Free Markets, Free People
This week, Bruce, Michael, and Dale discuss Israel and Obamacare.
The direct link to the podcast can be found here.
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Rob Port brings attention to the Papa John’s story:
At Slate, Matthew Yglesias scoffs at Papa Johns’ founder John Schnatter saying the Affordable Care Act, Obamacare, will drive up costs for his company by roughly $0.20 per order, something his company will be passing along to customers.
“Stipulating for a moment that this is true, doesn’t it seem like a rather small price to pay?” asks Yglesias.
No, it’s not small at all.
Rob then covers just the Papa John’s part of this formulation:
Papa John’s operates 3,973 restaurants. I can’t figure out how many orders the company processes daily, but let’s assume a very conservative 100 orders per store. That’s 397,300 orders every day. Adding $0.20 to ever order in additional labor costs translates into just over $29 million in additional costs for Papa Johns customers annually.
But, of course, as you’ve already figured out, if that’s true for Papa John’s, it is probably true for most other companies in the US as well.
So as Rob says, “no, it’s not small at all”. In fact, it is potentially a huge increase in the price people will pay for all goods and services.
Papa John’s isn’t alone in seeing a price increase in their futures. As the magazine relates, in its most recent earnings call, McDonald’s said the health care plan will cost their stores an extra $10,000 to $30,000. While the vast expansion of government power involved in the bill will result in more federal expenditures, the pizza magnate’s comment highlights the fact that it will create an across-the-board surtax on virtually all expenditures by families and individuals. This will mean an increase in the cost of living that will hit the poor a lot harder than the rich the president claims to want to tax.
In fact, as pointed out, it has the same effect as a tax on the poor.
Yet the left simply seems unable to wrap their heads around that. Here’s a commenter to the article I took the paragraph above from:
It is shocking that the CEO of Papa John’s and this magazine commentator would begrudge the near-poor workers of that company health insurance — and better healthcare for a few cents per pie!! Our country is based on the premise that we all pay a little more to help those less fortunate — the key here is “a little more.” Does anyone really object to that??
Yes. Strenuously. And by the way, this country was not founded on the premise “that we all pay a little more to help those less fortunate” and claiming that to be so is an attempt to rewrite history. It was about providing everyone an equal opportunity under the law to succeed while protecting their basic rights to life, liberty and property.
So we have the probability that prices will increase in the future as companies charge more for their products to cover health care. And that brings us to a pretty basic point, here made by Bethany Mandel at Commentary Magazine:
What this person and other liberals have wrong is this: It’s not about the price of pizza. If it were actually possible to improve healthcare for millions of Americans and insure millions more, conservatives would be on board. The basis of conservative opposition to ObamaCare is this: We do not think it will help the majority of Americans. The bill is titled the “Affordable Care Act,” but does nothing to make healthcare more affordable, nor will it improve health care. In reality, it provides a worse standard of care at a higher cost.
Under ObamaCare, 17 million Americans will be added to Medicaid’s rolls in order to move some Americans from the uninsured to the insured column. Are they actually better off?
I, of course, wouldn’t be “on board” if it had to do with government intervention, however I understand the point she’s trying to make. What has been passed won’t a) reduce costs and make health care more affordable or b) improve health care.
It is the “big lie” writ large. The parameters defining health care delivery are finite, not infinite. You have 24 hours in a day and x number of providers. Is adding 17 million to the welfare portion of government health care (the one most providers refuse to take because of the supreme hassle and low reimbursement rate) really going to improve their lives?
As Avik Roy notes, even though we’ll be paying more across the board to make it possible, probably not:
In July 2010, at National Review Online’s Critical Condition blog, I wrote about a University of Virginia study, published in Annals of Surgery, finding that surgical patients on Medicaid endured a 97 percent higher likelihood of in-hospital death than patients with private insurance, and a 13 percent greater chance of death than those with no insurance at all. I noted several other clinical studies that showed similar results.
