This is what Andrew Breitbart warned us about and fought so courageously against. The lies of the left to advance their agenda. Do we roll over, or do we take up the torch and continue the fight? Click to read more
insurance
What do you do when you can’t run on your record? If you watch the Democrats you will find out. The answer is to manufacture bogus issues out of thin air and try to anger and scare people into voting against dismal Democrat policies.
Judging by the two mail pieces I just received from my congressman, Tim Bishop, it looks like he has settled on his reelection strategy. After all, he doesn’t want to run on his record (ObamaCare, bailouts, Stimulus, trillions in deficit spending); with the demise of earmarks he can’t say he’s bringing home the bacon; since he is facing a re-match in his reelection bid, using the same smear tactics this time around will be harder; so let’s scare the bejeezus out of the seniors.
Newt Gingrich may have just killed his presidential bid in less than a week after announcing it. Aside from his support of ethanol subsidies, the old commercial sitting on the couch with Nancy Pelosi, he tops it off by attacking Paul Ryan’s budget that was approved by all but four Republican members of the House of Representatives.
He says the Ryan plan is too radical. Compared to what? ObamaCare?
While Medicare savings under the Democrats’ health care law and pending proposals would come mainly from reduced federal payments to doctors, hospitals and insurance companies, the budget put forth by House Republicans would cut spending by turning Medicare into a system of vouchers for future beneficiaries to buy private insurance, but in amounts that would not keep pace with the projected inflation of health costs.
The Democrats’ plan is to pay doctors, hospitals, and insurance companies less. How does that work in the real world? Doctors will refuse to accept more Medicare patients as will hospitals. So Medicare recipients may have coverage, but won’t have a doctor to serve them. You cannot bring down the cost of medical care by government fiat.
Ryan’s plan actually brings the free market into play by putting the decision making in the hands of the consumer. Of course, the Democrats say that amount Ryan proposes will not keep up with the rising costs of medical care. Aren’t these the same people who said if we did not spend nearly a trillion on the stimulus, unemployment would rise to 9%, wheras if we did, it would go no higher than 8%?
Paul Ryan showed the courage to tackle entitlements and with a credible plan. It may not be perfect, but it is a solid start. The Democrats’ “plan” is just more politbureau control from Washington dictating to the rest of us their failed solutions. It’s time for a change.
As for Newt, he can go back to the think tank, and re-think some of his positions.
That’s my opinion; I’d like to know yours. Please comment below.
(This is the last of a series of articles focusing on topics presented at the Cato Policy Perspectives 2011 conference held at New York’s Waldorf Astoria hotel on Friday, April 8, 2011)
“What a difference a year makes” is short assessment of ObamaCare presented by Michael Cannon of the Cato Institute. “It cannot be fixed, it has to be repealed,” was his blunt conclusion.
As long as you are not Rip Van Winkle you should know by now that as Nancy Pelosi famously said, “We have to pass the bill, to find out what is in it.” Well, we’re finding out. We found out that it was true ObamaCare does double count $500 billion in savings, there are thousands of organizations asking for waivers from the program, and the individual mandate has been struck down by several courts.
When President Obama and his team stood before their supporters and introduced ObamaCare you could almost hear them sing in unison the Carly Simon song, “Nobody does it better…”. They were going to bring us the health care we had been waiting for. Magically covering every soul in America whether they wanted it or not. If they did not, the government would be just like granny used to be, “Open wide, this won’t hurt a bit.” Come to think of it, was that granny or… never mind.
httpvh://www.youtube.com/watch?v=3DB-hJVLVh0&hd=1
Kirsten Gillibrand and Joe DioGuardi battle it out in a televised debate. Here are some of the highlights.
Kirsten Gillibrand was elected to Congress as a relatively conservative Democrat. She received a grade of “A” from the National Rifle Association and she was counted among the Blue Dog Democrats. After Hillary Clinton became Secretary of State, Gillibrand was appointed to Clinton’s vacant senate seat. Since joining the senate she has changed her positions 180 degrees. The National Rifle Association now gives her a grade of “F”. She now votes lockstep with Harry Reid.
