First Conservative Blog

Conservative Blog Post for October 13, 2009

‘Duh’ Economics   

Democrats this morning scrambled to contain damage resulting from release of a report highly critical of the health care takeover plan currently being debated in the US Senate.  The report – paid for by the Insurance industry and undertaken by highly respected Price Waterhouse Coopers – claims that the current plan would drive costs for an average individual up by at least $600 per year and would result in additional premiums of $1,700 per year for family coverage by 2013. 

This prediction drew the predictable Democrat reaction.  “Hatchet Job,” said a spokesperson from Senator Max Baucus’ (d-MT) office.  “Fundamentally Flawed” added AARP.  Without specifically addressing the reasons the study was flawed or incorrect, liberals proceeded with their usual method of handling dissent – impugning the motivations of the messenger.   “Insurance Company and Industry Greed,” seemed to be the central theme coming from Congressional Democrats. 

Price Waterhouse Coopers has been crunching numbers well before Barack Obama was riding the waves and attending his private high school in Hawaii.  The well-respected firm wouldn’t put its professional reputation into the cross-hairs of the Democrat party character assassination squads unless it was absolutely sure of its position – regardless of who paid for it.   Despite what Democrats claim, corporate integrity is alive and well in the US. 

The study identifies three central economic themes that Democrats can’t seem to grasp.  So for the purpose of identification, we’ll call these  ‘Duh’ principles .  Leftists who reject or can’t understand the principles of Economics just won’t get it, but perhaps the use of ‘Duh’ can shame them at least into listening.

‘Duh’ Principle 1 – Additional requirements placed upon an industry drives up costs to providers. 

As the Price Waterhouse Coopers study points out, heaping more responsibility on the industry will result in rapidly escalating costs to those organization that currently provide insurance services.  The only thing difficult to understand here is why Democrats have such a hard time understanding. 

Covering pre-existing conditions – although perhaps a noble objective – requires the industry to assume payment responsibilities for conditions they do not currently have to cover.  Does this increase their costs?  Of course it does!  There are a myriad of new requirements in the proposed legislation under consideration in both houses of Congress as well.  Each will drive up provider costs.

‘Duh’ Principle 2 – Higher provider costs means higher prices for consumers.

Will these new requirements directly increase costs to consumers?  It better or the company will soon fail.  Every organization must generate a profit for its shareholders or owners to remain viable.  It also may be that the government intends for insurance providers to fail so that the government option – or complete federal takeover of the insurance industry – will become the only remaining course.

When Democrats can’t tax value from an offending group or industry, they typically resort to adding costs and responsibilities to somebody else.  Astonishingly, the Democrat theme is that shareholders – not customers – absorb cost and tax increases.   As shareholders are viewed as members of the oppressive wealth class, this is an acceptable course.  

Shareholders can’t operate any business without a respectable profit margin.  They will compel the organization to pass on any additional costs to consumers.  And if all insurance providers must meet the same new set of requirements, all insurance company prices will rise concurrently.  There will be no advantage in moving from one provider to another.   One additional note on shareholders; most of these folks are average Americans that own portions of health provider companies as part of their stock holdings or 401(k) plans.  These aren’t rich New Englanders (like the Kennedys and Kerrys) who spend their summers on Martha’s Vineyard.

Unfortunately for them, Democrats are going to get blamed for rising health care costs at the same time service levels to customers will decrease.   As there are no Republicans around to blame, Washington lefties will have to face public wrath on their own.    So what are they to do?  There really is only one option – which the left will never accept.

‘Duh’ Principle 3 – Only by decreasing operating costs and lowering risk can the cost of health care be reduced. 

In addition to dumping service requirements on the health care industry, Government can influence the cost of doing business in only two additional ways; setting legal standards and taxation.  Democrats have allowed the legal industry to drive the cost of American health care well above the rate of inflation. Risk of being sued is a primary financial consideration for every medical professional.   And although nearly all Americans agree that fair compensation should be paid to victims of malpractice, the punitive damages – those damages that are awarded to a victim and his attorney as punishment for a wrong doing – are out of control.   John Edwards has a mansion and a mistress as proof of how much money the legal industry bleeds from the misfortunes of others.

Physicians must limit their exposure to lawsuits by ordering every test, exam and treatment imaginable for each patient – regardless of the likelihood of success.  This is termed ‘defensive’ medicine, which provides only marginal benefit to the patient and significantly escalates cost to the provider.  A legal reform effort that would limit punitive damages but leave actual damages up to court discretion would be hugely helpful in lowering the cost of doing business in health care.  And lowering costs allows physicians and insurance providers to compete for customers with better rates.   Unfortunately, the American Bar Association and the legal community is a primary owner of the Democrat party and will never allow their ability to leech a huge income off the misfortunes of others to be restricted. 

Increased taxation only elevates costs to the provider and applies further upward pressure on the price structure.  Upward pressure applied to the entire industry only raises internal costs, and as we have already seen raises costs to consumers. 

