Sunday, September 27, 2009

Why *NOT* Socialism?

Recently, my roommate asked me to come up with a relatively concise set of reasons why Socialism is a poor economic & political system. Perhaps this will be followed up with, "Why Capitalism!", but I'll save that for another time. The version sent to her is a little more condensed, but in the interest of having some of the major objections in one place, here's what I have written (p.s. check the links for the full effect):

1. What is Socialism?

First, it’s important to fundamentally understand exactly what Socialist philosophy actually is. Webster’s defines the term as such:
1 : any of various economic and political theories advocating collective or governmental ownership and administration of the means of production and distribution of goods
In essence, it is an economic (and political) system in which private property is partially or entirely eliminated and resources are controlled by the collective “society”. Practically speaking, this means that everything – especially the factories, machinery, land & resources used in production – is owned or controlled by the government. The goods and services people need and use every day are provided not by independent entrepreneurs who succeed or fail based on their ability to produce things which are valuable to their customers, but instead by a government or other central authority. As opposed to a market system, where the price – and thus distribution - of various goods & services is the natural result of individuals bidding for and accepting trades with each other, a pure socialist system rejects prices altogether or sets them arbitrarily through centralized planning agencies and thus distributes resources via top-down (non-price) rationing.

At root, the most important thing is that under a socialist system, the distribution of goods is controlled by government - this can happen in Fascist societies like WWII era Italy or Spain, under National Socialism like Germany, within Communist systems like the U.S.S.R., China, North Korea, or Cuba, or even in limited forms in welfare states such as modern-day United States, Canada, Europe, Australia and many others.

Even if private property still exists, as it does under Fascist/Corporatist economies (contrary to common perception Fascism is one form of Socialism - see Walter Block for a more detailed explanation on this point), centralized control of the use of that property results in a de facto Socialist society - again, the key point is whether or not resources are controlled by individuals or by the collective society or government, ownership without actually being allowed to make decisions about the use of owned goods cannot truly be defined as a system based in private property rights.

2. The Appeal of Socialism

The appeal of this system is in some ways understandable for a few reasons. First, there is the simplicity and directness of top-down problem-solving – that is, if you believe there is a “problem” with society such as a disparity in wealth for example, it is certainly easy enough to envision the solution being to simply take money or resources from the rich and give to the poor. On the surface, socialism appears to provide the means to correct what many people perceive as social injustice, but it comes at the extreme cost of personal security and liberty.

Secondly, while markets may be seen as somewhat “chaotic” and develop through spontaneous (bottom-up) order, socialism appears to be more controlled and even “scientific”. Because the distribution & production of the things we need are planned by political leaders and academics, this position makes sense, except that it rests on the false assumptions that the planners can have knowledge of individuals' needs & wants. In reality, this is knowledge which they cannot possibly obtain within a socialist economy.

Often, without thinking very far in depth about all of this or considering the long-term effects of these ideas, and without an understanding of the economics involved, many people are tempted to believe that socialism will provide a better society. It's not uncommon to hear people say something to the effect of; "Socialism/Communism works well 'on paper'; the theory is great, but it just doesn't work in practice." A theory that doesn't work in reality is hardly a good theory at all... And in truth, the results of socialism are virtually the opposite of what its stated intentions appear to be.

3. The Problems with Socialism

Human Beings & Central Planning:

The most immediate, and obvious problem with socialism rests with a single, quite simple question, which few ever actually bother to ask... If all resources, goods, labor & production is to be controlled, planned & distributed by a central authority, then:
Who gets to decide who gets what?
The people in charge of resource distribution have an immense amount of power over the lives of individuals in a socialistic society. Even in the most simplistic arrangements, if we are to expect equitable (not to mention, beneficial) results from central planning, the planners must be counted on to be ultra-benevolent, completely unbiased and be perfectly altruistic. Needless to say, this is rather unrealistic - indeed, as Milton Friedman once quipped; "Who are these angels...?"

All resources in the universe are finite – although this seems like a basic point, it’s quite important to understand clearly in any discussion of economic theory. At any given moment, some people will be able to get a particular good, and some will not, so we have to figure out how best to distribute scarce goods. Under a socialist system, the determination of who gets what is necessarily handed over to a single human being or a small group who are as likely to base their decisions on immediate self-interest giving the best or highest quantity of goods to themselves, their families and friends or to more powerful and better connected people, hoping for an improved social position as they are to base their decisions on principles of equality. Unfortunately however, even if the planners did want to distribute goods on the basis of need, ultimately, there is no way of obtaining the knowledge of others' needs for this to be possible (which I will explain in more detail momentarily).

Though the intention of a socialist system may be to provide an equal standard of living to all people, human nature does not change. And indeed, in all historical examples of socialist societies, such as the U.S.S.R., India, China, or East Germany, and modern examples such as Venezuela, Cuba, or North Korea, the people who control the distribution of resources primarily enrich themselves while neglecting the rest of the population. As a result, in every one of these societies, often the only way to keep from starving, not to mention obtaining a high standard of living, is through bribery and making connections with the men & women in charge of distributing goods. Additionally, as in any political system, those who obtain authority are typically the individuals who most desire it. So granting incredible power to a single person, or a group of people, invariably winds up rewarding not the most altruistic & noble, but the most ambitious and selfish – and in fact, that has proven to be exactly the case in each of the aforementioned nations. Tyranny is the inevitable result of such a system.

As Lord Acton famously quipped;
“Power tends to corrupt, and absolute power corrupts absolutely.”
Thus in fact, while paying lip-service to basing society on cooperation, sharing, brotherhood, camaraderie and social justice, the concentrated power necessary to lead and manage a socialist state - or even an intentionally anarchic socialism like a commune - rewards just the most greedy, the most strategic & conniving, and those who desire power the most.

The “New Socialist Man” & Socialist Labor:

In a free market economy, individuals may choose which career suits them best, or even which they would like to try their hands at regardless of aptitude. People who like the goods & services being produced and find them to be beneficial purchase those services, and other people who do not will not; thus the producers' contributions to the well-being of fellow human beings will determine their relative success or failure judged based on profits or losses. Higher profits (in this case "wages") then encourage other individuals to become employed in those highly demanded industries. This is easy enough to see in any market economy. For instance, one modern example is the dramatic rise in computer programmers throughout the late 1990's - increased demand for such services resulted in employers bidding up wages which then encouraged more people to join the field.

There is no central planner, and thus no one person determining what occupations are “needed”, and what individuals "should" do with their lives - instead; wages, prices & personal choice are the determining factors. In essence, markets offer individuals the opportunity to use their talents as they see fit, and thus leaves individuals with the freedom to control their own lives.

This is not the case under a socialist system. Because the means of production are controlled by the state, all workers are effectively state employees – and because the central planners must decide which goods & services society has enough or too much of at any given time, it is the planners who ultimately determine which job individuals are allowed to have. So people's jobs are fundamentally not self-determined.

Additionally, there are no competing firms or private ownership, there is no opportunity for entrepreneurs to start their own businesses. So if you are dissatisfied with the position you’ve attained, you have virtually no option to change. To make matters worse, because the focus of a socialist society is on “equality” and goods are distributed by a state official, there is little to no incentive for individual workers to work more than is required of them, and in fact a great incentive to do the opposite. The quality of life you receive working hard is, in theory at least, identical to the quality of life you receive by not working at all. This means that in order for the state-run factories, farms & businesses to produce enough goods, they need to use other means of convincing workers to actually work hard. Karl Marx understood this, and envisioned a socialist society completely changing human nature, and believed that an entirely new type of “socialist man” would develop – a man who worked purely altruistically, only for the benefit of his comrades. No such man originated in Russia, or China, or anywhere else, and so the rulers of those nations instead resorted first to endless propaganda campaigns and moralistic preaching, explaining that workers’ duty was to produce as much as possible, and then to jail and other punishments for failing to comply with the leadership.

The Economic Calculation Problem:

The most significant, and catastrophic problem with socialism is actually that even if there was no corruption, and even if the central planners were completely benevolent, completely just, completely fair, and distributed resources only based on need and made no biased, personal decisions and were completely unaffected by bribes or promises of favors… And even if every worker was perfectly happy with the station he had been assigned, and was willing to work at his full potential every day purely for the betterment of the general society, there is no functional feedback or information gathering mechanism in a socialist state for the central planners to actually know what needs to be produced, or in which quantities. This is what Ludwig von Mises & F.A. Hayek refer to as the “Economic Calculation Problem”.

In a market economy absent government-manufactured distortions such as special taxes or corporate bailouts, freely shifting prices are packed with information for both producers & consumers due to their relationship to supply & demand. For instance, high prices simultaneously encourage consumers to limit their consumption while pushing producers to step up production and increase supply until demand has been met. Profits & losses also provide incredibly important signals and feedback on the relative success or failure of different firms’ production efforts. Prices incorporate the local, dispersed and often very specialized knowledge of individual consumers & producers – from mining or growing raw materials through producing final goods and on to the preferences of individual consumers.

Socialist systems have no such mechanism for obtaining information about the highly dispersed needs & wants of individuals in a society - and thus no way of efficiently producing or distributing goods & services. A central planner must instead decide which goods to produce in what quantities, and that requires not only superhuman benevolence and prescience, but also that they perform the impossible task of calculating what millions of individual people’s wants & needs will be over a sustained period of time. Pricing allows markets participants the information they need to make decisions about the best usage of scarce resources – central planning simply cannot do this. So while it may seem more scientific and intelligent to have experts determine the way resources are used, in reality it winds up being possibly the least scientific way of distributing goods as it lacks any way measure success or failure, and has no feedback describing the needs & preferences of real people.

Amusingly, the central planners in the U.S.S.R. actually resorted to using the Sears catalog in order to determine prices of many goods.

4. Socialism in History

The end results of socialism throughout history have been exactly what one might expect when reasoned through carefully. A state-owned means of production, the rejection of private property & free price systems, and the centralization of power in the hands of a small oligarchy has, and will always, lead directly to corrupt totalitarianism, dictatorial police states, famine, democide and poorer living standards for all citizens. Any time a government is used to take goods from one person and give to another, these actions must be accomplished through the initiation of force. Sometimes they start out small, such as collecting higher & higher taxes as seen in various welfare states, but they ultimately lead to bigger and more significant abuses until liberty is destroyed and the welfare of individuals (even lives themselves) are subjugated to the whims of the autocrats. Thus, such nations have been responsible for the deaths of well over 100 million of their own citizens (not including war casualties) just in the 20th Century, and have consistently seen the worst economic conditions found anywhere in the world.

Tuesday, September 22, 2009

Fun with Numbers III: Returning to a Gold Standard?

I was thinking this afternoon about what would happen if the US returned to a gold standard. The most obvious thing is that the value of gold per ounce would skyrocket...

Right now gold is "pegged" at around $1,000 an oz.

If we returned to a gold standard now, to determine the dollar value per ounce of gold, we would simply divide the supply of money by the US supply of gold ($X/Y ounces). It's quite clear that there would be many times more of the amount of dollars per oz. of gold available - much much greater than $1,000 per oz. But how much more?

A quick googling says the US reserve is 282,191,696 ounces of gold (8,000 tonnes). So if we set a gold standard again, based on the current M2 money supply - $8.2977 Trillion - that would be about $29,404.47 per ounce of Gold.

Just for fun: As late as 1971, the price of gold was fixed to roughly $35.00 per ounce.

