Free Markets, Free People

Government

Discounting human nature

One of the most ironic and, if it weren’t so serious, amusing aspects of central planners is how they come to the conclusion that their plan – despite thousands of years of human nature – will manage to overcome human nature.  What I mean by that akward sentence is they believe they can retrain us to like what they’ll make us do.  Screw human nature.  Screw the laws of economics.  Screw just about every immutable law of nature.  This crap sounded great in the beer haze of the dormitory among their liberal friends.

It’s a correlary of the “the only reason socialism hasn’t worked is we haven’t tried it my way” belief.  And I do mean “belief”.  An act of faith.  More underpants gnomes.

The case in point?  Megan McArdle brings it to us:

In December, I predicted that “doc shock” was going to be a major problem for the U.S. health-care overhaul, as people found out that the narrow networks insurers use to keep premiums low often don’t cover the top-notch doctors you’d like to see if you get really sick:

“If narrow networks could give everyone in the country access to health-care outcomes no worse than 90 percent as good as the folks with the best doctors at 75 percent of the price we’d pay for broader networks, the health-care wonks would jump on that deal as an unbelievable bargain. But I think it’s pretty clear that average folks don’t think like health-care wonks.

So what does ObamaCare do?  Force people into narrow networks despite it being clear to anyone with the IQ of a turnip and a couple of years observing how humans do things, that narrow networks are going to fail.

“So even if narrow networks actually were better, people would resist them. And they’ll fight with every fiber of their being when you tell them to take their kid with leukemia to a community hospital rather than the top-notch children’s hospital nearby. Expect the fight over doc shock to be bitter and long — and to end when insurers cave and start adding pricey doctors back to their networks.”

That’s right … you’re relegated to whatever backwater network of care the particular insurance company you’ve been forced to buy from (or pay a tax too if you prefer) has contracted with.  Want world-class care for your child?  Tough beans.  See your doc at the community hospital instead.

So what has happened?  Well exactly what happened before when something like this was tried:

However much good, sound policy sense narrow networks might make, they are political poison. Regulators and politicians are going to find it very hard to withstand the appeals of constituents who have been restricted to the bargain basement of our nation’s health-care system. I simply don’t think they’ll be able to stand it for very long. This is basically what happened to the managed-care revolution that held down cost growth in the mid-1990s — people in those plans complained bitterly, in their capacity as both voters and employees. A combination of legal and market pressure forced insurers to open up their networks and approve more treatments. And then costs started rising again. As people begin using their Obamacare policies and start running into restrictions, the same sort of pressure will begin to mount.

But did our estwhile leaders learn anything from managed care’s failure?

Nah.

Because, you know, they weren’t in charge at the time and besides, human nature is just overrated.

So, as with every other aspect of this nonsense, watch Obama do what is necessary to ensure the fewest number of people possible are hurt by this … until after midterms, at least and 2016 if Mr. “I can do whatever I want” can swing it.

~McQ

ObamaCare: you wonder how much the government can screw up something?

Well the hits keep on coming with this atrocity of a law known as the Affordable Care Act, aka ObamaCare.  More and more negative nonsense keeps emerging as we get deeper and deeper into its implementation:

In his State of the Union address, President Obama urged Congress to “give America a raise.” Well, it turns out that Obama is giving America a $70 billion annual pay cut, courtesy of Obamacare.

That is the overlooked nugget in the new Congressional Budget Office report detailing the economic costs of Obamacare. While much attention has been paid to the report’s finding that Obamacare will reduce employment by as much as 2.5 million workers, buried on page 117 (Appendix C) is this bombshell: “CBO estimates that the ACA will cause a reduction of roughly 1 percent in aggregate labor compensation over the 2017-2024 period, compared with what it would have been otherwise.”

Translation: Obamacare means a 1 percent pay cut for American workers.

How much does that come to? Since wages and salaries were about $6.85 trillion in 2012 and are expected to exceed $7 trillion in 2013 and 2014, a 1 percent reduction in compensation is going to cost American workers at least $70 billion a year in lost wages.