So the three ‘Duh’ Principles of Economics are obvious to all who look, read and research the health care issues.  Democrats who live as ostriches or only watch CNN, continue to believe that laws of economics do not apply to them or their policies.  And even though consumers may be gullible for a while, consumers can add and subtract.  When they see their costs outpacing their ability to pay, Democrats will be held accountable. 

Obama’s Health Care Failure – Why the Message is Failing to Change Minds

If Democrats thought that the nightmare of townhall meetings was over, the President announced yesterday that He will be delivering a speech on heath care next week.  After the drubbing congressional lefties took over the past several weeks as a result of Obama’s handling of the issue, this speech should only re-ignite resistance.  After all, the President doesn’t offer specifics on how it all will work.  That is a job for little people.  In the end though, there really isn’t much the President can say  that would soften the anti-Democrat mood. 

But why did the resistance to health care legislation hit such a fevered pitch in the first place? Here are the top ten reasons the Obama communication plan that pushed the health care debate – has utterly failed. 

10.  Believing that Health Care is “All About Obama” – As evidenced by the school-video issue, the President’s team believes that He only has to set the policy direction for the country and His will “be done.”  The difficult part about this is that Obama has never held a real job and doesn’t understand that even though leadership makes decisions, carrying them out has consequences.  American seniors have figured out some of these consequences and they don’t like any of them. 

9.  Economic Dishonesty - Obama’s reluctance to discuss the source of cost savings only contributes to distrust.  Cutting billions from Medicare to redistribute elsewhere has only one consequence – rationing of care.  Rationing of care is the ONLY way that any cost savings will be achieved.  Seniors in particular understand street-level economics and also understand that enjoyment of their later years will be severely hurt by any of the health care bills currently being considered.

8.  Lies -  Democrats always seem surprised when voters don’t accept their positions.  Not discussing specific issues such as rationing and ultimate cost leaves constituents feeling that they are being lied to.  And if Arelen Specter is doing the talking – they are.  Lying to one’s voters is a sure ticket to political unemployment.

7.  SEIU – Union thugs sent to intimidate seniors makes really bad news coverage.   As most Americans know, if you have to send out bullies to rally for a cause, the cause is probably disastrous to your interests.  It is curious though that the big guys in purple shirts can’t intimidate Grandma and Grandpa from attending the town halls and making their feelings known.

6.  Charlie Rangel – Although not directly related to health care legislation, it was revealed yesterday that the congressman may have ‘forgotten’ to declare something like half of his income on his tax filings.  As a leading Democrat, Rangel only brings the spotlight to Democrats’ ‘do as I say, not as I do’ method of running the government.  This is just another reason to not trust the Democrat leadership.

5.  Jobless Claims – If Obama’s Stimulus program is working so well, why are so many still out of work?  The public isn’t buying the argument that Obama inherited the recession from GWB any more.  Belief is setting in that the Stimulus and federal spending are making the economic problems worse.   Jobs are still being shed by the hundreds of thousands and it is more apparent that Obama and the Democrats have no idea why their plan isn’t working.  If the Stimulus isn’t creating jobs, why should the public believe they should be trusted to write health care legislation?

4.  Taxation – Democrats typically villify the ‘rich’ as the ones who should be penalized and pay for benefits to the rest of us.  Unfortunately, the ‘rich’ are the ones who do the hiring and provide job creation.  With the failure of the Stimulus causing an already disastrous jobs situation, Americans now understand that any additional taxation – regardless of whom the tax is levied against – will ony make matters worse.

3. Taxation II – Obama has been clear about receiving a health care legislation package that would be “deficit neutral.”  Unfortunately, now that Democrats have had to publicly acknowledge that the proposal would be hugely expensive, even after rationing of care to seniors, the public is highy distrustful of anything the Democrats have to say regarding the federal budget.  These were the folks that in just a few short months have managed to misjudge the defict by a total of two trillion dollars.

2.  Dishonesty II – Statements that individuals can keep the health care plan they have if they are happy with it are simply untrue.  As any senior or anyone who has balanced a checkbook understands, offering a cheaper alternative with a government option will cause businesses to cease providing health benefits to their workers.  To maintain a competitive cost structure, businesses will HAVE to throw their workers onto the government plan.  So the health care plan that you would be able to keep – simply will not be available.  The problem for Democrats is that there are far too many people in America that have run businesses and organizations that fully understand that a government option will be an unparalelled disaster for those that already have good health services.

1.  Cancelling ‘Freedom of Choice’ – This term usually refers to those wishing to make the abortion procedure available to all based on the patient’s right to privacy.  Now however, the Obama administration along with congressional Democrats is restricting ‘choice’ as it applies to senior citizens nearing the end of their lives.  If certain medical procedures will be allowed only according to a government formula, seniors will no longer have ‘choice’ in how they continue to live their lives.  And even though the President has decreed that this will not happen, He has not presented a single reason that restricted treatment options will not occur.