Wednesday, August 8, 2012


A Facebook friend posted a status today cheering on all the "free" benefits that are taking effect for women looking to have their birth control paid for by people other than themselves. After some back and forth about what "free" means when talking about something paid for with tax money, a commenter (who shall remain nameless unless you are mutual friends, in which case you know who to shake your head at) made the following statement:

It has nothing to do with who pays taxes. It is forcing insurance companies to pay for those services out of the premiums that YOU Already pay them!!!! Why is this so hard for people to understand? We are now getting more services for the money that we pay into the insurance company. They make less profits because they have to cover more services for us! This is a very good thing for all of us!!!!!!!!

Note the liberal use of exclamation points, each one adding an order of magnitude to the comment's inherent truthfulness. Exclamation points aside, here was my response (unedited except for the correction of spelling errors):
It has everything to do with who pays taxes. The feds are setting up a national exchange to administer healthcare. Who pays for that? Taxpayers. Set aside for a moment the fact that this will allow the goverment to pick and choose favorites among healthcare companies. While the feds are allowing states to set up their own exchanges (which of course, must meet federal guidelines on how they are set up, which companies can participate, and how money is distributed), most are sensibly opting out. This will increasingly put the decisions in the hands of a federal bureaucracy.

Ever heard of a federal agency that didn't get bigger and succumb to budget bloat? Me neither. This will only increase costs, especially when you consider that by government mandate, people who don't pay federal taxes (and thus don't pay for the upkeep of this behemoth) will still be covered. Who will make up these costs? The insurance companies? No. Economics 101. When costs go up to a supplier, those costs are passed on to the consumer.

One way the goverment will be tempted to combat this is to enforce price controls on what doctors can charge for services. This is how medicare and medicaid work. It has led to an ever-decreasing number of doctors who will accept patients on those plans. A similar effect will occur if the price controls are instead forced upon insurers: fewer companies will enter into the market and many existing ones will drop out. At the same time, more and more people will be forced into this government plan as companies who today pay for healthcare as a fringe benefit decrease coverage or drop it all together, further exploding costs to the taxpayer.

Ask yourself this: are you aware of any government programs which costs has decreased, which budgets have shrunk? No. Because the definition of a budget cut has been changed at the federal level. When you or I think of a budget cut, It looks like this: "our budget was $1000. We cut it 10%. Now our budget is $900". At the federal level, it looks like this: "Our budget was $1000. We wanted to raise it 50%. Instead we only raised it 30%. Therefore, our budget was cut by 20%."

This will not end well.

It never ceases to amaze me that there are still people who believe the following:

  1. Businesses don't pass their costs on to consumers.
  2. Arbitrarily setting prices for goods will have no effect on the producers of those goods
  3. It is somehow a good thing when a business has its profits shrunk or seized.
  4. A government that can run up trillions of dollars in debt will have no problem containing costs.
  5. The government can ever provide "free" anything to taxpayers.
Of course, my answer above didn't even touch on the other side effect of price controls: rampant fraud and abuse. Some of those doctors who don't stop taking medicare and medicaid patients instead find ways to overbill the system and reap profits off the taxpayer. If oversight and penalties were better enforced, even more doctors would drop entitlement patients.


Addendum: A later comment brought up the 80/20 rule in the law, that requires insurers to use 80% of revenues on "clinical services" in order to cap costs. Well, that's just another method of price control. And it leads to all the bad things mentioned above. Don't believe me? Then believe the feds, who have seen fit to grant waivers to entities that allow them to ignore the 80/20 rule.

Also, passing laws and then selectively allowing certain entities to ignore them: regardless of your political affiliation, shouldn't you be outraged by that?