Saturday, September 19, 2009

Money & Spirituality, Worth & Inflation

Two recent comments to my Rise & Fall of the Dollar: 1800-2009 chart at caught my attention today.

One is simple enough; just asking what the equivalent value for $500 in 1924 would be in today's dollars. The other, was that we are missing the forest for the trees by talking about valuations of the dollar, because human being aren't just money-making machines, we're spiritual creatures whose worth and whose lives need to be counted in more than just dollars & cents. The thing is though, both questions are actually linked in ways that I think perhaps I fail to make as clear as I should.

First off, question 1:

$500 in 1924 would be about $6244.60 in 2008 - a little more today - based on the increases in CPI over the years. CPI is often the main way we look at inflation, but we also look at buying power against other currencies, against gold, etc. There are many calculation tools readily accessible online, one of my favorites is the West Egg Inflation Calculator because it goes all the way back to 1800, but also the Bureau of Labor Statistics has one that goes back just through the existence of the Federal Reserve to 1913 which also is quite good.

Like I said... Simple enough. But what's this really mean? That is why it is important to address the second comment as well.

Am I missing the forest for the trees by talking about the value of money? No. I'm not... More to the point, I'm going to turn this back around on that secondary commenter. What enables us to really understand the big picture here, is first and foremost understanding that money is not an end in and of itself. In fact, quite the opposite.

Besides being a store of value and an easily standardized medium of transferring different goods (not to mention the primary source of information about needs & wants dispersed across large, decentralized populations), money is nothing if not a way to more effectively acquire the goods & services that make your life better.

Money isn't just an object to hold on to, to stuff in a mattress, a safe or a bank, to carry around in a locked briefcase, to fill a swimming pool with, or to stuff into a stripper's g-string. Sure you can use money for those purposes... But mostly, it's something to obtain by serving the needs of your fellow man, and then turn into houses, cars, computers, movie-nights, fancy dinners with your partners, vacations, baby bottles, laser-tag games and anything else you might want or need.

So everything I ever talk about related to money has to be filtered first through the understanding of what it actually is. Everyone has different wants & needs, and none of us have the skills or time to create absolutely everything we might want to have from scratch. And we shouldn't. The world is immensely better off when people are able to specialize in certain tasks and fields. So instead of just looking at inflation as a purely "monetary" cost, we need to look at it from a different vantage point at the same time.

One way too refocus the discussion is to shift the wording away from currency, and to something that is more tangibly meaningful to most people but which has a quality that necessarily can't change too much over the years.

For example:

If you were to buy a diamond engagement ring for $500 in 1924, the quality would be the equivalent of buying a $6300 diamond ring today. Something like this 2 carat diamond ring perhaps...

But today, $500 can only purchase something more like this...

...Now look, I'm not saying that the size of diamond ring you present to your potential fiance or the ring that you receive is in any way a full measurement of something as spiritual and intangible as love, but the point I'm making is that the devaluation of the currency is expressed in real life losses in the quality of things that we all value and make us happy.

It's not just about being "money-making machines", as the second commenter suggested, but about the ability we have to make gestures of affection for the ones we love, the quality of food, or transportation we can afford, the time we can spend relaxing and not working.

And YES, of course incomes have risen too in the last 85 years. And many goods have gotten much much cheaper over that time, helping us immensely. Only, wages don't seem to rise nearly fast enough to make up for the losses. This, actually, should be shocking for another reason entirely in my opinion - we have seen massive leaps in productivity throughout the 20th Century, and salaries have gone up partially as a response to that - but also just to compensate for "cost of living" increases. With both higher productivity and higher salaries, one would think that inflation would be greatly outstripped, and it still isn't. But the fact that salaries have gone up is still no legitimate counter argument, because it's not just about wages. It's also about savings.

So sure, it's easier to get $6,300 today than it was in 1924, and sure, $6,300 today buys a higher quality of life . But what if wages aren't a factor at all? What if the money we're talking about was just left to you by your grandparents or great-grandparents?

Another way we all need to think about these things is to imagine your grandfather or your great grandfather leaving you money.

If, for example, a $500 account held by your great-grandfather in 1924 just came to light and you were to be the beneficiary - that money sitting around has done nothing but lose value for the last 85 years. To put it broadly, the value of the dollar is 1/12th what it was in 1924. That 2 carat ring the money would have bought in 1924 is out of the question today.

Or... Imagine that, like in so many time-travel movies, we went back and started an interest-bearing account back in 1924 with the $500... Say at 3%

$500(1.03)^85 = $6,167.85

Makes sense, right? If inflation has been increasing on average 3% a year, then a 3% interest rate on a savings account would basically make up for the loss and you'd wind up with identical purchasing power.

But this is awful! Without the declining value of the currency, $500 would still buy you that 2 carat diamond, and 5 times that would still be pretty good year's salary. As I said, the purchasing power has declined to 1/12th of what it was... So the value that $6,167 gets you today should be more like $75,000.

Think about that.

If inflation hadn't killed the value of the dollar, a savings account like that with interest, started 85 years ago would be worth the equivalent of a very decent year of income... Again to put it in more human terms, this is the difference between being able to afford a raft like this:

...and a boat like this:

Or it could have paid off your school loans instead of just your credit card bill... It could buy you a lovely new luxury hybrid instead of just a 20 year old, 100+k mile used car that gets 12 mpg.

Or... You could just stick with the cheap car, a couple kayaks for the weekends, and spend the rest of the money on helping kids get educations or helping starving people in the 3rd world get food & water by supporting charities like the Red Cross, Children International, or PlayPump. Whatever you think is important, whatever you value, whatever causes you like and want to support - $500 left for you in 1924 would allow you to do so much more, were it not for the disastrous effects of inflation.

It's hard for people to wrap their minds around this idea sometimes, but it's a big problem. The hypothetical trust fund left to you by your great grandfather, with just a modest 3% interest over 85 years would be buying 12 times better a quality of life had inflation not worked steadily against it. Technology and efficiency increases over the last 85 years make the quality of life go up just the same, but a slow deflationary process would ultimately have meant an even better quality of life for the same money. A much better quality of life.

Friday, September 18, 2009

Neocon... Liberal.... What's the difference?

Democans... Republicrats... And lo, there is no difference, and we are thus left with a bickering, sneering, jeering one-party system and a mass of ignorant, apathetic and dare I say, brainwashed people who actually think there's a legitimate difference between the two.

And that's why sometimes it's good to review the tape. We all need to remind ourselves what the candidates were all actually saying on policy issues without all the emotional investment in particular people and especially without the insane attachment to completely indistinguishable parties.

I tried my best at the time to keep the actual policies at the forefront of people's minds within my circle of influence back in 2007 & 2008, but what can you do? Outside of Ron Paul, Dennis Kucinich and Mike Gravel (occasionally), there's not a principled argument to be found here:


It's continually baffling, sickening and exceptionally frustrating to watch ordinary people pick meaningless "sides" and fight each other tooth and nail over candidates and politicians who's differences are superficial at best, and even then... More often than not the superficial differences don't really exist. Listen to the people in that video. Hillary sounds like Obama who sounds like Bush who sounds like McCain who sounds like Romney and on and on. They all parse words, they all "waffle", they all equivocate and they all desperately avoid making any statements that could be construed as something specific. Hell, Obama's health care speech the other day was the best example of all time - constantly referring to "my plan" while leaving the details up to Pelosi & members of the Senate...

Isn't that great? Obama can appear to take full responsibility while having complete deniability for all the results. This is obviously especially awesome when you're making a series of economically (logically... mathematically... realistically... historically...?) impossible promises. When things don't come out right, when the outcomes aren't what he said they would be in his speech, it's not the President's fault. Pelosi, of course, will blame the Republican opposition & "tea-baggers", who will in turn point out that they weren't in control of Congress, which will ignite yet another cycle of shifting the proverbial buck. The great bulk of the American people can't possibly keep track of it all and will fall into the familiar patterns of supporting Team Red or Team Blue, mindless of the history or facts.

But much worse than sounding the same, adopting the same weaseling cop-outs for gross negligence & irresponsibility - which, if you listen closely, they inevitably do - they all do the same things! Wire tapping, endless wars, cronyism, picking winners, funneling money towards special interests like unions, investment banks, military suppliers... The only thing that matters is more power. More control. More ability to transfer the wealth of ordinary folks straight into the pockets of themselves & their friends.

It's a race to the bottom for these guys and there's really nothing we can do.

And that I'm becoming more and more serious about each day. Pessimism is starting to set in. Especially after Karl Denninger's recent plea to deal with the mounting debts of this nation.

RC Dean's "Iron Lawz"

Regular Hit & Run commenter RC Dean provides his oft' referenced Iron Lawz of... Well... Life.

1. You get more of what you reward and less of what you punish.
2. If everything is a priority, nothing is a priority.
3. The less you know about something, the easier it looks.
4. You aren’t free unless you are free to be wrong.
5. Any power used for you today will be used against you tomorrow.
6. Money and power will always find each other.

Fearing citizen violence? You shouldn't.

Nancy Pelosi (among dozens of others) is busy yapping day in and day out about how scary it is that people attending various Tea Party protests & other anti-government activities are maybe... possibly going to start some kind of violent outbursts where people might get hurt or killed.

Naturally, Senators like Ms. Pelosi forget that they are the ones in charge of stuff like this:

I just never get it when government people talk about politically or ideologically motivated violence as if it's a real threat from ordinary people...

Over the course of the 20th Century, governments around the world were responsible for killing around 262,000,000 of their own citizens. Not as collateral damage in wars either, just straight up starved, murdered and dominated their people to death - almost always for some kind of religious/ethnic hatred or simply because the leadership would do anything to maintain their power.

262 Million.


A few years ago, my brother and I were discussing the value of a well-armed militia that could potentially take on the government if push came to shove while riding in the car with our father (a retired Air Force Colonel). My dad kind of laughed and said, there's not a thing an ordinary citizen could possibly do. I have to agree...

So in a country of 300 million people, one guy who carries a handgun to a protest and doesn't do anything remotely aggressive with it - even after being spit on by SEI Union thugs - is held up to be the boogeyman?


Ron Paul Interviewed by Time

Dr. Paul on Income Taxes, the Federal Reserve, the Drug War and Obama's handling of the Iraq War... It's good to see this thing in Time - hopefully a broader audience will get a glimpse of reality for a change.

Tuesday, September 15, 2009

US Congress = Bizarro Version of British Parliament?

In more good news: Glenn Thrush at Politico just informed me that it's now against the rules to insult the government or its leaders in the halls of Congress courtesy of House Rules Committee Chairwoman Louise Slaughter (D-NY). Ain't it cool how much the Democrats support free speech?

It's like watching a hyper-speed version of The Road to Serfdom up in this joint.

Thrush writes:

Especially useful: The section on how to properly insult the executive branch in the in the chamber.

"Disgrace" and "nitwits" -- okay.

"Liar" or "sexual misconduct" -- ixnay.

Under section 370 of the House Rules and Manual it has been held that a Member could:

• refer to the government as “something hated, something oppressive.”
• refer to the President as “using legislative or judicial pork.”
• refer to a Presidential message as a “disgrace to the country.”
• refer to unnamed officials as “our half-baked nitwits handling foreign affairs.”

