The ruinous cost of free health care 1

“Free” government benefits are the most expensive goods in the world.

The Democratic Socialist Party – formerly the Democratic Party – is trying to win votes by promising free health care for all.

Supposing a national health service were to be introduced into the USA, what would it cost?

Investor’s Business Daily reports and comments:

Democrats have been falling over themselves to endorse Bernie Sanders’s government takeover of health care. Maybe they should have taken a closer look at his “Medicare for all” plan before signing up. The gargantuan price tag is just one of its many terrible flaws.

Last year, 16 Senators, including three presidential hopefuls, co-sponsored Sanders’s “Medicare for all” bill. And earlier this month, more than 70 Democrats signed on to form a “Medicare for all” caucus. Support for the bill is now something of a litmus test for Democratic hopefuls.

Do they have any idea what they’re endorsing?

A new study out Monday from George Mason University’s Mercatus Center finds that the Sanders plan would add $32.6 trillion to federal spending in its first 10 years, with costs steadily rising from there. That closely matches other studies — including one by the liberal Urban Institute — that looked at the Sanders plan.

To put this in perspective, “Medicare for all” would nearly double the size of the already bloated federal government.

Doubling corporate and individual income taxes wouldn’t cover the costs.

Even this [estimate of $32.6 trillion over 10 years] is wildly optimistic. To get to this number, author Charles Blahous had to make several completely unrealistic assumptions about savings under Sanders’ hugely disruptive plan.

The first is a massive cut in payments to providers. Sanders wants to apply Medicare’s below-market rates across the board, which would amount to a roughly 40% cut in payments to doctors and hospitals. Blahous figures this will save hundreds of billions of dollars a year.

Democrats are also apparently unaware that “Medicare for all” would be a more expensive than anything that exists anywhere else in the world … 

Sanders’ plan would eliminate all out-of-pocket expenses for medical, dental and vision care. The only exception would be a small copay for brand-name drugs. …

There is no industrialized country in the world that does this.

Even in the Scandinavian countries that Bernie Sanders directs us to admire (rather than Stalinist Russia which is actually his ideal), “people pay as much as 30% of their nations’ health costs out-of-pocket”. 

And – perhaps surprisingly to American communists –

In Communist China, almost a third of health spending is out-of-pocket.

In Bernie’s USA, the illusion of all medical treatment being “free” would need to be maintained. But how? After all, doctors cannot work for nothing. Hospitals have running costs.

Because Sanders would eliminate prices entirely from health care, the only way to control health spending would be to slap stiff price controls on doctors, hospitals and drugs, or ration care.

Rationing is inevitable in any government-run health service. Administrators have to decide how to allocate resources. When you are in control of your own medical decisions, you decide what treatment, what drugs you are able or prepared to pay for. When the state decides for you, it will not consult your preferences. It will make kill-or-cure, life-or-death decisions for you. The “death panels” that Sarah Palin warned against will determine how long you live; and, for as long as you live, in what state of health.   

Here’s what health care in the U.S. would look like as a result:

There would be chronic shortages of doctors nationwide. Hospital overcrowding would be epidemic. Waits for everything from hip replacements to cataract surgery to cancer treatments would be extensive. Drug innovation would come to a virtual standstill. And there would be endless fights over the size of the government’s health budget, along with massive amounts of waste, fraud and abuse.

How do we know this? Because this is precisely what’s happened in countries that have already gone down the “Medicare for all” road.

In Canada, the average wait time for a hip replacement is nearly two years in some provinces. Patients with cataracts can end up waiting a year for surgery. The UK has fewer doctors, nurses and hospital beds per capita than any other industrialized nation, and is in a state of almost constant crisis.

Almost constant crisis”? There is no break, no pause, no relief for the briefest of moments from the crisis that is the National Health Service of Great Britain.

Here at home, the Veterans Health Administration — once touted by the left as a model of socialized medicine — has seen deadly delays and massive corruption, even as its budget ballooned in size.

Almost 10% of Medicare spending today is for what the government euphemistically calls “improper payments”, but anyone else would label it waste. Extend this across the entire health care system and Sanders’s “Medicare for all” would result in some $400 billion a year in “improper payments”.

But the biggest problem with “Medicare for all” — and any plan to socialize medicine — is its underlying assumption. Namely, that a handful of government central planners can manage trillions of dollars’ worth of resources better than hundreds of millions of people making trillions of decisions every day in the free market. They can’t.

We already know central planning never works, since it has miserably failed where it’s been tried. It didn’t work in the Soviet Union. It doesn’t work in North Korea or Cuba, and it’s causing untold misery in Venezuela.

