that an employer is guilty of breaking one of the hundreds of state laws affecting employers, then, unlike criminal cases, the employer must prove their innocence.

I am afraid that this same attitude will prevail when the Federal government injects itself even deeper into health care and insurance in the U.S. Doctors and health care providers will be in the same position as employers, needing to prove their innocence. As patients, we might think that such a presumption of fault on health care providers is a good thing. Such a presumption will only cause more doctors and health care providers to leave the medical field. After all, who needs the aggravation?

Even without health care/insurance reform, there will not be enough doctors and health care providers for the juggernaut of the aging baby boomers. With or without reform, there will be delays in getting medical appointments with primary care physicians and specialists. We need reform and this is the time to do it. I can only hope that our politicans will use some care and sober judgment as they craft a reform bill.

Lower Taxes

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Want lower income taxes and national health insurance? Move to Britain. As this chart shows, income tax and health insurance takes about 30% of a paycheck in Britain. But wait.. Don’t book your flight to Britain yet. There is also a 17.5% VAT tax (Ouch!), a sales tax on many goods and services, but food and children’s clothing is exempt from the tax.

Here in the good ole U.S.A, about 9.9% goes to state and local taxes, as reported by the Tax Foundation. Keep that in mind the next time you read or hear someone say “half of the population pays no tax”. What they mean is that approximately half of the population pays little or no Federal income tax. Social Security and Medicare tax take a 15% bite (as an employer, I can assure you that the employee pays the company half of the Social Security tax in reduced wages). Add in 10% for state and local taxes and a quarter is gone out of every dollar earned, before the Feds take their share. If you are a breathing adult, you’re probably a taxpayer.

A state by state comparison of median income from the Kaiser Family Foundation shows some surprising data. There are a number of other comparisons at this site.

Health Care Debate

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Joseph Ellis, a historian and author, recently wrote an op-ed in the L.A. Times that provides a historical perspective on the debate about the role of government.

Whatever our position on health insurance, let’s keep it to a debate. The last time we had an unresolvable debate about the role of government was in 1861 and we don’t want to do that again.

Thoughts to Ponder

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“You cannot help the poor by destroying the rich.
You cannot strengthen the weak by weakening the strong.
You cannot bring about prosperity by discouraging thrift.
You cannot lift the wage earner up by pulling the wage payer down.
You cannot further the brotherhood of man by inciting class hatred.
You cannot build character and courage by taking away people’s initiative and independence.
You cannot help people permanently by doing for them, what they could and should do for themselves. “

……Abraham Lincoln —

Thanks to Lydia for passing this on to me.

Stock Returns

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Here’s an interesting table summarizing data from the Federal Reserve on comparative returns on stocks, T-bills and Treasury bonds from 1928 to 2008. What if you had put $100 a stock index like the Dow Jones in 1928? What would it be worth today?

What this illustrates is the power of compounding over a number of years. A nice gift from any parent or grandparent to a newborn child might be a small amount put in a stock index fund in trust for that child.

Confrontational Politics

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It’s called confrontational politics – the yelling and shouting heard this month at town hall meetings on health care. The tactics were first devised in the 1960s by the SDS, the Students for a Democratic Society, to protest the war and include intimidation, physical and vocal defiance and provocation. An underlying presumption of these tactics is that the ends justify the means.

In a twist of irony that would spark a wry smile in Rod Serling, the creator of the Twilight Zone, these strategies were later adopted by the College Republicans in the 1980s to thwart liberal causes on college campuses. Jack Abramoff, a leader of the movement, crafted a disciplined organization that promoted intimidation as an effective tool for conservative political causes.

In the 90s, environmental groups amended the strategy to include both violent confrontation and the passive resistance tactics espoused by Ghandi.

In the late nineties and early in this decade, an anti-corporate movement adopted these “in your face” stategies at several economic forums to challenge the fiscal policies of governments.

Common to all these movements is the perception that compromise is a betrayal of one’s principles. Compromise complicates issues for it requires that one party understand, to some degree, the other party’s point of view. Complexity is the enemy of those who prefer simplicity in their lives, beliefs and ideologies.

Debt Mountain

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There has been a big rally in corporate bonds in the past few months. Decreasing fears of defaults has sparked a huge inflow of money into these bonds. The U.S. corporate bond market is large, with $9.8 trillion in outstanding debt – 1.5 times the amount of outstanding Treasuries, or about 70% of the nation’s GDP.

According to Federal Reserve data, the U.S. mortgage market is even bigger – $14.7 trillion at the end of 2008, of which $8.2 trillion is securitized. The three government agencies Fannie Mae, Freddie Mac and Ginnie Mae now back 90% of mortgages.

Healthy Americans Act

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I’ve been a bit too busy lately to keep up with this blog. This blog is a good update of the continuing saga of health care/insurance reform in this country.

Ron Wyden, a senator from Oregon, initiated Senate bill 334 in 2007 and added several amendments in March 2008. The Congressional Budget Office’s analysis of the proposal found that it was revenue neutral within two years.

Likes: Basic plan is the standard basic Blue Cross/Blue Shield plan offered to federal government employees. State administered private insurance pools to spread the risk to insurers. Individual mandates to purchase insurance. People with low incomes are partly subsidized. Automatic enrollment if an individual makes no choice and no penalty to an individual who fails to make a choice. Ability to buy a more expensive policy if one can afford it. Leaves alone existing insurance policies negotiated as part of a collective bargaining agreement – the unions will like that. The basic plan is indexed to growth in GDP, not medical costs.

Dislikes: The basic plan is indexed to growth in GDP which is sure to grow less than medical costs. Private insurers will surely increase deductibles or reduce coverage for some services to offset the actuarial difference. The plan still involves employers who will pay a sliding scale tax (deductible) on the number of employees they have. However, with medical premiums increasing by 7 – 12% every year, I suppose that a sliding scale tax will at least be a known cost. It also evens up the playing field between larger companies, who pay more than smaller companies.

Of all the proposals I have read, I like this one the best for its fiscal soundness and it’s realistic approach to the competing interests of all.