Likewise, it has been held that a member could not:

• call the President a “liar.”
• call the President a “hypocrite.”
• describe the President’s veto of a bill as “cowardly.”
• charge that the President has been “intellectually dishonest.”
• refer to the President as “giving aid and comfort to the enemy.”
• refer to alleged “sexual misconduct on the President’s part.”
Wow. I'm half-surprised at this point that Rep. Slaughter (what a waste of an awesome name for an elected official!) didn't also mandate that the president be heretofore referred to as "His Holiness", "His Majesty", "King Barack" or simply "Dear Leader". If you're going to censure and censor all criticism, you may as well go the distance.

Leeching the System: The false heroics of guaranteed insurance.

Imagine for one moment that you, like me, are in a pretty average financial position. I live mostly paycheck to paycheck, I have more debt than I'd like (fortunately, mostly from my education) and it's a little hard for me to save a whole lot, but I can still manage the occasional movie-night and I'm at least not that far "behind".

Now... The trouble with this position is that I'm not really set up to deal with any major emergencies. I'm sure many others know what this is like.

If my car breaks down and the warranty doesn't apply I would be in a right pickle attempting to get it fixed for any cost above a few hundred dollars. Recently a friend's car broke down and it cost over $1,400 to repair. I imagine for many people that kind of unexpected expense would be a little hard to manage. I know it would be for me.

Of course there are many possible ways that people deal with such problems. If it were me, I might hit up my folks for a loan. Some people might have a credit card handy for these kinds of occasions. Still others might ditch the car for a while, start riding their bicycle and taking the bus to work until they'd saved up enough to cover the repairs.

There is yet another option available assuming I know enough people in the same financial straits though... For instance, let's imagine that there are 10 of us all in a similar situation; it's you, me, and 8 of our relatively trustworthy friends. Knowing that any major car repair could be painful for any one of us on our own, what if I proposed the radical idea that the 10 of us together could pool our money and be better prepared for disaster?

Certainly none of us is planning to get into an accident, plus we all take pretty good care of our cars and don't expect any big things to break, but just in case something horrible happens, the fund would be available to that person for use provided it meets the terms agreed to by the everyone and written out in a predefined contract.

We set up a special bank account for it, we define the terms of use, suggest maximum payout percentages that help keep the fund from entirely going to the first person who has a problem, etc... Then the ten of us all sign our names to the agreement and as they say, we "pays our money & takes our chances".

So say we each agree put in $250 up front and start adding $50 each month after that.

Our total fund starts with $2500 in it. One year, and fortunately 0 qualified emergencies later - our fund has $8,000. We all feel pretty good about that. If no one encounters a problem, then the fund just remains untouched, expanding and generating interest... If any of us wants out at any time, well - then said individual can have the money he paid in back (minus any money he took out of course) prorated with interest. Good deal, huh? Sounds good to me!

But now imagine that my friend shows up with her broken Volkswagon.

It's going to cost $1,400 to fix, and she doesn't have the money. However, she had never paid in to our pool. She didn't save any money, she hasn't contributed at all to our plan, but say she asks that we pay for her car-repair just the same. Should we? Would you?

Most people, I think, would rightly understand that she has no right to our money - and that by demanding that we cover the cost of her repair out of the emergency fund we set up to help protect ourselves, she is directly harming the 10 of us who have been contributing our hard-earned savings each month and abiding by our contract.

Most people, I think, would understand that for whatever her needs, intentions or feelings might be - my friend would ultimately be asking permission to be a leech on the rest of us.

Now imagine that I, being the extremely generous human being that I am, might agree to let her take money from the fund. That's absolutely a choice I could freely make, and no one could stop me from doing so; after all I paid in to the pot and some of that money is mine to take out. Unfortunately though, my total contribution has only been $800 by the end of the year. Not exactly enough to cover my friend's needs. Do I have the right to take money from the other 9 of you without your permission? Would that be remotely fair or just? Is it ok for me to take your money against your wishes, as well as my own - thus leaving you with less ability to afford a possible emergency in the future? Again, I think most people understand that; no, I don't have that right, and that it would be quite an injustice towards the group as a whole.

Somewhat intuitively - and certainly upon a little bit of reflection - nearly every person of any age can recognize that in the above scenario, the 10 original risk-poolers did nothing untoward, nothing coercive and harmed no one. We were worried about our situation and worked together to come up with what we believed would be a good solution given our individual financial limitations. If someone came in and took from us, they would be reducing the financial buffer we created to insulate ourselves from uncertain, but potentially very serious problems. Naturally the specific circumstances might play a role in whether or not we consider this fraud, theft, or whether or not we all agree to be charitable... But essentially, if someone new came in mid-stream, knowing that they were going to take from our pool without ever contributing - that person would be harming the rest of us directly, would she not?

Again, I believe most people understand this perfectly well. And so most people understand quite clearly who is harming whom, how it's happening, and can probably come up with a few possible responses... Very few of which would likely involve forcing the 10 of us to part with our savings.

But here's the rub: In matters of health care insurance, a sizable chunk of the national population seems woefully unable to grasp such basic concepts.

For instance, think about the presented situation in relationship to what President Obama said in his speech the other day on health care "reform":
"What this plan will do is to make the insurance you have work better for you. Under this plan, it will be against the law for insurance companies to deny you coverage because of a pre-existing condition."
Effectively, if you accept the analogy I'm making above, what the President is saying is that it would be illegal for the 10 of us who've created the car-repair risk pool to deny my friend the $1,400 regardless of the clear fact that we know in advance she would be siphoning off our collected resources and that this would be unavoidably at our expense.

We pay in each month. We know her car is broken and that if we let her in right now, she will immediately deplete our collective savings by almost a 5th. We also know that if we are unlucky and find that a couple of our own cars break down within that same year, this new law would mean that there are 1,400 fewer dollars available to treat our own illnesses repair our own cars. And remember again that the reason the 10 of us entered into the risk-pooling agreement to begin with was because individually we were all too poor to afford emergency repairs like that on our own!

Naturally theft or fraud is still wrong regardless of who it's perpetrated against - rich or poor. But the rich don't really need a risk pool... The awesome thing about being rich is being able to afford to pay for your own needs, be they large, small, expected, unexpected or completely frivolous.

But poor schlubs like you and me who would all need some help paying for big but uncertain expenses can't often whip out a briefcase full of $100 bills... So sometimes we have to think up other, more creative arrangements. With the risk-pool, no one was forced to pay in, and anyone could opt-out at any time... It was completely voluntary. But we all stayed in because we knew that with our combined resources, our own individual financial risk would be minimized enough to be bearable in the event of an emergency. We also all stayed in because we each believed that the probability of such emergencies happening was relatively low, and thus we would actually be able to afford to contribute to the pool.

But if such a law as President Obama proposes were passed, why keep voluntarily funding an insurance scheme knowing that as like as not, someone with no legitimate claim on the available financial resources can come in at any time and use them all up - thus leaving you stranded when you actually need the help?

If most of us were to just break down this situation as I've done above and understand how it applies to health care, we all can easily comprehend that a person with a pre-existing medical condition getting a beneficial law passed which forces existing insurance payers to cover his disease is a leech. We can also easily understand, as per above, that such leeches are draining money from the pool that was always actually intended to provide payment for the emergency care of hard-working, responsible individuals; this means moms & dads, grandmothers & grandfathers... Everyone.

And sure, sometimes, a few leeches here and there aren't a big problem and are often unavoidable... Sometimes it's just an accident of fate that a person might buy into an insurance policy and then get sick a day later, and while it's definitely unfortunate both for the sick individual and the people who are unfairly subsidizing that person's treatment - part of the point of risk-pooling in general is that you never really know when something bad might happen. So there's nothing fraudulent there, merely undesirable - and also relatively rare. However, anyone who signs up for insurance knowing that they are already ill and will be taking money from the system is being deceitful in order to unfairly stick other people with his debts - thus we rightly consider it insurance fraud and prosecute such people.

But Obama's speech makes the true leech not only a legally protected entity, but in fact the desirable position!

The result of such a foolish policy would be completely catastrophic as more people pass up paying the monthly fees of a health insurance plan when they are well, and instead only jump into the risk-pool when they experience the very type of emergency that we're all trying to hedge against. And because it would be illegal for an insurer to prevent them from doing this, there would be really no way to prevent such folks from draining the entire pool of money such that if and when some of us who've actually paid in got into trouble, there would be less money left to cover our needs, or perhaps none at all!

Of course, if we all properly understood the proposed legislation as protecting the leeches at the expense of regular hard-working folks who are not even wealthy enough on their own to handle emergencies out-of-pocket, no one would accept it.

So the proponents of such legislation don't ever let you view of these folks as the leeches of the system, destroying the security net for everyone else.

Instead, they postulate scenarios where the parasites are sympathetic, downtrodden and single mothers who happen to have the misfortune of being a little hard on their luck when they got an unexpected illness. They craft elaborate anecdotal narratives designed to ply our sympathies. And it works!

We all care about mothers.
We all care about human misfortune.
We all believe that people who've gotten dealt a bad hand could use a bit of help.

If we didn't, these types of stories would have no influence. But they work without fail, and they prod people to forget that as sympathetic the person in need might be, they are the ones taking and not giving back - that they are the selfish ones.

Ultimately, this is why merely telling the story of the sympathetic mother isn't enough. At some point, everyone knows that the world is full of unfortunate situations and bad cases, but we can only do the best we can to address them all. Sometimes, there's nothing to do but accept that there are consequences to never planning ahead and try to help out as best we can through charity or individual acts of generosity. We know this because we recognize that one person's misfortune doesn't give them the right to impose misfortune on other innocent people.

Therefore, in addition to the providing archetypal examples of the underdog hero - every good story needs a villain! It's not enough to say that in this case, the leech happens to be a young mother who we should care deeply for. Of course we should care - and we do - but we can't justify pushing her problems onto someone else equally deserving. So crafters of such narratives must also pose that the reason she can't afford her care is because the evil wealthy insurance executive denies her claim unfairly, exploitative male oppressors caused her to get sick in the first place, or even that the very system itself keeps her from earning a fair wage. In truth, almost any variation will do. So long as the leech can be turned into a victim of bad men or circumstances and wind up heroically triumphing over an unjust system - and as long as those who've paid into the system are the evil oppressors, hell-bent on keeping sick people from getting the medicine they desperately need, President Obama's insanely unjust, immoral and economically destructive ideas will seem noble and righteous to many people.

But the truth is so different... In truth, the villain is - and must always be - the person taking without giving, collecting without contributing. The true villain must be the aggressor, not the victim. I dare say in spite of compellingly emotional narratives, deep down everyone knows who the villain is.

Finally, let me say that I am most certainly not giving the behavior of some insurance executives a pass, nor am I supporting the status quo. So sure there are instances of unjust recision or fraudulent dereliction of contracts on the part of the insurance companies - just like there are plenty of people around scamming the system to get paid for injuries they always had or never had. People sometimes lie, cheat & swindle each other, but that's a human nature thing, not an "evil insurance executive" thing. These cases are clearly criminal, and they need to be treated (and prosecuted) as such. However, in the vast majority of cases, it really isn't any more philosophically complex than the example of 10 buddies combining their cash and hedging their bets.