Joe DioGuardi is a Certified Public Accountant who has previously served in Congress. His position is focused on the fiscal issues we currently face and his objective is to go to Washington and approach it like an accountant to get their fiscal house in order.
Here are their key positions:
- Gillibrand supports ObamaCare, DioGuardi thinks ObamaCare should be repealed and we should start over, beginning with tort reform
- Gillibrand supports a public option and appears to support taxpayer funding of abortions
- Gillibrand says she is strongly opposed to outsourcing but voted for the GM bailout after which GM increased offshore production
- Gillibrand denies that she or Andrew Cuomo had anything at all to do with the housing bubble.
Senator Gillibrand is running from her record as fast as her legs will carry her. Although she does deserve credit for admitting she supported ObamaCare although she would be hard pressed to deny it. She thinks that ObamaCare is just swell, though, and the only thing to continue working on is those big, bad, insurance companies that have the temerity to raise premiums, something that conservatives said would happen from the beginning.
An in depth article in the New York Times titled, “Lapses Found in Oversight of Failsafe Device on Oil Rig,” covers at length the problems surrounding the technology and methods employed to prevent the disaster that we see every day on our television screens, newspapers, and the Internet. It also points to the nearly complete lack of oversight and enforcement by the federal government to protect us. Politicians like to write legislation and put flowery titles on the same and gather for the cameras for signing ceremonies, but when it comes to the heavy lifting of enforcing the laws put in place they often fall down on the job.
When disaster strikes the typical Washington reaction is to add more regulations that eventually become so complex and contradictory that compliance becomes nearly impossible (e.g., Internal Revenue Code). In the case of the oil spill in the Gulf the article points out that studies were conducted in 2003, seven years ago, on failure points to prevent the situation we are living with today, but no requirements to put them in place or test them were instituted.
The article focuses on a device called a blind shear, whose purpose is, in the event of an accident like what happened on the Deepwater Horizon, to activate a pair of shear blades to cut the pipe that rises from the well and seal the well shut. The reliability of single blind shears has only proved to be about 46%. With this empirical data, new wells are installing two such devices for redundancy and backup. Such a recommendation was made to the Materials Management Service (the government agency regulating drilling) in 2001, nine years ago, but the MMS took no actions on the recommendation. In 2003, the MMS received a recommendation that would require the necessary underwater robots and testing of emergency backup systems, but again the MMS, demurred. The practice has been that the MMS simply took the drilling industries word that they were taking steps to prevent problems.
In 2003, the Deepwater Horizon rig has a problem in a storm that caused the rig to break away from the well it was drilling, the blind shear worked perfectly in that case giving the company a false sense of confidence in the technology. What happened next is revealing:
The following year, BP opted to remove a layer of redundancy from the blowout preventer. It asked Transocean to replace one of the blowout preventer’s secondary rams with a “test ram” — a device that would save BP money by reducing the time it took to conduct certain well tests. In a joint letter, BP and Transocean executives confirmed that BP was aware that the change “will reduce the built-in redundancy” and raise Transocean’s “risk profile.” – New York Times, 20 June 2010, pA1
Since the MMS did not require two blowout preventers, BP was in the clear to remove one. Also, consider the term “risk profile,” and think of this in terms of a free market where insurance companies played a role. If you increased the risk profile and didn’t want to have your policy canceled in its entirety for hiding that fact, the insurance company would no doubt increase BP premiums for the increased “risk profile.” Since this effort was a cost saving measure, having to pay more in insurance might have changed the equation such that BP would leave things as they were with two blowout preventers. But the government encouraged deep water drilling, the government put a cap on the amount of damages that a drilling company would have to pay that created a moral hazard, the government ignored recommendations to required greater safety measures and the government was lax in enforcing those regulations it had in place, instead relying on taking the industry’s word that all was well.
