Obamacare – The COVID-19 Virus of U.S. Healthcare Insurance

It tricks its way in and infects the vital organs.

Obamacare promised to reduce the cost and improve the availability of health care services in the U.S. without reducing the quality, generally considered the world’s best. By traditional metrics, e.g., the health of the American public, the cost, and the share of national resources devoted to healthcare, Obamacare is a total bust. As with any government program targeted to a single metric, a higher percentage of the population has insurance, whatever the cost or coverage, but even that has been declining since the enforcement mechanism, a grossly excessive individual mandate, was eliminated.

Obamacare made some households feel more financially secure, others less so. But it’s an illusion from a broader perspective as federal, state, and local finances are virtually all unsustainable. The federal government spent about $1.5 trillion on health care in 2019 and states about $300 billion. Handing out stacks of newly printed $100 bills to assist households with medical bills would have been a much cheaper and simpler solution.

The current Rube Goldberg monstrosity reflects the attempt to achieve the universal coverage and uniform quality of national health systems while maintaining private medical services and private health insurers under the misleading banner of “insuring the uninsured.” Many analysts believed Obamacare was purposely designed as a Rube Goldberg contraption intended to end with a “bang,” paving the way for “single payer” or “Medicare for all” – the current progressive goal. But like virtually all failed government programs, Obamacare whimpers on.

To repeal and replace would admit the obvious. But the “single payer” and “Medicare for all” proposals aren’t an actuarial insurance fix, merely a progressive federal tax. Their perceived merit is eliminating insurance company administrative costs (and administration), profits and actuarial premiums with political premiums – payroll taxes that contribute to total Treasury tax revenue. Politicizing the premiums will further politicize provider payments, two steps toward nationalized healthcare, the likely goal of many proponents.

Socialized national healthcare may be preferable to it. But politicians deny and mis-represent the European national healthcare systems’ inferior medical performance and deny the totalitarian necessity even while issuing multiple mandates and threats under Obamacare. The original separation of the private and public healthcare systems in the U.S. – the original “public option” – is another, arguably better option.

The Winding Road to the Obamacare Dead End

In a competitive market economy health expenses would largely be paid from personal precautionary savings or medical insurance, the premiums sufficient to cover actuarial claims according to the “law of large numbers” for unpredictable claims, with insurance reserves for worse than predicted experience, e.g., due to a pandemic. All insurance requires a degree of “assurance” to mitigate avoidable claims, a “moral hazard that the insured will take greater risks.

The U.S. health insurance industry in the early twentieth century followed the path of the savings bank industry of the prior century. Individual not for profit (mutual) firms (Blue Cross and Blue Shield) started appearing during the Great Depression for employees (initially teachers). The big expansion came when during WW II, FDR, no stranger to fascist business methods, capped wages but not benefits creating a loophole for un-taxed employer health insurance benefits that persists today, an advantage over individual plans paid mostly with after tax income.

Health care needs of the poor were addressed by a variety of public, civic and religious institutions. During the first half of the 20th century, driven largely by public health concerns, municipal hospitals provided health services but with independent fee for service doctors, whereas housing policies followed the fascist Wehrmacht model, paying private developers and builders to construct public rental housing.

Public healthcare, like public housing, was definitely below average. But the World Health Organization (WHO) Constitution of 1946 declared “enjoyment of the highest attainable standard of health”—defined as “a state of complete physical, mental and social well-being and not merely the absence of disease or infirmity”—“is one of the fundamental rights of every human being,” reaffirmed in the 2020 Democratic Party Platform.

Similarly, in market economies housing structures are considered a capital investment financed with debt or equity, owned or rented. But the United Nations identifies adequate affordable housing and secure tenure as a “fundamental human right.”These assertions followed the destruction of WW II and rise of European “democratic socialism,” but were foreshadowed by FDR’s New Deal policies during the Great Depression and his Second Bill of Rights in 1944.

European national Healthcare systems reflected this uniformity, with one standard for all under Britain’s system, whereas the French system allowed about 10% of the population to opt for higher quality care with private insurance.

The U.S. went in the opposite direction in the 1950s and 1960s. Federal expenditures for housing and health services were increasingly directly subsidized with federal progressive taxation, less intrusive to the private sector than prior methods or European systems, albeit more so than subsidizing income directly. The advent of federal Medicaid and Medicare subsidized insurance led to the decline of public hospitals (as did the movie “One Flew Over the Cuckoo’s Nest.” ) But the Budget Act of 1974 making expenditures more transparent shifted lobbying efforts to less transparent tax subsidies and to regulation by the Administrative State.

