Archive for June, 2009
In debates on health care, one number seems to pop up repeatedly: the claim that 45 million Americans are uninsured. Proponents of government controlled health care argue that it is immoral to allow approximately 15% of our fellow citizens to be left without health care.
But, there is something that they arent telling you: many (if not most) of those without health care in this country choose to not have health care.
Yes, at least 45 million Americans are not currently insured (according to most studies, but Ill get back to that later), but a closer look at the numbers tells a different story than the one that you have probably been told in the past.
I recently read John C. Goodman’s paper titled “Solving the Problem of the Uninsured,” and although I do not support the same solution that he does, I found his paper to be quite interesting.
Dr. Goodman took a hard look at the numbers and facts about the uninsured in this country and found some surprising information.
He wrote that the lack of health insurance can be compared to an experience like unemployment–many people experience it at one time or another, but it rarely is a long term problem. For example, “75% of uninsured spells are over within 12 months. Less than 10% last longer than 2 years.”
Many of the uninsured are actually eligible for government or job related health care, but chose not to that advantage of it: “there are between 10 and 14 million people who are theoretically eligible for Medicaid and SCHIP (for low income families who do not qualify for Medicaid) but do not bother to sign up. This is almost one in every four uninsured persons in the country.”
“Furthermore, in most places people are able to enroll in Medicaid up to 3 months after they receive medical treatment. Because these people can enroll at the drop of a hat, even after they have incurred medical expenses, are they not de facto insured even without the necessity of formal enrollment?”
“A lot of other people are also voluntarily uninsured. For example, about 9 million people (more than one in five of the uninsured) are eligible for employer insurance and decline to enroll even though the employer share of the premium is usually nominal.”
Many of the uninsured in America actually have the money to purchase insurance, but for one reason or another chose not to:
“The largest increase in the number of uninsured in recent years has occurred among higher-income families.”
“Further, over the past decade, the number of uninsured increased by 54% in households earning between $50,000 and $75,000 and by 130% among households earning $75,000 or more. By contrast, in households earning less than $50,000 the number of uninsured decreased approximately 3%.”
“Some information about middle-class families who are voluntarily uninsured is provided by a California survey of uninsured with incomes of more than 200% of poverty. Forty percent owned their own homes and more than half owned a personal computer. Twenty percent worked for an employer that offered health benefits, but half of those declined coverage for which they were eligible. This group was not opposed to insurance in general, however, because 90% had purchased auto, home, or life insurance in the past.”
Now, lets add all of this up: we have 10-14 million who are eligible for Medicaid or SCHIP, but do not enroll, and an additional 9 million that are eligible for benefits at work but do not sign up and we have between 19 and 23 million people in these two situations alone who are eligible for health insurance, but decline (or choose not to sign up for) it.
This takes a huge chunk out of the original 45 million number, bringing it down to a range between 22 and 26 million people who are uninsured and do not have the option to become insured. This is a much smaller number, especially when you remember the above statistics that the vast majority of people who are uninsured are uninsured for less than a year.
But, there are also several reasons to doubt the 45 million number itself. Dr. Goodman’s study cites a study by the CBO which “estimated the actual number of uninsured may be as low as 21 million.” He also cites “another report [which] finds that, even using Census Bureau methods, the 45 million number is about 25% too high, or off by 9 million people.” So, if those studies are correct, we have reduced the number of uninsured to 21-36 million.
And, if (and this is THE BIG IF) those two studies that he cited are correct and the number of uninsured is actually between 21-36 million, then it is safe to say that there is no major “insurance crisis” going on in this country.
Why? Well, at least 19-23 million Americans are eligible for health insurance or coverage but do not take advantage of it. Combining these numbers and the above numbers from the two studies (one of which came from the CBO), we are left with a range of anywhere from -2 million to 13 million uninsured. 13 million might seem like a huge number, but it is only around 4% of our population (and remember 13 million was the maximum). There has got to be a way to take care of this small percentage of Americans that will cost less than President Obama’s $1,000,000,000,000 [$1 trillion] health care initiative.
