In my last blog, Health-Care Reform Hurts the Constitution: Part II, I explored the history of so-called reform and the consequences thereof. I provided evidence that government intrusion not only historically has not helped reduce cost, but rather has caused costs to increase precipitously. In this installment, I would like to take a constructive approach and offers some free-market solutions to the the issues we have with health-care. There are actually two main issue that current legislation aims to address: coverage for the uninsured, and lowering health-care cost for the consumer. Before we tackle these issues, let me be clear about one thing: this present situation is just as much the fault of the Republicans as it is the Democrats. By refusing to deal with the escalating costs of health-care, Republicans effectively allowed liberals to frame the debate on their own terms. As the saying goes, “lead, follow, or get out of the way.” The GOP is just now trying to lead; however they lack the numbers, the voice, and any political momentum and have found that their pleadings are falling on deaf ears. Yet there are market-based solutions. Ironically, it was President Obama who alluded to this approach. In March 2009, President Obama said, "If there is a way of getting this done where we're driving down costs and people are getting health insurance at an affordable rate, and have choice of doctor, have flexibility in terms of their plans, and we could do that entirely through the market, I'd be happy to do it that way." Really? So where is that approach, and where has it been for the past 40-50 years? It’s been stuffed in the closet and held hostage by our federal government, and its muffled cries are begging to be heard. To this end, I offer the following as potential alternative to the currently proposed health-care legilsation:
1. The federal government can provide vouchers to the neediest in society, starting with Medicare recipients, and then in a short period of time, include other uninsured. This would allow them to choose a policy they feel comfortable with, psychologically and financially. It is also worth mentioning that his is same approach we use to help those in poverty by providing food stamps.
2. Allow individuals to purchase and retain health-insurance policies that they keep as their own, much like a life insurance plan. This would free individuals to not only maintain control over their finances and health, but remove the punitive mechanism that forces individuals to feel trapped in an undesirable job just to maintain health-care coverage. Moreover, people with individually purchased plans should have the same tax advantages as those receiving employer-sponsored plans. As, John Mackey, co-founder and CEO of Whole Foods Market Inc. suggest, "let's equalize the tax laws so that employer-provided health insurance and individually owned health insurance have the same tax benefits."
3. Congress should allow an expanded tax-free contribution to Health Savings Accounts (HSAs), which would result in a massive tax cut that would end up funding the cost of insuring those most in need, all without creating further economic wedges. Current legislative proposals aim at restricting this, which once again deprives the individual of free choice, thereby violating the Constitutional guarantee of “pursuit of happiness.”
4. Congress should allow consumers to purchase health insurance across state lines, leading to competition, which is a proven mechanism to lower costs. Our government could then offer tax incentives to insurance companies to form nationwide consortiums that would allow individuals to take part in consumer pools in order to provide access to those receiving vouchers. This is similar to the the health-care exchanges that the current Senate bill is proposing, with one big difference: it would allow and promote insurance companies to take the lead in the formation and would not be subject to heavy regulation and the imposition of federal bureaucrats or their political proxies.
5. The most important issue is to reshape the way plans are structured to match the true idea of what insurance is about, which is to manage catastrophic or significant risks. The insurance plans currently available often cover such a wide array of services, many of which are never utilized by a policyholder. Predictably, government is again responsible, mandating and dictating to insurance companies what they can and should cover. In contrast, if we were to create a flexible, tiered, transparent system of policies set at different levels of consumer affordability, the individual could make an informed choice as to which policy best meets his or her needs. Much of the cost could then be offset by HSAs, which could be partially funded by employers through tax-exempt matching funds that would otherwise be spent on underutilized health plans.
6. To directly control the cost, let’s create a significant tax credit or deduction for doctors that willingly see patients struggling with finances, and create a parallel process for pharmaceutical companies willing to provide medication at a reduced or no costs.
7. Streamline medical paperwork. According to the 2008 Dartmouth Atlas of Health Care, $210 billion dollars is wasted each year on medical paperwork. This is because of the myriad of plans and their enumerated clauses. This is where the insurance industry can take the lead by providing some sort of uniform codifying mechanism to address this issue. Let's face it, if colleges can agree upon two standardized admissions tests, surely the insurance industry can work together volitionally to align language, forms, and codes. The insurance industry should realize that if they don't, Congress will.