A socialist government – which is what the government would be that saves or executes its subjects by controlling their health care – is always, necessarily, inescapably, one big Death Panel.

A libertarian view of the state we’re in 2

John Stossel, in his plain-speaking, clear-headed way, deplores Obama’s failed economic policies:

President Obama sure is consistent. His State of the Union address sounded like his other speeches: What I’ve done is great! America is in a much better position. We’ve created a manufacturing sector that’s adding jobs. More oil is produced at home. I cut deficits in half!

Give me a break. The deficit is lower now not because of any prudence on Obama’s part but merely because the $800 billion stimulus spending blowout didn’t continue. All the president does is increase spending: free community college, free Obamaphones, free birth control, etc. Yes, our annual deficit is lower, but it’s still $488 billion! Our $18 trillion national debt increases by $3 million every minute!

Yes, more oil is produced at home, but that’s in spite of the administration. Oil production is down on public land.

Yes, the manufacturing sector added jobs, but that’s mostly because of cheaper natural gas created by fracking, which Obama’s cronies opposed. Also, America is finally recovering from recession. Obama’s policies probably slowed that recovery.

Does the President delude himself when he takes credit for oil production, lower deficits, etc.? Or does he mislead on purpose? I don’t know.

More recently he bragged, “I created the lowest unemployment rate in years.” He created it? He must know it’s “low” only compared to the 10 percent reached during the recession — and because millions have simply given up looking for work. This recovery is the slowest in 70 years.

Then he goes on to propose a very different speech from the one Obama gave last night:

If Obama gave the State of the Union address I’d like to hear, he’d say this:

I heard you, voters, in November when you took control of the Senate away from my party. I get it. I overreached. I was arrogant. I imposed Obamacare on a nation that was deeply divided about it. I ruled through executive orders instead of legislation. I threw money at “green” nonsense.

We’ve cut a bit out there, because at that point he pulled out the biggest bone of contention we have with libertarians like John Stossel: defense. He wants less spent on it – as Obama does – and  we want more spent on it. 

But on: 

I’ve been in government for years now. I know how badly it works. The last thing I should try to do is make it bigger. In fact, with Republicans now in control of Congress, it’s time I worked with them to shrink government. If we shrink it, we might even dig our way out of the debt hole we’re in. Heck, if we just slow the growth of government to 2 percent a year, we’d be in better shape.

But I didn’t even try to accomplish that. I pretended taxing the rich would solve our financial problems. But there aren’t enough rich people to tax.

That’s not what’s wrong with the idea. What’s wrong is the idea of redistribution itself. The right argument is against any form of redistribution by a central agency.

But on again:

I got drunk on the idea of promising voters “free” stuff such as low down-payment mortgages and guaranteed paid family leave. I told them that all good things come from government. That’s nonsense.

We should put an end to all bailouts. Businesses that screw up should accept the consequences, just like ordinary people who spend recklessly. Main Street should never again be forced to rescue Wall Street.

Instead of expanding government control of health care, we should phase it out. That includes Medicare. I know Medicare is popular, but it is unsustainable. Let current retirees receive their benefits as promised, but younger people should pay for their own health care.

People criticize the economic distortion created by welfare, but Medicare and Social Security are almost as bad. Both redistribute money away from the young and struggling toward those of us who have had decades to invest and save up.

To make these challenges a little easier to deal with, let’s make America richer by abolishing most regulations. They strangle opportunity.

The more I think about it, the more Congress and I could transform America for the better just by getting out of America’s way. The state of our union will be truly strong if the state – by which I mean government – is strictly limited.

That we would applaud.

Certainty of decline, probability of catastrophe 0

Read only a few pages of HR3200,The Affordable Health Care Choices Act 2009, and once you’ve got the gist of what they’re saying let your eye wander over a hundred or so more, and you’ll know beyond all doubt that you are now owned by the government. The link:

http://thomas.loc.gov/

To put it bluntly, this act has changed the USA into the USSA – the United Socialist States of America:

Here is part of Mark Steyn’s must-read article on the immediate and future costs of it:

On the day President Barack Obama signed Obamacare into law, Verizon sent an e-mail to all its employees, warning that the company’s costs “will increase in the short term.” And in the medium term? Well, U.S. corporations that are able to do so will get out of their prescription drugs plans and toss their retirees onto the Medicare pile. So far just three companies – Deere, Caterpillar and Valero Energy – have calculated that the loss of the deduction will add a combined $265 million to their costs. There are an additional 3,500 businesses presently claiming the break. The cost to taxpayers of that 28 percent benefit is about $665 per person. The cost to taxpayers of equivalent Medicare coverage is about $1,200 per person.

