Economic Realities and Obama Care

1) While the price of any product or service is primarily the result of supply as modified by demand, the cost of producing the product or supplying the service always rises or falls to approach this price.

2) In the absence of price competition and buyer resistance, both price and cost rise to unsustainable levels.

3) When a product or service is primarily paid for, not by the consumer, but by third parties, buyer resistance is rendered ineffective and price competition is severely compromised.

4) When a product or service is perceived as essential to a minimum quality of life, or as an entitlement, and is paid for by third parties, both price competition and buyer resistance are nullified and both price and cost will rise to unsustainable levels.

5) In economics, perception is reality.

6) When a product or service is perceived as essential or an entitlement, is paid for by a third party and the price and cost have risen to an unsustainable level, it is difficult or impossible to significantly reduce the price and cost without severe disruptions to the availability of the product or service. Therefore, if more funds and taxes are applied to Health Care, they will be quickly absorbed by increased costs; stability will not be achieved by increased funding.

Just understand, I am not supporting Obamacare for several reasons. It is far too large and invasive for any government bureaucracy to implement and manage. Like most governments programs, it tries to do too much too quickly. Like all governments programs, it starts with good intentions, then over manages with detailed regulations. It was intentionally misrepresented to the voting public, and to many members of congress in order to gain support.

Having said that, I think The Affordable Care Act attempts to address the two most critical problems that are causing the cost of Health Care in America to spiral out of control. These problems are: lack of pricing competition, and lack of buyer resistance. Price can be effectively controlled only by price competition and/or buyer resistance, and cost can only be controlled by controlling price.

Obamacare attempts to address pricing competition in several ways. By including all medical services in all insurance plans, eliminating prior condition considerations, and keeping only co-pays and deductibles as variables, insurance providers are more directly competitive so that premiums will be based more on the size and health of the population they can attract as subscribers, and the prices they can negotiate with medical providers (doctors, hospitals, laboratories, and drug providers). This gives insurance providers more incentive to pressure hospitals to find ways to reduce prices, and to price premiums to attract as wide a cohort of subscribers as possible. Obamacare also mandates a larger population of subscribers making it feasible to lower prices.

Buyer Resistance is almost completely eliminated in the present system because most people have insurance paid for by their employers and with minimum deductions and co- payments. The Affordable Care Act discourages minimum deductions and co-payments, and encourages subscribers to lower premium payments by accepting higher out of pocket costs. This reduces risk and costs to insurance providers, and more importantly, it provides incentive to subscribers to shop for lower costs (lower out of pocket outlays), and to avoid unnecessary medical procedures and doctor visits. This last could, by itself, reduce overall Health Care Costs to a very substantial degree Some will argue that these policies will be detrimental to the health of some people, but I reply that any lack of health care will be self imposed. I submit that people desperately need to become more self reliant and less dependent on government. In any case, something has to change. Health insurance is now mostly unaffordable and it is rapidly getting more so.

Presidential Aspirations

As I watch the Alice in Wonderland like dramas of the Obama Administration play out day to day, I wonder at the blind ambition that compels any man to seek the Presidency of the United States. It’s not as if being elected President is the result of thoughtful assessment of the candidate’s character and intellect, or his wise political philosophy, by a discerning majority of sincere and dedicated voters. Instead it is the result of an enormously costly popularity contest in which any deception or outright lie is expected and accepted so long as it is beneficial to the prejudicial inclinations of some of the voters. The voters often elect the most artful liar, or the most free spending candidate, usually to the detriment of wise self-government. I see little to enhance a person’s self esteem in this shoddy process.

Once elected, the President typically is forced to articulate ever blacker and more outrageous lies in order to appease the disparate cohort that financed his campaign and voted him into office. But now, his lies are parsed down to the last syllable by a loyal opposition who are expert in portraying the slightest deviation from the iron clad TRUTH as flagrant and deliberate prevarications of the most dangerous and un-American kind. Not only that, but what he does not say is similarly analyzed and construed in any way that will be perceived to his detriment. Even when he attempts to tell the exact truth, the opposition will find a way to interpret his remarks to his disfavor.

