“I hear Republicans getting giddy over the fact that “reconciliation,” if it comes to that, is a huge political loser. That’s the wrong way to look at it. The Democratic leadership has already internalized the inevitablility of taking its political lumps. That makes reconciliation truly scary.”

Sundance: “I’ll go.” Butch: “This is no time for bravery. I’ll let you.”

Does AGW exist to an extent to cause catastrophic problems? What contributes to my skepticism is that politicians are so hell-bent on imposing “cap and trade” and that AGW is its raison d’etre. What is cap and trade, you ask?

Cap: The government tells an emitter, say a utility company, that it must limit its release of greenhouse gases.

Trade: Because particular utilities cannot stay within the government mandated emission limits they must purchase “carbon credits” to “offset” their release.

Do you get that? The polluters still pollute – they just have to buy the right to do so!

When the utility company’s costs rise due to having to buy the carbon credits it will pass these cost on to the consumer through a higher utility bill. In a nutshell, the government would be imposing a regressive tax - a tax that hits the poor and middle class the hardest. As an aside, it is seemingly ironic that it is the conservatives fighting for the lowly consumer and liberals are the ones who are trying to increase their costs.

There is a ton of money to be made if AGW is believed to exist – by the entities originating carbon credits, the exchanges trading these credits, the companies that would audit the utilities, etc.

So, getting back to Climategate, when confronted with knowledge of motive and opportunity is it unreasonable to be skeptical of the means being employed?

1. Forget Democrat vs Republican. Since Medicare was enacted in 1965, politicians of all stripes have spent funds meant to cover tomorrow’s Medicare obligations on today’s “priorities.” Whether the money was spent on butter by Democrats or on guns by Republicans is irrelevant. It’s gone. Get over it.




2. Over the next 20 years 33 million baby boomers will enter the Medicare system and suck what marrow there is from its bones.




3. Medicare has an unfunded liability of $32 trillion meaning we need, and don’t have, that amount of money to pay for future Medicare claims.




4. Yes, Virginia, Medicare is bankrupt.




5. So, forget the uninsured. They are the excuse not the reason for health care reform. Without some other source politicians will have to take money from the special interests who keep them in office and use it to honor their obligation to Medicare recipients.

Separate in your mind health care reform into two parts:

Part I – Funding Medicare. If you were to read the news and see examples of the government making wise spending choices; tightening the belt as normal families do when money is scarce then maybe a case could be made for drastic action. But that’s not happening now. Drunk meet sailor.

The simplistic, even call it idealistic, answer to funding Medicare is for the government to reset its priorities and honor its commitments. Quit spending money on _________________ (enter your list of non-essential projects here).

Part II – Insurance Reform. Over the past year or so when politicians talked about “health care reform” everyday Americans understood them to mean “insurance reform” – new regulations to address the stories of uninsured people, expensive coverage, people who were denied insurance because of pre-existing conditions, rescissions, etc.

Here is a list of insurance reforms I would consider. Note that there are plenty of smart people out there, so I’d like to hear some constructive criticism of these ideas – and would welcome additional ones too.

• Guarantee issue individual health insurance. In a nutshell, insurers would have to take everyone no matter what medical conditions may exist. Insurers currently do this for group business. It is not practical, however, to have a person opt-out of insurance, wait until they get sick and then sign up for a policy as they enter the emergency room. There have to be some protections for insurers:




• Include an annual open enrollment period. A person could only enroll once a year. Maybe make it their month of birth. If you choose not to enroll you are uninsured until the next year’s open enrollment period. This reduces the opportunities of adverse selection from twelve months to one.




• Include a pre-existing condition provision that is offset by prior creditable coverage. A pre-existing condition would be one that was diagnosed or treated in the previous twelve months. After the policy has been in force for twelve months a claim could not be denied because it was pre-existing. So, yes, you will have stories of people denied coverage due to a pre-existing condition, but these will be reduced over time as the policies mature. This is currently done with group insurance.




