David Axelrod, the Senior White House Advisor, recently sent out an email meant to calm public outrage and 'dispel myths' about health care reform. In it he quoted President Obama at a recent town hall meeting saying, “Where we do disagree, let's disagree over things that are real, not these wild misrepresentations that bear no resemblance to anything that's actually been proposed.”
Here is my disagreement with the President and his staff and the whole Democratic Party. I object to the President and Legislators enslaving an entire industry, stripping Americans of their rights and livelihood, and putting them at the mercy of the government for survival. This may sound like one of the President's 'wild misrepresentations,' but it is a very real claim and the essence of the legislation that the President is promoting. For evidence I quote Mr. Axelrod's email (material also available here) under the heading "8 ways reform provides security and stability to those with or without coverage".
1. Ends Discrimination for Pre-Existing Conditions: Insurance companies will be prohibited from refusing you coverage because of your medical history.
2. Ends Exorbitant Out-of-Pocket Expenses, Deductibles or Co-Pays: Insurance companies will have to abide by yearly caps on how much they can charge for out-of-pocket expenses.
3. Ends Cost-Sharing for Preventive Care: Insurance companies must fully cover, without charge, regular checkups and tests that help you prevent illness, such as mammograms or eye and foot exams for diabetics.
4. Ends Dropping of Coverage for Seriously Ill: Insurance companies will be prohibited from dropping or watering down insurance coverage for those who become seriously ill.
5. Ends Gender Discrimination: Insurance companies will be prohibited from charging you more because of your gender.
6. Ends Annual or Lifetime Caps on Coverage: Insurance companies will be prevented from placing annual or lifetime caps on the coverage you receive.
7. Extends Coverage for Young Adults: Children would continue to be eligible for family coverage through the age of 26.
8. Guarantees Insurance Renewal: Insurance companies will be required to renew any policy as long as the policyholder pays their premium in full. Insurance companies won't be allowed to refuse renewal because someone became sick.
After years of immersion in liberal philosophy, the above proposals may sound like a good thing. Discrimination for pre-existing conditions may be considered unjust. Incomplete coverage due to chronic illness because of lifetime caps may seem unfair. But let's use regular language to explain what the government is trying to do to the insurance industry. Uncle Sam is telling the men and women who make a living by selling insurance policies the following:
You must sell policies to everyone for the same price, no matter how much money you know you will lose in the process (points 1 and 5). You must bear the full burden of their care to extent that the Legislature deems necessary, irregardless of how much it will cost you (points 2 and 3). No matter how much money you lose on the customer, even if it sends your company to bankruptcy and your family to bread lines, you may not decline them coverage (points 4, 6, and 8). Despite the fact your customers are paying much less for their polices than the actual cost of the medical care, you may not increase their out-of-pocket expenses (point 2). Oh, and you've got to cover their adult children too (point 7).
This is slavery. Slavery is what the legislature is proposing for the insurance industry. Imagine such rules being implemented in any other industry. Imagine, for example, if you had the job of mowing lawns and these regulations were established in the lawn mowing industry: Imagine that you were told that you must mow everyone's lawn for the same price, regardless of how many hours it takes to mow or how big the lawn is. Imagine being told you have to accept every customer that came your way for that price, even if you knew you would lose money on the contract. Imagine being told that you had to mow your customers lawn as often as they wanted without charging them any extra. Imagine being told that not only did these customers had lifetime contracts with you, but so did their children. From here it's easy to imagine quitting the business or shooting yourself in the head.
Americans are intelligent enough to realize that the insurance industry cannot continue to exist under the proposed policies. If a company is not allowed to compensate for increased costs by raising prices, what will happen to it? It will cease to exist. Instead of coverage for all, there will be coverage for none. But of course, that may be the true purpose of the legislation- setting our path for true socialization of the entire health care industry.
President Obama and the opponents of freedom in the Legislature figure that Americans won't stir against such abject tyranny because they are picking on a despised industry. President Obama points out that the insurance industry profits have been 'too high.' Apparently he believes it is the job of the government to make sure we don't make too much money. We all have had beefs with insurance companies, so he and our representatives figure we won't mind if the government takes over their jobs. Here they are wrong.
Health insurance providers have been collectively written off as an evil industry in an effort to dehumanize them. We don't think of the reform bill affecting fellow Americans, but that it will punish a greedy profit-seeking industry. But that industry is privately owned and provides employment for over 400,000 Americans who count on those profits to feed their families. They are no different than Americans in any other industry, all of which are profit-seeking. Why should we expect or allow them to roll over and become a national sacrifice?