What this means is that if people with pre-existing conditions get the legal privilege of joining existing insurance plans when otherwise they wouldn't qualify - they aren't taking from some faceless tuxedo-wearing rich guy (not that it would matter ethically anyway), and they're certainly not sticking it to the infamous insurance executives. Instead, they're taking from my grandmother and yours. They're taking from you, and me, and everyone else who sets aside a bit of their monthly pay to prepare for a possible, if hopefully avoided future risk.

This isn't heroic. It's monstrous.

There are so many reasons why health care resources are as limited as they are today primarily owing to egregious government interventions over the last 70 years, and there's much to be done about that. But if we start rewarding the leeches of society at the expense of all of the responsible people, we're all in some really deep trouble. The insurance industry won't survive that. Large-scale risk pooling as we know it can't survive it. As a result, the average person's ability to handle the existing high cost of medical care will plummet.

This may all come across to some as unsympathetic, but those who have pre-existing conditions must either find an insurer who will cover them voluntarily (and pay the attendant higher premiums) if they can afford it, or they need to mobilize the generous resources of private charities, family, friends and various communities to help relieve their financial burden. If they don't do this, then they are simply - and quite unfairly - pushing their costs onto other people... Regular people of all races, ethnicities, genders, professions, incomes and standards of living. The sooner we cut through the emotionally charged anecdotes & broadly scripted narratives and start addressing the substance of these issues; the sooner we start understanding that the villains & heroes created by so many supposedly fighting for "universal health care" are exactly the opposite of reality.

The bad guys aren't those who've worked hard and prepared for the future, to the contrary - they're the innocent ones in all this. The true villains are those so selfish as to demand something for nothing and to impose that demand on others by force of law.

Thursday, September 10, 2009

Barack Obama Speechifies on Health Care

Obama gave a predictably "great" speech last night on the need for health care reform. Of course, it was briefly marred by Rep. Joe Wilson's heckling cry of "You lie!" (kudos should be extended to Wilson for this bravery, although it seems no one but me believes this).

Anyway, the truth is - Obama's speech was full of all kinds of lies, half-truths and the same kind of vacuous nonsense I've come to expect out of someone who speaks primarily in empty platitudes. What do I mean, you ask?

Well, let's break it down.
Madam Speaker, Vice President Biden, members of Congress, and the American people:

When I spoke here last winter, this nation was facing the worst economic crisis since the Great Depression. We were losing an average of 700,000 jobs per month. Credit was frozen. And our financial system was on the verge of collapse.
Patently false in several regards. First because Obama addressed the Congress in February, when reports were already coming about credit "thawing" and more to the point because the initial downturn wasn't the worst since the great depression - the crash of 1987 was much worse. At any rate, much like the Great Depression, the prolonged pain is entirely a consequence of further government manipulations & interventions which have prevented (and are still preventing) a clearly-needed correction from taking place. Now, sure - most people would just call this rhetoric and not a "lie", but in the first paragraph, we're not off to a good start.
As any American who is still looking for work or a way to pay their bills will tell you, we are by no means out of the woods. A full and vibrant recovery is many months away. And I will not let up until those Americans who seek jobs can find them; until those businesses that seek capital and credit can thrive; until all responsible homeowners can stay in their homes. That is our ultimate goal. But thanks to the bold and decisive action we have taken since January, I can stand here with confidence and say that we have pulled this economy back from the brink.
Uhhhhhhhhhhhhhhhhhhhhhh huh. Sure.

I guess U3 Unemployment at 9.7% and still rising, a collapsing dollar and the very likely possibility of long-term economic stagnation coupled with inevitable mass inflation sure sounds like they've done a fabulous job pulling the economy "back from the brink"... If by "pull" they mean "push", and "back from" they mean "straight into". Brink, here we come!

Remember when they predicted that with the stimulus we'd see no higher than 7.9% unemployment? Remember how they said without the stimulus we'd be seeing such terrifying numbers as 8.7% unemployment?? Gosh, I do.

Courtesy Greg Makiw's blog - Here's the updated chart of government predictions vs. reality:

Likewise, here's the BLS' data on current U3 Unemployment (seasonally adjusted - which makes it look a little less scary right now because for whatever reason, August & Sept. always see a bump in the unemployment rate...)

Does it look like we're on a good trajectory?

(From the August Bureau of Labor Statistics report found here.)

I'm thinking not.
I want to thank the members of this body for your efforts and your support in these last several months, and especially those who have taken the difficult votes that have put us on a path to recovery. I also want to thank the American people for their patience and resolve during this trying time for our nation.

But we did not come here just to clean up crises. We came to build a future.
Offff course we did. Because surely, it would be too horrible to allow the future to be the spontaneous result of millions of people who are free enough to make their own choices and build their own futures based on their own values. No, that would be a terrible idea - instead, "we" need instead to plan the future. Because "we" know what's best! Our godlike prowess and epistemologically impossible ability to obtain knowledge about the wants & needs of hundreds of millions of people allows us to be the arbiters of all that The Peopletm will need in the future. For the greater good... And stuff.
So tonight, I return to speak to all of you about an issue that is central to that future — and that is the issue of health care.
Oh, do go on...
I am not the first president to take up this cause, but I am determined to be the last. It has now been nearly a century since Theodore Roosevelt first called for health care reform. And ever since, nearly every president and Congress, whether Democrat or Republican, has attempted to meet this challenge in some way. A bill for comprehensive health reform was first introduced by John Dingell Sr. in 1943. Sixty-five years later, his son continues to introduce that same bill at the beginning of each session.

Our collective failure to meet this challenge — year after year, decade after decade — has led us to a breaking point.
No kidding. So, he's admitting that for 100 years and really seriously since the early 1940's, that government has been meddling in the health care sector of the economy and it has only been met with disastrous results "year after year, decade after decade"? And... That's his pitch for why this time he'll get it right? Seriously? 100 years of abject failure, and not only that... But the last 70 years of leading up to the precarious position we're in today and he sees this as evidence that we need MORE meddling? Ugh.

How does anyone actually buy any of this nonsense?
Everyone understands the extraordinary hardships that are placed on the uninsured, who live every day just one accident or illness away from bankruptcy. These are not primarily people on welfare. These are middle-class Americans. Some can't get insurance on the job. Others are self-employed, and can't afford it, since buying insurance on your own costs you three times as much as the coverage you get from your employer. Many other Americans who are willing and able to pay are still denied insurance due to previous illnesses or conditions that insurance companies decide are too risky or expensive to cover.
And yet no mention of the fact that employer-provided insurance is not only a government created phenomenon, the increased expense of covering yourself individually outside of your employment is entirely a product of the US tax code and the wage controls imposed by FDR in 1941. No mention of the lack of real competition either...

No mention that the specific products offered by insurers are so tightly controlled and dictated by the Federal government that it barely makes a difference which company you choose.

In short, no mention of why individual plans cost three times as much as employer-provided ones. Obama has now sailed past what would be an opportunity to support real reform number one: Eliminate taxation on all medical expenses, eliminate the tax handicap against individual plans and stop dictating what range of coverage different companies are allowed to offer.
We are the only advanced democracy on Earth — the only wealthy nation — that allows such hardships for millions of its people. There are now more than 30 million American citizens who cannot get coverage. In just a two year period, one in every three Americans goes without health care coverage at some point. And every day, 14,000 Americans lose their coverage. In other words, it can happen to anyone.
No scare tactics here, huh? Nope. Not at all...

First. There might be 30 million people who are uninsured, but that does not mean that those people "cannot" get coverage. It means that for a whole host of reasons, they don't currently have insurance. Some people point out that 25% of the uninsured are eligible for existing public programs; so there goes 7.5 million, another 20% are people who can afford coverage but just haven't (I was once part of this number) - s0 let's drop another 6 million. And most interesting of all, around 75% of people who are uninsured will be insured within a year. This would mean that at any given time - according to Obama's nice round 30 million people figure we have somewhere around 22.5 million of them who are for all intents & purposes, just "between" things at the moment.

Now maybe you question the numbers, and that's fine - but I've seen a similar breakdown time and time again. Another one found here, for example. In any case, let's admit that the true number of people who fit into the crucial category of A. uninsured, B. unable to afford insurance, and C. ineligible for existing government programs is MUCH lower than 30 Million individuals.

Let's also back up and be honest with ourselves. "Insurance" and "Health Care" are two totally different goods. Even the uninsured still have access to health care resources in this country. Hospitals don't turn people away.

Secondly. Wherever Obama pulled the 14,000 a day figure from (I assume he's talking about recission?), that actually winds up being 5,110,000 a year. Sounds like a huge number right?

Yeah, except that that's slightly less than 1.7% of the current US population! For a year.

So sure... It could happen to "anyone". That is, if by "anyone", Obama actually meant; "almost no one".

Here's the real joke though... If 14,000 people are losing their insurance everyday (presumably for some nefarious reason, and not at all because they either lied on their applications or didn't pay their bills or have maxed out their contracted lifetime payout limits, etc.), then... Ok, that sure sucks. But how many people are joining the ranks of the insured every day?

I actually don't know. I'd like to though, because it would seriously mitigate much more of that 1.7%. It's not like we're losing 5,110,000 people every year and that's the end of the story... These people are either joining the ranks of Medicaid or Medicare, getting new insurance policies when they change jobs, get married or just decide they like a different company better... And of course, new 18-25 year olds are joining the rolls all the time too. So what's the REAL number of people who are losing their insurance, and not getting it back, due to actually no fault of their own and who really honestly don't have the ability to find new coverage? I don't know, but I'm betting it's a hell of a lot less than half of 1%.

This is all very misleading, isn't it? If we hemorrhaged 5 million people a year from the health care system, and we never added new people in, even at such a low percentage, that might be a real problem, wouldn't it? I mean we'd have no one insured at all in... Umm... 60 years!

But that's not the case. Obama just doesn't bother to mention it.
But the problem that plagues the health care system is not just a problem of the uninsured.

Those who do have insurance have never had less security and stability than they do today. More and more Americans worry that if you move, lose your job, or change your job, you'll lose your health insurance too. More and more Americans pay their premiums, only to discover that their insurance company has dropped their coverage when they get sick, or won't pay the full cost of care. It happens every day.
Yeah... Like how people are attacked by sharks every day too! I mean... Sure I just pulled that out of my ass, but it must happen somewhere every day, right?

Nah, look - I'll be serious. Health care attached to employment is a huge pain, and a big aspect of not only the higher costs in general for psychological and economic reasons (to say nothing of the asinine tax rules), it also necessarily incurs higher administrative costs... Switching plans every few years means all new paperwork too; for you, for your doctor, for insurance agents & actuaries, etc. etc. It's a bad deal all around. But again: Who's fault is that anyway?
One man from Illinois lost his coverage in the middle of chemotherapy because his insurer found that he hadn't reported gallstones that he didn't even know about. They delayed his treatment, and he died because of it. Another woman from Texas was about to get a double mastectomy when her insurance company canceled her policy because she forgot to declare a case of acne. By the time she had her insurance reinstated, her breast cancer more than doubled in size. That is heartbreaking, it is wrong, and no one should be treated that way in the United States of America.
Yeah... And in the UK a guy pulled his own teeth because he couldn't find a dentist.

What's your point, Obama? Awful things happen sometimes. Does that magically make anecdotes qualify as actual evidence proving that anything you want to do is defensible? Wait don't answer that... The correct answer is: No. It doesn't.

