The Market Ticker - Health Reform

Alan Grayson Tossed Out A Hardball

nospam@example.com (Karl Denninger) — Fri, 12 Mar 2010 14:20:00 -0500

Congressman Alan Grayson, D-Fla., today introduced a bill (H.R. 4789) which would give the option to buy into Medicare to every citizen of the United States. The “Public Option Act,” also known as the “Medicare You Can Buy Into Act,” would open up the Medicare network to anyone who can pay for it.

http://grayson.house.gov/News/DocumentSingle.aspx?DocumentID=175363#main

Ding ding ding ding.

If you're going to mandate that everyone have health insurance, then you have to provide a public option.

That is the only way you're going to keep people from being raped.

I still don't think this is Constitutional, by the way, but this much is clear: Medicare's premiums haven't been going up at 20, 30 or 40% a year.

Depending on the premium, I'm interested, and would likely dump my private insurance (which I have to pay for in cash) immediately were this to become law.

If we can't have the sort of four-point plan I've put forward in the past, this is the next best option.

Any Questions On Health Care's True Intent?

nospam@example.com (Karl Denninger) — Mon, 22 Feb 2010 10:14:00 -0500

This ought to tell you exactly what you need to know:

Note the inverted text (which I did; that's not Drudge.)

"Health Reform" was never about actually providing health care to anyone. It has been and is about trying to find a way to obtain more tax revenue to offset the huge budget deficits that President Obama is running and intents to try to continue to run, and he appears to be well-aware that there is no possibility that the market will accept the sort of Treasury Debt sales necessary to do so in the free market.

See, I told you so (again.)

You will get taxed now and health care improvements never. Believe it.

Health "Reform": Here We Go Again

nospam@example.com (Karl Denninger) — Sun, 21 Feb 2010 20:15:00 -0500

From the WSJ:

Liberals are making a bid to restore the "public option," ObamaCare's most controversial and destructive inspiration. Some 18 Senators as we went to press—led by Colorado's Michael Bennet and growing to include New York's Chuck Schumer on Thursday—have endorsed slipping this government-run insurance entitlement in the reconciliation process that would let Democrats abuse Senate rules to hustle ObamaCare into law with 50 votes. Vehemence among House progressives is also at a fever pitch, though it always is.

What, specifically, is wrong with a "public option?"

The Journal does us the favor of admitting the problem:

Rational Democrats killed the public option because it is hated by the insurers that will be driven out of business by its subsidy advantage, by the doctors and hospitals that will be forced to accept its below-market rates, and by the taxpayers who will get stuck with the bill.

Ah.

So you mean Medicare and Medicaid currently bill at below-market rates, and by doing so constitute a cost-shifting subsidy that is then forced upon both privately insured people and those with no insurance (but who do have money), who get to at gunpoint pick up the bill for those who are on these government programs?

So given this fact, where, may I ask, are the Republican "free market" calls for ending this practice? For making it unlawful to bill two different people differing amounts for the same procedure, drug, or device, with the difference in cost predicated only on who pays the bill?

I thought Republicans were "free market" people? That they believed in a fair, free, competitive marketplace?

How can you have such a thing when you have a bunch of government thugs that force private parties to pick up the cost of subsidized care not through generalized taxes, which are quite visible and against which the people can vote, but instead by co-opting so-called "private insurers" who then take the heat for policies that are forced down their throats by these very same government goons?

There are only two solutions to this health care mess:

The plan I put forward previously, or something darn similar to it. Barring differential billing predicated only on who's cutting the checks, forcing all "insurance" companies to accept anyone who wishes to buy into their plan under the same terms as they offer to anyone else, barring as a matter of federal law cost-shifting for those who show up without insurance and real tort reform. Do those four things, plus drop all protections against "reimportation" (in other words, if you buy it, it's yours, and you may sell it to anyone you wish) and a huge change in the health care cost picture would instantaneously occur.
A true single-payer system. Vastly inferior to the above, because such a system rations by definition, and provides little or no incentive for people to manage their own costs and health. This is, in essence, the destruction of the capitalist free-market health system.