8. Use present hospital exemplars to model reform around. Point in case: The Cleveland Clinic, which leverages technology and modern management tools to improve both efficiency and care for patients. This organization has created a new protocol by revolutionizing how it organizes patients. Rather than categorizing its patients according to medical specialties, The Cleveland Clinic created 25 "institutes" organized by disease or organ system. The clinic also uses evidence-based medicine to make decisions, and publicizes its results. This is not just about transparency, but is concerned with analysis of quality and efficiency of delivery of services, both which benefit the patent and consumer. Again, hospitals need to work together in common interest and in a volitional manner, or government will step in with ill-conceived regulatory practices, which will ultimately lead to inefficiencies and growing costs.
Finally, let’s not stick our heads in the sand and pretend that there are not people who are struggling with health-care affordability. Physicians need to be willing to treat those in need by reducing their costs, and government needs to back off and allow doctors to set their own prices without undue interference. And the truth is, this was the norm before government got involved. It is all too easy to turn a blind eye to our brothers and sisters who are suffering when we all rely on government to do the job. Let’s put health-care back where it belongs: in the hands of the consumers and the doctors.
Wednesday, December 16, 2009
Sunday, December 6, 2009
Health-Care Reform Weakens the Constitution: Part II
In my last blog, we examined how the current health-care legislative proposals violate both the sprit and the letter of the Constitution. Now lets look at this issue beyond the Constitution, in terms of practicality and it’s supposed ability to reduce overall health-care cost. The common rhetoric, whether it is quipped by the House, the Senate, or President Obama, is that this legislation will “bend the cost curve.” Both Congress and the President rushed to announce their claim had been vindicated by the Congressional Budget Office (CBO), which stated:” CBO and JCT now estimate that the legislation would yield a net reduction in deficits of $138 billion over the 10-year period.” This sounds encouraging, until you read the literal fine print, and discover several gaping holes in this projection.
For starters, the report parenthetically states, “The program’s cash flows would show net receipts for a number of years, followed by net outlays in subsequent decades.” In other words, the government is taxing for a full five years before they start paying out, giving them a revenue cushion that will eventually deflate as the true cost of the legislation kicks in. Moreover, the CBO report states, “The changes in revenues include effects on Social Security revenues, which are classified as off-budget.” Does this mean we are gong to use Social Security as a hedge, one again, to defray the cost of another program? That’s why Social Security is in trouble already! To rub salt in the wound, the CBO report adds that “The 10-year figure of $574 billion includes $560 billion in revenues from tax provisions (estimated by Joint Commission on Taxation) and $13 billion in additional revenues from certain provisions affecting Medicare, Medicaid, and other programs.” Translation, we are going to rob Peter (Medicare and Medicaid, both already in trouble) to pay Paul (new health care legislation). Taxpayers deserve more transparency than this kind of tax and revenue shell game.
History bears this analysis. When Medicare Part A was enacted in 1965,costs were projected to rise to $9 billion by 1990, but actual costs reached $67 billion by 1990. Or consider that when the Medicaid special hospitals subsidy was added in1987, annual costs were projected to be $100 million. By1992 costs had risen to $11 billion annually. This game has been played over and over again, and each time the government promises and the taxpayer loses. As Amitabh Chandra, a professor of public policy at Harvard University's John F. Kennedy School of Government observes, "The problem is that historically, Congress has not been able to keep its word on constraining costs." Others, including experts in health-care reform, also share these reservations. Dr. Jeffrey Flier, the dean of the Harvard Medical School, wrote in The Wall Street Journal on Nov. 18: "In discussions with dozens of health care leaders and economists, I find near unanimity of opinion that, whatever its shape, the final legislation that will emerge from Congress will markedly accelerate national health care spending rather than restrain it." And when the wealthy start pushing back at Congress via lobbyist, whom do you think will be left holding the bill? The middle class, of course. The bottom line is that the federal government cannot contain cost because they have no incentive to do so. With an never-ending revenue stream of tax-payers, what would compel them to change their behavior?