Now - the case of the Texas woman has clearly been resolved through legal processes. This is good news, and it sounds (though I have no way to know) like the right verdict was rendered. Fortunately, this kind of thing is exactly what the court system is for. The reality though, is that this tragedy is INCREDIBLY rare. Statistically, we all know it's border-line unheard of, but like any good anecdote, it tugs on our heart-strings and we remember it well. In fact, we remember it too well.

What we don't remember is all the good stuff that happens day after day after day. We don't remember the literally millions of people each year for whom this kind of thing is never a problem. People like my own mother, or like several of my aunts or both of my grandmothers. My family seems prone to cancer, to Alzheimer's, to arthritis, strokes & heart attacks... Not a single member of my family has been denied coverage or has fallen victim to rescission, or has been cut off mid-treatment. Not my grandfathers who died of stroke and/or heart attacks, not my mother & aunts who have had various forms of breast & skin cancer, not my grandmother who had a half-dozen tumors in her later years, and not my one living grandmother who recently broke her vertebrate. Of the couple hundred people I know personally, exactly 1 of them has ever actually had a bad experience with an insurance company, and that one's story is rather unknown to me.

If I were to base all my opinions on anecdotes, then I might be inclined to believe that none of what Obama just claimed has ever happened. And of course I'd be wrong!

But this is, again, why anecdotal evidence doesn't count in a real debate.

As a more bizarre example: A few years back, a US astronaut - Lisa Novak - drove across the country to find & try to kill her ex-boyfriend. Does this mean all astronauts are deranged and that we should never let anyone go into space again? I'm guessing not.

The world is not made of Nerf!

Sometimes bad stuff happens to people. Magical pixie dust doesn't exist... And wishing that it did won't fix real-world problems.
Then there's the problem of rising costs. We spend one-and-a-half times more per person on health care than any other country, but we aren't any healthier for it. This is one of the reasons that insurance premiums have gone up three times faster than wages. It's why so many employers — especially small businesses — are forcing their employees to pay more for insurance, or are dropping their coverage entirely. It's why so many aspiring entrepreneurs cannot afford to open a business in the first place, and why American businesses that compete internationally — like our automakers — are at a huge disadvantage. And it's why those of us with health insurance are also paying a hidden and growing tax for those without it — about $1000 per year that pays for somebody else's emergency room and charitable care.
Gosh, I wonder WHY this is!? Could it be because of DECADES of government intervention creating cartels, oligopolies & monopolies, restricting consumer choices and distorting the hell out of the market? No... Of course not.

Funny how the only two sectors of our economy that our government primarily is responsible for paying for - Education & Health Care - have seen costs & prices increase at insane rates.

I guess it's all just coincidence, huh?

But no, yet again, Obama starts the story in the middle and then doesn't bother to offer up any actual insight as to why the status quo is as it is today. A little bit of history, and even a middle school level microeconomics class would really help the credibility of this speech. Unfortunately, Jon Favreau, Obama's "Director of Speechwriting", is just 2 years older than me and in that time seems to have managed to acquire all the knowledge & understanding of a 5 year-old.

Yeah, that's harsh - but guess what, if you can't do even the basic research into the history of the system you're defending and even attempting to expand and if you're incapable of understanding as simple a concept as the Law of Suppy & Demand, then you deserve the ridicule.

(And no, fortunately it's not the same Jon Favreau we all know and love of Swingers & Ironman fame... He's busy doing real work. Praise Xenu! I might have had a mental breakdown if it had been him.)
Finally, our health care system is placing an unsustainable burden on taxpayers. When health care costs grow at the rate they have, it puts greater pressure on programs like Medicare and Medicaid. If we do nothing to slow these skyrocketing costs, we will eventually be spending more on Medicare and Medicaid than every other government program combined. Put simply, our health care problem is our deficit problem. Nothing else even comes close.
No kidding. So exactly how does massively expanding the criminally failed programs of Medicare & Medicaid which already have a combined nearly $60 Trillion in unfunded liabilities help this!? These things are a giant yolk around future taxpayers, and Obama - true to what seems to be becoming his MO - is betting on more of the same solving the problem. Good luck with that.

Doubling down on the status quo only exacerbates the deficit.
These are the facts. Nobody disputes them. We know we must reform this system. The question is how.
Well... I did just dispute a few of them (maybe I'm nobody?). And thus far what facts are in this speech have all been taken wildly out of context, with no historical or economic understanding, no explanations for how we arrived at this situation and they have all been presented in a relatively misleading way. So.............. Try again.

But it is true that we need reform.

Except... Not the ones Obama recommends. Let's try any number of these reforms instead.
There are those on the left who believe that the only way to fix the system is through a single-payer system like Canada's, where we would severely restrict the private insurance market and have the government provide coverage for everyone. On the right, there are those who argue that we should end the employer-based system and leave individuals to buy health insurance on their own.

I have to say that there are arguments to be made for both approaches. But either one would represent a radical shift that would disrupt the health care most people currently have. Since health care represents one-sixth of our economy, I believe it makes more sense to build on what works and fix what doesn't, rather than try to build an entirely new system from scratch. And that is precisely what those of you in Congress have tried to do over the past several months.
Sure... By calling each other Nazis.
During that time, we have seen Washington at its best and its worst.
Now that is a statement I can agree with. We sure have seen our masters at their "best"!
We have seen many in this chamber work tirelessly for the better part of this year to offer thoughtful ideas about how to achieve reform. Of the five committees asked to develop bills, four have completed their work, and the Senate Finance Committee announced today that it will move forward next week. That has never happened before.
Oh goodie.
Our overall efforts have been supported by an unprecedented coalition of doctors and nurses; hospitals, seniors' groups and even drug companies — many of whom opposed reform in the past. And there is agreement in this chamber on about 80 percent of what needs to be done, putting us closer to the goal of reform than we have ever been.
Wait... What was that... "Even drug companies" you say? Oh..... Right. Yeah. Corporatism is awesome isn't it? The fun part is listening to my friends, who also support the government "plans" claiming that all the opposition is funded by those evil drug companies. Because, as we all know, Big Business HAAAATES Big Government. Or... Wait, no. That's backwards, isn't it?
But what we have also seen in these last months is the same partisan spectacle that only hardens the disdain many Americans have toward their own government. Instead of honest debate, we have seen scare tactics. Some have dug into unyielding ideological camps that offer no hope of compromise. Too many have used this as an opportunity to score short-term political points, even if it robs the country of our opportunity to solve a long-term challenge. And out of this blizzard of charges and countercharges, confusion has reigned.
Scare tactics like perhaps alluding to 14,000 people a day who are being kicked off their insurance with no context?

Scare tactics like regaling us with anecdotes about people who've DIED because their insurance wouldn't pay for cancer treatment when they needed it?

Scare tactics like calling legitimate protesters; "Brownshirts" and accusing them of carrying Swastikas?

Scare tactics like claiming (not so much Obama, but every one of his supporters I've met) that if you're not for Universal Health Care you're an evil bastard who wants to watch people suffer & die?

Political double standards are so cute sometimes. It's scare tactics when Team Red says "death panels!" but it's just the God's honest truth for Team Red to claim blood running through the streets.
Well the time for bickering is over. The time for games has passed. Now is the season for action. Now is when we must bring the best ideas of both parties together, and show the American people that we can still do what we were sent here to do. Now is the time to deliver on health care.
Then get out of the way and allow market forces to work. It's that simple.
The plan I'm announcing tonight would meet three basic goals:

It will provide more security and stability to those who have health insurance. It will provide insurance to those who don't. And it will slow the growth of health care costs for our families, our businesses, and our government. It's a plan that asks everyone to take responsibility for meeting this challenge — not just government and insurance companies, but employers and individuals. And it's a plan that incorporates ideas from Senators and Congressmen; from Democrats and Republicans — and yes, from some of my opponents in both the primary and general election.

Here are the details that every American needs to know about this plan:
FINALLY... Now we get to the meat of this.

Let's recap:
  1. Provide security & stability to the currently insured
  2. Provide "30 million" uninsured with insurance/achieve full coverage
  3. Lower costs or at least stop costs from escalating
Frankly - lack of coverage & lack of "security" is almost entirely a function of the high cost of health care combined with bad tax incentives and ancient legislation. So I'd probably put #3 way up at #1, deal with that directly and then watch the other two effected as a result. That might be too simple. What's Obama have to say?
First, if you are among the hundreds of millions of Americans who already have health insurance through your job, Medicare, Medicaid, or the VA, nothing in this plan will require you or your employer to change the coverage or the doctor you have. Let me repeat this: nothing in our plan requires you to change what you have.
Translation: Not right away. But soon.... Veryyyy sooon.
What this plan will do is to make the insurance you have work better for you. Under this plan, it will be against the law for insurance companies to deny you coverage because of a pre-existing condition.
Because as we all know, one of the best ways to save costs, is to have healthy people who've consistently paid in to their insurance plans for years have to suddenly cover the costs of already sick people who've never paid in to the pool.

Seriously - how is it that people don't realize how ridiculous this aspect of any plan would be? To mong some fear for a minute; Every dollar an insurance provider has available to pay for people's health care has to come from somewhere. It is a finite amount of money as well... So if new people join a particular pool of insured people, and they are already sick and already incur costs - they are DRAINING the potential money available from the people who've actually been paying in!!

This means that when grandmother & grandfather who've paid their insurance on time every month for the last 25 years, the money that would have been available to pay for their hip replacement or their heart attack or whatever else might happen, is GONE!

Someone else got that money... Someone who did not pay in. Someone who skews the costs for everyone up and sucks up the available resources.

This is not only a ridiculously poor business model and would almost instantly put any real insurer out of business (without infinite tax-payer bailouts) - it's also the least equitable or humanitarian idea I could possibly imagine!

And to understand this point is to understand addition. That's all! THINK about it, people:
  • Given: 10 Grandmas pay $100/month for 10 years
  • Thus: Insurance pool has $120,000 after 10 years
  • Enter: 30 year-old jerk with pre-existing condition, treatment cost: $5,000/month (has never paid in to the pool.
  • Thus: After 1 Year, total pool is decreased by $60,000
  • (Including new payments by grandmas + $100/month for newcomer, total for 11th year = $73,200)
So what happens? The 10 Grandmas' premiums go up... The 10 Grandmas have $60,000 less in the pot to deal with if they get sick... This means fewer medicines, doctors visits, hospital stays, wheelchairs, in-home care, ambulance rides, trips to the ER...

Less. Of everything.

Now there are fewer resources available to those people who actually put their money in, because instead those resources are going to fund some non-contributor. And it's not all rich guys! It's your grandma and mine. It's your mother & father. It's YOU!

Everyone. And I mean EVERYONE is screwed by government mandating that insurers simply accept those with pre-existing conditions.

The most ridiculous part of all is that the people who are advocating a system where resources are drained away from people who've paid in to their insurance plans their whole lives are also the ones calling the responsible people "Selfish"! As sad as it sometimes is to see people struggle to afford some of the things they need for a good life, the answer isn't institutionalized theft. The answer is more production, more freedom, letting people keep more of their money, more charity & compassion.

It's so damn simple, and so disturbingly wrong, that every time someone in the media or one of the people I know talks about banning "pre-existing condition" requirements I want to hit them with a lead pipe. It also makes me ask them why they'd rather see my grandmother get sick & "just die".
As soon as I sign this bill, it will be against the law for insurance companies to drop your coverage when you get sick or water it down when you need it most. They will no longer be able to place some arbitrary cap on the amount of coverage you can receive in a given year or a lifetime.