But we haven't had a capitalist, free-market health system in this country since the 1960s and early 70s. The day when you last wrote a check directly to your doctor for care as a routine part of your visit was when it died.

The day when you have a "prescription drug card" and paid $5, $10 or $20 for your drug, no matter whether it cost $25 or $250 if bought in cash, was the day it died.

The day when you got charged through cost-shifting of Granny's care to you, her drug cost to you, and the illegal alien who shot himself in the foot with a nail gun - is the day our capitalist health system died.

We cannot recover our capitalist health system without addressing these points. The four-point plan, along with federal legal strictures against anyone trying to bar someone's "first sale" rights, will restore our capitalist health system.

If we can't do that, and I suspect we cannot because we refuse to hold politicians to account for being bribed wholesale while we all demand something for nothing, then the only rational alternative remaining available to us is to ditch the current financial rape room party run by the "medical establishment" and expose the entire mess as a line item on the federal budget, so at least we know exactly how badly we're all being bent over the table each and every year.

That has the potential to lead to people being voted out of office somewhere down the road.

I don't like where Obama's proposals are going in this regard, but if there is to be a move toward forced "insurance" for everyone then there must be the choice for individuals to buy into a public option where the prices are known and so are the standards.

Without this we will continue to be serially violated by the health insurance and care companies, who have ramped up prices by a double-digit percentage - doubling them on average every five years - while claimed "inflation" has been in the low single-digit percentages.

Those are the only two choices folks, and if I can't get a capitalist system then I want and will support a Canadian one, with all its faults.

Why "Health Reform" Is Doomed To Fail

nospam@example.com (Karl Denninger) — Wed, 10 Feb 2010 09:17:00 -0500

"See, I told you so"

"Reports of premium increases up to 39% are deeply troubling," Rep. Henry A. Waxman (D-Beverly Hills), who chairs the energy committee, said in a statement. "At a time when millions of Americans are struggling to keep their health insurance, we need to know what possible justification there could be for increases of this magnitude."

The justifications are simple:

We in America are forced to pay for all of the medical innovation in the world, as a direct and proximate consequence of the acts of the douchebags in Congress who have (1) banned reimportation of drugs and devices, and (2) exempted drug and device makers from anti-trust laws that would otherwise make their conduct felonious in The United States.
We in America are threatened with forced enrollment in medical plans that some of us may not want, and the insurance companies, armed with their anti-trust exemptions, are exploiting this to cram these sorts of increases down our throats. Oh yeah, Waxman, you're one of those clownfaces that threatened us, aren't you?
These same companies are using their ability to refuse coverage now to prevent people from moving to other, lower-cost plans. If you've ever been sick, if you've ever had a medical condition, you're denied - and forced to either drop all coverage or pay the outrageous premium increases.
Businesses are not exempt from this. They're getting rammed too. This results in more layoffs, less hiring, and lower or no raises, since you're "getting it already."

There are only two solutions: either a single-payer system ala Canada or what I have written about in the past, such as my four-point plan. Add to that four-point plan a fifth point - any person who buys something can re-sell it at any price they want, including across international boundaries. That is, no more back-door payments to every other nation of the world in which we fund all of the R&D for medical innovation. If they want it, they can help pay for it.

Both of these paths forward, of course, neuter the insurance companies - in the case of the single-payer system they simply cease to exist.

Waxman is a douche. He has no more desire to fix this than he does to give up the bribes, er, "campaign contributions", from those very same interests.

WAKE UP AMERICA!

Tuesday, January 19th, A Seminal Moment

nospam@example.com (Karl Denninger) — Mon, 18 Jan 2010 09:37:00 -0500

Do we get Health Care "reform" that will:

Tax you now, provide better health care never?
Continue the linkage of health care and your employment, forcing millions of Americans to keep jobs they don't want and not take jobs they do?
Force you to purchase a health policy from a private company, a sop to big business (and a likely unconstitutional mandate)?
Fail to keep one of the Democrats' promises and indeed result in a worse outcome than if we had done nothing at all about the Health Care mess?