If we use lens of history to further our examination of government meddling in the free market, we find even uglier truths lurking beneath the surface of lies and pretenses. In the 1970s, it was Congress, once again, that warned us about the escalating costs of health care and the absolute need to contain these costs. Their answer: HMOs. The HMO act of 1973 forced small business to offer HMOs to their employees. Now that HMOs have turned out to not be the salve to heal the imaginary wound concocted by our legislature, Congress has vilified them as the culprit, pointing out how they exclude people form coverage, and do not address actual underlying health issues. As Donald W. Moran, former Legislative Assistant to Congressman David A. Stockman, points out: “In the 1970s, the push for cost containment was used to whitewash all manner of otherwise antisocial behavior on part of the government and the various provider groups scrambling for the federal health-care dollar.” What Congress created through legislative efforts, whether intended or unintended, is co-dependent relationship in which private enterprise and Congress collude to create the illness and then induce an unwitting public to admit themselves to their care.
To get a better understanding of why health-care cost have escalated, however, we have to get at the psychology behind it all. Whether it’s HMOs, Medicare, Medicaid, or the current legislation being pushed in D.C., the underlying dynamic is to separate the consumer from point of transaction. This dynamic is known as a ‘health-care wedge,” because it creates a “wedge” between the consumer and the provider. According to economist and author Arthur Laffer: “The health care wedge diminishes consumers’ incentives to monitor costs. Consumers bear only a fraction of the costs from any additional health care service. On the supplier side, doctors and other medical providers receive no incentive to provide higher quality services for less cost. No positive benefit accrues to those who do so.” Moreover, the more government intrudes, the more the free market is distorted, thereby decreasing competition, which necessarily increases costs. Additionally, because the rate of fraud in government programs, any “savings” realized would be ultimately abrogated. According to Malcolm Sparrow of Harvard University, a top specialist in health care fraud, “as much as 20 percent of federal health program budgets are consumed by fraud and abuse, which would be about $85 billion a year for Medicare.” Do you hear the sound, the sound of “savings” being washed down the drain of corruption, not to mention the stealthy, silent sucking of cash out of wallets in the form of escalating costs, fines, regulations, and ultimately, taxes? That’s the history, and that’s future reality if we are forced into accepting this latest power play by Congress and the President. Our federal government can help with the cost of health care if they act within the bounds of the free market. This will be the topic of Part III of my blog.
For starters, the report parenthetically states, “The program’s cash flows would show net receipts for a number of years, followed by net outlays in subsequent decades.” In other words, the government is taxing for a full five years before they start paying out, giving them a revenue cushion that will eventually deflate as the true cost of the legislation kicks in. Moreover, the CBO report states, “The changes in revenues include effects on Social Security revenues, which are classified as off-budget.” Does this mean we are gong to use Social Security as a hedge, one again, to defray the cost of another program? That’s why Social Security is in trouble already! To rub salt in the wound, the CBO report adds that “The 10-year figure of $574 billion includes $560 billion in revenues from tax provisions (estimated by Joint Commission on Taxation) and $13 billion in additional revenues from certain provisions affecting Medicare, Medicaid, and other programs.” Translation, we are going to rob Peter (Medicare and Medicaid, both already in trouble) to pay Paul (new health care legislation). Taxpayers deserve more transparency than this kind of tax and revenue shell game.
History bears this analysis. When Medicare Part A was enacted in 1965,costs were projected to rise to $9 billion by 1990, but actual costs reached $67 billion by 1990. Or consider that when the Medicaid special hospitals subsidy was added in1987, annual costs were projected to be $100 million. By1992 costs had risen to $11 billion annually. This game has been played over and over again, and each time the government promises and the taxpayer loses. As Amitabh Chandra, a professor of public policy at Harvard University's John F. Kennedy School of Government observes, "The problem is that historically, Congress has not been able to keep its word on constraining costs." Others, including experts in health-care reform, also share these reservations. Dr. Jeffrey Flier, the dean of the Harvard Medical School, wrote in The Wall Street Journal on Nov. 18: "In discussions with dozens of health care leaders and economists, I find near unanimity of opinion that, whatever its shape, the final legislation that will emerge from Congress will markedly accelerate national health care spending rather than restrain it." And when the wealthy start pushing back at Congress via lobbyist, whom do you think will be left holding the bill? The middle class, of course. The bottom line is that the federal government cannot contain cost because they have no incentive to do so. With an never-ending revenue stream of tax-payers, what would compel them to change their behavior?
