Tag Archives: reform

Government Forecasting

Posted on by razma766
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Here is a letter I recently sent to the Midland Daily News:

Joe Weir, in his recent letter, offers an extensive analysis of the health care bill recently passed by congress (“Understanding health care reform,” May 16).  Amongst all the cost savings and benefits, he cites the following projection: “The legislation will reduce the deficit by over $100 billion over the next ten years and by about $1 trillion over the second decade.”

The following are four examples of government’s ability to forecast government health care costs in the past:

1.       When Medicare was created in the 1960s, the long-range forecasts estimated that the program would cost about $12 billion by 1990. It ended up actually costing $110 billion that year, or nine times more than expected
 
2.       When Medicaid was created in 1965, it was supposed to be a very small program with annual expenditures of about $1 billion. It now costs federal taxpayers $280 billion per year.
 
3.       Medicaid’s disproportionate share hospital (DSH) program was created in 1987 to subsidize hospitals with large numbers of uninsured patients. The program was supposed to cost $1 billion in 1992, but actually cost $17 billion.
 
4.       The Medicare Catastrophic Coverage of 1988 was repealed after less than two years, in part because some provisions were already projected to cost six times more than originally forecast.*
 
The examples above do not prove that the $100 billion dollar deficit reduction projection is inaccurate.  They should, however, make one skeptical of government’s ability to accurately forecast the costs of the most recent health care reform.
 
Kurt Bouwhuis
 
 
* Daniel J. Mitchell, Will Federal Health Legislation Cause the Deficit to Soar? (Tax and Budget Bulletin 2009)

Equally Unequal

Posted on by razma766
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Here is a letter I recently sent to the Midland Daily News:

Dr. Valeriy Ginzburg states in a recent letter that “the bills adopted by the Senate and the House probably represent the most fair way of covering the uninsured while spreading the costs in an equitable fashion.” (“Health care reform imperative,” February 5).

I respectively disagree.

If the bills adopted by the Senate and the House truly spread costs across society fairly, the respective number of pages for these bills would not surpass 10 pages. In other words, it would be simple to total all health care costs and divide them equally amongst the members of society. It is precisely because these bills favor particular classes of people over others that these bills are well over 1000 pages of elusive legal jargon.

Kurt Bouwhuis

Unintended Consequences

Posted on by razma766
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Here is a letter I recently sent to the Midland Daily News:

Unintended Consequences

Most advocates of Obama’s health care reform dislike the employer paid health insurance system. Their disapproval of this system is rational – Just imagine if your house, car, etc… were all supplied by your employer and revoked upon leaving the company. I would, however, have a great deal of disagreement with many advocates of Obama’s health care reform over the origins of this faulty employer paid health insurance system.

The employer paid health insurance system is not the result of the free market, but rather, an unintended consequence of price controls placed on wages during World War II by the Roosevelt Administration. These price controls made it illegal to pay employees more than a government determined wage. As a result, businesses began to offer free health care on top of the maximum legal wage limit in order to attract the most valuable employees (as it was illegal to attract the best employees through wages).

The government propped up employer paid health insurance even further by altering the federal tax code. The federal tax code was changed to exclude, without limit, the value of employer paid health insurance from both income and payroll taxes. Although the price controls from the World War II era have been revoked, the employer paid health insurance tax exemption is still in existence today.

With every single piece of legislation enacted by government, there are unintended consequences that negatively impact society. These negative impacts are then ‘remedied’by further government intervention, which, it is argued, are ‘necessary’to solve the problem. This creates a cycle that is especially noticeable in both the health care and financial sectors of the economy, where government intervenes most.

Kurt Bouwhuis

Thievery Masquerading as Benevolence

Posted on by razma766
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Kurt Bouwhuis, Mackinac Center Intern

Here is a letter I recently sent to the Midland Daily News:

In Anne Mowery’s letter on balanced reporting, she states “…I cannot, as a decent person, turn my back on those who have lost their jobs or have a pre-existing condition that prevents them from getting insurance at a reasonable rate, or denies them coverage.” (“Give us balance,” Sept. 1).

As I read this statement, I was inspired by what I felt was Anne’s heartfelt proposal to help these people in need with her own time and resources.

My sense of inspiration quickly diminished as I read the very next sentence: “I find it troublesome when you run all of your guest writers’columns slamming Obama and those who would try to help the people who need help in these tough economic times.”  Although I share Anne’s desire for balanced reporting, I oppose her and Obama’s approach to helping people.

It is inspirational to see individuals spend their own time and resources helping people in need.  It is upsetting to see individuals spend their own time and resources lobbying for the confiscation of other people’s money to fulfill the same end.