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The non-partisan Congressional Budget Office recently released a report saying that the President’s healthcare plan would be very costly–the CBO estimated that the plan would cost around $1,000,000,000,000 [$1 trillion] in new debt and would only decrease the percentage of people without health insurance by around 1/3. From the CBO director’s blog: “According to our preliminary assessment, enacting the proposal would result in a net increase in federal budget deficits of about $1.0 trillion over the 2010-2019 period. When fully implemented, about 39 million individuals would obtain coverage through the new insurance exchanges. At the same time, the number of people who had coverage through an employer would decline by about 15 million (or roughly 10 percent), and coverage from other sources would fall by about 8 million, so the net decrease in the number of people uninsured would be about 16 million or 17 million.“
In other words, this plan is extremely expensive and will only accomplish around 1/3 of its goal.
$1,000,000,000,000 [$1 trillion] over 10 years comes out to $100,000,000,000 [$100 billion] in new debt per year from this program. If you divide that up amongst the $304 million people living in this country, the cost of this program in new debt per person per year is $328.95… BUT…
Not everyone pays (ie, the poor) or even files for taxes (ie, children) . According to the IRS, 132,276,000 individual tax returns were filed in 2006. Of these returns, 43,400,000 had no tax liability (and many actually had a negative tax liability). This means that taxes were paid on 88,876,000 tax returns. [Note: i used the 2006 IRS numbers because I was unable to find a percentage of returns that didnt pay taxes in 2007]
Now, if we take the $100,000,000,000 [$100 billion] and divide it up among the 88,876,000 income tax returns that paid taxes, we find that those Americans who do pay taxes will be forced to pay an average of $1125.16 per person per year to finance President Obama’s healthcare plan. Remember, this is an average–many Americans will be forced to pay much more than this.
And remember, this $1125.16 per taxpayer will only cover about 1/3 of those Americans who do not currently have health insurance. Covering the other 2/3 will undoubtedly be much more expensive.
As a taxpayer, are you OK with the government telling you that you HAVE TO pay $1125.16 per year to pay for someone else’s healthcare? If not, you need to call or email your representative and tell them that you oppose this plan–before it is too late.
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I have been hearing a lot of talk lately about repudiating our national debt.
Last week, my mom even commented that she thought that we should cancel our debt so that we didnt have to pay back China. No one can deny that my mom is very intelligent. The old phrase “mother knows best” often applies, but in this case, mom is incorrect.
According to the US Treasury department, our national debt is currently $11,379,966,189,575.05 [$11.3+ trillion]. This amounts to over $37,000 per person! But, the above numbers dont paint the whole picture. A while ago, I posted a link to a news story which claimed our “real” national debt totaled $78,800,000,000,000 [$78.8 trillion].
However, Richard Fisher who is President of the Federal Reserve Bank of Dallas recently gave a very interesting interview with the Wall Street Journal. In his interview, he talked about “the very deep hole [our political leaders] have dug in incurring unfunded liabilities of retirement and health-care obligations… [that] we at the Dallas Fed believe total over $99 trillion.” Thats $99,000,000,000,000. But that is just the money for the unfunded liabilities and the costs of retirement and health care that have already been promised. That number includes neither the current national debt, nor does it include the proposals by President Obama and the Democratic members of Congress to expand national healthcare. However, even without including new proposals, the total national debt is astounding to say the least. If you add the Dallas Federal Reserve’s estimation of unfunded liabilities with our current national debt, you reach a total of over $110,000,000,000,000 [$110 trillion]! This amounts to a total debt of over $360,000 for every American citizen!!!
Repudiating the debt probably sounds like a compelling idea. After all, our national debt is massive and will continue to grow, especially as baby boomers start to retire and Social Security and Medicare costs soar while revenues for those programs drop.
[[And by the way, Mr. Fisher far from being a Republican hack who criticizes every move made by Democrats.In fact, Mr. Fisher is a Democrat who served in both the Carter and Clinton Administrations. He was also the Democratic nominee for Senate in 1993 against Kay Bailey Hutchinson.]]
With current liabilities of over $360,000 per person, repudiating the debt may sound like a great idea. Afterall, that is a massive sum for each America to be responsible. In fact, there isnt enough money in the entire world to pay this debt. But, repudiating the debt is a terrible idea that must be opposed.
Yes, China and other foreign nations now own an increasing amount of our national debt. This of course represents a massive national security risk to America (I believe that it is the greatest current threat to our National survival). It is a security risk because the Chinese and other nations can threaten to dump their American debt holdings (making them worthless) unless we comply with their demands. However, repudiating the debt and telling nations like China that we are not going to pay them the money they lent us in good faith may be an even greater risk to our Nation.