If we use lens of history to further our examination of government meddling in the free market, we find even uglier truths lurking beneath the surface of lies and pretenses. In the 1970s, it was Congress, once again, that warned us about the escalating costs of health care and the absolute need to contain these costs. Their answer: HMOs. The HMO act of 1973 forced small business to offer HMOs to their employees. Now that HMOs have turned out to not be the salve to heal the imaginary wound concocted by our legislature, Congress has vilified them as the culprit, pointing out how they exclude people form coverage, and do not address actual underlying health issues. As Donald W. Moran, former Legislative Assistant to Congressman David A. Stockman, points out: “In the 1970s, the push for cost containment was used to whitewash all manner of otherwise antisocial behavior on part of the government and the various provider groups scrambling for the federal health-care dollar.” What Congress created through legislative efforts, whether intended or unintended, is co-dependent relationship in which private enterprise and Congress collude to create the illness and then induce an unwitting public to admit themselves to their care.
To get a better understanding of why health-care cost have escalated, however, we have to get at the psychology behind it all. Whether it’s HMOs, Medicare, Medicaid, or the current legislation being pushed in D.C., the underlying dynamic is to separate the consumer from point of transaction. This dynamic is known as a ‘health-care wedge,” because it creates a “wedge” between the consumer and the provider. According to economist and author Arthur Laffer: “The health care wedge diminishes consumers’ incentives to monitor costs. Consumers bear only a fraction of the costs from any additional health care service. On the supplier side, doctors and other medical providers receive no incentive to provide higher quality services for less cost. No positive benefit accrues to those who do so.” Moreover, the more government intrudes, the more the free market is distorted, thereby decreasing competition, which necessarily increases costs. Additionally, because the rate of fraud in government programs, any “savings” realized would be ultimately abrogated. According to Malcolm Sparrow of Harvard University, a top specialist in health care fraud, “as much as 20 percent of federal health program budgets are consumed by fraud and abuse, which would be about $85 billion a year for Medicare.” Do you hear the sound, the sound of “savings” being washed down the drain of corruption, not to mention the stealthy, silent sucking of cash out of wallets in the form of escalating costs, fines, regulations, and ultimately, taxes? That’s the history, and that’s future reality if we are forced into accepting this latest power play by Congress and the President. Our federal government can help with the cost of health care if they act within the bounds of the free market. This will be the topic of Part III of my blog.
Monday, November 30, 2009
Health Care Legislation Weakens the Constitution
“To compel a man to furnish funds for the propagation of ideas he disbelieves and abhors is sinful and tyrannical.”
-Thomas Jefferson
The current health-care debate has reached a fevered pitch across our nation, with defenders on both sides of the issue offering their learned opinions. In the Part I of this blog, I will examine what the U.S. Constitution has to say about the proposed approaches from our legislature. In Part II, which I will post in the next few days, I will use facts, history and logic to expose the deception and hypocrisy foisted upon us by our government's attempt to “reform” health care. I will also offer some concrete suggestions to address the issue of spiraling health-care costs and offer free-market alternatives to ensure access to those unable to afford insurance.
With regard to the Constitution, let's look at Section 8: The Powers of Congress, as a starting point. This sections reads as:
"The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States."