Yes, of course Mr. President - Because there's an infinite amount of money in every insurance company's Vault 'o Hoarded Gold!

You twat! There is only as much money as people have paid in, minus costs, minus a paltry 3-4% profit + whatever investment dividends fund managers garner year-to-year. And yes. Sometimes that's nominally a lot of money, I guarantee that whatever Blue Cross is sitting on is way more money than I'll probably make in a lifetime. So what? Blue Cross also has millions and millions of people who need to visit the doctor, get prescriptions and sometimes have really expensive procedures performed by qualified professionals.

There is nothing arbitrary about the lifetime award caps.

So yet again, it's clear that Obama has no conception what-so-ever about economics, or even the fundamentals of running a business. It'd surprise me if he was capable of running a lemonade stand at this point.

No, Obama - costs are NOT arbitrary.
We will place a limit on how much you can be charged for out-of-pocket expenses, because in the United States of America, no one should go broke because they get sick. And insurance companies will be required to cover, with no extra charge, routine checkups and preventive care, like mammograms and colonoscopies — because there's no reason we shouldn't be catching diseases like breast cancer and colon cancer before they get worse. That makes sense, it saves money, and it saves lives.
Actually, it may save lives, but it sure doesn't save money. The CBO did a whole report on it... Which apparently the president couldn't be bothered to read.

Preventative care costs more - and again, this is something that should be obvious to anyone. If you do mammograms of everyone once a year from the time they are 20 years old through the end of their lives, those mammograms cost money. So do the treatments.

It's a convenient fantasy to think that more preventative medicine is a way to savings.

That said - there's nothing wrong with spending more money to find more diseases before they become untreatable! It's just something individuals & their doctors should be doing voluntarily, and not something imposed from above by a politician who clearly believes that all monetary limits are imaginary.
That's what Americans who have health insurance can expect from this plan — more security and stability.
By which he means, ever-higher costs and thus lower access combined with fiat legislation that puts even more suppliers out of business (and inhibits any potential new suppliers from ever developing) while funneling the remaining money into a few highly-connected large firms?

Umm... Yeah... That's not secure or stable. It's dangerous and borderline insane.
Now, if you're one of the tens of millions of Americans who don't currently have health insurance, the second part of this plan will finally offer you quality, affordable choices. If you lose your job or change your job, you will be able to get coverage. If you strike out on your own and start a small business, you will be able to get coverage. We will do this by creating a new insurance exchange — a marketplace where individuals and small businesses will be able to shop for health insurance at competitive prices. Insurance companies will have an incentive to participate in this exchange because it lets them compete for millions of new customers. As one big group, these customers will have greater leverage to bargain with the insurance companies for better prices and quality coverage. This is how large companies and government employees get affordable insurance. It's how everyone in this Congress gets affordable insurance. And it's time to give every American the same opportunity that we've given ourselves.
Ok... I'm on board with this. Provided the government doesn't actually have anything to do with it. Allow insurance providers to compete nationally and can assuredly handle the rest. You see. Such an "exchange" already exists. I used it to find the completely affordable and acceptable (for my needs) insurance I currently subscribe to through Blue Cross.

The problem here, is that Obama talks a big game about competition, yet again without explaining the crippling (and actually arbitrary) laws which hinder it.

Laws which require all insurers to offer the same basic package of coverage.

Laws which mandate what prices various treatments are to cost.

Laws which prohibit insurers from competing nationally or internationally (even though it would make more sense for most people to buy insurance with various groups of people based on considerations other than simple geography).

Laws which distort the market entirely by granting cartel or oligopoly status to various suppliers and give special subsidies and IP protections to the chosen few major companies.

You want competition - the free market "knows" how to do that! Government, the biggest monopoly of all, on the other hand, has no clue.
For those individuals and small businesses who still cannot afford the lower-priced insurance available in the exchange, we will provide tax credits, the size of which will be based on your need. And all insurance companies that want access to this new marketplace will have to abide by the consumer protections I already mentioned. This exchange will take effect in four years, which will give us time to do it right.
The "exchange" is called the INTERNET you ninny! Just let up on all the stupid legislation and let market forces do the rest. The government can't be trusted to run a website (much less run one without blowing $18 million on it) anyway.

If you want an insurance provider's version of eBay, then you need to set up the conditions that made eBay possible. Anything else is just idiotic talk.
In the meantime, for those Americans who can't get insurance today because they have pre-existing medical conditions, we will immediately offer low-cost coverage that will protect you against financial ruin if you become seriously ill. This was a good idea when Senator John McCain proposed it in the campaign, it's a good idea now, and we should embrace it.
Ok. Isn't that what we already do? I forgot... Isn't there like... "Medicaid" or something for this purpose?
Now, even if we provide these affordable options, there may be those — particularly the young and healthy — who still want to take the risk and go without coverage. There may still be companies that refuse to do right by their workers. The problem is, such irresponsible behavior costs all the rest of us money. If there are affordable options and people still don't sign up for health insurance, it means we pay for those people's expensive emergency room visits.
Or... You know... They don't actually get sick and die, because not every 25 year-old is keeling over with lupus every episode day.

This is just outright bullshit. And even if it wasn't, having almost everyone pay for their own insurance in an unfettered, private market (which would actually drive costs down & quality up), then having the government covering the 2-3% of people who are either really that poor or who are really ok with being triaged dead-last in an ER for the sniffles and be treated for 5 minutes by a doctor with much better things to do after 10 hours of waiting and no ability to make appointments in advance would arguably be much cheaper all the same.

Again... Think about it. If the vast majority of people are paying for their own care - because the vast majority of people actually want to see a doctor for more than 5 minutes - then the remaining few percent of us who don't and do actually wind up in the ER will be much less of public expense than if we're deliberately paying for all of it.

Real economists should get on this little bit of research.... But I digress.
If some businesses don't provide workers health care, it forces the rest of us to pick up the tab when their workers get sick, and gives those businesses an unfair advantage over their competitors.
An "unfair" advantage huh? Cause sure, on one hand that business might pay less for their workforce... So it's an "advantage" in that sense. But then, all the companies that do offer paid health care are at a competitive advantage for finding better employees. But again, a little bit of historical background would prevent our politicians from being this retarded.

Employers started paying for health care because FDR wouldn't let them actually give people pay raises! They weren't forced to provide it, they did it because it was a competitive advantage TO do it!

But what I really want to know is why Obama has such a problem with allowing people to actually do different things?? Everything any of us do has some combination of costs & benefits. It's the same for businesses. What is so hard to understand about that?
And unless everybody does their part, many of the insurance reforms we seek — especially requiring insurance companies to cover pre-existing conditions — just can't be achieved.
It can't be achieved period... So try again.
That's why under my plan, individuals will be required to carry basic health insurance — just as most states require you to carry auto insurance. Likewise, businesses will be required to either offer their workers health care, or chip in to help cover the cost of their workers. There will be a hardship waiver for those individuals who still cannot afford coverage, and 95 percent of all small businesses, because of their size and narrow profit margin, would be exempt from these requirements. But we cannot have large businesses and individuals who can afford coverage game the system by avoiding responsibility to themselves or their employees. Improving our health care system only works if everybody does their part.
And here we get to the real crux of the matter. Force.

To achieve the "plan". We have to force individuals to buy in regardless of whether or not they want to. We have to force companies to incur higher costs regardless of whether or not it makes sense.

But who administers this force? And more to the point how is it going to be done? One senator already suggested a nearly $3,800 fine for not getting health insurance. Genius.
While there remain some significant details to be ironed out, I believe a broad consensus exists for the aspects of the plan I just outlined: consumer protections for those with insurance, an exchange that allows individuals and small businesses to purchase affordable coverage, and a requirement that people who can afford insurance get insurance.

And I have no doubt that these reforms would greatly benefit Americans from all walks of life, as well as the economy as a whole. Still, given all the misinformation that's been spread over the past few months, I realize that many Americans have grown nervous about reform. So tonight I'd like to address some of the key controversies that are still out there.
No sir, the basic points of Obama's plan are most certainly not broadly agreed on. And no sir, it's quite conclusive that everything he's said will hurt the economy in ways he cannot even imagine.

Imposing higher costs on individuals, on employers while creating new layers of bureaucracy to force people to comply and imposing new taxes and higher deficits on everyone to pay for these things is a stake through the heart of our economy. Nothing more.
Some of people's concerns have grown out of bogus claims spread by those whose only agenda is to kill reform at any cost. The best example is the claim, made not just by radio and cable talk show hosts, but prominent politicians, that we plan to set up panels of bureaucrats with the power to kill off senior citizens. Such a charge would be laughable if it weren't so cynical and irresponsible. It is a lie, plain and simple.
Yeah... Way to skip over the more serious criticisms and just jump right to the extreme ones. Perhaps you'd like to address something real?
There are also those who claim that our reform effort will insure illegal immigrants. This, too, is false — the reforms I'm proposing would not apply to those who are here illegally.
HOW WOULD YOU KNOW!?? Illegal immigrants can already get drivers licenses, social security numbers and attend public schools (my own mother teaches a few). Is our president really that blind to reality?? Of course it will apply to illegal immigrants. Who is better at, or has more experience with, gaming the system than people who's entire lives are spent dodging deportation while trying to work?

(I'll leave aside for now, the need to open the damn borders to anyone already...)

But now's clearly the time to cue Joe Wilson... Obama: "YOU LIE!"
And one more misunderstanding I want to clear up — under our plan, no federal dollars will be used to fund abortions, and federal conscience laws will remain in place.
Umm... Ok. But Federal dollars will go to fund the pre-natal care, pregnancies and child-birth right? Because... Clearly, that too is a great way to both increase costs and cow-tow to the religious right. Don't get me wrong, my entire tirade here is about NOT forcing other people to pay for your health care, but once you do - how exactly do you avoid the divergent ethical issues?

In fact, this brings up another truly significant point about all this.

Keeping the government out of health care means that no one is forced to pay for other people to have procedures they believe are morally wrong. The ethical questions of how you justify which procedures in light of people's preferences isn't an issue! If you want to have an abortion - FINE. You pay for it and leave the hardcore Christians out of it. If some Rastararian wants to follow in Marley's footsteps and treat cancer with Pot instead of doctors visits... FINE. But don't make anyone else buy it. If you want to see an acupuncturist or a chiropractor, or you think that aromatherapy is the thing for you... You're an idiot... But go for it! Just don't expect me to cover it.

It's your life. No one else's.

But that's the trick with freedom. You get to do whatever you want... But you do NOT get to force everyone else to go along with you, much less use their money or time to pay for or provide you with what you want. Freedom & personal responsibility are one and the same people!

Alternatively, when you start forcing everyone to pay for your health care, your housing, your food, etc., you are de facto giving those same people control over your life. In the new America our political class is setting about creating - You no longer get to say, "Hey, it's a free country - I can do whatever I want!" or "It's none of your damn business what I do with my life!"

When forced taxation is used to pay for your 7th child, your abortion, your drug rehab, your liver failure, your lung cancer... It is everyone's business what you do.
My health care proposal has also been attacked by some who oppose reform as a "government takeover" of the entire health care system. As proof, critics point to a provision in our plan that allows the uninsured and small businesses to choose a publicly sponsored insurance option, administered by the government just like Medicaid or Medicare.