Kurt Bouwhuis

Profit is BAD – Sharing is GOOD

Posted on by razma766
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Kurt Bouwhuis, Mackinac Center Intern

Here is a video I found on Michigan Liberal this morning that is rather interesting.  Although I enjoyed the graphics and short duration, it is a bit misleading and completely leaves out the notion of unintended consequences or the effects of current government regulations on our health care industry.  Aside from disregarding the complex web of government regulations that shape the industry we have today, the clip assures us that eliminating profits is a good idea.

The creator of this short clip suggests that profit is an added expense that could be used to provide more people with health care.  It seems plausible, but what purpose does profit serve? Aside from encouraging entrepreneurship and risk taking, it tells producers what people want. For example, suppose I am a the CEO of a medical insurance company with low deductibles. Additionally, suppose a new competitor enters the market and offers a high deductible insurance at a lower cost. Some consumers will likely choose to buy less of my insurance and more of the other insurance. These consumer choices become translated into a loss my insurance company and a profit for the new competitor. This economic activity is dynamic and guides the production of goods and the elimination of others.  Unfortunately, it is impossible to eliminate profits without eliminating the vital role it plays in conveying information between producers and consumers.

In the clip, Medicare is said to be a model program – The problem is, the future obligations are trillions of dollars in the red.

The “rationing” by private insurance companies could easily be reduced by competition (that is currently being restricted by government regulation).  If a company chooses to ration too much, a consumer could easily choose another company.  If government chooses to ration, consumers will have no choice but to stick with the government monopoly.

As a funny side note, the clip tells us to imagine what the world would be like with private fire insurance.  It is quite an easy world to imagine here in the United States because we have private fire insurance.  We do, however, have public fire protection.

Health Care – In a Nutshell

Posted on by razma766
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nutshell

Kurt Bouwhuis, Mackinac Center Intern

I initially found this post at Cafe Hayek.  Do not miss this superb article from the Atlantic by David Goldhill.  Here is an excerpt:

Indeed, I suspect that our collective search for villains—for someone to blame—has distracted us and our political leaders from addressing the fundamental causes of our nation’s health-care crisis. All of the actors in health care—from doctors to insurers to pharmaceutical companies—work in a heavily regulated, massively subsidized industry full of structural distortions. They all want to serve patients well. But they also all behave rationally in response to the economic incentives those distortions create. Accidentally, but relentlessly, America has built a health-care system with incentives that inexorably generate terrible and perverse results. Incentives that emphasize health care over any other aspect of health and well-being. That emphasize treatment over prevention. That disguise true costs. That favor complexity, and discourage transparent competition based on price or quality. That result in a generational pyramid scheme rather than sustainable financing. And that—most important—remove consumers from our irreplaceable role as the ultimate ensurer

Misleading Information

Posted on by razma766
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Kurt Bouwhuis, Mackinac Center Intern

“So let me explain what reform will mean for you. Let me start my dispelling the outlandish rumors…” – President Obama

I figured I would use this line from the clip to dispel the outlandish rumor that Obama makes starting at 4:37. He states we have two different approaches when it comes to health care. Our first approach is the status quo. Our second choice is reform. With either of these approaches, we are left with a healthcare system strangled by government through heavy subsidies and regulation.

I will give him the benefit of the doubt and assume he forgot to mention the third approach – Freedom. Allowing individuals to voluntarily associate in the absence of government coercion. Removing government from healthcare would get rid of political decision making, which is heavily influenced by special interests, and allow for competition to drive costs down (like in most other markets).

It appears to me that no one really understands health care reform. John Stewart has some good evidence.

Medical Coverage Like A Game Show

Posted on by razma766
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Kurt Bouwhuis, Mackinac Center Intern

In less than 90 seconds the new video highlights the upside-down priorities of Oregons Medicaid system. Lobbying groups have used the political process to push coverage for special-interest causes like substance abuse and weight loss treatment ahead of treatments for some kinds of cancer on the priority list.

Enjoy!

When it’s time to change…

Posted on by lmruhland
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–Lauren Ruhland, 2008 MCPP intern

A survey conducted by the Glengariff Group last month indicates that the people of Michigan are interested in making big reforms to save the state money.  Among the findings mentioned in the Detroit News:

  • Nearly 80 percent support finding means of punishment for nonviolent offenders, other than prison. It costs $5 million a day, or $2 billion a year, to run Michigan’s prison system, but leaders in Lansing have been at odds on how to reduce costs and the inmate population — expected to top 56,000 within five years.
  • Nearly 75 percent said they would support increasing health care premiums for state employees. State employees pay between 5 percent and 10 percent of the cost of their health care premium, whereas private sector employees typically pay between 16 and 28 percent of their premiums, according to the survey.
  • About 74 percent said they support changing retirement benefits for new teachers. Michigan teachers have a defined benefit system, which requires school districts to pay a specific amount into the retirement system each year. Those surveyed favored a 401(k)-type individual contribution plan for new teachers.

Many respondents also expressed their desire for wordy ballot initiatives with the intention of creating sweeping changes in the government structure in order to shift the balance of power. (Just kidding.)