So progressives targeted finance and insurance, where the subsidies are often opaque. The objective became achieving a socialist incidence of both cost and delivery of health services by subsidizing and manipulating the private insurance market. The problem with FDR’s freely granting of multiple “rights” including healthcare and housing during this “fireside chat” was that they were not his to dispense. Progressive “rights” are nothing more than meretricious socialist promises implemented with a totalitarian stick that violate the unalienable rights in America’s Declaration of Independence that are the cornerstone of a market system, the reason for multiple conflicting and confused Supreme Court decisions regarding Obamacare.

The Clinton Administration first proposed Hillarycare, the precursor to Obamacare, in 1993. When that failed, it turned to housing, where it was too successful. These latent New Deal viruses later turned deadly. Some three and a half years ago I argued that the two legislative centerpieces of the Obama Administration, the “Dodd-Frank Act” (the Wall Street Bank Bailout) and the “Affordable Care Act” (Obamacare) had the same fatal flaw. Politicians basically intervened in finance and insurance markets to provide equality of home ownership and medical care across all incomes without transparently paying the price. The effects spread like a deadly virus, distorting all the incentives, checks and balances that kept the private system afloat, replaced by universal one-size-fits-all mandates. The sub-prime lending debacle, like the Wehrmacht, lasted a decade, the current age of Obamacare (see Appendix).

The Building of a Rube Goldberg Contraption: Doubling Down on “Pre-Existing Distortions”

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Paint it Black

Well, if this isn’t a good reason for a grad student passionately interested in English literature – meaning the study of classic literature written in English (starting with Beowulf and running all the way to Tom Stoppard) to avoid the U of Chicago and embrace a program of self-education then I don’t know what is. It’s akin to being invited to a grand, lavish multi-course banquet and then only allowed a single tiny plate of hors d oeuvres. Which you must consume, and praise lavishly, and not even consider looking over at the main course. Or for another comparison – be fascinated by American pop music all through the 20th century, and then only be permitted to specialize in Motown. Because … reasons. Anyone fascinated by Chaucer or Tin Pan Alley is just plain out of luck, because of systemic racism, and overwhelming whiteness of the culture and the stain of slavery, et cetera, which is usually the reason given. Frankly, I think it’s just momentarily fashionable to Paint everything Black.

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Stopping the Insanity

On a recent fishing trip with a group of politically conservative friends, we found ourselves lamenting the societal insanity that has evolved around the covid-19 virus. The question was, how long will this massive over-reaction to a low-octane viral illness continue? Half of the group admitted to continuing to wear their masks when going into stores, simply to avoid being hassled. This struck me as rather sheep-like behavior. Most citizens are used to listening to, and following the advice of their local officials, a natural pattern of behavior which helps maintain the general order of society. This virus, which due to its occult origin, originally appeared potentially disastrous, is in reality, very pedestrian in its lethality. It has however, succeeded in bringing out the inner tyrant in many state and local officials. The demand that masks be worn, despite the fact that they are little more than a talisman against an invisible boogey man, has created a degree of compliance in the population unlike anything since the legitimate threats of polio or the Spanish flu.

It is a universal truth that tyrants never cede their power willingly. For most of us, ‘sic semper tyrannis’ is not a good solution if one wishes to continue the course of one’s life. One might rob the tyrant of his, but it’s likely to be accomplished at the cost of one’s own life or liberty. Simple civil disobedience has been shown to be effective when many participate, but it too is often injurious to one’s liberty.

Many years ago, I worked for one of the giant American corporations that inhaled management philosophies like hits from a bong. In the mind of upper management, each new inhalation was sure to provide magic visions to cure all the ills of the business. I took to calling it ‘panacea du jour’. One hot philosophy in the early 1980s was called ‘leadership by example’. In practice, it consisted of putting hard hats on the managers and making them pretend to be workers. Someone exhaled, and the vision was gone. But the core concept will work for us in our present circumstance.

