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Abuse a Feature, Not Failure of Bigger Government

I think the most significant thing to come out of the trio (so far) of Obama administration scandals last week was how they pointed out the cognitive and practical failures of “progressive” beliefs about big government. They’re scrambling to define the abuses and failures of government agencies and individuals as aberrations of a government that oversees, well, everything when in fact these types of failures are inevitable features of central planning and the belief that a governing elite of well-intentioned experts can guide us lesser souls to happiness and fulfillment by rationally and scientifically allocating resources and regulating behavior.

This is nonsense.

If you have ten minutes right now before going any further, read I Pencil by Leonard Read. That along with the brief intro by current FEE president Larry Reed and an afterward by Milton Friedman say everything I want to say, only better than I can say it. And well before I ever thought of it.

If you don’t have ten minutes right now then bookmark the I Pencil link and read it later. Here, in a nutshell, is what it says:

1. What kind of arrogant idiot (I’m going with idiot even though I’m thinking something else) thinks they can possibly know the wants and needs or “what’s best” for an entire society full of people with as many tastes, value systems, priorities, hopes, dreams, fears, talents, challenges and even luck as there are social security numbers?

2. Assuming they know what’s best for everybody, what kind of arrogant idiot thinks they can measure, produce and allocate every resource, from the raw materials to delivery of the finished product, to every person to allow them to fulfill their dreams and desires?

3. Assuming they know what makes everybody happy and that they can provide everything to make everybody happy, what kind of arrogant idiot thinks, where humans are involved, that the massive power to pick winners and losers, to allocate success and failure, will not be abused by the people doing the allocating and deciding? The insiders will prosper and everyone else will toil under their yoke.

In Federalist 51, James Madison said:

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If men were angels, no government would be necessary. If angels were to govern men, neither external nor internal controls on government would be necessary.

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We don’t live in a world of angels, we’ve just become so lazy that we’d rather assume we do than take on the responsibilities of self-governing.

The biggest lesson of the last week isn’t that there are arrogant idiots in government, even if they’re a minority. It’s that no matter how well meaning, no matter how divinely inspired or technically adept and scientifically sound, governance-by-expert is a fallacy. There is no magic mathematical formula or giant computer model that can divine a balance between what the actual people of a nation want and what that nation has. The only system that’s done that is free enterprise: free people making free decisions in a reasonably regulated free market. Everything else has been tried and failed miserably – literally leading to misery.

President Obama, in a moment when he actually said what he meant and not what he though you wanted to hear, famously said that government is the only thing we all belong to. No, government should belong to all of us. We need to take it back, and the first step is to get it down to a manageable size.

Sequester Sequester Oh My!

I could have saved a lot of time and gotten up later if I had this George Will column before my radio show this morning. It eloquently lays waste to the sequester hysteria about  people dying in the streets and life on this earth as we know it ending because the federal budget will be cut by $85 billion out of $3.6 trillion this year and $1.2 trillion out of $46 trillion over the next ten years, an amount of spending that is as unfathomable as it is unsustainable.

The Washington Post has some interactive graphs and charts showing dollar impacts across the states and the Pew Center has some nice visualizations if you want real data, but what’s coming out of the White House takes the cake. It’s report, Impact of March 1st Cuts on Middle Class Families, Jobs, and Economic Security looks like something out of the old Soviet Union, a pure propaganda piece using cherry-picked facts and worst-case scenarios to present an agenda-driven scare piece.

I won’t go line by line because I’ve got better things to do than dissect a fictional frog, but here’s the bottom line: If the cuts will really result in fewer teachers, less spending on police and security, fewer vaccinations, increased violence against women, and all of the other catastrophic outcomes despite spending levels that are still well above even those of just a few years ago, then the administration has pretty messed up priorities.

They prefer to spend hundreds of billions of dollars subsidizing solar panels and windmills while children go hungry, untaught and unvaccinated? The President spends nearly $1 million dollars to go golfing with Tiger Woods but he’s going to put our lives in jeopardy over local police funding? It seems that they’re taking the most important, and in many cases even constitutionally valid, federal programs and making them the last priority by cutting them first. Couldn’t they at least cancel a couple of GSA Las Vegas conventions and provide a few more student loans? Oh the humanity!

Of course this isn’t the case and in fact is a time-worn method called the Washington Monument strategy. They hide and protect the waste and abuse while putting out the hew and cry that even a dollar less than what they currently spend will cause plagues, locusts, and, dare I say, global warming.

Cities do it all the time by saying they’ll cut police and pothole repairs while they attend conferences out of state and keep the local pool open. It’s a scare tactic and nothing more than blatant political pandering. It doesn’t give you much credit for common sense, either. Across the board cuts are the worst possible way to cut spending. But if it’s the only way then it’s better than nothing.

