Contemplating Health Care Reform

Friday, September 25, 2009

Danger Will Robinson! Economic Danger!

ObamaCare is a looming economic disaster.

It will pile on to the largest post-WWII deficit stimulus in US economic history, creating huge additional tax disincentives to start businesses, and crowding out productive private investment.

Incentives are the gravitational force of economics. Removing incentives stalls economic growth, most often via taxes. Obama’s idea to fund his plan fails miserably, and taxes the largest economic producers:

The House bill proposes to raise the highest personal income tax rate by 5.4 percentage points. This is on top of the Obama administration's plan to raise the top rate by another 4.6 percentage points next year. The combined 10-percentage-point increase raises the top income tax rate to 45%—an economic growth-destroying level not seen since the early 1980s. Sen. Max Baucus (D., Mont.) proposes, instead, to tax some health insurance premiums.

In neither bill do higher taxes finance the proposed additional spending. Should the Medicare savings fail to materialize, as we* believe they will, the spending in either bill will add more than $100 billion per year in perpetuity to the already soaring national debt. [my emphasis – Pub.]

*John F. Cogan, R. Glenn Hubbard, and Daniel Kessler, Doubling Down on a Flawed Insurance Model, WSJ, 9/25/09

Notably, these new taxes start in 2010, a really stupid idea when we're still in an economic recovery, but health insurance full-coverage doesn't begin until 2013, comfortably after the 2012 election. Also note the indefinite expiration “in perpetuity” cost. That's not funded, either.

Barack's economic timing could not be worse: leftover misguided Depression-era, unfunded social welfare programs like Social Security, Medicare and Medicaid are about to step on the baby - boomer demographic landmine, effectively bankrupting them before the inevitable temporary ineffective politically expedient non-fix "fix."

Somehow, President Obama thinks adding to the problem will solve it.

He’ll make it far worse.

Tuesday, September 22, 2009

When is a Tax Not a Tax?

When is a tax not a tax?

Apparently, when President Obama says so.

On the Sunday shows this weekend, Mr. Obama continued his sale of health reform. Among his comments on ABC’s “This Week” program was the statement “For us to say you’ve got to take responsibility to get health insurance is absolutely not a tax increase.”

George Stephanopoulos, to his credit, pressed Mr. Obama on this, looking up the definition of tax in the Merriam-Webster dictionary.

[full exchange available here.]

President Obama seems confused by this health care tax increase, because those who would be required to purchase insurance would receive some benefit in return. But The Wall Street Journal observed, “what doesn't count as a nontax under Mr. Obama's definition? All taxes can be justified in the name of providing some type of service, however wasteful.”

[Obama’s Nontax Tax, WSJ, 9/21/09]

As we (and many others) previously remarked, requiring people to spend their money is absolutely a tax. And because many of the affected people currently pay $0, choosing not to carry health insurance, it is an increase. So if the reform proposal backed by Mr. Obama passes, including mandatory coverage, it will be a tax increase.

Monday, September 21, 2009

Farewell, Free Speech

The debate over health care has taken a frightening new turn. David Henderson of EconLog blogs about the HHS threatening Humana and demanding it stop mailer because its information runs counter to the current administration's narrative on health care reform.
One of the ways that governments try to "win" debates is to make debate by the other side illegal. This is what HHS is doing, at the behest of Senator Baucus.

The HHS threatened to take action against Humana if it didn't stop sending out its mailer.
For years, various commentators have said that Friedrich Hayek, in The Road to Serfdom, and Milton Friedman, in Capitalism and Freedom, exaggerated the dangers to freedom of speech from government control. But also for years, drug companies have feared criticizing the FDA because the FDA has so much discretionary control over their economic livelihoods. Now HHS has upped the ante. Will the defenders of freedom of speech step up to defend Humana's rights, as opposed to Humana's statements. How many people will there be who disagree with what Humana said, but who defend (I don't even need "to the death"--I'll settle for a letter and postage stamp) their right to say it?

When we allow the government to exercise its might to strip us of our basic right to speech, to stifle opposition at its whim, then we are in deep trouble. Then, we are on the road from freedom to tyranny. To serfdom.