On a separate issue regarding the cleanup, in an article in the Wall Street Journal titled, “The President Does a Jones Act,” it states that in the two weeks following the disaster, thirteen countries contacted our government offering assistance with the clean up. Our government turned the offers down. As the State Department put it:
“While there is no need right now that the U.S. cannot meet, the U.S. Coast Guard is assessing these offers of assistance to see if there will be something which we will need in the near future.” One month later, many of these offers are still outstanding. – Wall Street Journal, 19 June 2010
The Belgians reportedly have the ships and technology that could clean up the mess in the Gulf in one-third the time than is currently estimated. All it requires is suspending the Jones Act of 1920. Bush did it almost immediately in the wake of Hurricane Katrina so that foreign ships could come in and provide temporary housing for the hurricane victims. Officials in the Obama Administration weakly respond that “no one has asked them yet,” to suspend the Jones Act. What are they waiting for? Doesn’t Obama and everyone in his administration to hit the Sunday talk shows tell us that they has been on top of this since day one? One plausible reason for the hesitation is that it might offend the maritime unions.
We are continually told by this administration that we need more government expertise telling us how to run our lives. Surrender your liberties, we’ll take care of you. I don’t think so. What do you think?
As President Obama used his first Oval Office address to push for another massive government takeover of our economy in the energy sector, it is time to debunk the myth regarding regulation versus free markets. The Statists like to claim that the financial crisis, the lack of health care, and the disaster in the Gulf are all proof that free markets are evil and we need the benevolent care of our federal government to keep us safe and warm.
Regulation
Let’s focus on the current crisis, the oil spill in the Gulf of Mexico. Here is the government’s role in this mess:
- Government has banned drilling on land (ANWR) and in shallow water of the coasts of California, Florida, the East Coast, while not only forcing oil companies to go into deeper water, but providing incentives to do so.
- The same agency of the federal government (MMS) is charged with both collecting royalties from the oil companies and for levying fines on them for violations of regulations.
- While drilling the Deepwater Horizon well, BP asked the government for several waivers of regulations, and the waivers were granted.
- After the spill started, Governor Bobby Jindal of Louisiana wanted to build sand berms to block the oil from reaching the cost, but the federal government wanted to study the problem and would not allow him to proceed.
- Foreign nations such as Norway, Holland, Belgium and Japan offered to provide ships to help clean up the oil in the Gulf, but U.S. law, the Jones Act of 1920, does not allow them to operate in U.S. waters. When asked why the government didn’t just suspend the Jones Act for this emergency, the government’s lead agent on the ground, Thad Allen, said, “Nobody’s come to me to ask for a waiver.” When Carol Browner, Obama’s energy advisor was asked why the administration did not lift the Jones Act said, “Nobody has asked us for a waiver.” Who are they waiting for to ask them?
- The government placed a cap on the amount of damages that a company would be responsible to pay at $75 million, which creates a moral hazard. That is, if I can make billions extracting oil and my out of pocket cost if I screw it up is $75 million, I’ll take shortcuts all the way.
- BP has said they are responsible for the oil spill, they will pay to clean it up, they will pay all legitimate claims resulting from it, even waiving the $75 million cap that the law allows. So why do our leaders use language like, keeping their boot on the neck of BP and knowing whose ass to kick? This is starting to cause a backlash in the U.K. which has resulted in comments such as, “The rest of the world is fed up with the parasitic attitude of the U.S.”
- The government starts making statements that they want BP not to pay a dividend to its shareholders or to put $20 billion into an escrow fund that the government will oversee and spend as they see fit and even to the point of putting BP into receivership. Who is our President, Hugo Chavez?
Free Markets
Let’s look at what would happen in a truly free market:
- Anyone wishing to drill for oil would be able to reap the profits from the well, but would also have full responsibility for the costs of any and all damages or cleanup. This may lead to less drilling if the venture is too risky, but that’s how markets work; it is a balance of risk and return.
- To help offset some of the risk, insurance companies could make a market in providing insurance for a disaster, but rest assured the insurance company would have their personnel inspecting the rigs to make sure all necessary risks were minimized and if not, jacking up the premiums or cancelling the insurance.
- Government regulation would be simpler in terms of setting standards of what quality of materials could be used, what redundancy must be in place to provide for any failures of primary systems, what levels of emergency equipment must be in place and what contingency plans must be prepared and tested to make sure they work. If an oil company doesn’t not have adequate insurance, drilling must stop until they do. If the oil company is out of compliance with a major safety issue, drilling must stop until it is corrected.
- When going into new areas such as deep water, the technologies to be used should be tested and independently verified to make sure they work as designed under the new conditions, and the insurance industry would be very much interested in participating in such testing, to minimize their risk.
