A Small Business Perspective on Obamacare

The IRS scandals have definitely re-invigorated skepticism of Obamacare, especially considering the fact that the IRS will have a pretty big role in its implementation.  Who is comfortable with an agency that engages in blatant political targeting being involved in our healthcare?  But that’s just a tactical question.  A more fundamental reason to be skeptical is its effect on small business.  Reason’s ‘Hit & Run’ blog just posted an excerpt of an email that circulated at Capterra, a Virginia small business that is grappling with how to deal with escalating healthcare costs:

We’re considering a switch from CareFirst to United because CareFirst is increasing their rates by 28%.  We may be able to switch to United without any increase in our premiums for the next year; our insurance guy will confirm this over the next couple weeks.

The email then goes on to explain the implications of the change, one being that some doctors may not accept United insurance.  Keeping the same plan, of course, means that employees will need to pay a larger portion of  the bill, and the company will have less money available for raises, new hires, and the like.  The email goes on to lay out a number of options and to solicit opinions from the staff.  It also provides some context about how we got here, and serves as a good reminder about hell and good intentions:

Back in the 1940s, our federal government enacted wage controls that restricted what some businesses could pay their employees.  (There were smart people who spoke out against this terrible idea but unfortunately not enough.)  This resulted in businesses looking for other ways to compensate their employees and the IRS decided that it would not treat benefits such as health insurance as taxable wages.  Until then people generally paid medical fees out of pocket in the same way they paid for virtually anything else out of pocket.  The fees up until were relatively small for two reasons:  1) medicine was not very advanced so when something catastophric happened there was not often much that could be done to help the patient and therefore no huge expenses were incurred and 2) since people were paying their doctors directly it was a very efficient and fair market.

So 70 years later, even though the wage controls thankfully disappeared, the IRS treatment of health insurance did not.  Health insurance benefits continue to not be taxed as income.  At first glance by the uninformed citizen (such as me until a few years ago), this appears to be a good thing.  But in reality it is actually a terrible thing.

Why is it terrible?  There are a lot of reasons, but the most important one is that we become detached from the actual costs.  We have little to no incentive to consider price, and therefore prices go up – imagine how different the contents of your grocery cart might look if you paid a fixed price every week.  These problems, of course, predated Obamacare.  However, Obamacare does make the problem go from bad to worse by mandating coverage of things like acupuncture, chiropractic, weight loss surgery, and infertility treatments.  Perhaps these are worthwhile things to cover, but they are expensive.  One of the most expensive additions, however, will come from mandated coverage of preexisting conditions.  The email from Capterra summarizes the problem nicely:

one big reason that our rates are skyrocketing is that it is becoming illegal for CareFirst and all other health insurance companies to deny someone with a preexisting condition.  What insurance provider in their right mind would cover someone new who say, just contracted flesh eating bacteria, for example?  It’s the equivalent of a home insurance provider accepting a new customer whose house was already burning down.

Wrong On So Many Levels

From the Washington Examiner:

Sarah Hall Ingram, the IRS executive in charge of the tax exempt division in 2010 when it began targeting conservative Tea Party, evangelical and pro-Israel groups for harrassment, got more than $100,000 in bonuses between 2009 and 2012.

Does this suggest that targeting such groups was official policy, worthy of reward when executed successfully?  Is it true, as alleged in the story, that bonuses of this size require Presidential approval?  If so, could this represent a direct link between the White House and the IRS shenanigans?  And should anyone in government get these kinds of bonuses while the government is drowning in debt?

Oh, and don’t forget that these are the types of people that will play a huge role in implementing Obamacare.  How does that make you feel?

“They were asking for the names of the donors, which is exactly the opposite…”

“…of what we were looking for because if people knew their names would be made public or known to the government, they stop giving,”

That was the intention.