If you like this path, and you live in Massachusetts, vote Democrat on Tuesday.

If you reject this path - Democrat or Republican - then you must not vote Democrat on Tuesday.

Democrats want a public health care option, for good reason. If we are going to be forced to have health insurance then we should all be in the same pool. You, I, Congress and The President. We should all have skin in the same game. But The Democrats did not assemble a bill that will provide what they claim they want. Instead they took bribes and put forward a bill that will in fact destroy both public and privately-funded health care.

Republicans believe this is a broken model. They're right - it is. But they have not put forward a true market model, as I called for in September, nor do they have any intent of addressing the problem either, as they are being bribed too!

The truth is that this bill before the House and Senate will destroy health care in The United States. It will force you to spend 25% of your pretax income on "insurance" that will cover less than you get now. Many will opt to pay the fine instead, which will in turn cause the insolvency of the system, at which point the health care providers and insurers will clamor for bailouts just as the banks did when they made unjustified and unrealistic projections based on fraud and lost their bets.

On January 19th, one state in America will choose the path for health care in this nation. The choice is, unfortunately, not between a good system and a bad system, but rather between forcing the politicians to scrap a catastrophe, leaving what we have now in place in the meantime, or hurtling toward a full-on collapse of private insurance and the best health care in the world.

A vote for Coakley is a vote for that collapse.

Choose - and vote - wisely.

The True Intent of Health "Reform"

nospam@example.com (Karl Denninger) — Fri, 25 Dec 2009 15:39:00 -0500

There are two interesting articles in the WSJ relating to the "Health Reform" bill, one by Karl Rove and the second coming from The Heritage Foundation, a conservative think tank.

Let's first talk about Karl Rove:

Taxes start going up now, Medicare cuts begin after next fall's election, and spending for subsidies commences in five years. The price tag is not the first decade's announced $871 billion cost: It is $2.4 trillion. That's the cost of the tax credits in insurance exchanges, and the additional Medicaid costs the reform generates, over the first 10 years it's fully up and running, according to Congressional Budget Office numbers compiled by Republicans on the Senate Finance Committee.

Take the partisanship out and what you have is the above, basically. On this Mr. Rove is exactly correct.

The tax increases come now, Medicare cuts come after the next election but in point of fact the spending will come never.

I'll explain after I provide some of the second article:

The purpose of this compulsory contract, coupled with the arbitrary price ratios and controls, is to require many people to buy artificially high-priced policies to subsidize coverage for others as well as an industry saddled with other government costs and regulations. Congress lawfully could enact a general tax to pay for these subsidies or it could create a tax credit for those who buy health insurance, but that would require Congress to "pay for" or budget for the subsidies in a conventional manner. The sponsors of the current bills are attempting, through the personal mandate, to keep the transfers entirely off budget or--through the gimmick of unconstitutional taxes or penalties they dub "shared responsibility payments"--make these transfers appear to be revenue-enhancing.

This "personal responsibility" provision of the legislation, more accurately known as the "individual mandate" because it commands all individuals to enter into a contractual relationship with a private insurance company, takes congressional power and control to a striking new level. Its defenders have struggled to justify the mandate by analogizing it to existing federal laws and court decisions, but their efforts do not withstand serious scrutiny. An individual mandate to enter into a contract with or buy a particular product from a private party, with tax penalties to enforce it, is unprecedented-- not just in scope but in kind--and unconstitutional as a matter of first principles and under any reasonable reading of judicial precedents.

Congress has a responsibility, pursuant to the oath of all Senators and Representatives, to determine the constitutionality of its own actions independently of how the Supreme Court has previously ruled or may rule in the future. But it is very unlikely that the Court would extend current constitutional doctrines, or devise new ones, to uphold this new and unprecedented claim of federal power.