We will not allow their sacrifice because we know that freedoms taken away from one group of Americans means a loss of freedom for all Americans. If we begin to sacrifice the unalienable rights of some for our comforts and commodities, then our rights will never be safe again. Once we find ourselves outside of the majority interest, we too will find our rights forfeited for the 'good of society.' And so we will fiercely and passionately fight, since our own God-given liberties are at stake, for the rights of the men and women of the insurance industry. We see all too clearly that if they go down, we may find ourselves next on the chopping block of socialism.
Rusty Scalpel
This blog can be submitted for White House correction at http://www.whitehouse.gov/realitycheck/contact
Showing posts with label price controls. Show all posts
Showing posts with label price controls. Show all posts
Friday, August 14, 2009
Saturday, August 1, 2009
When the Majority of Health Care is Government-Funded
I wish I could say that I believed the Blue Dog Democrats will stand firm on health care reform issues. But I am afraid that the party-line vote in the House Energy and Commerce Committee on Friday night is a preview of what we will see in the final House and Senate votes on health care reform in September.
As I contemplate the bill my heart fills with sorrow. Where are the righteous legislators who should be defending against such a breach of freedom and logic? Have we fallen so far into ignorance and selfishness as to have elected a body who will allow this legislation to pass?
Medicare and Medicaid enrollment already stand at nearly 100 million, about one third of our nation's population. (45 million and 42 million respectively) In many regions (like where I live), Medicare and Medicaid patients already make up the majority of health care visits. With the addition of the government public insurance option and government subsidies of private plans, government control of the health care industry will increase.
As health care providers are painfully aware, the national legislature controls reimbursement rates to physicians for visits from Medicare and Medicaid patients. In perhaps the majority of cases (especially in non-rural designated areas), government reimbursement for care rendered to these patients does not cover the cost of the care. In other words, health care providers lose money every time they see a government patient.
Economically speaking, the legislature has established price controls for over one third of all health care visits. Doctors make up their losses by overcharging their other patients. Thus, patients who pay with cash or through a private insurance plan lose money twice: once when they are overcharged for their visits to compensate for government patients and a second time when their taxes cover the bill for these patients.
We can see that Uncle Sam has already torn a sizable hole in the pocket of self-paying, self-sufficient Americans by forcing them to fund the care of 1/3 of the population. How much more will he siphon from their bank accounts with the addition of the government public insurance option and subsidies to pay for the insurance of millions of more Americans?
We can see that additional government funding of health care will be a major problem. The problem is made much worse when we consider other goodies (check out this link) that have been included in the House Version of the Bill. This bill, laced with measures that strip freedom and human dignity and provisions for future federal power grabs, is a collection of sophisticated price controls. As we have discussed in the past and well understand, such measures must fail, regardless of their sophistication.
I cannot emphasize enough how disastrous the bill will be if passed. American health care survives today even with the existing burden of heavy price control. But the bill is too much. It will not "fix" health care. It will cause the health care industry to grind to a halt, necessitating further government takeover. Please let your legislators know about your feelings on this issue.
Rusty Scalpel
As I contemplate the bill my heart fills with sorrow. Where are the righteous legislators who should be defending against such a breach of freedom and logic? Have we fallen so far into ignorance and selfishness as to have elected a body who will allow this legislation to pass?
Medicare and Medicaid enrollment already stand at nearly 100 million, about one third of our nation's population. (45 million and 42 million respectively) In many regions (like where I live), Medicare and Medicaid patients already make up the majority of health care visits. With the addition of the government public insurance option and government subsidies of private plans, government control of the health care industry will increase.
As health care providers are painfully aware, the national legislature controls reimbursement rates to physicians for visits from Medicare and Medicaid patients. In perhaps the majority of cases (especially in non-rural designated areas), government reimbursement for care rendered to these patients does not cover the cost of the care. In other words, health care providers lose money every time they see a government patient.
Economically speaking, the legislature has established price controls for over one third of all health care visits. Doctors make up their losses by overcharging their other patients. Thus, patients who pay with cash or through a private insurance plan lose money twice: once when they are overcharged for their visits to compensate for government patients and a second time when their taxes cover the bill for these patients.
We can see that Uncle Sam has already torn a sizable hole in the pocket of self-paying, self-sufficient Americans by forcing them to fund the care of 1/3 of the population. How much more will he siphon from their bank accounts with the addition of the government public insurance option and subsidies to pay for the insurance of millions of more Americans?
We can see that additional government funding of health care will be a major problem. The problem is made much worse when we consider other goodies (check out this link) that have been included in the House Version of the Bill. This bill, laced with measures that strip freedom and human dignity and provisions for future federal power grabs, is a collection of sophisticated price controls. As we have discussed in the past and well understand, such measures must fail, regardless of their sophistication.
