Americanly Yours

Senators Chris Dodd and Ted Kennedy have introduced a new health care bill to the Senate.  This bill will keep the same basic government run insurance plan as their previous bill.  Yet, this new plan also hits “large” businesses (defined as businesses with over 25 employees!!!) with “fines” of $750 for failing to provide employees with health insurance. The bill’s authors argue that this “fine” will force businesses to provide their employees with health care and will save the government money.  According to Senators Christopher Dodd and Ted Kennedy, this bill “virtually eliminates the dropping of currently covered employees from employer-sponsored health plans.”

Senators Dodd and Kennedy are either lying or are unbelievably stupid.

In fact, this bill only encourages employers to drop coverage for their employees.  According to the National Coalition on Health Care, “The annual premium for  single coverage [employer health plans] averaged over $4,700.^“

Under this plan, employers can drop their employees coverage, knowing that the government will pick up the tab.  Doing so will result in a “fine” of $750 per full time worker, but will actually result in cost savings around $4000 per employee!  This is a massive subsidy for corporations who choose not to insure their employees.

This plan will encourage employers to abandon their private insurance plans knowing that their employees will still be covered.  This will lead to a “race to the bottom” among companies because dropping coverage will lead to massive cost savings.

For example, at the end of last year Microsoft employed around 56,000 workers in America.  If they were to drop all of their employees’ health care plans, they would be subjected to fines of around $42 million  However, considering that the average health care plan costs employers around $4,700 per person, Microsoft would actually save around $221.2 million per year–after paying the “fines” by dropping coverage.

This new bill is a rotten one that will destroy private health insurance.  It will cause employers to drop coverage for their employees and will result in more Americans using the government “option.”

This bill will cost Americans a lot of money, will subsidize corporations who drop employee coverage, and will destroy the private insurance industry.  This bill will be ironically called the “Affordable Health Choices Act.”  Please call your Senator at 1-800-833-6354 and voice your opposition to this bill.  It will only take you two minutes.

Americanly Yours,

Phred Barnet

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I got this interesting cartoon from Tarrin Lupo over at LCL Report a while back.  Enjoy.

Americanly Yours,
Phred Barnet

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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.

Americanly Yours,

Phred Barnet

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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.

Americanly Yours,

Phred Barnet

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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.

Americanly Yours,

Phred Barnet

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