Aug 29

Spending seven minutes with John Stossel’s recent report, “Health Care Mystery: What’ll that cost?” will be an excellent use of your time.    In his famously straightforward and commonsense-filled manner, he describes exactly what’s wrong with health care and insurance today, and what’s required to fix it — namely, Health Savings Accounts.

Better yet, he spends some time with someone who’s already reaping the benefits of HSA’s:  Whole Food’s chairman, John Mackey.    It was Mackey’s piece in the Wall Street Journal that touched off a firestorm of criticism from big-government lovers the world over — HSA’s are an existential threat to them.

Aug 28

Elections do indeed have consequences.   The consequences of the latest U.S. Presidential election are taking the form of a titanic debate boiling down to liberty versus socialism.

Amidst this debate, there are calls for “bipartisanship”.   But why would the winner of the election, with a self-proclaimed mandate for “change” want to reach out to the other side?   On many of the issues, the Democrats simply have a different worldview than the Republicans.   Given that the Democrats won the election, and enjoy large voting majorities in the House and Senate, who needs the Republicans?  What point would it serve for the winners of an election to water down their legislative goals with the policies and perspectives of the other side — the policies and perspectives that they don’t agree with?   If they believe in their policies, and have the votes to get them done, they should just do so.

But perhaps they don’t really believe.

Perhaps by making token outreaches, and token modifications, they can give the impression of consideration and compromise, and provide political cover for themselves when things don’t work out as planned.  This, I suggest, is the likely purpose of bipartisanship.   It is rational for political purposes, but remains irrational for purposes of sound public policy.

Sound economic principles don’t need to be watered down and compromised upon with those that are less sound.   The Republicans ought to have thoroughly learned this lesson, and should greet any calls for bipartisanship by the other side with complete skepticism, and should likewise stop their own calls for bipartisanship, as they make no sense.   They had their chance and blew it big time.   The best they can do now is provide thorough and credible alternatives via a well-executed marketing war.   The American people will sort out the damage.   With protests mounting as the truth comes out about the Democrats’ plans for government, they’ve already begun to do so.

Aug 24

There have been some amusing rumblings about the ads that California and Nevada are shooting over each others bows.   So what’s the problem?  That’s what’s supposed to happen!

What a great demonstration of how competition works at some of the highest organizational levels out there — entire states.   How much better off would we be if states took their relative economic strengths seriously?

But look at some of the reverse cases.  In the Northeast, we have New York and New Jersey racing each other to the bottom as to who can impose the highest income taxes on their upper income earners.   It’s a clear blindness to the Laffer Curve if there ever was one.

It’s also a wilfull ignorance of the concept of dynamic vs. static budget analysis, that is, legislators enacting laws and regulations as if there will be no behavioral changes by the players involved.   It goes something like this:   “Say, let’s raise taxes on the “wealthy” by 10%, and we’ll budget a 10% increase in revenue from them.   There aren’t enough of them to vote it down anyway, and then we can fund some nifty new programs in our budget!”

When will states like California, New Jersey and New York open their eyes to the cause and effect of bloated budgets and high taxes (note, they’re the same thing) leading to businesses and individuals seeking more welcoming pastures?   Do they need to make such complete economic basket cases of themselves before the causality is obvious?

The shame of this is that millions of people needlessly suffer the consequences in the meantime.

Aug 22

Health care and health insurance are not the same thing.   Yet our increasingly contentious public debate is largely addressing these issues as if they are, and that is a chief source of problems with our resulting public policy prescriptions.

I’m going to define health “care” as all of the things we do (or should do) to take care of ourselves in a planned fashion.   Things like annual physicals, eating well, getting exercise, taking our prescription medications, and so on.   Taking personal responsibility for these things reduces the risk that we will have a physically devastating event down the road.   But to protect ourselves from financial devastation, health “insurance” is entirely appropriate.

Notice that in the case of health “care” the actions we take have (or should have) a high probability of happening.   Yet in the case of a medical catastrophe (heart attack, long term disability, etc.), we all hope that the probability of that happening is very low.

Because of the probabilities, insurance should play an important role in the latter, but has no place in the former, with one exception:  an insurer would likely be willing to lower their price if they were assured that the buyer was taking “care” of themselves – because the risk of them having to pay would be lower.   Other than that aspect, why should an insurance company be involved in what doctor I want to see, and what services they will provide to me, and what that will cost?  Why shouldn’t “care providers” be free to advertise and compete for their customers like the sellers of any other product?   And for that matter, why heavily regulate insurance companies and hamstring them from providing a whole host of products at different levels of service and pricing?

Health Savings Accounts are the answer.    Very simply, the annual money that would typically purchase a family insurance policy is split into two parts:  one part is placed into an account to be spent on “care” and the other part purchases “catastrophic insurance”.  The account holder spends money in the account with no external interference or paperwork, but sleeps well knowing that if a huge expense comes up, they are fully covered.  Most notably, they keep any unspent money that accumulates in the account.  Consumers now have every incentive to be fully informed and involved in their purchases, and health costs drop from the service provider competition that ensues.

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