First of all, while China is now the largest foreign holder of our national debt, they hold less than 7% of the total debt. Allies like Japan, the United Kingdom, Brazil, European nations, Mexico, India, and Israel also hold significant amounts of our national debt. China’s holdings of our debt represents about 25% of the amount held by foreign governments. Repudiating the debt to spite China would not only hurt China, but would also hurt many of our allies.
These nations could respond by exiting free trade agreements (if we can unilaterally declare agreements null and void, so can they).
The American public actually owns a higher amount of the national debt than do foreign nations. As of January 31st of this year, the American public held 31% of the debt while foreign governments held 29%. Repudiating the debt would adversely effect Americans who purchased government bonds to save for their futures. Remember those savings bonds that your grandmother used to give you when you were a kid? Well, those would be worthless if we repudiated the debt. So would the treasury bonds that many older people have bought to prepare for their retirement.
Another 41% (if you add the numbers up you get a total of 101%–not my fault, these are government numbers) of the national debt is held by the government. For example, the Social Security Administration holds treasury bills for money that it loaned to the Treasury Department. Repudiating this portion of the debt would only mean that it would have to be reissued later when the sectors of the government that loaned money out need it in the future to manage their budgets.
Besides all of this, of the $110,000,000,000,000 [$110 trillion] in total debt and obligation, only about 10% of that represents our current national debt. Even if we repudiated the $11,379,966,189,575.05 [$11.3+ trillion] that we currently owe, we would still be responsible for a national debt of $99,000,000,000,000 [$99 trillion] in the future. But if we repudiated the national debt, we could NEVER ever run a deficit again. No foreign government would be dumb enough to loan money to a nation which had previously declared that its debt no longer existed. That would be the definition of bad banking. No financial advisor could ever recommend US bonds for his clients without being laughed at.
The political and economic costs of repudiating the debt are extremely high. Like it or not, we are stuck with this debt. However, we can think of this as a lesson. If we balance the budget in the future and pay back the debt over the next 30 years (the maximum time a US treasury bond can be issued for) we will have plenty of time to think about the costs of running large deficits for so long. All of the interest on the debt which is paid out should serve as a lesson for future generations of Americans about the importance of living within their means.
Repudiating the debt would make it impossible to pay for the bloated government programs which have already been promised to generations of Americans. Im 100% for balancing the budget. I believe that we should balance our budget and begin to wind down our entitlement and discretionary programs as fast as possible. This debt should be taken care of the right way. In this case, the right way happens to be the hard way: We must oppose new government programs and discretionary spending, we must balance our budget, we must cut taxes to ensure economic growth, and we must pay back our national debt to those who have put their faith in us and loaned us money.
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General Motors declared bankruptcy yesterday morning. This move had been much anticipated and probably didnt surprise anyone.
Presidents Bush and Obama gave General Motors billions of dollars to help it avoid bankruptcy, yet the inevitable still happened. No matter what your stance on bailouts and government interventions are, you probably agree that this money was wasted. If you support bailouts and nationalizations, then you would probably argue that the money was wasted because the government could have and should have) bailed out and taken over GM six months ago. If you are opposed to bailouts and nationalizations, then you would be opposed to any and all government assistance for GM. More money will be wasted on GM in the future.
According to the Washington Post: “During the GM bankruptcy, the United States aims to raise its investment in the company to $50 billion, take a majority stake in it and name most of its directors, giving the government unprecedented control over one of the nation’s largest manufacturers.”
I dont think that you can seriously deny that the United States is no longer a Capitalist Nation. We have now officially morphed into a socialist country. Yesterday was another sad day for Capitalists who again were forced to watch while the government continued to destroy this once great Nation.
President Obama and other supporters of these interventions have promised that they will be temporary. I dont believe this and neither should you. Thomas Sowell says that “nothing is so permanent as a temporary government program.” Historically this has proven again and again to be true. There are still programs in effect from the Great Depression which were said to be temporary at the time. A 3% excise tax on phone use was enacted as a temporary measure in 1898 to help pay for the Spanish-American War. This “temporary” tax lasted 108 years until it was finally ended in 2006.
