Wednesday, August 12, 2009

Health Care

Health Care Bill Problems.

There are very serious questions in respect to the Health Care bill undergoing the legislative process.

The bill should have a couple of major targets which ought to be adoptable to both democrats and republicans. First and foremost the parties should recognize that there are serious shortcomings in the countries financing of medical programs. Fundamentally, any sensible evaluation indicates that the cost of medical coverage is increasing at a rate that cannot be afforded. Secondly, is recognition that health care coverage needs to be extended to a segment of the uninsured now presently uncovered and desirous of coverage. Increasing the coverage to a segment of the population estimated to be around 40,000,000 people could exacerbate a serious economic problem into a disaster to our medical system. This doesn’t mean we shouldn’t make a run at doing as much as we can. But, a problem of this magnitude needs debate and input from all quarters.

The most serious and I regard as a despicable legislative shortcoming is that the republicans are totally excluded from the legislative process. This means that the attitudes and opinions of nearly half the U.S. population is ignored.

I will enumerate several of the issues that demand bipartisan agreement and the lack thereof make the health plan bill a worthless exercise.

  1. The health care financial problem has been growing and growing for many years and deserves a non panic solution process. The artificial requirement for instant enactment with complete and arbitrary one sided construction is an obvious political ploy by one group to arrogantly impose their beliefs.
  2. It is unbelievable that the bill seems to exclude the legislature and other governmental entities in its provisions. They get to keep their outstanding coverage if they choose. Is this not a suspicious consideration, as to the quality of the plans coverage?
  3. I think it is generally accepted that the American heath care system is the best in the world. There may be others that address some the shortcomings of the U.S. system. The old saying “If it ain’t broke don’t fix it” seems applicable here. A careful evaluation of each deficiency in our system and an enactment of improvements on an issue by issue approach is far more likely to be successful that the meat cleaver that is being advanced.
  4. I am a 73 year old retired person, my wife is 70. We have health care coverage that we regard as satisfactory. We have a life and death fear that the plan will seriously impact us. No where is it carefully explained what are the likely odds of our treatment being negatively impacted. It has been advanced that present health care insurance providers will face a choice of paying a tax penalty instead of continuing their present coverage. And this will be an attractive cost decision for them. If this is so the claim that we will all be allowed to keep the coverage we have is ridiculous. The choice will be the present corporate providers not us. And we know how they will decide, certainly not in our best interest.
  5. The unspoken but almost certain reason for this .by many politicians is to reduce coverage to the elderly to make financial burden of the Medicaid and Medicare payments lower. The solution here is to work on the economy to grow fast and provide additional wealth to afford the costs.
  6. The plan seems to negatively impact what is paid to doctors, nurses and health provider insurers. It does not take a rocket scientist to conclude that this will reduce the number of doctors, nurses and quality insurers. We need to stimulate the growth of these people. How can you possibly provide coverage for more people with less resources to provide them. This is insanity!
  7. I guess I’m a bigot because I wish to exclude many illegal immigrants from U.S. provided free health care. There are of course probably exceptions to this position. But, they should be discussed. Illegal immigrants convicted of a felony would head the list as far as I’m concerned. A person who brought to the U.S. at age two illegally and who is now grown as the mother of 5 U.S. citizen children should be covered. Discuss please I beg of you.
  8. I confess to being a republican very close to the middle. I am really an independent. I oppose abortions. But, I support a woman’s right to choose. I preferred Sara over McCain and Obama both (chuckle). As a republican, I should rejoice in this unilateral approach to a disastrous bill. Probably in 2 or 3 years at most, the warts and shortcomings of this bill will result in a backlash of monumental proportions against the democrats. Almost every man and woman over 65 will vote republican. Maybe I shouldn’t let any democrats see this. It just might get them to read the bill and think better.
  9. The cost of this bill will be disastrous. There is a list of things that we all want that are good and proper. But, life requires reflection and prioritization. We really can only have what we can afford. But, if we debate the choices reasonable people can pick the most effective things to obtain.
  10. There are probably a hundred maybe lots more bad provisions in this vast incomprehensible bill. Every lobbyist on the planet has hidden provisions tucked into the bill.
  11. What should we do? First focus totally on repairing our bruised and battered economy. When its become robust again in maybe a year of doing the right things, we can have broken this monstrous bill into 10 or 20 understandable bills which can be debated in that period. We can pass the best of them.
  12. For example, in my view, the best thing we can do is focus on the abuses and thievery in the present system. I’ve seen it reported that maybe a hundred billion could be saved here. That’s a good start. Also, when the legal costs of on the job accidents skyrocketed, workman’s compensation was created to limit compensation to a fair and reasonable award. The same could be done with malpractice insurance. I happen to be a retired lawyer that was admitted to New York, Connecticut and California. The trial lawyers will probably lynch me if they get to me.
  13. The solution to our health system financial problem is to handle our economics sensibly. The amount of money we pay to OPEC, if retained in the U.S. would get us out of this mess, but that is another story. We must foster Clean Coal, Nuclear, Solar, Wind, and Conservation to make us completely energy independent. Allowing the Jihadists to have indirect control over my medical needs is anathema