When you go into a store or other enclosed area that demands you wear a mask, do not. Simply go in, go about your business not as if you were dancing naked in public, rather you are treating the mask-less condition as entirely normal (as it should be). Be courteous, be pleasant and smile. I even sing along to whatever background music is being played in the background. You will get a lot of ugly looks from the karens around you. But when they glower, smile back. You will notice something that you may not have anticipated. Some of the masked individuals will look at you with obvious jealousy. For those few who also choose to not wear a mask, give them a wink and thumbs up. You have now assumed the mantle of leadership. Will you be in trouble? Nope. You have a trump card, HIPAA. The tyrants of the 1990s planted the seeds of their own destruction by making it illegal to demand details of your medical condition. On the off chance of a real confrontation, you have two magic words, ‘medical exemption’. A medical exemption means that you don’t have to wear a mask. The nature of your medical condition cannot be demanded by local authorities. HIPAA is over-riding federal law. States may in fact add to HIPAA law provisions, but cannot subtract from it in a way that forces you to reveal information.

If you choose a leadership position as outlined here, there are no absolute guarantees of personal safety from rogue tyrants or the fists of the ultra-aggrieved. But the tiny tyrants’ taste of dictatorial powers has intoxicated them and they will not swear off its sweet succor without our help.

“We Live Here Together” – Comments?

Executive Order on Combating Race & Sex Stereotyping

A taste

Context: “From the battlefield of Gettysburg to the bus boycott in Montgomery and the Selma-to-Montgomery Marches, heroic Americans have valiantly risked their lives to ensure that their children would grow up in a Nation living out its creed, expressed in the Declaration of Independence.”

Descriptions of critical race theory workshops subsidized by the government.

Its position:

But training like that discussed above perpetuates racial stereotypes and division and can use subtle coercive pressure to ensure conformity of viewpoint. Such ideas may be fashionable in the academy, but they have no place in programs and activities supported by Federal taxpayer dollars. Research also suggests that blame-focused diversity training reinforces biases and decreases opportunities for minorities.

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COVID 19:The Value of Lives Saved versus the Cost of the Shutdown

Economics is all about trade offs. In response to COVID 19 politicians have made these decisions. Ironically, the politician most directly responsible for well over 10,000 deaths, New York Governor Andrew Cuomo, has argued that human life is’”priceless”’ But politicians always put lives at risk and imply a value. Had a national health care system existed as progressives like Gov Cuomo support, his defense may well have been that those deaths were justified as a matter of national health care policy.

The practical pending question is who should get the vaccine first. Ezekiel Emanuel, Obama Care designer and Biden COVID adviser, would give the over 65 group, which accounts for 80% of U.S. deaths, the lowest priority for the vaccine based on their age, whereas the CDC recommends the opposite based on risk.

Productivity Finances Health Care

In a purely private system, the population would save for lifetime health care expense directly or through insurance companies and decide to what extent they would do so. Individual “value of life” determinations would depend on income and wealth, both reflecting individual productivity. In a fully socialized system, all lives would be valued equally based on the country’s ability to pay, reflecting average national productivity, I.e., still subject to aggregate fiscal and actuarial constraints. Whereas about 10% of households in the French National Health System top it up with private insurance and care, the British NIH system operates more like the Soviet System, with the political elite leaving the country for private care beyond the standard.

Market based systems require a large life cycle accumulation of capital, for retirement and medical expenses, both back-ended and virtually indistinguishable. Socialized systems could – and arguably should – do the same.The U.S. has a hybrid (many would say Rube Goldberg) health care system, with Medicare, like Social Security, entirely pay-as-you-go with a faux Trust Fund. Social Security has relied on general tax revenues for over a decade and Medicare will as well in about four years.

National health care systems are funded entirely by progressive taxation. In the US. payroll taxes and progressive income taxes pay for about half of all insurance costs: Medicaid (20%) covers the poor, Medicare (15%) the elderly, Obama Care the working population (16%), the military (5%) and almost all the rest receive tax-subsidized employer insurance. Government also provides partial explicit unemployment insurance for lost productivity paid by taxing workers, with an occasional top-off in a pandemic.

Society benefits from the additional wealth accumulation of funded systems in the form of enhanced national productivity and economic growth, expanding the tax base. This allows the wealthy to opt out, but progressive politicians may find the increased longevity “unfair” and tax that wealth away, implicitly an advanced estate tax. Liquidating wealth has the same macro-consequence as increasing government debt to finance current health care, reducing future well being and potential tax revenues.

The Value of Life: to Whom?

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