• Make individual premiums tax deductible. If a person is covered under a group insurance plan they can pay for premiums with pre-tax dollars. This reduces the effective cost of $100 in premiums to maybe $65. Make this tax benefit available to people who purchase individual policies as well. This would go a long way in making coverage more affordable and accessible to many people.




• Allow people to buy policies from insurers in other states. In effect, this will cause states to make their policies more affordable by removing expensive state mandated benefits.




• Make Health Savings Account plans a more robust option. Especially for young people, HSA plans are an attractive alternative to traditional insurance. Imagine if such a plan was available in 1965. Many of the baby boomers who are about to hit Medicare would have a nice nest egg ready to address their upcoming medical expenses.




• Tort reform. There are plenty of fresh ideas out there that could address the high cost of the practice of defensive medicine while still preserving patient rights.

As I write this I hear reports that the Senate is about to unveil a measure with stiffer penalties on employers and a government-run public option. This public option is the proverbial camel’s nose to a single-payer system. We do live in interesting times, no? What are your thoughts?

From the NY Times, Doctors Are Opting Out of Medicare:

Many people, just as they become eligible for Medicare, discover that the insurance rug has been pulled out from under them. Some doctors — often internists but also gastroenterologists, gynecologists, psychiatrists and other specialists — are no longer accepting Medicare, either because they have opted out of the insurance system or they are not accepting new patients with Medicare coverage. The doctors’ reasons: reimbursement rates are too low and paperwork too much of a hassle.

At a time when doctors treating patients with private insurance are reimbursed an average of about Medicare plus 25% why would a physician get excited to shift to a government-run public option that was only going to pay Medicare plus 5%?

Will this lead our country’s most experienced doctors to call it quits and retire early? As a consumer do you want to be treated by a well-compensated physician or someone who is having to make his margins off of patient volume?

Medicare expenditures (medical claims and plan administration) are expected to outstrip Medicare income (taxes and participant premiums) in the year 2017. Everything past 2017 is an unfunded liability.

Over the next 20 years enrollment in Medicare is expected to go from 46 million to 79 million. At the same time the ratio of workers to Medicare beneficiaries will decline from 3.7 to 2.4. With those kind of numbers you can understand why politicians in Washington are getting a bit anxious.

So as you watch President Obama’s speech tonight ask yourself, “Dude, who spent my lockbox?” The answer is the same people who want to take over the private health care system. You can identify them easily. They will be clapping when you hear the words “public option, co-op, exchange and single-payer.”

Do you want to entrust your health care to the same people who are building bridges to nowhere, funding studies on snail sex, etc – all with your lockbox dollars?

Keep in mind that these politicians want to average out the bankrupt Medicare plan with the profitable private sector system. Doing so will allow them to keep feeding at the trough for awhile longer.

What do you think? Is it really about providing health care to the uninsured? Or lowering premiums that private sector folks willingly pay? What’s the motivation?

P.S. – Expect the same thing to happen with Social Security and your fully-funded 401(k) plan.

Take the time to read and comprehend Jeffrey Rogers Hummel’s article, Why Default on U.S. Treasuries is Likely and you will come to understand the motivation that will drive politics over the next several years. Hummel describes two firewalls separating us from default:

• The first is the trust funds of Medicare and Social Security. Tax income into these two programs is expected to be outstripped by claims in 2017 and 2037, respectfully. Once this happens the Fed will have to dip into general revenue – thus depriving politicians the largess they are famous for tossing about. And, if investors in U.S. Treasuries sense weakness they will demand a risk premium. If this happens Hummel then considers a collapse similar to that of the Soviet Union a possible scenario.




• The second firewall involves hyperinflation and is a resulting choice between preserving the value of the dollar and defaulting on the debt. Hummel predicts that the Feds would choose to save the value of the dollar and would therefore default.

Why is a single-payer plan sacrosanct to liberals? Single-payer provides a form of dollar cost averaging whereby the unprofitable Medicare / Medicaid plans absorb the profitable private sector plans thus affording the financial cushion the Feds so desperately need.