The President’s Healthcare Law

President Obama wanted to make sure that every individual had health insurance coverage. That is a worthy goal. But in practice, it just won’t work. It will create a multi-trillion dollar government takeover of healthcare that gives too much control to Washington, DC, and not enough to patients and their doctors.

The simple truth is that the President’s law is unaffordable and doesn’t deliver the real reform for Americans that he promised.

It’s unaffordable. According to a recent study by a Trustee on the Medicare Board, the President’s healthcare law is projected to add $530 billion to federal deficits and increase spending by more than $1.15 trillion over the next decade. A health care policy analyst at the Cato Institute calculates the deficit impact at $823 billion and spending at $2.7 trillion over the same period.

Under the law, the mandate to expand Medicaid eligibility will cost Montana taxpayer’s as much as $155 billion from 2014 to 2019.

Americans wanted real reform, but the President’s law just isn’t it. More federal spending and expensive state mandates are not the way to control healthcare costs for all Americans.

It’s irresponsible and wasteful. Rather than making common sense reforms, the President’s healthcare law takes $500 billion from Medicare’s trust fund to pay for new Washington, DC, spending and does little to combat the waste.

Real healthcare reform is efficient, effective, and patient-centered. A wasteful, Washington, DC, centered plan is simply not what Americans want or need. A Montana Chamber of Commerce survey of 600 Montana voters shows that 60% do not support the President’s law even though they overwhelmingly see rising healthcare costs as their biggest “pocketbook” concern.

It’s unaccountable. Buried inside President Obama’s 2,700-page healthcare bill was the creation of a new board – called “IPAB,” a 15-member board of unelected healthcare bureaucrats in charge of making decisions about your access to healthcare.

The President’s plan gives too much control to Washington, DC. Healthcare reform must be patient centered, giving patients and their doctors full control over their personal healthcare decisions.

It’s unconstitutional. The law forces you to buy insurance even if you don’t want it or it’s not right for you. And if you don’t, the government penalizes you by taking even more of your hard-earned money.

We can do better. Let’s bring everyone together – Democrats and Republicans – to find the best ideas that produce real results. Let’s work to replace this law with a patient-centered approach that can deliver real reform for the American people.

 

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Potential Scenarios on the SCOTUS ruling of the PPACA

The United States Supreme Court will rule within days on the constitutionality of president Obama’s Patient Protection and Affordable Care Act (PPACA). We’ve taken a look at what we feel are the three most likely outcome scenarios and attempted to unravel them.

But before we do that, let’s break down the four main issues that were argued before the Court:

1) Whether or not the federal Anti-Injunction Act is applicable to this case – This rarely-invoked Act is from the 19th century and basically states that a tax cannot be challenged in court until it has actually been assessed. Since the individual mandate’s penalties wouldn’t go into effect until 2014, the Supreme Court could not hear challenges to it until taxes are collected in 2015. Virtually all legal scholars and analysts agree it is very unlikely the court will find the Act applicable.

2) Whether the individual mandate is a tax – The individual mandate, also known as the “minimal coverage provision,” is the core of the PPACA. It requires that all individuals purchase health insurance regardless of their health, economic situation, or wishes. The question whether this mandate exceeds the constitutional limits of the “Commerce Clause”, which allows Congress’ regulate commerce between and among the states. While the federal government has routinely regulated terms of commerce, it has never before required it in order that it could regulate it.

3) Severability – If the Supreme Court rules some provisions of the PPACA unconstitutional, will the remaining portions stand, or must the whole Act be scrapped? The individual mandate is what funds the Act’s major provisions. Without out the Act becomes fiscally ruinous. Rather than the Supreme Court creating health care policy themselves, many argue that if they find the mandate unconstitutional they should allow congress to start over. The PPACA does not contain a severability clause, which some see as a simple oversight and others see as a fatal flaw.

4) PPACA’s Medicaid expansion constitutionality – As of now, the PPACA requires states to expand their Medicaid programs to cover more people, or risk losing all federal dollars for Medicaid. While federal dollars routinely come with restrictions, the states’ argument is that a threat of cutting off Medicaid dollars is too forceful, or “coercive” deeming it unconstitutional.

Potential Outcome #1: Court upholds the entire law

The Court concludes the individual mandate is not unconstitutional and the bill stands as written. The timeline for implementing exchanges and other provisions of the law continue as scheduled, pressing states that have not been complying with the law until after the Supreme Court ruling to scramble to get up to speed to meet the deadlines or risk the federal government entering into their states to enforce the law. States will need to comply with all of the law or risk losing all of their Medicaid funding, and ultimately this forces the states to take over the care of all those individuals that qualify. Furthermore, the precedent will be set giving the federal government the authority to order people into enter into a contract and/or purchase a product, and therefore fundamentally changing our system of government.