So we’re roughly doubling the cost of covering an estimated 5 million retirees.

Now admittedly the above scenario has not been, as they say, officially “scored” by the Congressional Budget Office, by comparison with whom Little Orphan Annie singing “The Sun’ll Come Out Tomorrow” sounds like Morrisey covering “Gloomy Sunday.” Incidentally, has the CBO ever run the numbers for projected savings if the entire CBO were laid off and replaced by a children’s magician with an assistant in spangled tights from whose cleavage he plucked entirely random numbers? Just a thought.

This single component of “health” “care” “reform” neatly encompasses all the broader trends about where we’re headed – not just in terms of increased costs (both to businesses and individual taxpayers) and worse care (for those retirees bounced from company plans into Medicare), but also in the remorseless governmentalization of American life and the disincentivization of the private sector. As we see, even the very modest attempts made by Congress to constrain the 2003 prescription drug plan prove unable to prevent its expansion and metastasization. The one thing that can be said for certain is that, whatever claims are made for Obamacare, it will lead to more people depending on government for their health arrangements. Those 5 million retirees are only the advance guard. And, if you’re one of those optimistic souls whose confidence in the CBO is unbounded, let’s meet up in three years’ time and see who was correct – the bureaucrats passing out the federal happy juice, or the real businesses already making real business decisions about Obamacare.

Can we afford this? No. Even on the official numbers, we’re projected to add to the existing $8 trillion in debt another $12 trillion over the next decade. What could we do? Tax those big bad corporations a bit more? Medtronic has just announced that the new Obamacare taxes on its products could force it to lay off 1,000 workers. What do those guys do? Well, they develop products such as the recently approved pacemaker that’s safe for MRI scans or the InterStim bladder control device. So that’s a thousand fewer people who’ll be working on new stuff. Well, so what? The public won’t miss what they never knew they had. So, again, the effect is one of disincentivization – in this case, of innovation.

If existing tax structures can’t cover the costs, what can we do? Start a new tax! The VATman cometh. VAT is Euro-speak for “value added tax.” … This is yet another imposition on businesses, taking time away from wealth creation and reallocating it to government paperwork. If the Democrats hold Congress this fall, I would figure on VAT sooner rather than later.

All of the above is pretty much a safe bet. What about the imponderables? Even Obama hasn’t yet asked the CBO to cost out, say, what happens to the price of oil when the Straits of Hormuz are under a de facto Iranian nuclear umbrella – as they will be soon, because the former global hyperpower, which now gets mad over a few hundred housing units in Jerusalem, is blasé and insouciant about the wilder shores of the mullahs’ dreams. Or suppose, as seems to be happening, the Sino-Iranian alliance were to result in a reorientation of global oil relationships, or the Russo-Iranian friendship bloomed to such a degree that, between Moscow’s control of Europe’s gas supply and Tehran’s new role as Middle Eastern superpower, the economy of the entire developed world becomes dependent on an alliance profoundly hostile to it.

Which is to say that right now the future lies somewhere between the certainty of decline and the probability of catastrophe. What can stop it? Not a lot. But now that your “pro-life” Democratic congressman has sold out, you might want to quit calling Washington and try your state capital. If the Commerce Clause can legitimize the “individual mandate,” then there is no republic, not in any meaningful sense. If you don’t like the sound of that, maybe it’s time for a constitutional convention.

What is to be done? 0

John Hinderaker of Power Line quotes Lawrence Kadish (writing in the Wall Street Journal, October 12):

It is the interest on the national debt that makes our future unstable. The exploding size of that burden suggests that, short of devaluing the dollar and taking a large bite out of the middle class through inflation and taxation, there is no way to ever pay down that bill. …

In stark but simple terms, unless Americans are made aware of this financial crisis and demand accountability, the very fabric of our society will be destroyed. Interest rates and interest costs will soar and government revenues will be devoured by interest on the national debt. Eventually, most of what we spend on Social Security, Medicare, education, national defense and much more may have to come from new borrowing, if such funding can be obtained. Left unchecked, this destructive deficit-debt cycle will leave the White House and Congress with either having to default on the national debt or instruct the Treasury to run the printing presses into a policy of hyperinflation.

It is against this background that Washington is now debating whether to create social programs it can’t afford.

He comments on this – and we agree:

It is hard to overestimate the danger to which the fecklessness of our current leaders in Washington exposes the nation.

But if  Americans are ‘made aware’ of the great danger they are in – and many of them are aware, as witness the tea parties and the 9/12 protest – what can and should they do about it? ‘Demanding accountability’ would not be enough, even if they got it.