- In the event of an accident, the government should lend all possible assistance to the oil company to stop the leak and clear the red tape for a cleanup effort and discuss responsibilities after the disaster is under control.
The end result would be more cautious companies because they could be wiped out if they cut corners. Insurance companies would have a second set of eyes making sure that things were done properly, because they make money when nothing goes wrong and are indifferent to whether any oil is recovered or not as long as the premiums are paid. The government would be out of the business of micromanaging the industry; providing incentives and penalties under the same agency; having key personal asking “mother, may I” before taking any steps, and we wouldn’t need a dozen agencies with overlapping responsibility trying to take control.
Free markets have incentives that do work. What is often complained about is the myth of a free market where the government has placed perverse incentives on companies and then act surprised when said companies follow the incentives. Their response is always more regulation with more perverse incentives and the cycle repeats. More government is not the answer, it is the problem.
This is from today’s New York Times:
“Fearing that health insurance premiums may shoot up in the next few years, Senate Democrats laid a foundation on Tuesday for federal regulation of rates, four weeks after President Obama signed a law intended to rein in soaring health costs.”
With the ink barely dry on ObamaCare, Democrats in Congress are scrambling to keep their masterpiece from unraveling. As I have pointed out repeatedly, there is nothing in the ObamaCare plan that helps reduce the cost of delivering health care. It is all about controlling what doctors, medical service providers, and insurance companies are paid. All the underlying pressures on health costs (tort reform, 3rd party payer, etc.) are still in place.
“We Have to Pass the Bill to Know What’s In It”
Nancy Pelosi’s stunning but famous words are coming into play. Let’s see what has the senators panicked.
- To hoodwink the American people that this abomination is cost effective, ObamaCare warms up by hitting us with four years of taxes before the expensive benefits come into play.
- Every American will be required to purchase health insurance or pay a penalty. That penalty will initially be $95 per adult in 2014, rising to $695 per adult in 2016 and $2,085 for a family. This money will be collected by the IRS, not by insurance companies
- Americans cannot be denied coverage for an existing condition
So here’s the scenario. If you compare the cost of the penalty of $2,085 for a family vs. the cost of insurance for a family of $10,000, coupled with the inability of insurance companies to deny coverage for pre-existing conditions, healthy people will start dropping insurance coverage left and right. Why not? On the way to the hospital, you can call an insurance company and say you want to be covered for the pains in your chest and you cannot be denied. So insurance companies will only have sick people as clients. With only sick people that they constantly have to pay claims on, their only course of action if they want to stay in business is to raise premiums on all those sick people. If they start doing it now, they may be able to raise them less than if they wait until 2016.
So the insurance companies are acting rationally to this mess the Democrats dragged across the finish line and now they are shocked, SHOCKED, that they should do this.
Grace-Marie Turner, president of the Galen Institute, a research center that advocates free-market health policies, said the Democrats’ proposal was unlikely to succeed in lowering insurance costs.
“Capping premiums without recognizing the forces that are driving up costs would be like tightening the lid on a pressure cooker while the heat is being turned up,” Mrs. Turner said.
The Democratic fix is to have a new bureaucracy that will provide a check on unjustified premiums. I think you can look at this in one of two ways, both plausible. The Democrats were stupid enough to believe, as they typically do, that Americans don’t act rationally to their government policies. It’s also why they don’t understand that when they raise taxes they never collect as much money as they thought, and when taxes are cut they can’t believe how much money flows into the Treasury due to economic growth. The second scenario is this new commission will cap premiums to the point of driving private insurance companies out of business and then the Democrats will say, “Geez, we didn’t want to do this, but I guess we have to put in place a public option that, by the way, will be the only option.”
Senator Lamar Alexander of Tennessee, the No. 3 Republican in the Senate, said: “Health insurance companies’ profits for one year equal about two days of health care spending in the United States. So even if we were to take away all the profits of the so-called greedy insurance companies, that would still leave 363 days a year when health care costs are expanding at a rate our country cannot afford.”
Now that I think about it, it is probably the second scenario that is more likely, that is, force the public option. Your government is about to swallow up another big chunk of the economy if we don’t turn them out in November.