Potential Outcome #2: Court overturns a portion of the law

This is a very broad grouping of all the possibilities that could occur, but let’s point out the major portions that are most likely being focused on and their implications.

The Court invalidates the individual mandate, but decides to let the remainder of the bill stand. The question then turns to what portions of the bill are considered essential to the mandate. Community rating and guaranteed issued insurance reforms would most likely be removed. Insurers simply could not provide them without the funds the mandate would genererate. Without forcing consumers to buy insurance, the young and the healthy will continue to opt out. Without the removal of the community rating and guaranteed issue reforms, it will mostly likely result in the bankruptcy of many insurance providers, and ultimate death, of the health care industry.

Another portion of the law that could be struck down is the forced expansion of Medicaid. This would have serious impacts on the exchanges, as most of the insurance subsidies provided through them will likely be to newly Medicaid-eligible participants. The question of coercion has never been decided by the Court.

If only the individual mandate and/or the forced expansion of Medicaid are overturned, there are still many provisions remaining, such as the forced state exchanges and the employer mandate, to name just a few. The fate of these provisions will likely be decided by congress and the Executive in 2013.

Potential Outcome #3: Court overturns the entire law

Due to lack of a severability clause, if the Court invalidates the individual mandate, it could strike down the entire bill. It would deem that if indeed the individual mandate were struck down, the remaining provisions would no longer function “in a manner consistent with the intent of Congress”.

Yes, some people will be back where they were before the ACA for a short time, left without insurance, but this opens the floodgates for new, free-market based ideas to be presented to not only create actual permanent change and affordability for Americans, but to change the mindset and practices of insurance providers, as well.

 

For more resources on free-market based health care reform, please see the footnotes attached as well as the following:

• Arduin, Laffer, & Moore Econometrics. (2009). The prognosis for national health insurance: a Montana perspective. Montana Policy Institute. <http://bit.ly/LgEdjh>

• Issue Brief: Pitfalls of the Patient Protection and Affordable Care Act for Montanans. Montana Policy Institute.

• Montana Policy Institute – Free-Market Health Care Resource Page http://www.montanapolicy.org/main/page.php?page_id=37

• Patient Centered Reform Online <http://www.patientcenteredreform.com>

 

Enough Already! – And here who who will run your health care…

http://www.bloomberg.com/news/print/2010-07-22/obama-to-sign-law-limiting-110-billion-in-erroneous-government-payments.html

An Open Letter to President Obama as You Visit Our Great State

By Carl Graham

President, Montana Policy Institute

 

Dear President Obama,

I just heard that you’re coming to Bozeman.  It’s great that you’re willing to get out of the D.C. echo chamber and come out to where us regular folks live.  And I think most Montanans will take pride in a Presidential visit regardless of political affiliations or policy differences.

It’s been rumored that you might also hold a health care town hall while in Bozeman.  If so, may I make a suggestion?  Both political Parties have pretty much turned town halls into fawn-fests with packed audiences and planted questions that result in little more than preaching to the choir and sound bites for the 24 hour news cycle.  I’d like to offer you an alternative, and a way to reach the very people who I assume you’d like to convince that your health care reform proposals are worthwhile.  I mean, of course, those of us who do not think that your proposals would fix the current problems with health care, and that they would even create another whole set of problems that will have to be addressed down the road.

As it turns out, our little nonpartisan think tank – the Montana Policy Institute – has been planning a Free Market Health Care Reform forum in Bozeman since June, and it happens to fall on the very day you’ll be here.  We’ll have national health care policy experts and statewide health and insurance industry leaders talking about what needs reforming, and how we can do it in a way that tackles what’s wrong with health care without harming what’s right with it.  And frankly, I think they’d like to hear from you as well.  We’d be more than happy to make room in our agenda if you want to drop by.

This is a serious forum with expert panels and policy discussions.  Participants are concerned that what’s being proposed is nothing more than the nationalization of one-sixth of our economy and the removal of individual choice from one of the most important aspects of our lives.  You could tell us why we’re wrong by addressing some pretty basic questions:

–          You say that people can keep their own insurance if they like it, as the overwhelming majority of Americans do.  But why would people stick with their current plans if the public plan is cheaper, and what’s the point of a public plan if it’s not?  Isn’t this really just a ruse to get people out of private insurance and into a government-run system?

–          How will private insurers compete with a public option that gets taxpayer startup funding, doesn’t have to show a profit, has the ability to literally print money, and can regulate competitors to increase their costs and decrease their profits?  Can you help us understand by providing another example of a taxpayer-owned enterprise that competes on a level playing field with private sector companies?