Government programs, actions, and interventions tend not to end. It is important to oppose them as they happen, while these actions are still fresh in the minds of the public. If the government does not sell its stake in General Motors within the next few years the vast majority of people will cease to care, opposition will subside, and the government will continue to control General Motors forever (or at least for quite a long time).
Even if our government sells its stake in General Motors within the next few years, there will still be a tendency for future administrations to use Presidents Bush and Obama’s actions as precedents for future interventions and nationalizations.
President Obama told NBC’s Brian Williams that the government would be taking a controlling stake in General Motors. He also said that he essentially had no choice but to do so.
But, President Obama did have a choice. A liquidation bankruptcy of GM might have caused temporary stress for the economy, but this stress would have been temporary and would have smoothed out in the long run. Under a liquidation bankruptcy, General Motors would have been broken into pieces and sold off piece by piece to the highest bidder. Every brand name, factory, patent, and all real estate owned by GM would have been sold off. The money recovered from these sales would have gone to pay as much of the money owed to GM bondholders–who to the company in good faith–as possible.
The brand names would have been sold–probably to existing car companies, although they possibly would have been sold to venture capitalists who were looking to start a new car company. The factories would have been sold to new owners (or the same venture capitalists) who would either continue to make cars in them or would refit them for some other kind of production. GM’s patents would have fetched lucrative amounts of money at auction. Purchasing these patents at a discounted auction price could have helped move other automakers years forward in their research and development, saving them billions of dollars. For example, GM was years ahead of the competition in developing fuel cell cars.
The auction process might have been stressful while it was being sorted out, but it would have been an efficient way to deal with General Motors. Instead, our government has pledged to loan GM an additional $50,000,000,000 [$50 billion]. However, GM owes creditors $172,800,000,000 [$172.8 billion], meaning that the government’s invenstment will be unlikely to stop at $50,000,000,000 [$50 billion], just as AIG’s initial $85,000,000,000 [$85 billion] bailout ended up doubling.
You can argue that government control of General Motors will save American jobs, although this argument is tenuous at best. General Motors is losing money for several reasons including: their cars are not up to par with those of Honda, Toyota, Nissan, and Ford, their union contracts force them to pay their current and former workers much more money than similar workers at Honda, Toyota, and Nissan, and they have been slower to innovate than have their Asian rivals.
Toyota, Honda, and Nissan have been continually building more and more of their cars in America, while General Motors, Chrysler, and Ford have been building less. Last November, I wrote an article detailing my opposition to all bailouts, but said that if the government had to bailout auto companies, I would rather it bailout the successful ones (ie Toyota and Honda). At least this way money would be flowing to innovative companies who have a chance of paying back the loans, rather than to sluggish companies who refuse to adapt and will be unlikely to repay any loans.
The United States government now has a controlling stake in General Motors and a very large stake in Chrysler. General Motors, the world’s second largest automaker, is now owned by the United States government (with a minority stake being held by the UAW). Chrysler is now owned by the UAW (with a sizable minority stake being held by the US government). Additionally, a significant percentage of Nissan is owned by the French government (the French government owns 15.7% of Renault which owns 44.4% of Nissan). This is not fair to Ford, Honda, and Toyota. These three companies have to compete with three large automakers who are owned by large and powerful governments who have made it a matter of public policy to ensure that the automakers they own do not disappear. As a Ford stockholder, I’m pretty mad that a company that I have invested in (because I believe in its products and its management) now has to compete with a powerful government which can print money to pump into Ford’s competitors as it sees fit. Additionally, the US government also had the right to increase regulations on the auto industry which can hurt Ford and benefit its government owned competitors.
As unfair as this is to Ford’s shareholders, this is extremely unfair to the taxpayers who will have to foot the bill for these bailouts. The tens of billions of dollars in additional funding for GM are not the whole picture. American consumers will have to pay thousands more for their cars in the future due to the inefficiencies being created by the government bailiuts. The United States government is keeping car companies in business which have no business being in business. It is also mandating that certain GM models now be produced in America, rather than in foreign countries. While this may sound like a good thing in an economy that is hemorrhaging jobs, it is not. GM has chosen to produce cars overseas becaue it is cheaper to do so. Simply put, forcing GM to produce cars here will raise the cost of those cars and will make American consumers poorer.
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