Let's be clear about this. The framers of the Constitution undoubtedly wanted the federal government to have access to money through the imposition taxes; this is beyond dispute and was upheld by the Federalist papers, the document created by the Founding Fathers that provides both justification for and elaboration of, the Constitution. However, the proposition underlying this ability to tax has to take into account the historical context. The fledgling United States was a fragile union, beset by powerful real and potential enemies. The need to raise and maintain a vigilant and effective military was the most pressing issue. As Alexander Hamilton stated: “The result from all this is that the Union ought to be invested with full power to levy troops; to build and equip fleets; and to raise the revenues which will be required for the formation and support of an army and navy, in the customary and ordinary modes practiced in other governments.” (Federalist 23) And although the Federalist papers defend this power to tax, the catch is in the last part of Section 8: "but all Duties, Imposts and Excises shall be uniform throughout the United States." This means that the taxation should not favor one portion of society at the expense of the other. The new health-care legislation, regardless of the house it emanates from, violates both the letter and spirit of this clause. By taxing the wealthy to supply for those less fortunate, you are playing favoritism, which ultimately compromises the integrity of the republic because it buys representatives votes from the public, leading to the entrenched political power structures. As Hamilton noted:
"BEFORE we proceed to examine any other objections to an indefinite power of taxation in the Union, I shall make one general remark; which is, that if the jurisdiction of the national government, in the article of revenue, should be restricted to particular objects, it would naturally occasion an undue proportion of the public burdens to fall upon those objects. Two evils would spring from this source: the oppression of particular branches of industry; and an unequal distribution of the taxes, as well among the several States as among the citizens of the same State.” (Federalist 23) And to those who invoke the “general welfare” phrase as evidence of the some inherent right of the government to dictatorially collect taxes at will, consider the words of James Madison, who is considered to be the “father” of the Constitution: "With respect to the two words 'general welfare', I have always regarded them as qualified by the detail of powers connected with them. To take them in a literal and unlimited sense would be a metamorphosis of the Constitution into a character which there is a host of proofs was not contemplated by its creators." Madison also wrote, "If Congress can do whatever in their discretion can be done by money, and will promote the General Welfare, the Government is no longer a limited one, possessing enumerated powers, but an indefinite one, subject to particular exceptions."
The health care legislation perpetrates these “evils” in several forms: it punishes small business by imposing fees should they not provide health insurance for their employees, whether or not they can afford it; it selectively singles out and penalizes, through the use of fines, insurance companies that do not comply with regulations; it imposes this taxation unequally on the wealthy, and it willfully perverts the intention and the nature of the Constitution. How much longer should we, as a free people, allow the government to violate the Constitution and impose their will upon us in a manner inconsistent with liberty and the principles our national and political identity was founded on?
-Thomas Jefferson
The current health-care debate has reached a fevered pitch across our nation, with defenders on both sides of the issue offering their learned opinions. In the Part I of this blog, I will examine what the U.S. Constitution has to say about the proposed approaches from our legislature. In Part II, which I will post in the next few days, I will use facts, history and logic to expose the deception and hypocrisy foisted upon us by our government's attempt to “reform” health care. I will also offer some concrete suggestions to address the issue of spiraling health-care costs and offer free-market alternatives to ensure access to those unable to afford insurance.
With regard to the Constitution, let's look at Section 8: The Powers of Congress, as a starting point. This sections reads as:
"The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States."
Let's be clear about this. The framers of the Constitution undoubtedly wanted the federal government to have access to money through the imposition taxes; this is beyond dispute and was upheld by the Federalist papers, the document created by the Founding Fathers that provides both justification for and elaboration of, the Constitution. However, the proposition underlying this ability to tax has to take into account the historical context. The fledgling United States was a fragile union, beset by powerful real and potential enemies. The need to raise and maintain a vigilant and effective military was the most pressing issue. As Alexander Hamilton stated: “The result from all this is that the Union ought to be invested with full power to levy troops; to build and equip fleets; and to raise the revenues which will be required for the formation and support of an army and navy, in the customary and ordinary modes practiced in other governments.” (Federalist 23) And although the Federalist papers defend this power to tax, the catch is in the last part of Section 8: "but all Duties, Imposts and Excises shall be uniform throughout the United States." This means that the taxation should not favor one portion of society at the expense of the other. The new health-care legislation, regardless of the house it emanates from, violates both the letter and spirit of this clause. By taxing the wealthy to supply for those less fortunate, you are playing favoritism, which ultimately compromises the integrity of the republic because it buys representatives votes from the public, leading to the entrenched political power structures. As Hamilton noted:
"BEFORE we proceed to examine any other objections to an indefinite power of taxation in the Union, I shall make one general remark; which is, that if the jurisdiction of the national government, in the article of revenue, should be restricted to particular objects, it would naturally occasion an undue proportion of the public burdens to fall upon those objects. Two evils would spring from this source: the oppression of particular branches of industry; and an unequal distribution of the taxes, as well among the several States as among the citizens of the same State.” (Federalist 23) And to those who invoke the “general welfare” phrase as evidence of the some inherent right of the government to dictatorially collect taxes at will, consider the words of James Madison, who is considered to be the “father” of the Constitution: "With respect to the two words 'general welfare', I have always regarded them as qualified by the detail of powers connected with them. To take them in a literal and unlimited sense would be a metamorphosis of the Constitution into a character which there is a host of proofs was not contemplated by its creators." Madison also wrote, "If Congress can do whatever in their discretion can be done by money, and will promote the General Welfare, the Government is no longer a limited one, possessing enumerated powers, but an indefinite one, subject to particular exceptions."