It gets worse. Most of that $70 billion in lost wages will come from the paychecks of working-class Americans — those who can afford it least. That’s because Obamacare is a tax on work that will affect lower- and middle-income workers who depend on government subsidies for health coverage. The subsidies Obamacare provides depend on income. If your income goes up, your subsidies go down. This means Obamacare effectively traps people in lower-income jobs by imposing an additional tax on every dollar of additional income they earn. Working hard to earn a promotion or get a raise, or taking on additional part-time work — all the things people do to pursue the American Dream — are discouraged by Obamacare. As Keith Hennessey, former chairman of the White House National Economic Council, explains it, “Obamacare punishes additional work, education, job training and professional advancement, anything that generates additional income for those trying to climb into the middle class.”

Emphasis mine.  Obamacare provides a disincentive to succeed (as do the majority of government welfare programs).  And what is the old saying?  If you want more of a behavior, reward it.  Want less?  Tax it.

The new twist?  They then subsidize the cost when they’ve knocked the victim’s income down enough to make insurance unaffordable.

Meanwhile Congressional Democrats and the administration are agitating for a raise in the minimum wage.  They take it away with one hand, try to ignore the fact that they’ve done so and demonize the GOP because they’re not pro-minimum wage (or said another way, they actually understand the economic impact of a minimum wage).

If ever there was a picture beside the definition of “dysfunctional government”, it would be this administration’s along with Congressional Democrats.

And beside the definition of “punching bag?”  The GOP.

~McQ

ObamaCare – the political gift that keeps on giving

As this Obamanation known as ObamaCare contiunes to unroll and unravell, we find more and more incompetence evident.  At this point, you mostly are so in awe (in a negative way) of how badly this was done, that all you’re left to do is shake your head in wonder.  The latest:

Amy Goldstein of  The Post reveals that the appeals process guaranteed in the Obamacare law does not actually exist. The story outlines an almost comical process that requires citizens who seek a fair hearing to have an innocent, HealthCare.gov-generated mistake corrected to fill out a seven-page paper form that is then inexplicably shipped to Kentucky, where it is entered into a government database that isn’t actually connected to anything. It’s a digital dead end for those who dare to complain. Typical. As a result, 22,000 Americans who have submitted an appeals request remain without proper coverage and they have no recourse. And, according to The Post, in the latest show of non-transparency from this administration, officials have “not made public the fact that the appeals system for the online marketplace is not working.” There is “no indication that infrastructure . . .  necessary for conducting informal reviews and fair hearings had even been created, let alone become operational,” and administration officials are refusing to give any information as to when the appeals process might start moving. This is an administration that wants to hide things rather than fix things.

So, the appeals process is analogus to filling out a long paper form and then just throwing it into a dumpster for all the good it does the person filling out the form.  But has the administration made it clear that the process is – well not broken, how about nonexistent?  Nope.  People are still required to fill our their appeals forms, submit them and wait.  Except there is no mechanism in the current system for anyone to see, much less review, the submission.  The appeal is entered into a data base and that’s the end of the process.  Those waiting are left without recourse.

One more time for the morons in the establishment GOP – here’s your issue.

Or, if you continue to pursue immigration – here’s your sign.

~McQ

ObamaCare: the myth and the reality

Perhaps I should say the building myth and the reality.

What is the building myth?  That the worst is behind it.  Megan McArdle fills you in:

Many of the commentators I’ve read seem to think that the worst is over, as far as unpopular surprises.

But she then takes a chain saw to that particular notion:

In fact, the worst is yet to come.

· 2014: Small-business policy cancellations. This year, the small-business market is going to get hit with the policy cancellations that roiled the individual market last year. Some firms will get better deals, but others will find that their coverage is being canceled in favor of more expensive policies that don’t cover as many of the doctors or procedures that they want. This is going to be a rolling problem throughout the year.

· Summer 2014: Insurers get a sizable chunk of money from the government to cover any excess losses. When the costs are published, this is going to be wildly unpopular: The administration has spent three years saying that Obamacare was the antidote to abuses by Big, Bad Insurance Companies, and suddenly it’s a mechanism to funnel taxpayer money to them?

· Fall 2014: New premiums are announced.

· 2014 and onward: Medicare reimbursement cuts eat into hospital margins, triggering a lot of lobbying and sad ads about how Beloved Local Hospital may have to close.

· Spring 2015: The Internal Revenue Service starts collecting individual mandate penalties: 1 percent of income in the first year. That’s going to be a nasty shock to folks who thought the penalty was just $95. I, like many other analysts, expect the administration to announce a temporary delay sometime after April 1, 2014.