When a President has a good idea or policy, it is usually rejected by the opposition merely because it is his idea and to welcome it would seem to support him, a perception to be avoided at any cost. The opposition we speak of includes all of those who did not vote for him, and some who did, which often means a majority of the population.

From the above, it would seem that I consider Presidential lying to be an avoidable evil. In fact I believe that, while lying may be evil, it is also unavoidable if anything is to be accomplished. A majority of the President’s supporters as well as of the general population will not agree to any policy or proposed legislation if all the facts, warts and all, are accurately presented. This is because it is impossible to invent a policy that is acceptable to every, or even most, political factions.

The most powerful example of this conundrum is the Affordable Care Act, or Obamacare. So many lies, half-truths, and misrepresentations were presented by the President on nationwide television for the purpose of attracting enough votes to pass it have been exposed as the ACA was implemented, that the public is understandably disheartened. The President’s opponents have left no stone unturned to insure that every voter who has access to television has personally witnessed the President telling bald-faced lies.

As if this were not enough to completely discredit the President, the inept, amateurish, and premature implementation of Obamacare has exposed the incredible lack of foresight and planning supporting this intrusive, massive, camel-like piece of legislation. Much of this failure can be attributed to the need to get this controversial revision of healthcare fully implemented before the next election, after which the required congressional votes may no longer be forthcoming.

Another indication of the haste with which Obamacare was cobbled together is the inordinate expense charged to the construction of the failed website, which was to be the key access to the insurance companies. The cost of this website has been reported as 400 to 600 million dollars, an unbelievable amount to spend for an internet portal which is less complex than those operated by Amazon and many other retailers.

The Global Warming Concept

A compelling quotation of Charlotte Perkins Gilman was printed in The Star recently: “A concept is stronger than a fact.” She was probably referencing a feminist issue of some sort, but this wise aphorism has far reaching application. The first definition of ‘concept’ in the Encarta Dictionary is as follows: “Something thought or imagined. Something that somebody has thought up or that somebody might be able to imagine.” Among the synonyms offered by the dictionary are: idea, notion, thought, perception, impression, theory, hypothesis and, finally, belief. This definition and list of synonyms makes the point that a concept is not dependent on facts, and the Charlotte Perkins Gilman quotation makes the point that a concept may very well over ride any facts pertaining to the subject at hand.

Think about the concept that making guns illegal will reduce violent crime, a notion held and strongly pursued by many otherwise logical and practical citizens. In their minds, the concept is far stronger than the obvious fact that the government will be no more able to eliminate illegal guns than it is able to eliminate illegal drugs, making the NRA’s self-serving slogan “When guns are outlawed, only outlaws will have guns” a good deal more sensible than the high minded concept so strongly held by many. Think about the concept held by millions of pacifists that war is always avoidable and that our government is at fault for participating in such evil, self-destructive nonsense, ignoring the fact that it is necessary to participate in war if we are to avoid being destroyed by the many malevolent forces existing all over the world. It is as if these folks had no knowledge of the past; their concept of peace is stronger than the facts of history.

In remarkably similar fashion, the concept of global warming has so overwhelmed the common sense of a part of the scientific community, the media, the political powers that be and, apparently, the public, that the facts of world climate are no longer even relevant. It is now assumed by all that the facts of what drives world climate are all known and understood and that these facts are conclusive in the accepted notion that not only is the world’s climate warming disastrously, but that this warming is driven by human activities and that it can be reversed if we just give up using carbon based energy. But in truth, all the facts related to the world’s climate are not known and understood, and the facts that are known (and perhaps understood) do not support any part of this global warming concept.

No matter; as Ms. Gilman informs us, the concept is stronger than the facts.