American Elephants

A Little History for Today. by The Elephant's Child
November 17, 2012, 9:10 pm
Filed under: Capitalism, Economy, Freedom, History, Politics, Taxes | Tags: , ,

Ronald Reagan in 1975, on Johnny Carson’s “Tonight Show.”


ObamaCare versus The Doctors in Oklahoma. by The Elephant's Child

Back during World War II, wages were frozen, so in order to attract and reward employees, employers began offering health insurance as a benefit. And here we are. It seemed like a good idea at the time. Third parties pay the majority of medical bills, so competition is not allowed to fun free. Yet when free enterprise opens up the marketplace, the result is better care for a remarkably lower cost. A third-party payer system is one in which A buys goods or services from B that are paid for by C. Because insurance companies or the government pick up the tab, patients don’t have the normal incentive to choose the best value. In the current situation patients often do not know what procedures cost.

Three years ago, Dr. Keith Smith, co-founder and managing partner of the Surgery Center of Oklahoma took a radical step in the health care industry. He posted a list of prices for 112 common surgical procedures online. He and his partner Dr. Steve Lantier founded the Surgery Center 15 years ago, after they became disillusioned at the way patients were treated at St. Anthony Hospital in Oklahoma City, where the two men worked as anesthesiologists. . They bought the shell of a former surgical center with the aim of creating a for-profit facility that could deliver fist-rate care at a fraction of what traditional hospitals charge.

The Surgery Center demonstrates that you can deliver high quality care at low prices.”In any other industry, tons of attention is devoted to making systems more efficient, but in health care that’s just completely lost,” says Dr. Jason Sigmon, an ear, nose and throat surgeon who regularly performs procedures at both the Surgery center and at the Integris Baptist Medical Center which is run by the non-profit Integris Health, the largest health care provider in Oklahoma.

Every employee, except for clerical staff,  at the Surgery Center is directly involved in patient care. Human resources and building maintenance are the responsibility of the head nurse. No administrative employees. (the top 18 administrative employees at Integris Health in 2010 received an average of $413,000 in compensation). Because bills charged by Integris are paid primarily by insurance companies or the government, the hospital gets away with gouging for its services. A procedure that Dr. Sigmon performed at Integris in October 2010 called a “complex bilateral sinus procedure” which helps patients with chronic nasal infections. The bill, which was strictly for the hospital and does not include Sigmon’s or the anesthesiologist’s fees totaled $33,505. When Sigmon performs the same procedure at the Surgery Center, the all-inclusive price is $4,885.

ObamaCare is, first of all, very badly written law. It assumes that America will simply salute and follow its regulations. But people and businesses respond to incentives.  Companies are getting out of the health insurance market and self-funding. Hospitals are reorganizing and Doctor’s groups are reorganizing. Some doctors are establishing “concierge” practices where patients pay a concierge fee to a physician for yearly care. There will be many other responses as ObamaCare begins to take effect.

On the other hand, a new provision buried in ObamaCare effectively prohibits doctors from starting their own hospitals or expanding the hospitals they already own, which has been widely interpreted as a give-away to the American Hospital Association — the way things are done in Chicago politics. The Surgery Center is exempt from this statute, since it is technically not a hospital and does not accept Medicaid or Medicare.

Smith and Lantier believe that market-driven facilities like theirs will thrive and proliferate as consumers catch on to the very costly collusion between Big Government and Big Health Care. Affordable health care is possible.

There Wasn’t a Mandate, Mr. President. by The Elephant's Child

President Obama on Wednesday announced that any budget deal must include $1.6 trillion from higher taxes. “When it comes to the top 2%, what I’m not going to do is extend further a tax cut for folks who don’t need it.” He argued that we are never going to get anywhere near balancing the budget without more revenue from people earning above $250,000 a year.

Economist Stephen Moore points out that “the country needs an economy that will create more of the ‘millionaires and billionaires’ that Mr. Obama loves to excoriate, not more taxes from those who already exist.”

Mr. Obama also said Wednesday that “The math tends not to work.”  Closing tax loopholes wouldn’t provide enough revenue for a budget deal. Thus, tax rates must go up immediately for those making more than $250,00 a year, even if this means sending the economy over the January 2013 tax cliff. He’s betting that the Republicans will blink.

Obama’s latest line that any budget deal must raise taxes by $1.6 trillion, which is $800 trillion more than he had agreed to with Speaker Boehner last year.  Stocks promptly took another dive on the President’s remarks. The Dow fell 185 points, and is now down 5% since Mr. Obama’s re-election. The President is playing political chicken.

Democrats in the Senate have announced that there will be no deal without another stimulus. Previous attempts to “stimulate” the economy have worked so well that one cannot imagine what they’re thinking, but it must be something along the lines of “this time it will be different.”

The President is skilled at campaigning, if you favor Chicago-style campaigning. And is the Biggest Government Spender in world history. Obama’s first major legislative initiative was the so-called stimulus, which increased future federal spending by nearly a trillion dollars, the most expensive legislation in history up till that point. “You don’t promote economic recovery, growth and prosperity by borrowing a trillion dollars out of the economy in order to spend a trillion dollars back into it,” explains Peter Ferrara.

After only his first year, Obama’s spending binge had climbed to 25.2% of GDP — the highest in history except for World War II. The average during President Clinton’s two terms was 19.7, during Bush’s two terms it was 19.6%, and during the 60+ years from World War II until 2008 — 19.7%. Obama’s 2013 budget shows federal spending increasing from $2.938 trillion in 2008 to an all time record $3.796 trillion, an increase of 27.3%.

President Obama is a Big Government Spender. His ideas are concerned with what government should do which revolve around ever more government control of the entire economy. More spending, more regulation, more control. He has told us innumerable times that “government service” is the important job in the economy. He does not like business, has no respect for business, and disapproves of profit.

The President wants higher taxes and higher federal spending to “spread the wealth around.” He believes that would make the economy grow faster as the middle class and the poor spend the money “the rich” were wasting in savings and investment.

In a market economy, if consumer demand is insufficient to clear the market, the price of the good or service will fall until demand equals supply. President Obama’s concept of raiding the savings and investment of “the rich” to spread the wealth around and thus increase spending and consumption is exactly backwards. If those who make the sacrifice to save and to take the risk of investing find that the government is going to seize their savings and investment when they are successful reduce their savings and investment and take their money elsewhere where it will not be confiscated.

Many economists are predicting a new recession, double digit unemployment, collapsing real wages and incomes and new poverty records due to Obama’s policy intransigence. Increases in the top tax rates of nearly every major federal tax are already enacted and will go into effect on January 1. That will be on top of the highest corporate tax rate in the world, the end of the temporary payroll tax cut, and the end of the Bush tax cuts. It’s not going to be pretty.

Barack Obama doesn’t understand economics, and he refuses to listen to those who do.

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