American Heart Association Continues to Advocate Unhealthy Lifestyle

According to a report in the New York Times, the AHA continues to suggest that everyone should aim for a maximum daily sodium intake of 1500 milligrams per day:

Some influential organizations, including the American Heart Association, have said everyone, not just those at risk, should aim for that very low sodium level. The heart association reaffirmed that position in an interview on Monday

But a re-analysis of the available data suggests that this advice could kill you:

But the new expert committee, commissioned by the Institute of Medicine at the behest of the Centers for Disease Control and Prevention, said there was no rationale for anyone to aim for sodium levels below 2,300 milligrams a day. The group examined new evidence that had emerged since the last such report was issued, in 2005.

“As you go below the 2,300 mark, there is an absence of data in terms of benefit and there begin to be suggestions in subgroup populations about potential harms,” said Dr. Brian L. Strom, chairman of the committee and a professor of public health at the University of Pennsylvania. He explained that the possible harms included increased rates of heart attacks and an increased risk of death.

And in my opinion here is the best part of the entire story (emphasis added):

Although the advice to restrict sodium to 1,500 milligrams a day has been enshrined in dietary guidelines, it never came from research on health outcomes, Dr. Strom said. Instead, it is the lowest sodium consumption can go if a person eats enough food to get sufficient calories and nutrients to live on. As for the 2,300-milligram level, that was the highest sodium levels could go before blood pressure began inching up.

Doesn’t make much sense, does it?  And after hearing this, what do you think about the accuracy of the other health/nutrition guidelines you have been getting?

This IRS Scandal Keeps Getting Worse

We now know that it’s more widespread than we thought.  Originally, the IRS insisted that this was just the dirty work of a few low level staffers in Cincinnati, but it seems that there were some staffers in DC and California doing pretty much the same thing:

David French, senior counsel of the American Center for Law and Justice (ACLJ), which represents 27 Tea Party groups, told The Daily Caller that the IRS’ Cincinnati office was not the only unit targeting Tea Party and conservative groups for increased scrutiny.

“We’ve dealt with two offices in California, the one in Cincinnati of course, and one in Washington, D.C. So when that story came out on Friday, we knew instantaneously it was false, because we had personal dealings with four different IRS offices from coast to coast and that was in connection with our representing 27 Tea Party groups and conservative groups in 19 states,“ French said, adding that the two California offices were located in Laguna Niguel and El Monte.

Are we to believe that low level staffers scattered across an entire continent independently decided to target conservatives?  I don’t think so.  And now it’s revealed that this has been happening since at least 2010, senior officials knew about it since 2012, and the information was provided to ProPublica, a group that is often described as left wing. My hat is off to RightPunditry for having better instincts than me from the get-go.  Shame on me for not remembering that this sort of thing is how Barack Obama won his election to the Senate in the first place.  Of course, back then it was shady unsealing of divorce court records.  Now it seems he has moved on to bigger and better scandals.

An interesting side story:  George Will, writing in the Washington Post, notices a liberal narrative that is emerging around this scandal – the idea that this is the fruits of the SCOTUS decision in Citizen’s United.  He turns that ridiculous argument on its head:

this tempest is all the Supreme Court’s fault: The Citizens United decision — that corporations, particularly nonprofit advocacy groups, have First Amendment rights — so burdened the IRS with making determinations about who deserves tax-exempt status that some political innocents in Cincinnati inexplicably decided to begin by rummaging through the affairs of conservatives. Ere long, presumably, they would have gotten around to groups with “progressive” in their titles.

Remember, all campaign “reform” proposals regulate political speech. And all involve the IRS in allocating speech rights.

IRS Targeted Conservative Groups Before 2012 Election [Updated]

And today a high ranking official formally apologized:

Organizations were singled out because they included the words “tea party” or “patriot” in their applications for tax-exempt status, said Lois Lerner, who heads the IRS division that oversees tax-exempt groups.

But there’s more:

Lerner said the practice was initiated by low-level workers in Cincinnati and was not motivated by political bias. After her talk, she told The AP that no high level IRS officials knew about the practice.

