Big Government & Murphy's Law - An Infringement on Liberty

In light of the current debate on The Patient Protection and Affordable Care Act (aka Obama Care), there is no better time to discuss some of our Federal Governments so called UTOPIAN, good for America, saves the children and elderly policies and their resulting unintended consequences. Social Security Looking at face value of this government program you would say how could anyone be against it. A program in which money is taken out of a person's pay check via payroll taxes and given to the government to hold so that the person can receive guaranteed income checks once they reach the retirement age. At first glance you would think that this program is not so different than current 401k or IRA type plans. There is no doubt that it is a humane and logical approach to enable citizens to have funds available for them during their retirement years. It should reduce the need for government assistance programs in those golden years of a person's life. So what are some of the unintended consequences from what looks to be a very good program? First, let us start with the government being in control and confiscating a person's income. With the government in control of your income you naturally lose some freedom. For example, when the Social Security Act was passed in 1935 the amount of payroll tax, OASDI, was 1%. Today, it is 6.2% from your paycheck and 6.2% from your employer for a total of 12.4%. So let me understand you have to take more of my money to pay for benefits going to others? Like many government programs their answer is to raise taxes to keep that program running (CBO Cuts Forecast for Social Security Fund Life Span, Sees Debt Topping GDP in 2021 | ThinkAdvisor). In addition, some will insist that Social Security does not create debt and interest on that debt. I would disagree and say that it does. You may ask how can a system in which the people's money is put in a trust fund and the benefits are paid out from the trust fund cause the US to incur debt? From 1984 to 2009 the social security trust fund actually had more money coming in than being paid out. Since the money is not kept in a so called "lock box", the government can use those funds to allocate to other programs and replace the social security funds with an IOU (Treasury Bonds). Guess what happens when you have to borrow money to pay back the IOU? You generate debt by selling bonds to replace the IOU. In addition, we pay interest on that debt (Gov't Owes Social Security $5 Tril; You'd Pay It Back | Investor's Business Daily). Finally, guess what happens to that money that is confiscated from your check for social security if you pass away before you benefits begin? Well, your family gets a fraction of what your benefit would be up to a maximum limit. Why shouldn't you be able to will the entire amount to your beneficiaries like you can with a 401k or IRA? Bottom line, when you rely on a government system of forced savings with their rules you get less bang for your buck with little recourse. There are many other disadvantages to social security vs a 401k or IRA that I could go over, but I think you get the point. Government may pass what looks to be a great program yet in practical application is far inferior to a private citizen having the liberty to take that money and save it according to their choice.

Medicare A government health care program in which a payroll tax is deducted from a person's pay in order to provide them health care coverage at the age of 65 (with some exceptions). Again, a program that has great intentions of a noble cause. Indeed it did fundamentally change the medical system in this country. Once you take a look at the historical record of this coverage you will see the positives of the bill but also some major unintended results. Let us look at the funding of Medicare. Today a 2.9% payroll tax is used to fund Medicare. The current trust fund for hospital insurance is on track to be depleted by 2026. As of 2008 the payments out are more than the revenue coming in to fund the program. So how has the government dealt with fund depletion? Well you either increase your revenue or decrease cost. To increase revenue to the fund you have to increase the payroll tax. The initial payroll tax when the program was started was 0.35% and now is 2.9%. This puts you at the mercy of the government. At least in the private sector you would have a choice of another policy. Not everyone can afford these increases and hurts those that have the least. The other way you are at the mercy of the government is when they reduce cost. They do this by either reducing coverage, make it tougher for a procedure to be covered without additional pre-approval paperwork, and/or reducing reimbursement to the provider. In all cases, it simply becomes inefficient for a provider to service the individuals with this coverage. You can see how Murphy's Law kicks in and those that suffer are the patient and to a lesser degree the provider from an economic and patient-provider relationship stand point. Did you ever wonder why the market came up with Medicare advantage plans that supplement the primary coverage from Medicare? It was because the coverage and reimbursement of Medicare has been dwindled over time and the cost of what was not covered is passed on to the patient. Now if the program was so great why would there be a need for a supplemental policy? Finally, compare the amount of fraud you see in government run programs to those of the private sector. It is by far that the waste, fraud, and abuse happens to a higher degree with government run Medicare than private insurance policies. Merrill Matthews points out that Medicare loses approximately 10 to 15 percent in fraud, the rate for private insurers has been estimated to be only 1 to 1.5 percent (Medicare’s ‘Efficiency’ | National Review). This ultimately hurts patients as this impacts their coverage and cost to make up for this abuse. Obama Care So with the two examples above why would you think that this government program, which basically regulates the private insurance market and impacts every citizen in this country, will be any different in regards to Murphy's Law. The answer is simply it isn't. Let us take a brief look at some of the unintended consequences from this law.

• Insurance premiums have risen above the rate prior to this laws passage

• A part time employment increase and more part time employee hours are being cut to 29 hours or less

• Employer provider insurance is being dropped. Employees are forced to go into the exchanges and not receive any assistance/subsidy to defray the cost

• A 16 member group, United States Preventive Service Task Force, will determine appropriate procedures and preventative care recommendations that the insurers will have to adopt. This group has been labeled as the "death panel".

• Subsidies to purchase insurance. The federal employees will be subsidized while private citizens will not be subsidized when thrown into an exchange. Again another tax that can be increased over time as the program's inefficiencies are exploited

• Waivers to some organizations and businesses yet not for everyone

• Federal control of private insurance offerings through regulations and the Secretary of Health and Human Services.

• Nothing in the bill reduces the rise in medical cost

• The law is estimated to cost 2x more than the original estimate which will add to the deficit and debt

• The IRS will be enforcing the law and their recent track record should disqualify them to having access to our medical data
  

I can keep going, but you can see as more is discovered about this law it is tracking to be one of the worse pieces of legislation passed. In my humble opinion, it will destroy the foundation of our workforce, devastate the prescriber-patient relationship, allow non-medical personnel access to our private medical information, and allow politics to influence the quality of our health care system. Why did you need to try and overhaul the entire system? Why did the law not include measures that would decrease medical cost? Some simple changes to the original system could have been (see Real Healthcare Reform post for further detail):

• Wiring medical claims: allowing prescribers access to patients medical claims, procedures, and their results which would decrease the chance of a duplicate test....

• Allowing the purchase of insurance across state lines. The formation of national insurance pools would provide competition and choice which would keep purchasing cost tied to a free market system

• Catastrophic coverage policies

• Health care savings accounts subsidized by employers and government to help defray the cost of purchasing insurance

• Tort reform to limit damages for those practitioners that used evidence based protocols

• Reimbursement tied to use of evidence based protocols

• High risk insurance for those with preexisting conditions

• Portability - once you have purchased an insurance policy you can take it with you. It is your private policy that cannot be influenced by the employer

These are just some of the reforms that could have been made that would reduce costs but not have the unintended consequences as well as preserve individual choice and liberty. There are plenty of other big government programs I consider failures (VA system, ...), but I am trying to limit the scope and size of this post. So I urge all of you to fight for your freedom and fight those in power that have put themselves over you. Remove them from office in 2014 and 2016. We cannot afford weak kneed politicians that put their yearning for power over what is good for the people. The time is now to speak as one voice and force the change needed. I appreciate you taking the time to read and consider my opinions. So until next time, Make Each Day Count! Beach Bum Philosopher