· Spring 2015: The IRS demands that people whose income was higher than they projected pay back their excess subsidies. This could be thousands of dollars.

· Spring 2015: Cuts to Medicare Advantage, which the administration punted on in 2013, are scheduled to go into effect. This will reduce benefits currently enjoyed by millions of seniors, which is why they didn’t let them go into effect this year.

· Fall 2015: This is when expert Bob Laszewski says insurers will begin exiting the market if the exchange policies aren’t profitable.

· Fall 2017: Companies and unions start learning whether their plans will get hit by the “Cadillac tax,” a stiff excise tax on expensive policies that will hit plans with generous benefits or an older and sicker employee base. Expect a lot of companies and unions to radically decrease benefits and increase cost-sharing as a result.

· January 2018: The temporary risk-adjustment plans, which the administration is relying on to keep insurers in the marketplaces even if their customer pool is older and sicker than projected, run out. Now if insurers take losses, they just lose the money.

· Fall 2018: Buyers find out that subsidy growth is capped for next year’s premiums; instead of simply being pegged to the price of the second-cheapest silver plan, whatever that cost is, their growth is fixed. This will show up in higher premiums for families — and, potentially, in an adverse-selection death spiral.

In fact, she is exactly right.  Note how many of these surprises happen before 2016.  And, as they come true, perhaps … just perhaps … when voters are told that the rest of this nonsense is likely to come true too (it is the law, you see), they might believe it.

Perhaps.  The “Cadillac tax” was inartfully delayed until after the election.  However, the snowball will already be rolling down hill by then and you’d think the public would be open to believing that the rest of this abomination, that which was delayed, will indeed happen.  And you’d also believe they’d want to do something about that (that, of course assumes Obama doesn’t wave the magic executive pen and waive all of this until after the election).

But then, doing something would depend on what?  Well, getting elected officials that want to actually get rid of most of this monstrosity and are willing to say that and then do it.  Uh, that won’t be Democrats (well except perhaps blue dog Democrats, if they’re not extinct by then).

What it all boils down too is that voters will have to depend on Republicans to do the heavy lifting.  The question is will they do that if elected?  In other words, will Republicans be up to the job?

If I had to base it on the current crop – yeah, not so much.

~McQ

Manufacturing a problem for government to solve

It is something government is quite good at doing, even though the solution usually ends up being worse than the problem.

And then there are “problems” that aren’t really problems, but government sees an opportunity to step in and “solve” it via, well, more government and less freedom, of course.

For instance:

Two out of three Americans are dissatisfied with the way income and wealth are currently distributed in the U.S. This includes three-fourths of Democrats and 54% of Republicans.

On it’s face, you might not think much about this, since very few people are satisfied with their condition, regardless of how good it really is.  Everyone thinks they should be doing better.  And, for the most part, many like to blame others for their inability to realize whatever goals and dreams they’ve set out for themselves.  It’s certainly not their fault they aren’t the CEO of a Fortune 100 company … it has to be the “elite” or the “rich” or the “old boy network” that’s kept them from their dream.  And they certainly think they should be making more than they do.  They’re worth it, just ask them.

They’re also fertile ground for the biggest con artist in the world to use their dissatisfaction to promise them their dream at the expense of others.  Instead of saying, “Don’t like your situation?  Work harder and smarter then”, this bunch of grifters promise to use their power to help the dissatisfied get “their due”.  And so:

President Barack Obama spoke about income disparities in a Dec. 4, 2013, speech, saying he wanted to prioritize lowering income disparity and increasing opportunities, particularly for the poor, during the rest of his second term. He most likely will return to that topic in his State of the Union speech at the end of the month. Gallup’s Jan. 5-8 Mood of the Nation survey included a question asking Americans how satisfied they are with income and wealth distribution in the U.S. Few, 7%, report that they are “very satisfied” with the distribution, while 39% of Americans say they are “very dissatisfied.”

Who says a failing economy can’t be used to increase political and governmental power?  Just hide and watch.  Of course, it is no coincidence that the “dissatisfaction” with the “distribution” of “income and wealth” took a nose dive with the economy, is it?

