American Elephants


ObamaCare Promises What It Cannot Deliver. by The Elephant's Child

The biggest problem with ObamaCare has always been the possibility that it would be implemented. The bill is so poorly conceived, so poorly written, that it is bound to be a disaster. What will happen when it is actually fully implemented remains to be seen, but everything the government itself was supposed to do has failed. Everything. Failed completely.

  • The CLASS Act: A pathetic attempt to create long-term care insurance was dumped by the administration after it became clear that it was impossible to do.
  • The 1099 provision: Was absurd. It required businesses to issue a 1099 form to any vendor from whom they purchased $600 of goods or services in a year. It was repealed after Business owners explained what an impossible burden it was.
  • Federal high risk pools: Created and funded, but nobody enrolled. Cost too much and was too complex.
  • Retiree health Subsidies: Large corporations and unions were happy to accept free money for what they were doing anyway (providing health benefits to retirees) but the money ran out in a third of the time expected.
  • CO-OPs: Congress put so many restrictions on what was supposed to be a non-profit health plan in each state that none have come into being despite billions being spent.
  • Small employer tax credits: The complexity and confusion of these credits meant than only a handful of companies applied.
  • Medical Loss Ratios:The MLR Requirements had the predictable effect of discouraging innovation and higher-deductible or “mini-med” health plans.
  • Medicaid expansions: The Supreme Court made these expansions voluntary for the states and it looks like fewer than half will do it.
  • Health IT: The HITECH bill was enacted separately from ObamaCare, and billion have been spent, but reports from the field indicate that the top-down efforts result in lower quality and less efficiency.
  • Limits on FSA funding: The families most disadvantaged by the new $2,500 limit on FSA funding are those with special needs children.
  • Limits on the Medical Expense Deduction: Beginning in 2013, a taxpayer will be able to deduct only those medical expenses that exceed 10% of income, up from the current 7.5%. Those most hurt will be the most medically needy families.

The screw-ups have been such a mess that Kathleen Sebelius has issued thousands of waivers issued to selected companies and unions. There were no qualifying standards for who got a waiver for what. All up to the kind of day Ms. Sebelius was having, I guess.

ObamaCare promises what it cannot deliver. The theory was that giving people health insurance would mean that they could get medical care that the uninsured are not now getting. There are not enough doctors, nurses and hospital personnel, in thousands.  The medical professions have become less desirable, large numbers of doctors say they will retire early, or just quit.

ObamaCare does not pay for itself. There is a huge increase in the demand for care, but no increase in supply. Since people will not be able to find doctors, emergency room use will skyrocket. Democrats lied about the cost, but it is far worse than the worst predictions.

ObamaCare mandates and subsidies will destabilize large sections of the economy. Already happening, as most major national restaurants are switching their employees to part-time to avoid having to pay for insurance that they cannot afford.

The incentives are all wrong. Insurers must charge the same premium regardless of expected costs. All plans will have the incentive to attract the healthy and avoid the sick. The incentive for providers becomes getting adequately paid. The incentive for insurers or government is cutting costs.

The individual mandate: If weakly enforced, people will have an incentive to stay uninsured when healthy, enroll after they get sick, then drop coverage when well again. If strongly enforced, it will strain every family budget. There is nothing in ObamaCare that will make medicine or insurance cheaper.

These problems are entirely inherent in the legislation itself, as it was devised.



What Does Barack Obama Want? by The Elephant's Child

Everywhere the talk is about The Fiscal Cliff, and the negotiations. Everyone wants to know what Obama wants. He wants to tax the rich, and Jay Carney has assured us that he will veto any bill that does not tax the rich. Obama is apparently going to go out campaigning to rouse the nation to lobby for the bill he wants passed, his way.

I’ve pointed out that Alan Reynolds said that “Obama doesn’t understand economics and apparently won’t listen to anyone who does.” He also doesn’t understand negotiations. His idea of negotiations is to force you to agree with him. He hates disagreement.

An odd trend has taken place in the United States. The two political parties have grown more distinctly separate, more dramatically opposed to each other. I don’t know why I’m surprised any more, but after the election, there was an outpouring of really angry Democrats, calling conservative talk shows, tweeting, attacking Romney signs or bumper stickers. They won, and we weren’t humble enough, defeated enough, subservient enough. I’ll admit I was really disappointed in the election, but they won, and what was that all about? Why were they so angry about winning? We are not supposed to disagree.

It’s not just that. There are Republican ideas and there are Democrat ideas, and never the twain shall meet. Republican ideas are wrong, lies, false, stupid, and, of course — racist. Republicans like Fox News because it is indeed more fair and balanced. Obama would prefer not to have any representative of Fox in the press corps, or on the plane.  Democrats hate Fox: wrong, lies, false, stupid, and, of course— racist.

Democrats believe in Keynesian economics, that a downturn results from a lack of demand, and to fix it you have to create demand, so they keep trying to pump money into the economy in one way or another, in hopes that people will spend the money and thus jump-start something or other. Doesn’t work, has never worked, but hope springs eternal.

Indeed, Obama’s $800 billion neo-Keynesian stimulus package actually impeded economic recovery. According to John B. Taylor, a Stanford University economist who carried out an in-depth study of the stimulus, the government’s spending did not result in growth and jobs.

“Individuals and families largely saved the transfers and tax rates,” Taylor wrote.”The federal government increased purchases but by only an immaterial amount. State and local governments used the stimulus grants to reduce their net borrowing…rather than to increase expenditures, and they shifted expenditures away from purchases toward transfers. Some argue that the economy would have been worse off without these stimulus packages, but the results do not support that view.*”

“Obama’s own views about what he has, and has not, learned during his four years in the White House say a lot about why he has been a failure as president.*”

The area in my presidency where I think my management and understanding of the presidency evolved most,” Obama has said,”and where I think we made the most mistakes, was less on the policy front and more on the communications front.

You mean he didn’t make enough speeches? The greatest communicator since Ronald Reagan had — a failure to communicate? Well, that’s why he’s going out to rouse the compliant.

Obama’s proposal to raise taxes on the rich would reduce the deficit from $1.1 trillion to $1.02 trillion, maybe. The rich have lots of options, and can rearrange their affairs to pay less in taxes. The rich are moving out of high tax states and taking their businesses with them. They can move their money around too.

The owners of 990,000 small businesses, defined as those with 50 or more employees, report their income on their 1040 tax returns. In response to the new costs of ObamaCare, many are reducing their employees to 49 or less.

President Obama does not believe that small businesses number among “the rich” as Republicans claim. Small businesses are the neighborhood barber, the shoe shop, and the little bookstore. He even made a point of visiting a small bookstore in the capitol, to celebrate small business, this weekend.

So what does President Obama want? He wants to make speeches, because that’s where he’s comfortable. He wants to tax the rich because he believes in redistribution of wealth and believes he has a mandate to do so. He wants more revenue to spend. He wants people to stop disagreeing with him. And he doesn’t think there are any consequences from raising taxes, so as soon as he’s inaugurated for his next term, he’ll slap on a carbon tax, because that’s what his green supporters want. Redistribution of wealth usually turns out to be redistributed to the ruling class, and the poor are just poorer than ever.

Time for Walter Wriston again:

Capital will go where it is wanted and stay where it is well treated. It will flee from manipulation or onerous regulation of its value or use and no government power can restrain it for long.

*Edward Klein: The Amateur




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