Got that second part?

Good, because here's my prediction.

Congress will somehow manage to put these two bills together and come up with something that both Houses of Congress will pass, and Obama will sign it.

The lawsuits will come immediately thereafter.

They will succeed, because there is simply no justification anywhere in The Constitution, nor can one be manufactured, to force someone under pain of federal fine and/or imprisonment to purchase something from a private party simply as a consequence of being alive.

This is so blatantly unconstitutional that nobody in The House or Senate can seriously expect it to stand. Therefore, we must conclude that it is not intended to stand - both House and Senate fully expect that mandate to be struck.

When, not if, it is you will discover the what I have said all along is the truth purpose of this so-called "reform" - a single-payer system.

Here's how it will happen.

Congress will pass and Obama will sign something containing this "individual mandate."
This will generate immediate lawsuits which will begin their way through the system, headed for the United States Supreme Court. That process will take several years. Note that the so-called "benefits" of this reform will also take several years to show up. This is not an accident.
Meanwhile, the taxes begin immediately. This is exactly what happened in the 1930s by the way - taxes were raised right into the maw of an economic recession, and helped turn it into a Depression. Such it will be this time as well.
Young, healthy people will pay the "fines" under protest and refuse to buy coverage (it's cheaper than complying with a $15,000/year mandate to pay the $750/year fine!) and join said lawsuits in Step #2. This will in turn begin to force private companies out of the system (remember, there are also price controls in there!) as adverse selection will not be eliminated as promised.
At some point the courts will strike the individual mandate. Free to not pay the fine or buy insurance and prevented from raising rates adverse selection will collapse the remaining private health insurers.

At this point you have:

Permanently higher taxes (since it is constitutional to tax!)
NO private health insurers left in the market.
The "standards and practices" remaining and impossible to remove (note the super-majority requirements in the bill - intentionally put there to prevent the removal of those standards and practices!)

What comes next? Unable to impose mandatory individual payments to private companies The Government will then have "no choice" but to put in place a Canadian-style system.

For good or bad, you will get both rationing and a tax-funded medical system in The United States. Private override insurance may remain available and you may be able to continue to buy health care for cash, but neither is assured - neither can be done (for the most part) in Canada, as just one example.

I do not believe this outcome will be an accident - indeed, I believe it is the intention of the Obama Administration and The Democrats all along.

Those who are ascribing some sort of partisan "liberalism" motive - that is, a desire to take over 20% of the economy - are wrong. The real desire is to collapse health care spending to around 9-10% of GDP.

Since neither party is willing to have an honest debate and discussion with Americans relating to the amount of care we can afford to provide people, including but not limited to care as we age, for those who are unable to pay for it on their own, and since both parties have been co-opted by the medical device and pharmaceutical industry who have clamored for "more and more" of GDP (while delivering relatively small incremental "benefits" in the form of extending life, albeit at a questionable level of quality), this is what we're going to get.

Mark this Ticker and come back to it in three or five years - I'd make a fairly large wager that this is exactly what we will not only get but what is the true intent behind this "bill."

Health Care FARCE Voted Up Last Night

nospam@example.com (Karl Denninger) — Sun, 08 Nov 2009 12:33:00 -0500

Do we live in a Constitutional Republic any longer?

The 16th Amendment made lawful the income tax - that is, a direct tax on Americans.

But nowhere in The Constitution is the power found to force people, under penalty of law (including fines and imprisonment), to pay private parties for services they do not desire to purchase.

Yet that is in the bill passed last night.

Yes, we have Congressfolk - both men and women, and all Democrats (save one Republican) who voted for this.

This sure appears to be blatantly unconstitutional - and, I would argue, those who voted for the bill know it.

If you watched CSPAN yesterday you heard the speeches. All those who rose in favor of the bill talked not about The Constitution and how this bill was a solution to the problems facing America's Health Care System - a system that consumes some 17% of our GDP - but rather it appealed to how individuals with specific circumstances would be helped.