So let me set the record straight. My guiding principle is, and always has been, that consumers do better when there is choice and competition. Unfortunately, in 34 states, 75 percent of the insurance market is controlled by five or fewer companies. In Alabama, almost 90 percent is controlled by just one company. Without competition, the price of insurance goes up and the quality goes down. And it makes it easier for insurance companies to treat their customers badly — by cherry-picking the healthiest individuals and trying to drop the sickest; by overcharging small businesses who have no leverage; and by jacking up rates.
See... Here again, actually knowing what you're talking about would really help! WHY do only 5 companies dominate the market!???

ASK THE QUESTION. Learn the answer.
Insurance executives don't do this because they are bad people. They do it because it's profitable. As one former insurance executive testified before Congress, insurance companies are not only encouraged to find reasons to drop the seriously ill; they are rewarded for it. All of this is in service of meeting what this former executive called "Wall Street's relentless profit expectations."

Now, I have no interest in putting insurance companies out of business. They provide a legitimate service, and employ a lot of our friends and neighbors. I just want to hold them accountable. The insurance reforms that I've already mentioned would do just that. But an additional step we can take to keep insurance companies honest is by making a not-for-profit public option available in the insurance exchange. Let me be clear — it would only be an option for those who don't have insurance. No one would be forced to choose it, and it would not impact those of you who already have insurance. In fact, based on Congressional Budget Office estimates, we believe that less than 5 percent of Americans would sign up.
Oh so nowwwwwwwwww you read CBO reports? Right.

Despite all this, the insurance companies and their allies don't like this idea. They argue that these private companies can't fairly compete with the government. And they'd be right if taxpayers were subsidizing this public insurance option. But they won't be. I have insisted that like any private insurance company, the public insurance option would have to be self-sufficient and rely on the premiums it collects. But by avoiding some of the overhead that gets eaten up at private companies by profits, excessive administrative costs and executive salaries, it could provide a good deal for consumers. It would also keep pressure on private insurers to keep their policies affordable and treat their customers better, the same way public colleges and universities provide additional choice and competition to students without in any way inhibiting a vibrant system of private colleges and universities.
Except... That... You know, Insurance companies DO like 90% of Obama's so-called "reforms". Big Money & Big Power will always find each other. If anyone seriously believes that the major insurance companies which already have the ears & pens of law-makers enough to grant them near-monopolies in each state won't be able to work the new "reforms" into giving them even more customers & more power, they're delusional.

At any rate, what's not to love? Employers AND individuals required to buy insurance? 40+ Million (bogus number, but whatever, the President used it... So I get to use it now!) new customers??

Any "Public Option" is going to put massive new burdens on ordinary taxpayers, it'll further stifle the economy and yes Mr. President, pave the way for 100% Government-controlled health care (one of the few policies that would literally force me to leave the US for good for my own health). But it sure as hell isn't going to hurt the big insurance companies... At least not until our banana-republic nationalizes them like Hugo Chavez.

So - I call bullshit! PhRMA is a already sponsoring Obama's plans... The other big companies will be on board as soon as their lobbyists draft the right addendums. They're probably already done - but it sure is a convenient and oh-so-populist straw man for the President to use.
It's worth noting that a strong majority of Americans still favor a public insurance option of the sort I've proposed tonight.
[Citation Needed]
But its impact shouldn't be exaggerated — by the left, the right, or the media. It is only one part of my plan, and should not be used as a handy excuse for the usual Washington ideological battles. To my progressive friends, I would remind you that for decades, the driving idea behind reform has been to end insurance company abuses and make coverage affordable for those without it. The public option is only a means to that end — and we should remain open to other ideas that accomplish our ultimate goal. And to my Republican friends, I say that rather than making wild claims about a government takeover of health care, we should work together to address any legitimate concerns you may have.

For example, some have suggested that that the public option go into effect only in those markets where insurance companies are not providing affordable policies. Others propose a co-op or another nonprofit entity to administer the plan. These are all constructive ideas worth exploring. But I will not back down on the basic principle that if Americans can't find affordable coverage, we will provide you with a choice. And I will make sure that no government bureaucrat or insurance company bureaucrat gets between you and the care that you need.
Again... that's all the President is proposing! Every bit of this is government bureaucrats and government-created monopoly insurance bureaucrats bound by a massive regulatory state getting between you and the care you need. That's ALL it is.

Not doing that would mean getting the government out of the way and letting people exchange goods & services voluntarily on terms agreed to by both parties with contracted terms that aren't mucked up by the tax-code or thousands of pages of legislation.

As George Reisman put it in his essay "The Real Right to Medical Care versus Socialized Medicine":

"The only way that the individual's freedom, and thus his rights, can be violated is by means of the initiation of physical force against him – that is, by the use of guns and clubs against him, in the form of the government's threat to dispatch the police if he does not obey irrational laws.
Finally, let me discuss an issue that is a great concern to me, to members of this chamber, and to the public — and that is how we pay for this plan. [...]

The right to free exchange and the freedom of contract becomes an essential aspect of all rational rights to things. Rights to things exist only in the context of the freedom of exchange and the freedom of contract. [...]

...the right to medical care does not mean a right to medical care as such, but to the medical care one can buy from willing providers. One's right to medical care is violated not when there is medical care that one cannot afford to buy, but when there is medical care that one could afford to buy if one were not prevented from doing so by the initiation of physical force. It is violated by medical licensing legislation and by every other form of legislation and regulation that artificially raises the cost of medical care and thereby prevents people from obtaining the medical care they otherwise could have obtained from willing providers. The precise nature of such legislation and regulation we shall see in detail, in due course."

The government does nothing but get in the way of people's freedom to contract, and inserts itself hamfistedly in between you and the health care you need every day - and has been doing this for nigh-on 70 years. Again, the lack of historical understanding and solid economic reasoning leads Obama (or his baby speech writer) to make assertions that are laughable on their face - and worse, the complete opposite of reality.

A massive new government bureaucracy forced on 300,000,000 won't insert bureaucrats between you and the care you need? Really??? Cause if it doesn't, then why bother at all? I mean why hire all those bureaucrats to begin with??

Here's what you need to know. First, I will not sign a plan that adds one dime to our deficits — either now or in the future. Period.
ROLFMAO... *Collects composure*

Would anyone believe this coming from the president who has outspent Bush's entire presidency in a matter of months? Don't answer that.
And to prove that I'm serious, there will be a provision in this plan that requires us to come forward with more spending cuts if the savings we promised don't materialize. Part of the reason I faced a trillion dollar deficit when I walked in the door of the White House is because too many initiatives over the last decade were not paid for — from the Iraq War to tax breaks for the wealthy. I will not make that same mistake with health care.
Yep. He faced a trillion dollar deficit, then bumped that bitch up to $10 trillion, cause... why not?? Money is just printed, right?
Second, we've estimated that most of this plan can be paid for by finding savings within the existing health care system — a system that is currently full of waste and abuse. Right now, too much of the hard-earned savings and tax dollars we spend on health care doesn't make us healthier. That's not my judgment — it's the judgment of medical professionals across this country. And this is also true when it comes to Medicare and Medicaid.
We = Obama & his staff of Leprechauns and itty-bitty Pixies, with all math done by the wisest of all creatures: The Incredible Hulk.

You cannot pay for 40 million people's health care (his own damn numbers!) with quarters you find under the mattress Barack. Shut. Up.
In fact, I want to speak directly to America's seniors for a moment, because Medicare is another issue that's been subjected to demagoguery and distortion during the course of this debate.

More than four decades ago, this nation stood up for the principle that after a lifetime of hard work, our seniors should not be left to struggle with a pile of medical bills in their later years. That is how Medicare was born. And it remains a sacred trust that must be passed down from one generation to the next. That is why not a dollar of the Medicare trust fund will be used to pay for this plan.
Because... There is no Medicare trust fund? Since all the FICA money I'm paying in goes directly out the back-end to Seniors currently collecting benefits and/or is raided by other government agencies to pay for other nonsense.

Jeesh. Medicare's unfunded liability is like $37 Trillion all by itself. "Trust fund"? What are you smoking?
The only thing this plan would eliminate is the hundreds of billions of dollars in waste and fraud, as well as unwarranted subsidies in Medicare that go to insurance companies — subsidies that do everything to pad their profits and nothing to improve your care. And we will also create an independent commission of doctors and medical experts charged with identifying more waste in the years ahead.

These steps will ensure that you — America's seniors — get the benefits you've been promised. They will ensure that Medicare is there for future generations. And we can use some of the savings to fill the gap in coverage that forces too many seniors to pay thousands of dollars a year out of their own pocket for prescription drugs. That's what this plan will do for you. So don't pay attention to those scary stories about how your benefits will be cut — especially since some of the same folks who are spreading these tall tales have fought against Medicare in the past, and just this year supported a budget that would have essentially turned Medicare into a privatized voucher program. That will never happen on my watch. I will protect Medicare.
Until it collapses under it's own massive failure like the USSR. (And for the same reasons... go figure.)
Now, because Medicare is such a big part of the health care system, making the program more efficient can help usher in changes in the way we deliver health care that can reduce costs for everybody. We have long known that some places, like the Intermountain Healthcare in Utah or the Geisinger Health System in rural Pennsylvania, offer high-quality care at costs below average. The commission can help encourage the adoption of these common sense best practices by doctors and medical professionals throughout the system — everything from reducing hospital infection rates to encouraging better coordination between teams of doctors.

Reducing the waste and inefficiency in Medicare and Medicaid will pay for most of this plan. Much of the rest would be paid for with revenues from the very same drug and insurance companies that stand to benefit from tens of millions of new customers. This reform will charge insurance companies a fee for their most expensive policies, which will encourage them to provide greater value for the money — an idea which has the support of Democratic and Republican experts. And according to these same experts, this modest change could help hold down the cost of health care for all of us in the long-run.
Yes indeed. Reducing waste, encouraging efficiency is great. Ya know what does that naturally? Market competition.

Cause the market actually has mechanisms called "Profit" and "Loss" that punish companies for being wasteful and rewards others for better efficiency. Funny how that works. Also funny how profit & loss don't apply to government and not a single thing they do could be described as efficient from Medicare to the Post Office to the Army... You name it.
Finally, many in this chamber — particularly on the Republican side of the aisle — have long insisted that reforming our medical malpractice laws can help bring down the cost of health care. I don't believe malpractice reform is a silver bullet, but I have talked to enough doctors to know that defensive medicine may be contributing to unnecessary costs. So I am proposing that we move forward on a range of ideas about how to put patient safety first and let doctors focus on practicing medicine. I know that the Bush Administration considered authorizing demonstration projects in individual states to test these issues. It's a good idea, and I am directing my Secretary of Health and Human Services to move forward on this initiative today.
Too little too late buddy, but hey - that makes thing #1.5 that I agreed with so far... So kudos to that.
Add it all up, and the plan I'm proposing will cost around $900 billion over ten years — less than we have spent on the Iraq and Afghanistan wars, and less than the tax cuts for the wealthiest few Americans that Congress passed at the beginning of the previous administration. Most of these costs will be paid for with money already being spent — but spent badly — in the existing health care system. The plan will not add to our deficit. The middle-class will realize greater security, not higher taxes. And if we are able to slow the growth of health care costs by just one-tenth of one percent each year, it will actually reduce the deficit by $4 trillion over the long term.
I don't have the heart to even laugh anymore. Medicaid started as a $3 Billion program in 1966 - by 1990, the House Ways & Means Committee claimed that it wouldn't cost any more than $12 Billion. However, in reality - it cost $107 Billion by 1990.

