US Controversies and Big Ideas 2008 and Beyond

Individual Mandate for healthcare: the flawed comparison with auto-insurance

In the make-belief world of the current administration, supercilious comparisons are made to justify its proposed programs which have no basis whatsoever in reality. Fallacies abound and seem logical to the unsuspecting. One clear example is the justification for an individual mandate for health care. “Just like compulsory auto-insurance is mandatory, so also for health care”. Yeah, that seems like a straightforward and reasonable justification.

It goes a step further. An auto accident could cause damage to another person who probably does not bear any responsibility for it. Such a person needs compensation for the harm caused to him. The person who caused the accident will be able to pay only if he or she has an insurance plan. Similarly, the administration argues, everyone needs to have a health insurance plan to pay for their care rather than end up in an emergency room where they cannot be denied care. That society would otherwise pay for their care.

First, the individual mandate for auto-insurance does not require drivers to pay for comprehensive insurance. They only need to pay for the minimum level of liability coverage. The individual mandate for health insurance, proposed in the conceptual plans, are required to meet the standards of coverage that the Government requires each person to have which would now include pre-existing conditions. The comparable auto-insurance would include not only comprehensive coverage but also costs of repair and maintenance including oil change!

Just like a person whose auto-liability insurance includes only the minimum coverage will have to pay out-of-pocket for any amount in excess of it, the individual mandate can at the most require a minimum level of health coverage.

A more efficient alternative to individual mandate is   health savings plans. For those with very low incomes, the government could provide vouchers to fund the accounts. This would be akin to earned income credits. For emergency care, the expense could be paid over an extended period of time to cover the deductibles. The rest would be covered from the insurance plan.  

The Sophistry on Medicare: The case against Government takeover

What the Democrats lack in governance, they make up in sophistry. The issue of Medicare and Government takeover is just one example. They sneer at the apparent hypocrisy of Republicans who have taken on the role of opposing cuts in Medicare. “If you are against Government takeover, why are you supporting a government program like Medicare or even Medicaid? Similarly, the Democrats chide the elderly for opposing government takeover while insisting on retaining their own government health program.

Given an option, the Republicans are inclined to offer choice and private services to the elderly. The Medicare Advantage program was launched for precisely that reason. And the Democrats are viscerally opposed to Medicare Advantage. Better still, the Republicans would be inclined to simply offer vouchers to low income or retired folks which they can use to pay for privately delivered services.

The Medicare program has already been paid for by the elderly—it is now their turn to benefit from the investments they have already committed. That the Democrats are now considering the reallocation of funds from Medicare to their universal care experiments is only confirmation that the government cannot be trusted to comply with social contracts. When public finances are mismanaged, governments will be inclined to raid cash hordes.

The rationale for Medicare and Medicaid or for children’s programs for healthcare was not that Government provision of health is generally better than private delivery. Instead, the premise was that private markets fail to function when the elderly, the low income folks and children don’t have the purchasing power to buy health care.

With advances in knowledge about the health care business, its time to look at alternatives. The elderly can take care of their health needs if they are able to save money in their health care accounts over their working life. The poor and children of low-income households can pay for their health care with vouchers.

The Democrats are looking to make cuts somewhere to pay for universal access because they refuse to institute incentives which will help to cut costs. Resources are scarce and increasing demand for health care can only be fulfilled by supply side reforms including competition in the health care industry. The Democratic program cannot possibly increase access so they will only redistribute resources from one group to another without improving the overall system.   

 

NObama's fallacies: reality and populism

A steady stream of harebrained notions bubble out of the Nobama campaign. At regular intervals, the bubbles burst as a Republican or conservative thorn pricks them. Barack Obama steps out of the cloud, stares at the ground reality and realizes that he has to swing to the opposite end of his belief system. After a momentary encounter with the world we are familiar with, he is back to propogating the same old poppycock. We see this spectacle of reverse movements, a bizarre dance happening over again.

If Obama does not makes these corrections from the holy progressive path, he will simply be seen as insane. This happened when he finally signed the bill to grant immunity to telecommunications companies who share terrorism related information with the Government without a warrant. We know how FBI was unable to take action against suspected terrorists following the 1993 bombing of the World Trade Tower; the process of obtaining a warrant from a court was way to cumbersome to take action in real time.

One of the latest such notions is that money can be saved from defense expenditures to pay for social programs. That defense expenditures are rising so rapidly that poor folks don't have enough anymore for medical treatment, education and social security. Nothing could be further from the truth. Ross Perot has assembled figures in a very user-friendly presentation about government revenues and expenditures. The remarkable fact is that the share of defense expenditure has been halved since the Vietnam war. On the other hand, medicare and medicaid expenditure is growing by more than the three times the rate of the GDP. Obama is suggesting more of the same--a universal care system which is not much different from medicare and medicaid.

The only reason medicaid and medicare expenditure rises is that there is no in-built price mechanism to put any check on the growth of these expenditures. Nobama refuses to acknowledge this simple reality. The guy is so blind to economic facts that the dance is going to continue when he is in office. I have seen this happen before in India whenever the Janata party came to power. A bunch of crackpots came to some twisted conclusions and disrupted the daily life of people. Nobama's dance is all the more surreal as it is happening in a society that is otherwise sane if nothing else.   

Barack Obama: Accidental Presidency?

Peter Sellers "Being There" was a hilarious comedy of an accidental Presidency. An obscure recluse for life decides to step outside in the world and finds himself campaigning. A comedy of errors ensues and his every word is interpreted to be more profound than it was intended. The audience, hearing the candidate from a distance, separated by a wall of mass media is enthralled! The actual person happens to be an empty suit bumbling along step at a time and eventually into the White House....I remember the movie almost twenty years after I saw it.

Barack Obama's path to Presidency seems so much like the movie. An unknown person till last year, he has already gained worldwide fame. He got a series of lucky breaks along the way as his opponents in elections floundered following scandalous revelations about them. Now he is talking about change and the crowd loves it. The reality of his traditional liberal views be damned.

He addresses the Jewish community and lies that he would take a firm stand against Iran. In the Senate, he opposed characterizing the Iranian Revolutionary Guard as a terrorist organization. He invokes the memory of Reagan, of all people, to describe his stance. It would be hard to find a contrast as stark as Ronald Reagan and this impostor. Yet, the Jewish community is solidly Democratic.

Regardless, the poll numbers suggest that he is going from strength to strength. The foul mood of the electorate will, in all probability, propel him to the Presidency. Hey, where are all the comedians.