But a desire to help someone is not the test for legislation. All legislation by definition is designed to help someone. The test is whether whatever is being proposed comports with the black-letter requirements of The Constitution, and the even-blacker-letter requirements of the laws of mathematics.

This bill meets neither essential test of all legislation; it instead proposes to destroy our Constitutional system of government.

Yet despite member after member rising last evening in opposition and stating that these mandates were unconstitutional not one rebuttal of that point was made by those in support.

The "Holy Grail" for the so-called "private" insurance businesses is forcing everyone onto one of their plans. This is due to the problem of "adverse selection" - that is, you would not buy insurance until you got sick if it is quite (or very) expensive. The more expensive the insurance gets the worse this problem becomes and the "insurance" ceases to be insurance at all. Remember, "insurance" is a thing you buy to protect against an unlikely outcome - if you're already ill or believe you will become ill the outcome isn't unlikely - it is either probable or known.

Yet the desires and demands of private business do not give license to use The Constitution as toilet paper.

But the extra-constitutional game didn't stop there. Oh no. This 1990 page monstrosity goes much further. It mandates that employers not only cover everyone they hire and pay at least a specific percentage of their premiums (or face a fine) it also mandates that said employer cover all members of that employee's family. While it is unlawful to discriminate against people based on their family status, what do you think is going to happen to salaries across the board to cover the risk of someone showing up for a job interview and having eight kids?

Does Octomom become permanently unemployable - or does every employer in the nation reduce your salary offer now and forever to guard against the possibility of another Octomom showing up for a job interview?

You know the answer here - nobody is going to take the risk of a multi-million dollar discrimination lawsuit. Your salary offer will be reduced, and if you are currently employed, you can forget about raises for a long time.

There are Constitutional solutions to this mess. I have posted about them before. My chronicle of those posts in The Ticker is found here; it encompasses a reasonably small set.

Left un-addressed (intentionally, by the device and drug lobbies) are the reasons we spend so much on health care in this country. Put simply, America pays for the development of every advanced treatment in the world and has for the last 30 years, yet every other nation's citizens get to enjoy those advancements for free.

That's right. The Pharmaceutical and Device industry has managed to get legislation enacted prohibiting the re-importation of devices or drugs sold overseas. These overseas markets demand price controls on the drugs and devices sold there, and get it. We, on the other hand, have a "price at what the market will bear" system.

The result is that the heart stent that is used in Canada costs a tiny fraction of what the same stent costs in The United States even though they are made by the same company.

Normally such distortions are instantly corrected by cross-border arbitrage. That is, if I sell a widget in Canada for (US) $1.00, and for $10.00 here in the United States, someone will order 10,000 of them in Canada and ship them across the border back to the US, driving the price in the United State back down close to the Canadian price.

In general, once I own a thing I have the right to dispose of it as I see fit. Nobody would accept the idea that by purchasing a car I can not then sell it at some later point for whatever price I desire. Nor would they accept this in the price of houses, lawn mowers, life jackets, boats, toothpaste, books or Christmas decorations.

Yet today it is not lawful for me to buy 100,000 doses of Viagra in Canada (where they sell for a fraction of the US price) and then ship them back to the United States. This "unlawfulness" has been artificially created by the drug and device manufacturers, who claim concern for "purity" and "counterfeits" - a red herring and in fact a false claim. There has never been a right to import or sell a counterfeit product; what these manufacturers have managed to prevent is the importation of lawfully-produced and properly labeled drugs and devices made in their own factories!

The fact of the matter is that if the world is to benefit from the innovation of US companies they should pay the same price as everyone else does - including the United States. The solution to this sort of improper and outrageous forced subsidy by the American Consumer and Taxpayer is to remove the laws that bar importation of lawfully-produced and properly-labeled drugs and devices - that is, to enforce the general principle of common law that once I buy a thing to whom I resell it and under what terms is a right that I acquired in exclusivity through my original purchase.