Saturday, August 1, 2009

Macroeconomics and Microeconomics in a Capitalistic Society

Both the Republicans and the Democrats are partially right and wrong on their interpretation and application of key economic factors. The problem is there are 3 major Keynsian factors that have profound impact on the economies health. They are Interest Rates, Tax Rates and Government Spending. There are other economic activities that can enhance or minimize there influence. Lord John Maynard Keynes a preeminent economist in the mid twentieth century espoused the following, somewhat simplified. He said that lower interest rates stimulated the growth of the economy and higher interest rates depressed the growth. He said that lower tax rates stimulated the growth of the economy and higher tax rates depressed economic growth. And, finally the most controversial, government spending. Higher government spending ( often termed deficit spending ) stimulates the growth of the economy and Lowered government spending ( often termed surplus ) depresses the economy’s growth.

Each of these factors have very confusing aspects. The reason is that sometimes Interest Rates should be raised and sometimes they should be lowered. The same holds true for Tax Rates and Government spending.

First, I choose to use the term Redutio Ad Absurdem (means reduce to absurdity). It means propose extremes that are so wide most everyone knows what should be done. The two major extremes are rampant inflation and serious recession or depression.

Rampant inflation occurs when interest rates are very low, tax rates are very low and government spending is too high. Serious recession occurs when interest rates are too high, tax rates are too high and spending is too low. The closest we have had in recent years was Jimmy Carters “Stagflation”. Ronald Reagan spun that around by dramatically lowering tax rates, and increasing spending with massive defense spending and he persuaded Volker’s federal reserves 16 or more interest rates to be reduced.

So the big dilemma here is what should theses factors be targeted at. The truth is that there is a band of cooperative levels of each of these factors where the economy will grow at a sustainable rate. Needless to stay there is considerable disagreement amongst economic thinkers as to what that should be. In my opinion there is a set of economic conditions that could exist that would permit a sustainable growth rate of 4.5%. This is a high figure and will only be achievable if we do a lot of things right and to be totally honest getting all that right is extremely hard to accomplish. A more reasonable and still hard to maintain rate is around 3%. I will later define what needs to be, to permit a sustainable of say 4.5%. All I can say about that is solving many of our economic maladies would occur if we at least chose that growth rate as an optimum target.

Lets diverge and explain how these factors work. Tax rates are the most controversial and the most misunderstood. Fundamentally within a band, difficult to define precisely because it varies when the other factors vary. If you reduce taxes, the government in fact realizes more revenue. And if you raise tax rates the government realizes less revenue. This has occurred many times, so to me not accepting this is the major flaw in reasoning of those supporting raising tax rates to obtain more revenue. Why is that? Lower tax rates seems to stimulate small business growth, which results in more employment. Since more people are working, more people are paying taxes. And the more money they spend, then even more people become employed serving them. And since they are not now on the unemployment, the government spends less on this expense, leaving them with more cash to apply to worthy expenditures.

Interest rates can have a massive impact on economic growth. Let’s just do some simple arithmetic. Assume a $100,000 mortgage at 7% versus 5%. The difference of 2% on $100,000 is $2,000 per year or $167 per month. That amount of money on every mortgage is extremely stimulative to the economy.