But you know the old Rahm Emanuel saying – “never let a crisis go to waste”, even if it is a manufactured crisis.  If it is an opportunity to expand government (especially if that expansion accrues more power to government and less to the people) then it’s all good.

They’ll have to move fast though:

Obama will almost certainly touch on inequality in his State of the Union address on Jan. 28. This will certainly resonate in a general sense with the majority of Americans who are dissatisfied with income and wealth distribution in the U.S. today. Members of the president’s party agree most strongly with the president that this is an issue, but majorities of Republicans and independents are at least somewhat dissatisfied as well.

Although Americans are more likely to be satisfied with the opportunity for people to get ahead through hard work, their satisfaction is well below where it was before the economic downturn. Accordingly, improvement in the U.S. economy could bring Americans’ views back to pre-recession levels.

Heaven forbid the economy get better before more useless programs can be “funded” and more plans executed to relieve the “rich” and “wealthy” of their money for the usual vote buying schemes.

But with this crew in charge, an economic turnaround isn’t very likely anytime soon … so I’m sure they feel pretty darn safe at the moment and believe that they have plenty of time.

~McQ

US drops out of top 10 for economic freedom

I’m not sure that this will surprise anyone, given the size and intrusiveness of our government:

World economic freedom has reached record levels, according to the 2014 Index of Economic Freedom, released Tuesday by the Heritage Foundation and The Wall Street Journal. But after seven straight years of decline, the U.S. has dropped out of the top 10 most economically free countries.

For 20 years, the index has measured a nation’s commitment to free enterprise on a scale of 0 to 100 by evaluating 10 categories, including fiscal soundness, government size and property rights. These commitments have powerful effects: Countries achieving higher levels of economic freedom consistently and measurably outperform others in economic growth, long-term prosperity and social progress. Botswana, for example, has made gains through low tax rates and political stability.

Obviously the decline began before the Obama administration, but the policies of this administration have certainly hastened the decline and are certainly a primary reason for the US dropping out of the top 10:

Those losing freedom, on the other hand, risk economic stagnation, high unemployment and deteriorating social conditions. For instance, heavy-handed government intervention in Brazil’s economy continues to limit mobility and fuel a sense of injustice.

It’s not hard to see why the U.S. is losing ground. Even marginal tax rates exceeding 43% cannot finance runaway government spending, which has caused the national debt to skyrocket. The Obama administration continues to shackle entire sectors of the economy with regulation, including health care, finance and energy. The intervention impedes both personal freedom and national prosperity.

And that’s certainly been the case these past 5 years.  Regulation has exploded, government intrusiveness has increased, freedom is in retreat.

Bottom line:

Despite financial crises and recessions, the global economy has expanded by nearly 70% in 20 years, to $54 trillion in 2012 from $32 trillion in 1993. Hundreds of millions of people have left grinding poverty behind as their economies have become freer. But it is an appalling, avoidable human tragedy how many of the world’s peoples remain unfree—and poor.

The record of increasing economic freedom elsewhere makes it inexcusable that a country like the U.S. continues to pursue policies antithetical to its own growth, while wielding its influence to encourage other countries to chart the same disastrous course. The 2014 Index of Economic Freedom documents a world-wide race to enhance economic opportunity through greater freedom—and this year’s index demonstrates that the U.S. needs a drastic change in direction.

Drastic action needed, dithering and inaction expected, continued decline the result.

~McQ

ICYMI

Of course “ICYMI” is internet shorthand for “In Case You Missed It“.  And in case you missed a couple of things I found interesting I thought I’d throw them up here.

For instance:

According to the White House, 79% of those enrolled in Obamacare need subsidies because they cannot otherwise afford the premiums that have, in some cases, nearly doubled. Only 21% did not need subsidies.
As Businessweek noted, people “earning up to four times the poverty rate—as much as $96,000 a year for a family of four”—can get Obamacare subsidies from the federal government.

79%.  That’s right, 79%.  And why do they need subsidies?  Because they can’t afford their insurance premiums anymore.  And why can’t they afford their insurance premiums anymore?

ObamaCare.

Catch 22.

Oh, and here’s a great chart on something else you might have missed:

Yes, that’s right … when all is said, done and figured, the real unemployment rate is around 11%, not 6.7%.  No wonder those 79% need subsidies.