And that’s before the 17 million are added. This is the mess we find ourselves in when agenda driven politicians pass laws they haven’t even read over and above the objections of the majority of the people.
It’s hard to call that a “representative democracy” isn’t it?
And, no, this still isn’t about pizza.
UPDATE: Morning Bell (Heritage Foundation) weighs in:
At least 60 percent of firms are estimating Obamacare will raise their health care costs, according to a new study released Wednesday by Mercer, a human resources consulting firm. One-third of those expect a cost increase of 5 percent or more.
The study states:
The employers that will be hit hardest are those with large part-time populations—employers in retail and hospitality services. Nearly half of these employers (46%) expect PPACA will push up cost by at least 3% in 2014—and another third don’t yet know what the impact will be.
An example of the impact from the CEO of CKE Restaurants:
The money to comply with the [Affordable Care Act] must come from somewhere. We use our revenue to pay our bills and expenses, to pay down our debt, and we reinvest what’s left in our business. That’s how we create jobs. There’s no corporate pot of gold we can go to, to cover increased health care costs. New unit construction will cease if we have to allocate moneys for that construction to the ACA. And building new restaurants is how we create jobs.
As we’ve said many times before, this isn’t rocket science and they’re called “economic laws” for a reason. Unfortunately the left continues to ignore them (or pretend they don’t exist) with predictable results.
John Goodman poses a scenario for you to consider:
Suppose you are accused of a crime and suppose your lawyer is paid the way doctors are paid. That is, suppose some third-party payer bureaucracy pays your lawyer a different fee for each separate task she performs in your defense. Just to make up some numbers that reflect the full degree of arbitrariness we find in medicine, let’s suppose your lawyer is paid $50 per hour for jury selection and $500 per hour for making your final case to the jury.
What would happen? At the end of your trial, your lawyer’s summation would be stirring, compelling, logical and persuasive. In fact, it might well get you off scot free if only it were delivered to the right jury. But you don’t have the right jury. Because of the fee schedule, your lawyer skimped on jury selection way back at the beginning of your trial.
This is why you don’t want to pay a lawyer, or any other professional, by task. You want your lawyer to be able to reallocate her time — in this case, from the summation speech to the voir dire proceeding. If each hour of her time is compensated at the same rate, she will feel free to allocate the last hour spent on your case to its highest valued use rather than to the activity that is paid the highest fee.
None of us would ever want to pay a lawyer by task, would we (not talking about a will or legal document production here, but instead some form of defense against charges which necessitates a jury trial and requiring the accomplishment of many tasks)? We’d instead insist upon paying them for a package of services designed to do whatever is necessary to defend us to the best of their ability with the ultimate goal of us walking free.
So why is it we can’t demand the same of doctors? Why can’t we demand a package of services designed by them to address all of our medical problems?
Well if your stuck with Medicare or Medicaid, you’re stuck with government price fixing and payment by task, that’s why. First the price fixing:
Medicare has a list of some 7,500 separate tasks it pays physicians to perform. For each task there is a price that varies according to location and other factors. Of the 800,000 practicing physicians in this country, not all are in Medicare and no doctor is going to perform every task on Medicare’s list.
Yet Medicare is potentially setting about 6 billion prices across the country at any one time.
OK? Bad enough that Medicare has completely removed the price mechanism from the process. As economist Dr. Mark Perry notes:
These problems sound a lot like the deficiencies of Soviet-style central planning in general when the government, rather than the market, sets prices, see Economic Calculation Problem.
Exactly and stultifyingly obvious, correct? In fact, it’s something one shouldn’t have to point out. Nor, would it seem, should it be something that we’re doing either. But we are. You just have to remember, our government doesn’t care about history, because, well, you know, it will get it right where all these other governments have failed. Just watch.
If the price fixing isn’t bad enough, it has also hit upon a procedure that actually inhibits the delivery of good health care rather than incentivizing it.