I cannot emphasize enough how disastrous the bill will be if passed. American health care survives today even with the existing burden of heavy price control. But the bill is too much. It will not "fix" health care. It will cause the health care industry to grind to a halt, necessitating further government takeover. Please let your legislators know about your feelings on this issue.
Rusty Scalpel
Saturday, July 4, 2009
Price Controls, Medical Shortage, and Apples
In the face of rising health care prices, price control may appear a reasonable means to keep health care accessible to the masses. If health care is becoming too expensive, why not lock in prices to a rate that will insure that everyone gets the care that they need? To answer the question, let's apply it to a field that appears much more simple and economically fundamental. Let's apply it to apple selling.
Suppose that a late frost killed the blossoms of the apple trees of North America. By late summer, the shortage really starts to show as prices triple what they were in previous years. We understand why prices are high because we remember the supply and demand curves taught us in high school economics courses. The curves really work in the real world. Apple supply has fallen and demand has remained the same. There is a relative shortage of apples and price goes up.
Let's suppose the Secretary of Agriculture declares an apple state of emergency and appeals to Congress for help. The poor who depend on apples for survival are going hungry. The rich who can afford high prices are hording apples for themselves. Congress must recognize that a disaster is at hand and take stringent measures. Congress responds to the national crisis by establishing price controls in the apple industry. By law, apples can not sell above a given price. Problem solved and constituents appeased.
We, with our rudimentary understanding of supply and demand, can anticipate what effect the new law will have on the apple shortage. The past high price of apples had ensured that they stayed stocked in supermarkets. They were available so that those who really needed them got them. As Congress stomps down the price, consumers rush to stores to buy apples. The precious few apples are squandered on ordinary uses. The produce section of grocery stores are emptied and there are no more apples to replace those sold. The prices that kept apples available are now gone and we have a real shortage on our hands.
Empty shelves are evidence enough that demand for apples is greater than available supply. In a free economy, this would push up the price of apples and encourage suppliers to produce more of them. But in our economy, Congress has set the price of apples. It cannot rise. Suppliers had very few to sell in the first place and selling at an artificially low price, they cannot make up their losses and many of them go out of business.
What's more, Congress did not realize that the international trading partners of the United States were shipping apples to our apple-starved country even as the price control was being passed. They had seen the high prices and realized that they could make a profit by selling their apples here. Had those apples arrived, supply would have increased to meet demand and the prices of apples would have fallen. However, when news got out that had Congress passed the price control bill, those apple-laden ships turned around and returned to their own countries without selling a single apple. With price controls in place, it was no longer worth it to sell their apples here.
After the first year of price controls, many apple growers are unable to stay in the market. They leave the business and further decreased the available supply. Those still in the market still face the price control. They are unable to invest in their apple crop as they would other years because they know they will have to sell low. They try to cut production costs to make up for their low selling price. They skimp on fertilizers and pesticides. As a result, it is a crop of puny, wormy apples that hit stores that summer.
It is plain to see that without price controls, the apple market would have soon recovered. The high prices would have rationed the use of apples to the most important uses. The prices would have helped apple growers survive a hard year to be able to grow in the next. The high prices would have ensured that quality apples continue to be grown (with a variety of lower-quality apples available at lower prices). What's more, the high prices would have attracted additional suppliers who would have ended the shortage of supply and brought down the price.
The lessons learned from price controls in the apple market apply to all free markets, even the supposedly impossible-to-understand medical market. As with all other goods and services, the price of health care is determined by the balance of supply and demand. If supply is high compared to demand, prices drop to increase demand for the product. If supply is is low relative to demand, high prices ensue which dictate a natural rationing of the the product. It is reserved for the most urgent purposes and a true shortage never occurs.
Just as in the apple business, the imposition of price controls in the medical market will cause an increase in demand. Artificial low prices will ensure that available medical care is "used up" instead of being reserved for the most important purposes. Here a real shortage will occur (think of the stories of 7 month waits to use an MRI in Canada).
Just like in the apple business, the imposition of price controls will decrease available supply. It will make the delivery of health care services financially unattractive, if not impossible for many providers. They will drop out of business and the shortage will worsen. Remaining available services will drop in quality. What's more, medical providers who would otherwise be willing to come to the rescue for financial motives will no longer have any incentive to do so. The care they would provide and the resulting price relief will never come.
It is interesting to note that government programs that provide "free care" to patients have many of the same effects as price controls. They lead to unbridled consumption of available health care resources by enrolled patients. Reimbursement for these services is a price control- reimbursement rates are set by Congress. These artificially low prices discourage medical care suppliers from providing services and further aggravate the medical "shortage." I would be fascinated to see a study demonstrating how much of the "high" price of health care for privately-paying citizens can be directly attributed to federal aid programs.