And thus a rule of thumb should have been born.

Any time some politician claims his program will only cost $X over Y period of time, just assume the true cost will actually be 10*$X.
This is the plan I'm proposing. It's a plan that incorporates ideas from many of the people in this room tonight — Democrats and Republicans. And I will continue to seek common ground in the weeks ahead. If you come to me with a serious set of proposals, I will be there to listen. My door is always open.

But know this: I will not waste time with those who have made the calculation that it's better politics to kill this plan than improve it. I will not stand by while the special interests use the same old tactics to keep things exactly the way they are. If you misrepresent what's in the plan, we will call you out. And I will not accept the status quo as a solution. Not this time. Not now.
Well first off - having thoroughly parsed this speech, I can say unequivocally two things.

1. There is very little actual "plan" to be found here. There are a series of goals. A series of platitudes. Some moralizing and a lot of rhetoric - but there is no proposed means of implementation. It's also entirely contradictory... Some people in the Entertainment industry often say; "Quick : Cheap : Good... Pick any two."

In this case, our options are more like: Cheap : Quality : Full Coverage - Pick any two. Unfortunately, because it's so incredibly destructive of liberty, I'm afraid we'll wind up with none of the above.


2. This "plan" IS the Status Quo. Only magnified ten times.

More government involvement... More strongly protected monopolies & oligopolies... Expanded Medicaid & Medicare... Mandated employer coverage... Mandated individual coverage.... More restrictions on insurers and producers of health care resources.

In short - this "plan" is EVERYTHING we're currently doing expanded. That's it. There is nothing in this entire speech that goes against the status quo in any meaningful way.

The rest is just doublespeak. Everything is expande.... But he'll cut costs. Nothing will change too much too fast... But he won't accept things as they are. Insurance companies aren't the bad guy... Except that they really are. Bureaucrats will be responsible for anything and everything... But they won't get in between you and your health care. We'll create a massive "exchange" program to increase insurer competition... But we'll impose a hundred new rules making all insurance exactly the same for your security. Everything is nothing. Freedom is slavery.

Get everything... Pay nothing.

No money down. Lifetime guarantee.
Everyone in this room knows what will happen if we do nothing. Our deficit will grow. More families will go bankrupt. More businesses will close. More Americans will lose their coverage when they are sick and need it most. And more will die as a result. We know these things to be true.

That is why we cannot fail. Because there are too many Americans counting on us to succeed — the ones who suffer silently, and the ones who shared their stories with us at town hall meetings, in e-mails, and in letters.

I received one of those letters a few days ago. It was from our beloved friend and colleague, Ted Kennedy. He had written it back in May, shortly after he was told that his illness was terminal. He asked that it be delivered upon his death.

In it, he spoke about what a happy time his last months were, thanks to the love and support of family and friends, his wife, Vicki, and his children, who are here tonight . And he expressed confidence that this would be the year that health care reform — "that great unfinished business of our society," he called it — would finally pass. He repeated the truth that health care is decisive for our future prosperity, but he also reminded me that "it concerns more than material things." "What we face," he wrote, "is above all a moral issue; at stake are not just the details of policy, but fundamental principles of social justice and the character of our country."

I've thought about that phrase quite a bit in recent days — the character of our country. One of the unique and wonderful things about America has always been our self-reliance, our rugged individualism, our fierce defense of freedom and our healthy skepticism of government. And figuring out the appropriate size and role of government has always been a source of rigorous and sometimes angry debate.
Wait... It's not over? Good god, it's another anecdote.
For some of Ted Kennedy's critics, his brand of liberalism represented an affront to American liberty. In their mind, his passion for universal health care was nothing more than a passion for big government.

But those of us who knew Teddy and worked with him here — people of both parties — know that what drove him was something more. His friend, Orrin Hatch, knows that. They worked together to provide children with health insurance. His friend John McCain knows that. They worked together on a Patient's Bill of Rights. His friend Chuck Grassley knows that. They worked together to provide health care to children with disabilities.

On issues like these, Ted Kennedy's passion was born not of some rigid ideology, but of his own experience. It was the experience of having two children stricken with cancer. He never forgot the sheer terror and helplessness that any parent feels when a child is badly sick; and he was able to imagine what it must be like for those without insurance; what it would be like to have to say to a wife or a child or an aging parent — there is something that could make you better, but I just can't afford it.
Ideology is sometimes another word for "principles". And that's what this is about to a large degree. I don't want politician's making decisions for 300 million people based on emotionally charged personal experiences or anecdotal stories... Call it ideology if you wish, but what I'm talking about here is making wise decisions based on a thorough understanding of the world combined with consistency of principle to do the right thing rather than the politically easy thing. Obama needs to stop talking out of both sides of his mouth, and realize that unicorns do not exist, and Leprechauns are bad accountants (unfortunately, when you can create money out of thin air you don't generally use it so well).

Freedom? Tyranny?

Those are the root choices. I will always come down on the side of liberty.

But if you're hell bent on tyranny and dominating something so important as health care by force, then at least realize that you can cover everyone for everything at the highest quality imaginable and accept the astronomical costs - or you can try to save money by cutting people out of the system & rationing. Those are your options. Don't pretend you can have low costs, full coverage and decent quality all at the same time.

The third way remains to unleash the productive capacity of the market to produce more health care resources for everyone, watch as prices go down, quality goes up and access increases to everyone.

Teddy Kennedy was a Big Government guy to be sure, and for most issues - I don't think he has much to teach us. But he was responsible for something that people haven't talked about much since he died. Ted Kennedy was one of the men responsible for the deregulation of price controls and increased freedom in the airline industry. As a result - now most everyone in the US has access to extremely safe, cheap & until the TSA mucked things up again - pretty convenient air travel. Deregulation did that. Not price controls, which do nothing but cause shortages and increase the cost of goods to all.

Want further proof? We all know consumer electronics is one of the least government-controlled industries in the US, and Neilsen estimates now have 99% of American households as owning at least one television. In 1950 this kind of saturation would have been unthinkable.

In nearly every industry but health care & education, quality has skyrocketed and prices (adjusted for inflation) have invariably come down. As a result, more people have quality goods & services for less money across the board. Is it really so hard to understand that the cause of the high cost is the massive interventions and controls placed on the economy in health care? Is it so hard to see the patterns?

I should think not. But apparently I'm a poor judge of such things...
That large-heartedness — that concern and regard for the plight of others — is not a partisan feeling. It is not a Republican or a Democratic feeling. It, too, is part of the American character. Our ability to stand in other people's shoes. A recognition that we are all in this together; that when fortune turns against one of us, others are there to lend a helping hand. A belief that in this country, hard work and responsibility should be rewarded by some measure of security and fair play; and an acknowledgment that sometimes government has to step in to help deliver on that promise.

This has always been the history of our progress. In 1933, when over half of our seniors could not support themselves and millions had seen their savings wiped away, there were those who argued that Social Security would lead to socialism. But the men and women of Congress stood fast, and we are all the better for it. In 1965, when some argued that Medicare represented a government takeover of health care, members of Congress, Democrats and Republicans, did not back down. They joined together so that all of us could enter our golden years with some basic peace of mind.
And yet both of those pyramid schemes are the source of our country's productive & economic woes and continually push higher and higher deficits & debt onto the next generation. They are the definition of "unsustainable". Citing them as examples of success to anyone from my generation is rubbing salt in our wounds. I will undoubtedly spend my life paying in to Social Security & Medicare and in 50 years never see a dime. It's nothing but a burden to working people to pay for primarily middle class retirees. What started at 40 workers paying in to every one collecting the ratio is now down to 3:1 - No honest person should struggle to see what's wrong with this picture.
You see, our predecessors understood that government could not, and should not, solve every problem. They understood that there are instances when the gains in security from government action are not worth the added constraints on our freedom. But they also understood that the danger of too much government is matched by the perils of too little; that without the leavening hand of wise policy, markets can crash, monopolies can stifle competition, and the vulnerable can be exploited. And they knew that when any government measure, no matter how carefully crafted or beneficial, is subject to scorn; when any efforts to help people in need are attacked as un-American; when facts and reason are thrown overboard and only timidity passes for wisdom; and we can no longer even engage in a civil conversation with each other over the things that truly matter — that at that point we don't merely lose our capacity to solve big challenges. We lose something essential about ourselves.
Our forefathers would be entirely appalled by all this. Our forefathers made passionate defenses of liberty in the face of British Tyranny that would seem entirely benign by modern American standards. A 2% excise tax? A few tariffs & duties? BAH... 40% of the average American's life now is spent working to pay off the government! We are 40% slaves. No Mr. Obama, our forefathers said things like this:

"Government is not reason; it is not eloquent; it is force. Like fire, it is a dangerous servant and a fearful master." - George Washington

"A wise and frugal government, which shall leave men free to regulate their own pursuits of industry and improvement, and shall not take from the mouth of labor the bread it has earned - this is the sum of good government." - Thomas Jefferson


"Any society that would give up a little liberty to gain a little security will deserve neither and lose both." - Benjamin Franklin

Franklin also said; "If passion drives you, let reason hold the reins."

Good advice, all... But as far as I can tell, totally unheeded in modern politics. This speech most certainly not withstanding.
What was true then remains true today. I understand how difficult this health care debate has been. I know that many in this country are deeply skeptical that government is looking out for them. I understand that the politically safe move would be to kick the can further down the road — to defer reform one more year, or one more election, or one more term.

But that's not what the moment calls for. That's not what we came here to do. We did not come to fear the future. We came here to shape it. I still believe we can act even when it's hard. I still believe we can replace acrimony with civility, and gridlock with progress. I still believe we can do great things, and that here and now we will meet history's test.

Because that is who we are. That is our calling. That is our character. Thank you, God bless you, and may God bless the United States of America.

Well... There you have it.

As usual, I find myself pitying that such decent words were wasted on such awful ideas. That's really all there is to say about it.

On a broader note, what Obama and his myriad supporters consistently fails to understand is that resources are not unlimited. If they were, we wouldn't even be having these discussions!

Unless we produce more (a lot more) of the goods in question, health care resources can either go to those who offer something of value in return for them - thereby increasing prosperity overall. OR they can go to those politically anointed few who are the beneficiaries of legislation redirecting those resources without offering acceptable value and backed by jail, fines & guns.

The choice comes down to whether or not you think people should interact with each other based on mutually beneficial trading relationships & voluntary choice, or based on violence.

If this seems reductionist, well... it is. But it's also the root & the philosophical foundation of all decisions we make as human beings about how we deal with each other. The ethical questions are at the root of all of this. Do you believe that all human interaction should be guided by voluntary relationships, or do you believe that we should be able to force people to do what we want when we don't get our way? Do you believe that it's ok to control people's decisions, or do you believe that people should be free to make their own choices and be responsible enough to live with the consequences? Do you believe that you should put your own money to support causes you believe in, or do you believe that it's ok to force other people to pay for those causes?

I think most Americans would like to think that they would answer all those questions coming down on the side of voluntary action & freedom. And then they'd say "but..." and negate the entire thing based on some anecdote or another... So let's change the terms, talk about the real world and start adopting sound logic, rational arguments & intelligent economics to solve what really amounts to a supply and regulation problem.