Medicare has strict rules about how tasks can be combined. For example, “special needs” patients typically have five or more comorbidities — a fancy way of saying that a lot of things are going wrong at once. These patients are costing Medicare about $60,000 a year and they consume a large share of Medicare’s entire budget. Ideally, when one of these patients sees a doctor, the doctor will deal with all five problems sequentially. That would economize on the patient’s time and ensure that the treatment regime for each malady is integrated and consistent with all the others.
Under Medicare’s payment system, however, a specialist can only bill Medicare the full fee for treating one of the five conditions during a single visit. If she treats the other four, she can only bill half price for those services. It’s even worse for primary care physicians. They cannot bill anything for treating the additional four conditions.
So, for example, if you have diabetes, COPD, high blood pressure or any combination of a number of other chronic diseases, tough cookies, your doc can only treat one per visit – unless, of course, he or she wants to work for free on the others.
Don’t believe me?
[When Dr. Young] sees Medicare or Medicaid patients at Tarrant County’s JPS Physicians Group, he can only deal with one ailment at a time. Even if a patient has several chronic diseases — diabetes, congestive heart failure, high blood pressure — the government’s payment rules allow him to only charge for one.
“You could spend the extra time and deal with everything, but you are completely giving away your services to do that,” he said. Patients are told to schedule another appointment or see a specialist.
Young calls the payment rules “ridiculously complicated.”
That has nothing to do with being complicated. It has to do with stupidity overruling common sense and the stupidity being enforced by an uncaring bureaucracy. “Rulz is rulz, Doc”. Do what is best for your patient and do it for free – that’s one way to lower costs, isn’t it?
But don’t forget – government involvement will mean better care at lower cost. That’s the promise, right?
Instead government is now redefining “better” to mean “their way or the highway”. It has nothing to do with what is better for the patient or the doctor. It has to do with what is better politically. And, of course, better for the bureaucracy. In this case, that means squeezing the doctor for everything they can get at the expense of the patient. Since you don’t have a choice about Medicare when you reach 65, any doctor you see doesn’t have a choice about how he or she treats you.
The only choice you have?
Live with it … if you can.
ObamaCare, as mentioned in a previous post, gets its Constitutional review by the Supreme Court today. CATO’s Ilya Shapiro lays out the agenda:
This morning, as expected, the Supreme Court agreed to take up Obamacare. What was unexpected — and unprecedented in modern times — is that it set aside five-and-a-half hours for the argument. Here are the issues the Court will decide:
- Whether Congress has the power to enact the individual mandate. – 2 hours
- Whether the challenge to the individual mandate is barred by the Anti-Injunction Act. – 1 hour
- Whether and to what extent the individual mandate, if unconstitutional, is severable from the rest of the Act. – 90 minutes
- Whether the new conditions on all federal Medicaid funding (expanding eligibility, greater coverage, etc.) constitute an unconstitutional coercion of the states. – 1 hour
Those are critical questions. They tend to define in four points, how threatened our rights are by this awful legislation. Forget what it is about, consider to what level it intrudes and what, if found Constitutional, it portends.
If found Constitutional, you can take the actual Constitution, the one that no fair reading gives an inkling of support to such nonsense as ObamaCare, and cut it up for toilet paper. It will be, officially, dead.
A decision that supports those 4 points (or even some of them) means the end of federalism and the final establishment of an all powerful national government which can (and will) run your life just about any way it wishes. If it has the power to enact a mandate such as that called for in ObamaCare, it can mandate just about anything it wishes. And, if the new conditions on all federal Medicaid funding stand, the states have no grounds to resist or refuse other federal intrusion.
In any event, the Supreme Court has now set the stage for the most significant case since Roe v. Wade. Indeed, this litigation implicates the future of the Republic as Roe never did. On both the individual-mandate and Medicaid-coercion issues, the Court will decide whether the Constitution’s structure — federalism and enumeration of powers — is judicially enforceable or whether Congress is the sole judge of its own authority. In other words, do we have a government of laws or men?