I threw that in because this is the state of the job market and that has an effect on who is going to enroll in this boondoggle of a government program.  But right now, it appears young people –  you know, the one’s Obama et al are counting on paying for this – aren’t enrolling.

But hey, is the White House worried?  Nah, they – as usual – have it all figured out:

About 30 percent of new enrollees are under 35. White House officials say that’s an acceptable mix, and they expect more young people to come on board closer to the March 31 deadline. “We think that more and more young people are going to sign up as time goes by, based on the experience in Massachusetts,” Gary Cohen, deputy administrator at the Centers for Medicare and Medicaid, said on a conference call with reporters. “We’re actually very pleased with the percentage that we have right now, and we expect that percentage to increase.”

This is the usual whistling past the graveyard this administration is so prone too.  They have no idea what will happen.  They “think” more will sign up.

Uh huh …

ObamaCare says it needs an enrollment of 38% of youth to pay for this monstrosity.  24% are enrolled.  And, apparently knowing youth better than I do (“Insurance?  I”m not sick.  Beside, I want that new 60″ TV.”) they’re sure they’ll make the time and effort to enroll and throw their money into the pit before March.

Not going to happen.  I’d suggest those who are going to enroll have, for the most part, enrolled.

Of course that doesn’t mean the administration won’t claim to have 38%.   But I’ll remind you they also claim unemployment is at 6.7%

~McQ

Trust, leadership and politics

Well you all saw the new job numbers – 74,000 new jobs, 525,000 more workers drop out of the workforce and magically, the U3 unemployment rate dropped to 6.7% (“and the underpants gnomes … SCORE!”)

Trust … why wouldn’t you trust the BLS’s numbers when you continually see this formula add up to “less” unemployment? /sarc

In more ways than one, trust in government is being squandered by those in government.

For instance have you ever seen “leaders” who seem to know less about what their “minions” are doing than this latest bunch?  Barack Obama is clueless as is, to a lesser extent, Chris Christie. And so we are witness to abuses of power on a regular basis. Most of those abuses can be linked to politics in general. But let’s face it, whatever the reason, we are seeing more and more abuse of power to the point that one might suggest that our government has become too powerful (“suggest” hell, it IS too powerful).

There’s another point that bothers me. I don’t know about you, but the way I’ve always been taught – in fact what I learned as a leader – is a leader is responsible for everything that does or doesn’t happen on his watch.

And while we may apply that in our lives and jobs, “we the people” seem content with swallowing the “gee, I didn’t know that was going on” nonsense from politicians. I’ve never seen an occupation where they are given so many passes on things that in the normal business world – or any other “world” – would be the end of their career.

In terms of leadership, It really doesn’t matter what happened, it’s his or her problem and responsibility. Good leaders don’t let those sorts of problems crop up very often. That’s because it is the leader’s job to set the ethical and moral boundaries of his administration and to relentlessly patrol those boundaries and punish those who cross them.

But that doesn’t happen today in politics. Instead we just leave ‘em be when they say “uh, gee, I didn’t know a thing about this.”

Ignorance isn’t an acceptable excuse. It’s the 7 year-old’s defense, one we don’t accept from our own kids, and yet we let politicians who claim to be leaders pull it every single day.

Trust? How can you trust anyone you let lie to you daily? How can you trust anyone who has no apparent moral or ethical boundaries and are only sorry to be caught? How can you believe anything they say? More importantly, how can you let these people have any say over your life at all?

Just wondering …

~McQ

The law with the Orwellian name continues to lose support

The Affordable Care Act, the monstrosity of Democratic legislation with the Orwellian name, continues to lose supporters.   And, as an added special feature, people in employer based programs are now paying more out-of-pocket for their medical expenses than before ObamaCare.  Very “affordable”, no?

Support for the Affordable Care Act has plummeted since late last summer, and people with employer-based health insurance say they increasingly are paying more for out-of-pocket medical expenses, a new Bankrate.com survey released Wednesday revealed.

When Bankrate.com first polled people in September—right before the launch of Obamacare insurance exchanges, there was an even split between those who said they would repeal the Affordable Care Act if given the power to do so and those who would keep it: 46 percent each. (The rest either had no opinion or didn’t know how they felt.)

But three months later, after the botched launch of those government-run exchanges, the number of people who said they would gut Obamacare had risen to 48 percent, while the number of respondents who said they would keep it as law had plunged to 38 percent.