Agency officials found out about the practice last year and moved to correct it, the IRS said in a statement. The statement did not specify when officials found out.

This sounds like jail time should apply here, no?  And, by the way, the IRS did not do this.  Individual employees are responsible, and they should be held accountable.  I think jail time is warranted, but at the very least they should be barred from working in government.

Update:  the IRS assures us that these actions weren’t due to political bias, and also will not say whether employees involved in this will be subject to disciplinary action.

Reassessing China

Apparently, some new information indicates that China’s ‘inevitable’ rise to become the largest economy may take longer than originally anticipated.  This reassessment seems to be due in part to the fact that the economic numbers may not be reliable:

[Prime minister Li Keqiang] complained in a US diplomatic cable released on WikiLeaks that Chinese GDP statistics are “man-made”, confiding to a US diplomat that he tracked electricity use, rail cargo, and bank loans to gauge growth. For a while, analysts use electricity data as a proxy for GDP but the commissars kept a step ahead by ordering power utilities to fiddle the figures.

The National Bureau of Statistics has since revealed that data collected by the regions overstates GDP by 10pc, though they have not acted on the insight. It is well-known why this goes on. The reward system of the Communist hierarchy has been geared to talking up growth, and officials gain kudos by lowering the stated “energy intensity” of their zone.

The unreliability of Chinese economic statistics has been an open secret for awhile.  But there are also other factors at play, including the environment.  Here is an assessment from Clyde Prestowitz:

“Keep in mind the next time you are in China and find yourself choking on the foul air that the things making the air foul are counted as positives for GDP. If you adjust Chinese GDP for environmental degradation and for over-investment in things that will never be used, it falls in size by 30-50 per cent. Much of this would show up as non-performing loans in most economies but since such loans are never recognised in China, it will show up as slower growth in future years,”

And the amount of these loans is staggering – approximately $14 trillion over the last four years.  Finally, there is a demographic problem to deal with:

The IMF says the reserve army of peasants looking for work peaked at around 150m in 2010. The surplus will evaporate soon after 2020, the so-called Lewis Point. A decade later China will face a shortage of almost 140m workers.

Something’s gotta give here.

Maybe We Need Some Skin in the Game

A blog at the Washington Post exposes some disparities in the cost of health procedures:

…Las Colinas Medical Center just outside Dallas billed Medicare, on average, $160,832 for lower joint replacements.

Five miles away and on the same street, Baylor Medical Center in Irving, Tex., billed the government an average fee of $42,632.

They have plenty of examples of this, which is due in part to health insurance*.  If patients aren’t paying for the procedure, they don’t care how much it costs.  Imagine how much different your grocery cart would look if you had the same co-pay no matter what you purchased.

*On the other hand, if you are more skilled at a particular procedure, you probably should get paid more for it.

“Imagine yourself in a small town, at the funeral for a 2-year-old girl…”

“...and there’s a NYT reporter, who you know is there because these elite people somewhere, who never otherwise pay any attention to you, see potential to use that girl’s dead body for leverage in a national political debate.” — Ann Althouse, who’s not pleased.

They should have told the reporter that it was a ‘Fast and Furious‘ gun that killed the girl.  The reporter would have immediately turned around to go home.

Questioning Mammograms

A recent article in the New York Times points out that mammograms may not be particularly effective:

Recently, a survey of three decades of screening published in November in The New England Journal of Medicine found that mammography’s impact is decidedly mixed: it does reduce, by a small percentage, the number of women who are told they have late-stage cancer, but it is far more likely to result in overdiagnosis and unnecessary treatment, including surgery, weeks of radiation and potentially toxic drugs.

This brings up a few obvious questions:  why did it take thirty years to figure this out? What was the basis for deciding to force insurance companies to cover such a procedure?  Also, is there any link between the timing of this study and the fact that Obamacare will soon be fully implemented?