If you’re devoted to freedom and liberty and opposed to intrusive and coercive government, you know how you want this to come out.
And it isn’t to the advantage of ObamaCare.
Promises, promises, promises. President Obama promised the passage of the Affordable Care Act would lower health care costs across the board, making health care “more affordable”. The entire premise of the massive government intrusion in that market was to lower costs and make insurance more affordable.
A new study says that doing nothing would actually have been slightly less expensive. The irony is this isn’t some opposition think tank which has put up these numbers but the Centers for Medicare and Medicaid Services:
Despite President Obama’s promises to rein in health care costs as part of his reform bill, health spending nationwide is expected to rise more than if the sweeping legislation had never become law.
Total spending is projected to grow annually by 5.8 percent under Mr. Obama’s Affordable Care Act, according to a 10-year forecast by the Centers for Medicare and Medicaid Services released Thursday. Without the ACA, spending would grow at a slightly slower rate of 5.7 percent annually.
The primary reason, supporters say, is more people will have insurance.
CMS officials attributed the growth to an expansion of the insured population. Under the plan, an estimated 23 million Americans are expected to obtain insurance in 2014, largely through state-based exchanges and expanded Medicaid eligibility.
The federal government is projected to spend 20 percent more on Medicaid, while spending on private health insurance is expected to rise by 9.4 percent.
Anyone – do you know why “private health insurance costs” are expected to rise by 9.4%? Because the privately insured will be tapped to help pay the difference between what an expanded Medicaid base pays and what doctors charge. Or, in other words, they will be the victim of government intrusion and market distortion. And of course government is then going to point to the costs its distortion caused and claim it should help solve the problem it has created. And what will be eventual answer to those increased costs caused by government distortion be? Single-payer, of course.
This study doesn’t address the other real problem – you may expand Medicaid dramatically, but having that insurance doesn’t guarantee seeing a doctor. Other studies have shown that increasing the insurance base doesn’t decrease emergency room use, but instead increases it in the face of a building doctor shortage. And then, of course, there are those doctors who simply won’t take Medicaid (or any more than they now have) because of the low reimbursement rate.
So when the White House’s Nancy-Ann DeParle says:
“The Affordable Care Act creates changes to the health care system that typically don’t show up on an accounting table,” she said. “We know these new provisions will save money for the health care system, even if today’s report doesn’t credit these strategies with reducing costs.”
She’s also leaving out that part of the problem that doesn’t “show up on an accounting table” as well.
Bottom line, we were sold a lemon, a bill of goods, snake oil. All the ACA does is give the government a legal ability to intrude deeper and deeper in a market it really has no business being in at all and to distort that market even further. And that’s precisely what is going to happen. We all know that when government gets in as deep as it will be in this market, nothing ends up “costing less”.
Trust me – this example I’m about to paste below isn’t the first nor will it be the last example of government health care and how it will work. Or in this case, how it works now:
A Hollywood woman who was dropped from Medicaid coverage while needing a bone marrow transplant is finally getting the coverage and treatment she needs to stay alive.
Diana Smith is battling a rare form of Leukemia and needs the transplant to survive. She managed to raise money to pay for it thanks to her friends and the community, but then last week she found out her Medicaid coverage was dropped – putting her operation on hold.
Yes, that’s right, she was dropped by Medicaid and had to raise the money herself to have the treatment she needed to survive. She’d been in remission after chemo treatments which was a prerequisite to receive the bone marrow transplant. Here’s the ironic part:
But her hopes of receiving the transplant were dashed in March, when she says, the Social Security Administration contacted her –without her soliciting it — and told her that her three year-old son was entitled to receive Social Security disability payments. Even though she didn’t ask for it, she signed the form and received her son’s first check.
In April, Medicaid canceled her universal health care policy because her income level had risen with her son’s payments – making her ineligible for the insurance program.
The problem is Jackson Memorial Hospital could not provide the procedure because the risk is too high. The universal policy from Medicaid helps shield the hospital from liability in this kind of case. Without it, they are subject to liability issues.