While the “botched launch” may have had some effect on that “plunge”, my guess is that hitting people’s wallet has pushed it down even more.  Health care insurance isn’t some esoteric policy argument.  It’s something that is important to everyone.  It is about their family and trying to afford the best for their family’s health. When policy negatively effects real people, they react just as negatively (and I do hope that Democrats double down on their support of the law, since it is all theirs anyway) :

The survey also found that people, by a 2-to-1 margin, felt Obamacare had had a more negative than positive impact on their own, individual health care. The poll questioned 1,005 adults, and had a margin of error of 3.6 percentage points.

[...]

His company’s survey also found that a total of 44 percent of people with employer-provided insurance said they are shelling out more dollars in deductibles and copayments than they were a year ago. And 47 percent of that group of people reported having more money deducted from their paycheck to pay the cost of those insurance plans than in 2012.

People earning between $50,000 and $75,000 annually were the most affected group: with 64 percent of them reporting a bigger hit on their paychecks from health insurance. Just 38 percent of the people earning less than $30,000 reported paying more for insurance in payroll deductions as of 2013.

The great leveling.  Apparently you’re “rich” if you earn between $50 and $75k, so it’s okay that you’re paying more – and besides, those “Cadillac plans” just aren’t fair (well, except for the exempt unions, of course … and Congress, and ….).  Don’t forget the tsunami of cancellations that will hit employer based programs hasn’t yet happened.

Obviously it doesn’t take great powers of perception to realize that this is just going to get worse and worse as the months pass.  And as those months pass, those supporting the legislation will become fewer and fewer.  It will be a grand issue on which Congressional Republicans can run (if they actually can figure out how to do that successfully without the usual idiocy).  Unfortunately, politics aside, it is going to be a building disaster for the American people.

Repeal is the best remedy.

~McQ

Michael Moore again demonstrates the cognitive dissonance of the left

Even Michael Moore thinks that ObamaCare is a disaster.  And that’s saying something when a big government liberal (socialist?) finds a big government program to be  … well, just awful.  But, as Allahpundit over at Hot Air points out, what do you suspect Moore’s solution might be?

I was just thinking yesterday, “I wonder what a guy who supports CastroCare thinks we should do to fix ObamaCare?” If you can’t guess, read this. If you can, why bother? His big knock on O-Care is true enough — “affordable” care ain’t so affordable — but you already knew that, just like you already know what he thinks should be done about it. The solution togross mismanagement of the federal exchange, capricious deadline-shifting driven by political whim, and tens of trillions in unfunded Medicare liabilities is, obviously, a bigger role for government in health care. There’s no problem with liberalism that socialism can’t solve.

It doesn’t occur to  Moore that the problem is two-fold – government’s inability to run any large program efficiently as well as the fact that because of it’s inefficiency, we can’t afford his solution.  Not to mention that my health care isn’t any of the government’s business.  Then, of course, in Moore’s case, there’s the fact that he was snookered by CastroCare.

But it all comes down to a fairly basic problem.  Most on the left, Moore included, really don’t understand how an economy works, where money actually comes from and how markets make wealth possible.  Apparently they actually believe that the government “has money” or it falls from the sky or whatever.  Then there is this innate belief that big government is the solution to all our ills, despite the fact that they can’t point to a single example of where that is true and won’t acknowledge the fact that many of the problems we face today are a product of big government.

When you don’t understand how wealth is produced or how money is earned, you have a tendency to believe in underpants gnomes.  The second part of the process is always an unknown or a mystery, but you’re sure that the result will be a positive.  So you tend to believe in the fantasy of big government being both efficient and beneficial.

Be clear, I’m not saying that all government is bad or that there aren’t certain parts that are beneficial.  There are very limited aspects of government that I think are both necessary and beneficial.   But what we have today – this inefficient monstrosity that is in every area of our life run by an ossified bureaucracy more interested in its survival than serving the public and politicians who aid and abet that bureaucracy – is not at all necessary or beneficial.

Yet the Michael Moore’s of the world seem to think that the way you clean up a big government mess is by making government bigger.  Apparently in the underpants gnome world of liberals, there’s a point where big government, if expanded enough, suddenly becomes efficient.

Or something.

~McQ