The health care legislation perpetrates these “evils” in several forms: it punishes small business by imposing fees should they not provide health insurance for their employees, whether or not they can afford it; it selectively singles out and penalizes, through the use of fines, insurance companies that do not comply with regulations; it imposes this taxation unequally on the wealthy, and it willfully perverts the intention and the nature of the Constitution. How much longer should we, as a free people, allow the government to violate the Constitution and impose their will upon us in a manner inconsistent with liberty and the principles our national and political identity was founded on?
Friday, November 13, 2009
Why The Constitution is Important
I created this website to educate both myself, as well as others, about the importance, necessity, and validity of the United States Constitution, as well as what the Constitution means, or should mean, to an average U.S. citizen. I say "should" because there has been a steady undermining of the clauses, provisions, and restrictions set forth in the Constitution, which has led to an ever-growing power grab by the federal government, expanding both it's size and scope. There are many people who claim the Constitution is a "living" document. They are correct. The framers of the Constitution intentionally built in a very constructive system of creating and ratifying amendments that require great effort to change the law of the land, and rightly so. The very fact that it takes 2/3 of each house of congress to change the Constitution is testimony to the foresight of the Founding Fathers, for they knew anything administered in a reactive or capricious manner had ruinous ends. This is based on great measure of living with tyranny and despotic governments. It was created to endure time and all attempts to usurp its protections in perpetuity. This idea of stability of intent is essential to not only the appropriate interpretation of the Constitution, but its preservation. As James Madison, the "father" of the Constitution explained: " I entirely concur in the propriety of restoring to the sense in which the Constitution was accepted and ratified by the nation. In that sense alone it is the legitimate Constitution. And if that be not the guide in expounding it, there can be no security for a consistent and stable, more than faithful exercise in its powers."(James Madison, "Letter to Henry Lee, June 25, 1824.") In other words, if we do not have a constant by which we gauge our liberty, we will eventually fall prey to to the perturbations, trends, and irrational reactions of society. And because the Constitution is document primarily of restriction of government authority, any ill-conceived notion of change, be it noble or dubious in intent, will lead to an expansion of absolute governmental power, and absolute power leads to absolute corruption. To understand this concept, we turn to Newton's third law of physics, which states that for every action, there is an opposite and equal reaction. This means that if we grow governmental power, we necessary shrink individual liberty, or the third law of physics, and its constancy, cease to exist. So, if the Constitution is a constant that protects our freedoms, it must remain constant or we are all in real peril.Of course, I realize the Constitution has been amended, or changed, many times, which some would point to as proof that the Constitution is inherently flawed. Yet, a closer examination of this ideas yields a different conclusion, because the vast majority of the amendments are clauses that restrict governmental power. Therefore, any attempt to change the Constitution must take this into account. In other words, if we endeavor to fundamentally change the law of the land, we should always do so to ensure future individual freedom. Think about it this way: If the Constitution is nothing more than a collection of the musings and ramblings of "dead white men," and its constancy is subject to the whims of political diatribe and hidden agendas, then we are all lost at sea, because our rudder has been removed. Moreover, if we have no constancy to check the powers of those who rule, are we really saying they are capable of checking themselves? As the Roman poet Juvenal asked: Quis custodiet ipos custodes? "Who is guarding the guardians?" In future post, we explore the contents and meaning of the Constitution. I welcome all rational, informed, and intelligent dialogue. Keep peace at your center at all times. This is the one constant beyond the Constitution we cannot lose.
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