Even though Smith offered to cancel her son’s disability benefits, she was told it’s too late.
The bureaucracy had spoken, she was denied any appeal and Smith was left to fend for herself. The not so amazing thing is she found a way to do that through the charity of others. But the “compassionate government” – which promised to make this all better and ensure that things like this wouldn’t be perpertrated by heartless and evil insurance companies – could care less.
Now you may say this is just an odd-ball exception to what normally happens – a set of circumstances which aren’t normal or what one could consider routine. Well, it was easily fixable, wasn’t it? Just accept her offer to cancel the disability benefits, schedule repayment and resume her treatment. Why was it be “too late” to do that? What possible reason makes it “too late”? Obviously she needed the treatment, had undergone the requisite chemo to get to a state of remission and was scheduled to receive it because of that. How could a compassionate government not quickly cancel her son’s unsolicited disability payment and resume her treatment?
Easy – bureaucracies aren’t compassionate. They’re inflexible rule followers, most of which they write themselves. One government program’s bureaucracy (Medicare) denies more claims per year than do the evil, heartless insurance companies. Stories like Diana Smith’s aren’t particularly unusual, nor will the likely be rare if we ever have a fully government run system. Bureaucracies will rule and their only rule will be to follow the rules – their rules, and you’d better know them – or find yourself in Smith’s position.
Byron York’s count has it at 209 “no”, 204 “yes”, with 18 undecided. David Dayden at FDL puts the count at 191 “yes”, 206 “no” (205-209 with leaners), with 17 undecided.
As you can imagine, the pressure on the remaining 17 or 18 is going to be enormous. Bart Stupak claims it has been a “living hell”.
Still nothing out of the CBO which means a Saturday vote is unlikely.
Obama’s interview with Brett Baier of Fox is likely to do nothing to change minds about health care, just as his speech in Ohio had little effect. He may as well have gone to Australia as this is shaping up. But it is clear he and the Democrats want to avoid any talk about “process” and continue to wave it away as something the American people just aren’t concerned with. Big mistake.
And although he wouldn’t own up to it in the Baier interview, Obama has told others that the fate of his presidency is on the line with this vote.
All it took for Dennis Kucinich to cave was a 45 minute ride on Airforce One. The liberal Ohio Democrat has found a way to rationalize his change of mind.
If you don’t think this is having an effect throughout the land, just remind yourself of the Scott Brown race, where Brown ran for liberal lion and chief health care reform advocate Teddy Kennedy’s seat as the “41st vote against health care”. Then cast your eyes west and note that Barbara Boxer, another Senate liberal is vulnerable as well.
Speaking of California Senators, Dianne Feinstein’s “National Insurance Rate Authority” has been dropped from the reconciliation bill. Since it has nothing to do with budgetary matters, it can’t be included. If this monstrosity passes, look for her to attempt to add it at another time as an amendment to some other Senate bill.
And Code Red suspects two new “yes” votes for the bill, from California Democratic Reps Dennis Cardoza and Jim Costa have to do with announced water allocations for the water starved Central Valley in the state. Yesterday the Interior Department moved up the March allocation, something never done in the past. A “back room deal” for their votes?
One of the things Baier did in his interview is question the health of Medicare. He got the president to admit that the bill doesn’t fix the structural problems of the program. More and more medical providers are recognizing that problem and opting out of taking Medicare patients because they claim they can’t afford them. And if Medicare is in bad shape, Medicaid is in worse shape. As if to emphasize that point, drug store chain Walgreens has announced that after April 16th, it will no longer take new Medicaid patients.
The point, of course, is this “reform” does nothing to address the structural problems of the two government run systems which are at the core of the health care cost problem in the US.
Last, but not least, the Attorney General of Virginia has announced the state’s intention to sue the federal government if the present health care bill is passed under the “deem and pass” rule. Virginia has already passed a law declaring it illegal for the federal government to require individuals to purchase health insurance.