The greatest of lies about government 1

Vasko Kohimayer writes in Front Page Magazine (an article well worth reading in its entirety):

Having incurred more than $65 trillion in obligations of various kinds, the federal government finds itself in an insurmountable fiscal hole. To give a sense of size, this amount is more than the annual economic output of the whole world and four times America’s Gross Domestic Product. It would be impossible to manage this even if our leaders suddenly came to their senses and began to behave responsibly. There is little chance of that, however. The larger our debt, the more eager they are to spend more.

Despite our leaders’ efforts to conceal the level of indebtedness, its reality cannot be evaded. The steady weakening of the dollar is one evidence of that. In recent months financial experts have even been discussing the unthinkable: The possibility that the American government may default… The deficit will end up being close to $2 trillion at the end of this fiscal year… The markets are growing increasingly concerned about the possibility of the United States failing to meet its obligations.

The question is how did America get into this position. What brought this country – once a citadel of financial stability – to such dire straits? The answer will become apparent when we look at the composition of America’s debt burden.

The federal government’s obligations consist of two main components. The smaller of the two is the one that is reported on more often. It is referred to as “public debt,” or “national debt,” or “sovereign debt.” This is the debt that the government has incurred as a consequence of its budget deficits over the years. It currently stands at $11.6 trillion, which is about 85 percent of GDP.

The public debt, however, only represents a relatively small portion of the government’s total debt. The rest is primarily made up of obligation connected with three large entitlement programs – Medicare, Social Security and Medicaid. It is estimated that together their combined claims amount to roughly $55 trillion more than what the government will collect in designated taxes. At this point Medicare and Social security do not yet represent a net budgetary expense, because revenues (FICA taxes) exceed what is paid being out in benefits. To put it differently, these programs are currently running surpluses; this situation, however, will not last indefinitely. The social security surplus will end around 2018. The negative gap will then widen rapidly with each successive year… The $55 trillion question is: How will the government raise the cash once the surpluses come to an end?

There are two ways in which this can be done: by raising taxes or by borrowing. Neither seems like a good option under the circumstances. Taxes are already perceived to be high; bringing them much higher would be politically unpopular if not impossible. Furthermore, raising taxes would hamper growth, which would in turn decrease the tax base and thus defeat the purpose of the increase in the first place. As far as borrowing is concerned, it is almost certain that investors would refuse to finance additional debt given their concerns about its present levels. With no place to go, it is likely the federal government will do what governments usually do when caught in this situation: it will “meet” its obligations by printing money.

This, of course, is an easy way out, but it debases the currency and produces inflation. And since America’s huge debt load is far beyond the government’s ability to pay off with honest money, the level of inflation is likely going to be very high. It would actually appear that the government has already embarked on this path. There are even those who fear that the United States may eventually experience hyperinflation… The soaring inflation that will follow will have a devastating effect on the already fragile financial system and will inevitably lead to economic breakdown. This will in turn set off centrifugal forces in a troubled and divided society.

America’s impending travails are thus ultimately tied to fiscal mismanagement, particularly in the area of entitlements. It is as ironic as it is instructive that entitlements seek to confer the kinds of benefits the Founding Fathers thought the federal government should have no business of pursing. It was with this in mind that they drafted a constitution that sought to prevent the federal government from getting involved in those areas. They made it very clear that federal functions were to be few and  limited, confined primarily to protecting the life, liberty and property of Americans.

Ensuring people’s well-being through the provision of retirement income, healthcare and other such goods was not to be the government’s job.

It is to our detriment that we have betrayed both our founding principles and the Constitution. We have done this because we have fallen for that greatest of lies, which is that government is capable of providing for citizens’ material and social needs

Brainwashed by years of public education, many believe that ensuring the population’s material welfare is precisely what good government is all about. But no government has ever been able to pull this off

Those naive enough to rely on the government’s “guarantee” of a “dignified” retirement are bound to be bitterly disappointed… But if the only thing the government did was to fail to deliver on its promises, the situation would not be so dire. Unfortunately, it also did something else in the process – it has bankrupted this nation by saddling it with debts and obligations we cannot fulfill. This outcome is unsurprising. The old maxim is as valid now as it has always been. Government does not solve problems; it only makes them worse. Given the ambitious scope of entitlements, it was only to be expected that federal involvement would eventually create difficulties on an insurmountable scale…

Posted under Commentary, Economics, government, Health, Socialism, United States by Jillian Becker on Monday, August 24, 2009

Tagged with , , , , ,

This post has 1 comment.

Permalink