Hummel concludes with:

What will ultimately kill the welfare State is that its centerpiece, government-provided social insurance, is simultaneously above reproach and beyond salvation. Fully-funded systems could have survived, but politicians had little incentive to enact them, and much less incentive to impose the huge costs of converting from pay-as-you-go. Whether this inevitable collapse of social democracies will ultimately be a good or bad thing depends on what replaces them.

Who holds the almost $12 trillion in US debt? $4.3 trillion is held by the US government. $4 trillion is held by the public (individuals, corporations, state or local governments) and $3.3 trillion is held by foreigners.

So, in the end, may the desperate motivation to enact ObamaCare really be to placate these debt holders? Said another way, is providing coverage to 47 million uninsured the goal or the excuse? What do you think?

In an interview with David Lionhardt of the New York Times, President Obama said the following with regard to end-of-life care:

“So that’s where I think you just get into some very difficult moral issues. But that’s also a huge driver of cost, right? I mean, the chronically ill and those toward the end of their lives are accounting for potentially 80 percent of the total health care bill out here. Well, I think that there is going to have to be a conversation that is guided by doctors, scientists, ethicists. And then there is going to have to be a very difficult democratic conversation that takes place.”

So, when President Obama says these words one could reasonably conclude that he is speaking of a new system of limiting care because Medicare and Medicaid already have an exclusion for “experimental and investigational” services (Section 411.15(o)).

What might such a system look like? We only have to look as far as the UK for the answer. Compare President Obama’s comments to the words found on the web page of National Institute of Health and Clinical Excellence (NICE), the rationing board for the NHS:

With the rapid advances in modern medicine, most people accept that no publicly funded healthcare system, including the NHS, can possibly pay for every new medical treatment which becomes available. The enormous costs involved mean that choices have to be made.

The NHS employ a tool called a QALY (quality-adjusted life years measurement) to help decide whether a person is deserving of a particular medical treatment. So, what we really are discussing is whether or not, as a society, we want ObamaCare to include a QALY-type system of limiting treatment and services to our citizens.

A person may look at a committee at a private insurer deciding on experimental or investigational medical treatments and equate that to a QALY system under ObamaCare but there are differences.

• Under a QALY system we are talking about denying to people proven treatments (read not experimental or investigational). Contrast that to a denial of payment for an experimental or investigational treatment. These would include procedures that have not been approved by the Food and Drug Administration or treatments that have not been proved effective in clinical studies.




• Frequency. The vast majority of people covered by private insurance are under age 65 (read much younger than today’s life expectancy of 77.9 years). Whereas, people on Medicare are quickly approaching or even exceeding 77.9. The introduction of a QALY-type system will, by its very nature, impact more senior citizens than the under age 65 crowd currently covered by private insurance.




• You can sue a private insurance company! When is the last time you heard of a successful suit against the Federal government? Private insurers have an incentive to make their product attractive to the buying public. A government-run, single-payer plan has no such worries.




• Look at what has happened in the UK. Britons were promised a plan of benefits. That became expensive and rationing ensued. People demanded that they have access to these denied treatments. So, now in the UK you get to pay the taxes for your “free” government insurance – and, if you want it (and can afford it) you can “top-up” and the government will allow you to pay for that life saving drug out of your own pocket!

Conclusion

A friend wrote, “…being skeptical of a public plan is not the same as being against health-care reform.” There are a number of things that can be done to make coverage more affordable and accessible. A QALY-type system of rationing care would come as a rude shock to Americans. We are a society of achievers who possess a “can-do” attitude. To throw up our hands and take an easy approach of just letting the government handle things is a mistake.

So, now that you understand the difference between “experimental and investigational” exclusions and a QALY system, when politicians speak of “cutting wasteful spending” be careful. They may be speaking of me-ma, you, your spouse or your child.

Isn’t it ironic that doctors will be paying the way to see more lower profit margin patients? Who knew that making health insurance affordable could be so expensive?