My healthcare response to my liberal friend as we debate the legislation

Am going to focus my response just on the health care bill. Its not a bill anymore it’s the law. I believe the Obama administrations priority on healthcare has been completely misplaced. The focus for the past year should have been on jobs. Bob Herbert, columnist for the NY times and certainly no conservative, wrote an excellent column about this March 9th. “The Obama administration and Democrats in general are in trouble because they are not urgently and effectively addressing the issue (unemployment) that most Americans want them to: the frightening economic insecurity that has put a chokehold on millions of American families. “ (and not wanting to repeat the entire article here would urge all to read) The effective unemployment rate still hovers around 17%. Caterpillar and AT&T have both done an analysis of the cost of HC to their companies. 150M after tax for Caterpillar, 1B in charges for AT&T. For these two companies it means that additional Cat and AT&T employees will either lose their jobs or have their jobs sent overseas. And what about the rest of the fortune 500 much less small business. Pelosi said the HC bill would almost immediately create (hope she meant private sector) 400K jobs. I have seen other projections that say the HC bill will not create US jobs but will cost 700,000 US jobs. For the sake of the US, on this one, I hope Pelosi is right. I do not feel this administration has effectively recognized and understood the significance of the unemployment problem. In fact I don’t think there is anyone at the top of the administration that understands creating private sector jobs in a global economy. If the dems get an election pounding this fall it will be because of jobs and the state of the economy not healthcare and the swing groups will be independents and seniors.


Lets move on to the healthcare financial model that I called the big lie. Your first sign is that the model is based on 10 years of collecting taxes for effectively 6 years of benefits. The second sign is the medicare mandates for the states. Again the NYT on Sat March 27th had a good article on the dilemma this creates for the states. In particular, California which is already close to bankruptcy will over the years be hit with massive new Medicaid outlays which are unaccounted for in the CBO model. Your third sign is this legislation creates 159 new agencies, commissions and bureaus. (plus 16K new IRS agents) Even if you somehow believe these will be value adds to health care delivery the complexity of putting these in place on time and on budget with quality is mind boggling. The fourth sign is the administrative compliance costs (and it will be billions) that will be absorbed by the private sector and individuals. These are never accounted for in a govt financial model. For example the Caterpillar and AT&T numbers will include this burden. The fifth sign is experiential. Name one government entitlement program that has ever reduced cost over its life. Basically, it is counter intuitive to believe this new HC law is revenue neutral or will reduce costs. And since you quoted Biden so will I, the 159 new government entities will create one gigantic fXXKing mess. ("If you have ten thousand regulations you destroy all respect for the law." Winston Churchill).

One last point on the financials. The California delegation (Pelosi, Harman, Feinstein, Boxer, Waxman, et al) are the leaders of the dem party in California and leaders in the HC push. Dem party in California has been in charge of the legislature for 30 or 40 years. And California is close to bankruptcy. How does one kill the goose that laid the golden egg?? Traditionally one sixth of the US economy. (Actual13.2% unemployment rate in CA in Jan, effective was higher) Ask them because they did it. Then move onto the City of Detroit. Now there is recognition of the ability of democrats to govern.

Moving back to the 159 new government entities and the number new federal agencies to be created. You are right we do not have a public option. What we do have is the creation of a massive new bureaucracy to directly control the insurance companies and health care delivery. I wonder what if any analysis has been done to determine the value add of each new federal job to health care delivery. I wonder if it will ever be done. What we do know for certain is that if a bureaucracy is ever put in place it will always spend vast amounts of energy justifying itself and attempting to expand its reach. And I consider the 16K new IRS agents to be reflective of the intimidation factor in this law. Exactly why do we need these when this country has a high degree of voluntary tax compliance. Its interesting that Waxman is already demanding hearings and requesting internal documents from Cat and AT&T on their cost projections. Intimidation, you bet. Do I think Waxman is clueless about the details of this legislation? Yes. You and I both know that major corporations have been all over this legislation. They wouldn’t have gone public without doing extensive homework. But Congress passed a law that many members didn’t read with a financial model that many members didn’t understand.

This bill is now law in a time when this country is running massive deficits. For the first time this year social security will take in less money than it pays out. Virtually every state has revenue shortfalls and budget problems. I believe Missouri’s revenue projection is 1B short of the money required for the budget. Last Friday, CNBC said the most recent deficit projection for the decade is now 8 trillion dollars worse than in 2008. Much like the unemployment rate, this is a catastrophe for every American. The best thing we can do for each other is improve the economy. Yet Healthcare mandated 14 new taxes (one article I read said the largest tax increase in US history) including payroll taxes on a barely recovering economy. And the legislation itself didn’t do the simplest of things to save hundreds of thousands of Americans money. Dorgan of North Dakota introduced an amendment to allow for the importation of drugs and it was voted down. And the stench of the special deals gives new meaning to slopping the hogs. In the end what can make this bill work is heavy focus on improving the economy, no special deals, everybody in, reasonable regulation, and a relentless focus on cost take out and process improvement in the entire healthcare landscape.

But then I am attempting to argue like this law is actually about healthcare versus income redistribution, government control, taking care of dem special interests (ie government employee unions, lawyers), a government power grab, and the first step to getting a public option. (and the dems make laws for the masses and want out clauses for themselves) NYT had a good recent article on this (wealth inequality). Income redistribution is one of the driving forces behind any Obama administration legislation. In any case, we now have to live with this healthcare bill. The near term chances of repeal are slim and none. The real question is will anyone really attempt to make improvements to this legislation that should be made.

I predict the American public will react negatively as the details of the bill become known. The devil is in the details and the American public will recognize the devil. This will be particularly true of seniors. We will have to see what this means in November. If the economy and unemployment rates haven’t improved dems are toast regardless of HC.

Finally, combining the HC bill spending with the current and projected federal deficits can mean only one thing with the dems in power: new taxes. Besides letting the Bush tax cuts expire I believe you will hear the dems call for something like a VAT tax. When you want European style safety nets you will get European style taxation.