We live in a time of rising prices and decreased medical availability. Our legislators may be tempted to consider price-control as a means to improve access to medical care. But we know that price controls will cause true shortages. A free economy regulates itself, increasing supply to meet demand to ensure access to care by all paying customers. The solution to high prices is high prices.
Rusty Scalpel
Suppose that a late frost killed the blossoms of the apple trees of North America. By late summer, the shortage really starts to show as prices triple what they were in previous years. We understand why prices are high because we remember the supply and demand curves taught us in high school economics courses. The curves really work in the real world. Apple supply has fallen and demand has remained the same. There is a relative shortage of apples and price goes up.
Let's suppose the Secretary of Agriculture declares an apple state of emergency and appeals to Congress for help. The poor who depend on apples for survival are going hungry. The rich who can afford high prices are hording apples for themselves. Congress must recognize that a disaster is at hand and take stringent measures. Congress responds to the national crisis by establishing price controls in the apple industry. By law, apples can not sell above a given price. Problem solved and constituents appeased.
We, with our rudimentary understanding of supply and demand, can anticipate what effect the new law will have on the apple shortage. The past high price of apples had ensured that they stayed stocked in supermarkets. They were available so that those who really needed them got them. As Congress stomps down the price, consumers rush to stores to buy apples. The precious few apples are squandered on ordinary uses. The produce section of grocery stores are emptied and there are no more apples to replace those sold. The prices that kept apples available are now gone and we have a real shortage on our hands.
Empty shelves are evidence enough that demand for apples is greater than available supply. In a free economy, this would push up the price of apples and encourage suppliers to produce more of them. But in our economy, Congress has set the price of apples. It cannot rise. Suppliers had very few to sell in the first place and selling at an artificially low price, they cannot make up their losses and many of them go out of business.
What's more, Congress did not realize that the international trading partners of the United States were shipping apples to our apple-starved country even as the price control was being passed. They had seen the high prices and realized that they could make a profit by selling their apples here. Had those apples arrived, supply would have increased to meet demand and the prices of apples would have fallen. However, when news got out that had Congress passed the price control bill, those apple-laden ships turned around and returned to their own countries without selling a single apple. With price controls in place, it was no longer worth it to sell their apples here.
After the first year of price controls, many apple growers are unable to stay in the market. They leave the business and further decreased the available supply. Those still in the market still face the price control. They are unable to invest in their apple crop as they would other years because they know they will have to sell low. They try to cut production costs to make up for their low selling price. They skimp on fertilizers and pesticides. As a result, it is a crop of puny, wormy apples that hit stores that summer.
It is plain to see that without price controls, the apple market would have soon recovered. The high prices would have rationed the use of apples to the most important uses. The prices would have helped apple growers survive a hard year to be able to grow in the next. The high prices would have ensured that quality apples continue to be grown (with a variety of lower-quality apples available at lower prices). What's more, the high prices would have attracted additional suppliers who would have ended the shortage of supply and brought down the price.
The lessons learned from price controls in the apple market apply to all free markets, even the supposedly impossible-to-understand medical market. As with all other goods and services, the price of health care is determined by the balance of supply and demand. If supply is high compared to demand, prices drop to increase demand for the product. If supply is is low relative to demand, high prices ensue which dictate a natural rationing of the the product. It is reserved for the most urgent purposes and a true shortage never occurs.
Just as in the apple business, the imposition of price controls in the medical market will cause an increase in demand. Artificial low prices will ensure that available medical care is "used up" instead of being reserved for the most important purposes. Here a real shortage will occur (think of the stories of 7 month waits to use an MRI in Canada).
Just like in the apple business, the imposition of price controls will decrease available supply. It will make the delivery of health care services financially unattractive, if not impossible for many providers. They will drop out of business and the shortage will worsen. Remaining available services will drop in quality. What's more, medical providers who would otherwise be willing to come to the rescue for financial motives will no longer have any incentive to do so. The care they would provide and the resulting price relief will never come.
It is interesting to note that government programs that provide "free care" to patients have many of the same effects as price controls. They lead to unbridled consumption of available health care resources by enrolled patients. Reimbursement for these services is a price control- reimbursement rates are set by Congress. These artificially low prices discourage medical care suppliers from providing services and further aggravate the medical "shortage." I would be fascinated to see a study demonstrating how much of the "high" price of health care for privately-paying citizens can be directly attributed to federal aid programs.
We live in a time of rising prices and decreased medical availability. Our legislators may be tempted to consider price-control as a means to improve access to medical care. But we know that price controls will cause true shortages. A free economy regulates itself, increasing supply to meet demand to ensure access to care by all paying customers. The solution to high prices is high prices.
Rusty Scalpel
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