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Monday, February 22, 2010

Obama's Plan In Two Words

"Balloon Mortgage."

I am glad that Obama released his plan this morning, when I was driving. Since I was in the car for several hours, I did not feel compelled to try to churn out a quick review. Instead, the rest of the world did it for me.

Among the variety of analyses upon which I base what I am about to say are some decidedly from the left, Wonk Room and Firedoglake, as well as CATO, ATR and the NY Times.

Put aside all the other criticisms, one thing becomes clear: The plan does nothing to control health care costs, and everything to increase those costs.

There are no market mechanisms to encourage consumers to price shop or to introduce price competition into the health care industry.

To the contrary, the plan continues the trend towards divorcing consumers from price decisions as to services and products; there also is no incentive to decrease demand because a large percentage of the population will receive government subsidies.

Yet because of the new insurance price control mechanism, the private insurance system will not be allowed to recoup the costs of such coverage.

This is a balloon which must burst, and it will several years down the road.

The result of the burst will be a collapse of the private insurance sector, and a government unable to pick up the pieces without severely rationed care (even if coverage remains expansive in theory, the care will not be available).

Obama's plan (and so too the House and Senate versions) is the worst of all worlds. It is a replica of the housing bubble, thrill for the first few years, and then the bill becomes due without any way to pay for it.

Update: The David Brooks calls Obama's plan a "fiscal time bomb":
This bill may be deficit-neutral on paper. But it has just become a fiscal time bomb. The revenue will never come.
Related Posts:
Health Summit A Manufactured Political Crisis
Obama Declares Legislative War
Progressive Bloggers In The Wizard of Oz

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  1. Obama's plan in one word: fascism.


    Where socialism sought totalitarian control of a society’s economic processes through direct state operation of the means of production, fascism sought that control indirectly, through domination of nominally private owners. Where socialism nationalized property explicitly, fascism did so implicitly, by requiring owners to use their property in the “national interest”—that is, as the autocratic authority conceived it. (Nevertheless, a few industries were operated by the state.) Where socialism abolished all market relations outright, fascism left the appearance of market relations while planning all economic activities. Where socialism abolished money and prices, fascism controlled the monetary system and set all prices and wages politically. In doing all this, fascism denatured the marketplace. Entrepreneurship was abolished. State ministries, rather than consumers, determined what was produced and under what conditions.

  2. Watching these Marxists argue the virtues of socialism in the face of defeat reminds me of those USSR apologists who argued that the Soviet system didn't fail because communism failed but because there wasn't ENOUGH communism.

    There is nothing to negotiate with such people. It's like arguing with a rusty, broken down steam roller that is rolling downhill out of control.

  3. hmmmm.... for all the wailing and nashing of teeth from the statists/collectivists... Seems Fascism really is a Liberal/Progressive state.

  4. Now, rather than insurance companies price their product based on actuarial loss experience as they have always done, the headlines are he wants to institute price controls.

    He said prior to the election that business can invest in coal fired power plants if they want to, but if they do then Obama said he will make sure the carbon tax system he wants to put in place will bankrupt them. Now the goal seems to be to bankrupt the private insurance companies by imposing price controls.

    This is one very bad dude. He is going to destroy our country.

  5. Why does Obama have it in for the insurance companies? I agree that the US is spending a great deal more than any other industrialized nation on health care, and that we should probably look to reduce that or at least limit further increases. However, the insurance industry does not appear, at first glance to be the primary culprit.
    As I see it, there are 2 issues in play: cost and coverage, and this bill, as it evolves, increasingly fails to address either issue. Obama and the left have never accepted that cost was an issue, so why not put together a simple bill to extend the percentage of Americans who have health insurance?

    What don't I understand? Or are they simply evil?

  6. Can we stop this? Does the House have to vote on it? What can be done?

  7. I was thinking the two words were going to be "We're screwed", before I commenced reading.

  8. I guess we are following the venezuela oil model. A country rich in oil and natural gas gives the government control over that industry and four years later the oil sector is in shambles blackouts are widespread and prices are through the roof.

  9. Scott Brown Breaks With Party, Votes For Jobs Bill
    Scott Brown 41 Scott Brown 60 (with Democrats)



  10. Yes those insurance companies make obscene profits. Obama must punish them, yes indeed.

    Why, as George Will says, if the government confiscated all that evil profit, it would pay for US health care for...three days.

    Considering all the backroom collusion that's gone on with this bill, I wouldn't be surprised if Anthem agreed to hike its prices so Obama could use that as a reason for price-fixing.

  11. I think it's Obama's strategy to wear us down by remaining obstinate in the face of criticism. He and his program have become like Chinese water torture. He wants us to throw our hands in the air and scream "enough" give him what he wants as long as he promises to go away!."

  12. I don't think all the supporters of this idiocy are evil, I just think that all of them expect to be part of the nomenklatura that will evolve and which will have easy access to the best health care while the kulaks will have to wait.

    Well, I guess that is sort of evil, but it's perfectly human.

  13. Moot: World economic collapse on the way,
    all State funding for Social Justice disappears,
    John Galt survives and prospers in private
    medical practice. :)

  14. Wow! What an honor! The Great One-Mark Levin just mentioned your blog on his show! Good on ya Sir!

  15. In Australia, this kind of monstrosity was introduced by the Whitlam government. Before his interference we had a perfectly good health insurance scheme, plus those who needed it could go to the public hospitals and doctors did pro bono work.

    The aim of the Whitlam govt was a take-over of the health insurance funds. Well so far it has not happened, but the am of every ALP govt. since Whitlam remains the same.

    Under KRudd we are once again facing the same kind of thing with the ALP being against health insurance. Now they are claiming that a tax rebate is "welfare for the rich", what a load of rubbish. Giving a tax deduction for being a member of a health fund is not welfare. Handing out dollars to hospitals and welfare recipients is welfare.

    The problem is that none of these statists have a clue when it comes to what is good for an economy.

  16. They won't give up on this. It is the cornerstone of their socialist Utopian ideals. Once this is in place they will keep tweeking it until it serves their goal-complete control of the American people.
    There is almost nothing that can't fall under the auspices of health, from pastime activities, diet, vices, industry-there is no limit to what they can meddle with. These people are very sinister indeed.

  17. In all the talk about health care reform, I don't feel like there's enough discussion about understanding the real costs of health care. Why don't we ever know the costs of health care procedures and treatments? I got a kick out of this fun, short video. Check it out.