–          Nearly 85% of Americans are satisfied with their current coverage.  Do we really need to overhaul or nationalize one-sixth of our economy to address the 15% of Americans who are not satisfied?  Couldn’t we just help the 15% and preserve everyone’s ability to pick the coverage that’s best for them by allowing more innovation in insurance products, or even by just providing a voucher for those who really can’t afford insurance?

–          The government already accounts for nearly 50% of all medical spending, as compared to about 25% in 1960.  Isn’t it reasonable to argue that costs have gone up pretty much in proportion to the government’s increased involvement already?

–          Medicare waste, fraud and abuse are estimated to account for as much as 30% of its costs.  That was $700 billion dollars in 2007, or about $2,300 for every legal U.S. resident.  Can we expect that 30% figure to continue as government-run medical spending goes into trillions upon trillions of dollars?  If not, what will be the new incentive for bureaucrats whose salaries are tied to hours worked rather than customers satisfied to cut costs, innovate, and increase efficiency and customer satisfaction?

–          The Congressional Budget Office says plans currently under consideration will increase the deficit by around $200-$300 billion over the first ten years and then really start picking up after that.  Who gets that bill, and how are they going to pay it?

This is just the beginning of what is a long list of our very serious concerns with the approach the Congress and you are taking in reforming our health care system. We’ll have a convention center full of Montanans.   We may not agree with your plan, but we’re prepared to listen.

 

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By Carl Graham

President, Montana Policy Institute

 

 

Dear President Obama,

I just heard that you’re coming to Bozeman.  It’s great that you’re willing to get out of the D.C. echo chamber and come out to where us regular folks live.  And I think most Montanans will take pride in a Presidential visit regardless of political affiliations or policy differences.

It’s been rumored that you might also hold a health care town hall while in Bozeman.  If so, may I make a suggestion?  Both political Parties have pretty much turned town halls into fawn-fests with packed audiences and planted questions that result in little more than preaching to the choir and sound bites for the 24 hour news cycle.  I’d like to offer you an alternative, and a way to reach the very people who I assume you’d like to convince that your health care reform proposals are worthwhile.  I mean, of course, those of us who do not think that your proposals would fix the current problems with health care, and that they would even create another whole set of problems that will have to be addressed down the road.

As it turns out, our little nonpartisan think tank – the Montana Policy Institute – has been planning a Free Market Health Care Reform forum in Bozeman since June, and it happens to fall on the very day you’ll be here.  We’ll have national health care policy experts and statewide health and insurance industry leaders talking about what needs reforming, and how we can do it in a way that tackles what’s wrong with health care without harming what’s right with it.  And frankly, I think they’d like to hear from you as well.  We’d be more than happy to make room in our agenda if you want to drop by.

This is a serious forum with expert panels and policy discussions.  Participants are concerned that what’s being proposed is nothing more than the nationalization of one-sixth of our economy and the removal of individual choice from one of the most important aspects of our lives.  You could tell us why we’re wrong by addressing some pretty basic questions:

–          You say that people can keep their own insurance if they like it, as the overwhelming majority of Americans do.  But why would people stick with their current plans if the public plan is cheaper, and what’s the point of a public plan if it’s not?  Isn’t this really just a ruse to get people out of private insurance and into a government-run system?

–          How will private insurers compete with a public option that gets taxpayer startup funding, doesn’t have to show a profit, has the ability to literally print money, and can regulate competitors to increase their costs and decrease their profits?  Can you help us understand by providing another example of a taxpayer-owned enterprise that competes on a level playing field with private sector companies?

–          Nearly 85% of Americans are satisfied with their current coverage.  Do we really need to overhaul or nationalize one-sixth of our economy to address the 15% of Americans who are not satisfied?  Couldn’t we just help the 15% and preserve everyone’s ability to pick the coverage that’s best for them by allowing more innovation in insurance products, or even by just providing a voucher for those who really can’t afford insurance?

–          The government already accounts for nearly 50% of all medical spending, as compared to about 25% in 1960.  Isn’t it reasonable to argue that costs have gone up pretty much in proportion to the government’s increased involvement already?

–          Medicare waste, fraud and abuse are estimated to account for as much as 30% of its costs.  That was $700 billion dollars in 2007, or about $2,300 for every legal U.S. resident.  Can we expect that 30% figure to continue as government-run medical spending goes into trillions upon trillions of dollars?  If not, what will be the new incentive for bureaucrats whose salaries are tied to hours worked rather than customers satisfied to cut costs, innovate, and increase efficiency and customer satisfaction?

–          The Congressional Budget Office says plans currently under consideration will increase the deficit by around $200-$300 billion over the first ten years and then really start picking up after that.  Who gets that bill, and how are they going to pay it?

This is just the beginning of what is a long list of our very serious concerns with the approach the Congress and you are taking in reforming our health care system. We’ll have a convention center full of Montanans.   We may not agree with your plan, but we’re prepared to listen.

 

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