What's That Price Tag Again?

Greetings from the Left Coast, where we here at Left Coast Blues do the heavy thinking for those who just can’t be bothered.

A couple of weeks ago, a fellow named Douglas Holtz-Eakin wrote a very interesting column in the Wall Street Journal. His column is about the true cost of the bill that’s been put forward by the Senate Finance Committee, and the tax burden that’s about to land on the middle class if it passes. Now Douglas is a pretty smart guy. He’s a former director of the Congressional Budget Office, and a Fellow at the Manhattan Institute. And that’s just for starters – here’s a link to his full bio. So we should probably pay attention to what he has to say.

To begin with, he points to the myth that Congress is actually going to cut Medicare reimbursements. According to the Balanced Budget Act of 1997, they should already have been cut – but year after year, Congress has voted to reinstate the money. In his words, “It is beyond fantastic to promise that future Congresses, for 10 straight years, will allow planned cuts in reimbursements to hospitals, other providers, and Medicare Advantage (thereby reducing the benefits of 25% of seniors in Medicare)…The very fact that this Congress is pursuing an expensive new entitlement belies the notion that members would be willing to cut existing ones.” (Or, as Nanny Ogg, one of my favorite characters in Terry Pratchett’s Discworld novels would say, “Pull the other one, it’s got bells on.”)

The problem is, if Congress admits to that rather obvious truth, it pushes the total cost of the legislation to well over $1 trillion.

Then there’s the $400 billion in new taxes and fees that the bill plans to raise by imposing a 40% tax on “Cadillac” policies (which several Democrats are already scrambling to insure that the union members in their districts won’t have to pay), and a variety of fees on health insurers, drug companies, and device manufacturers. Excuse me, but where do you think the insurers, drug companies, and device manufacturers are going to get the money? There’s only one way – by passing their increased costs along to consumers. Holtz-Eakin points to the Senate-House Joint Committee on Taxation, which indicated that “87% of the burden would fall on Americans making less than $200,000, and more than half on those earning under $100,000.”

Complicating matters even further, he points out that Democrats chose to make many of the industry fees nondeductible. Typically, a business would be able to count these kinds of fees as a business expense, which is subtracted from the revenue of the business before the tax obligation is calculated, just as the business would subtract rent on their facilities, their monthly power bill, etc. But every dollar that is taken from a business the way the Democrats are proposing to do it is a dollar that comes directly off the bottom line, and the business must increase revenue by more than a dollar to get it back. Holtz-Eakin estimates that this will result in an increase of as much as $200 billion in insurance premiums over the next 10 years, with 90% of that increase being borne by the middle class.

Why would Congress do such a thing? I can answer that one: Because it will then give Congress an excuse to even further demonize the health insurance industry for making such awful, terrible, greedy, unconscionable increases in premiums, and use the situation they created to further justify a government-run health care system. Cynical? Yep, but do you doubt it for a minute? I’ve still got that beach property for sale…

Thanks for listening.

I'm A Little Concerned About Calvin Woodward

Greetings from the Left Coast! Where we here at Left Coast Blues are a little concerned about the well-being and future career prospects of Calvin Woodward. Calvin’s byline appeared yesterday on an Associated Press story that revealed that, hard as it may seem for you to believe, you have once again been lied to by the Democrats. Here, in part, is what he had to say:

“In the health care debate, Democrats and their allies have gone after insurance companies as rapacious profiteers making ‘immoral’ and ‘obscene’ returns while ‘the bodies pile up.’

“Ledgers tell a different reality. Health insurance profit margins typically run about 6 percent, give or take a point or two. That’s anemic compared with other forms of insurance and a broad array of industries.

“Profits barely exceeded 2 percent of revenues in the latest annual measure…”

Now, the “Democrats and their allies” know darned well what the truth is. But they have some legislation they want passed, and they’ll do whatever they have to do to get it done. Let me remind you again of some of the Rules for Radicals I shared in my last post:

“An organizer…does not have a fixed truth – truth to him is relative and changing; everything to him is relative and changing. He is a political relativist.”

“The man of action views the issue of means and ends in pragmatic and strategic terms…He asks of ends only whether they are achievable and worth the cost; of means, only whether they will work.”

“Before men can act an issue must be polarized. Men will act when they are convinced that their cause is 100 per cent on the side of the angels and that the opposition is 100 per cent on the side of the devil. [The organizer] knows that there can be no action until issues are polarized to this degree.”

So, in this case, the issue at hand is that Democrats want to ultimately replace private health insurance with a government-run system. And that is the ultimate aim, no matter what they may say. Many leading Democrats are on record as favoring a “single-payer” (i.e., the government) system. Obama is on record as favoring a single-payer system. But the American people don’t want a single-payer system, because we’ve seen the dark side of such systems in other countries such as Canada and the U.K., and we’ve seen what a fiscal nightmare Medicare and Medicaid have become. So, in order to turn public opinion around, they are trying to "polarize" the issue by demonizing the health insurance industry. It doesn’t matter if they have to lie to make that happen, because truth is “relative and changing,” and all that matters is whether the effort will work.

They apparently believe that we’re too stupid to understand what they’re doing and why they’re doing it. In fact, Nancy Pelosi has such contempt for our intellect that she said yesterday that a government-sponsored “public option” may be more attractive if they just call it something else. So you’re starting to hear it called “the consumer option,” and the “competitive option.” Harry Reid thinks that it will fly as long as the states have the ability to “opt out” of the public plan. Mind you, that doesn’t mean that the people in those states could also “opt out” of paying for the plan – just that they wouldn’t receive any of the stuff they were paying for. Knowing what we know about politicians, does anybody out there seriously believe that any state would go down that road? Anybody? You there in the back? No? Too bad, because if you're buying that, I've got some beachfront property in West Texas I'd like to sell you. (It's great beach - a long ways to the water, but great beach.)

I believe that the American people are not that stupid, and that a day of electoral reckoning is coming. There’s a reason why the Congressional approval rating is lower than whale feces, and this kind of stuff is part of it.

In closing, I’d just like to thank Mr. Woodward for being intellectually honest enough to report the truth. That doesn’t happen nearly often enough these days, which is one of the reasons why people’s trust in traditional media is also lower than whale feces. Unfortunately, reporting the truth about something like this can’t be good for Mr. Woodward’s career. We just hope things work out OK for him. If worst comes to worst, maybe he can find a gig on Fox News.

Thanks for listening.