But fixing this distortion - one that costs Americans hundreds of billions of dollars annually - means removing a "special law" that is used by drug and device companies to screw Americans out of that money, and serves to force medical spending to the moon - all for the profit of a few oligarchs in the medical industry.

Also left unaddressed in The House Bill (again, intentionally) are two other factors that serve to together comprise more than half of our spending on medical care. These are:

The fact that 90% of your health care spending happens in the last year of your life. We must have a societal conversation on this issue, and determine what society's responsibility is for that last year. I argue that the answer to that question is in fact zero - we all begin to die the moment we are born, and yet none of us know exactly when the clock will expire in advance. As a consequence a perfect separation at that "last year" is not possible, but there are some realities we can - and must - face. First among them is that when you are in declining health, irrespective of your age, you do not have the right to impose your desire for additional hours, days or months of life on the back of others. You have the absolute right to expend any or all of your own resources in pursuit of that goal, but you have no right to reach into my or anyone else's pocket to do so. There are literally thousands of instances every day across this nation where persons who are in their waning hours or days - persons where the outcome is, within medical certainty - known - are hooked to machines and monitors in hospital beds that cost tens of thousands of dollars a day, simply because they do not have to pay for that last hour out of their own resources. This must end. We are a compassionate nation, but this is not compassion - it is barbarism. When my time comes I should be offered as much pain medication as I desire to take, including a sufficient amount to render me unconscious either in effect or fact - but I should have no right to expend any amount of society's funds beyond that pallative medication and care. While this would not save 90% of the nation's health care expense, it would save 30% or more, and we can do it right now, without any impact whatsoever on treatment and care that has a reasonable chance of resulting in a cure of the patient's condition.
Tort reform. Simply put, we call it "practicing" medicine. There's a reason for that. The law must change, even though this will outrage attorneys and their lobbying interests. A right of suit and recovery must remain for those cases in which gross negligence is shown; we have all heard of cases where the wrong arm or leg is amputated, the perfectly-good eye operated on rendering the patient totally blind, and other similar outrages. No society can or should accept outrageously negligent activity as "the cost of doing business", including ours. But most so-called "malpractice" isn't of that form. It is instead a lawsuit due to a bad outcome - an outcome that was known to be in the realm of possibility by the patient prior to the procedure, or due to an unforeseen risk. Medicine is not a science; it is an art. As an art we must accept that there is always the choice to do nothing and accept whatever outcome God (or Darwin if you prefer) ordains; it is by man's intervention that one attempts to change that natural course of events. Such an attempt will not always be successful. Defensive medicine to avoid the possibility of lawsuit costs hundreds of billions of dollars, all occasioned not by medical necessity but rather by documenting evasion of all reasonably-foreseeable risks - a ridiculously expensive practice for which we all pay. This must end.

If we cannot have a reasonable set of reforms as I have outlined in my "Wake up Washington" Ticker in September then we should instead pass a single-payer system such as exists in Canada, but (unlike Canada) let those who choose pay in cash for "excess services." No, it's not perfect, and yes, it is rationing. But so is what The House passed - they're just hiding it in their 1900+ page mess so you can't easily find it. A Canadian-style system, funded by general revenues, is Constitutional, unlike the outrage passed last night.

Either of those outcomes would produce marked improvements in the system we have now along with driving down costs dramatically - perhaps as much as 50% - from what is spent today.

The House Bill not only fails to address the problem but is an outrageously-broad and, I would argue, an unconstitutional reach into Americans most private parts. The Administration's own spokespeople admit this bill will cost us some 5.5 million jobs - on top of the 8 million we've already lost in the present economic malaise since the peak of employment in the summer of 2007. My "back of the envelope" computations are similar - I come up with 5 million jobs lost with a 20% variance and 95% confidence level - that is, somewhere between 4 and 6 million should be the total. Darn close, given that I'm not privvy to the Administration's facts and figures and am forced to work off published information.

When Pelosi and her gang of thugs took their place behind you they didn't even bother to snap on a glove first.