The health care passed (I guess, but now states are suing to block it?) and what I know I do not like. The point here will not be to debate the merits, we are all entitled to our viewpoint and that is mine. But even the people who support it should be skeptical about it somehow not costing more. I think people should be skeptical of the CBO estimates being relied upon by the proponents of the bill.
When the idea of it being deficit neutral first popped up I was skeptical. The more I thought about it I simply don't believe it. I am not sure if if the politicians saying it will not increase the deficit really believe it (makes them idiots), are lying (makes them liars) or have somehow adopted a George Costanza viewpoint ("it's not a lie if you believe it").
My skepticism of politicians goes back to 8th grade (a story I've told before) when our congressman, Father Robert Drinan, yes he was a priest, came to speak to our school. I asked if he would support Ted Kennedy for President and I got a two minute non-answer. Drinan was succeeded by Barney Frank--seriously. I think, but am not sure, that the lines have since been redrawn such that my hometown is no longer in Frank's district.Part of my opinion on the healthcare bill stems from my belief that collectively it is not possible for them to write a bill so comprehensive that it can get everything right. As I observed how both sides were bickering over this I was not able to discern where wanting to improve health insurance ended and ideology began. The way I view things ideology drifts into the realm of emotion and when emotion is involved the quality of the work usually suffers.
Serious question have there ever been politicians that seem to be a deranged at Nancy Pelosi and Barney Frank? Frank's behavior at the start of the Geithner visit the other day seemed very bizarre. Was Newt Gingrich this type of crazy? As a Libertarian I dislike all of them but these two seem to lack basic decorum. I know they never lose elections and for all I know run unopposed but do democrats like these two? Despite how the paragraph reads I am trying to be serious, do people who vote democrat actually like these two?
This leads me to financial regulation. How can this dysfunctional unit (senate and congress) possibly cull together an adequate regulatory structure. I am not saying we don't need an overhaul I am saying the people empowered to do it (per the joke I posted yesterday were there really congress people who did not read/understand the healthcare bill?) are woefully ill equipped to do the job properly. How can we be confident that what they produce doesn't make it worse.
So many of the questions asked of Geithner, Bernanke and Volcker are so elementary by congresspeople, congresspeople on related committees mind you, that it creates the appearance buffoonery. I realize there could be a political reason for asking very elementary questions over and over, but if they never get to the difficult ones then confidence is not instilled that they understand the magnitude of the problem they are being tasked to fix.
Yes changes need to be made but I simply don't believe they know how to do it.
This is not intended to be purely an anti-democrat rant as I think just as poorly of Bush et al.
36 comments:
People are half and half on Nancy Pelosi. Half love her and half hate her. She seems like a politician who is good at her job, and her job is to get people to vote the same way. Someone like that is not necessarily going to come across well on cameras.
Barney Frank comes across as insane. Sometimes he seems like truth-to-the-power insane, but other times it is "Why is he in charge of anything?" insane. I do not like how the financial reform stuff has been handled.
I so rarely chime in with a "me too" because I like to think I have my own brain, but this nails me to a T. I'm not an R or a D, I'm just extremely skeptical based on past performance that the government can really do something right.
And the problem is bigger because when they screw up, they can't just walk away, file for bankruptcy, go out of business, whatever. They have to throw good money after bad or cut the benefit.
So my guess again, based on past performance is that we're going to end up with more expensive health care or reduced benefits. I don't see any other way. They screwed up social security and that will likely have an impact on my retirement. Fine, I can mitigate that by saving a TON now. But how do I mitigate health care screw ups? I don't know the answer to that yet, and it has me ascared.
Nicely stated Roger...the feeling of "confoundedness" is what I believe is at hand here. In this vacuum and the absence of a better option, voters, investors, business owners, kindergartners all choose to maintain the static state. Unfortunately, until the above painfully feel it in their piggy bank, all remains the same despite the foolishness of it all.
America changed with the health care bill, now law; Mark Steyn called it "Happy Dependence Day." The bill signing ceremony and democrat celebration was described by one commentator as looking more like a sports team celebrating after a win than sober politicians who had passed a bill into law. To me, it looked more like a team of thieves who were celebrating after a successful robbery. One should not be surprised by Obama now, as he told us during the campaign that he wanted to "spread the wealth" and that is just what he is doing; taking from the productive who pay taxes and tend to vote Republican, and giving to the non or less productive who do not pay taxes (or at least not much) and tend to vote Democrat. I fear for my once great, but now declining, country.
"The trouble with Socialism is that eventually you run out of other people's money."
Margaret Thatcher
Bill Gross, as well as the action in the bond market yesterday, would suggest that you're right, Roger.
CBO is very good at creating estimates. However, they base the estimates on the data and mandates provided by Congress. So it is kind of like backtesting investment returns. Congress keeps throwing options to CBO until they get a spending neutral or savings.
Once the bill is passed, the parameters change. Does anyone believe they will cut Medicare by $66 Billion? I don't. Does anyone think they will keep costs to the rate of inflation? I don't. Also, the new taxes are based on the assumption that higher taxes won't result in lower economic output, which means lower incomes (hence, lower taxes).
I wrote about this recently. Medicare has cost 9 times as much as initially estimated. The drug bill passed by Bush has exceeded estimates. Even the recent Massachusetts plan has cost 20% more than expected. It would probably be more according to the Democratic State Treasurer who claims the Feds pumped money into Mass to get the nation to buy into the national plan.
Ultimately, this will have no positive impact. Costs will continue to rise at current rates. The indigent, who should be the ones we help, already had options for state funded insurance. My wife works at a hospital, and they sign folks at the poverty level up all the time for state provided insurance. So those that really needed it will have it.
In the end, we need a system where the patient is a consumer. Right now, we just get anything done without questioning costs or necessity. If we had a substantial deductible, then we would become smart consumers and keep a lid on costs. I have an HSA plan, and this is exactly what we do: minute clinics, refusing unnecessary procedures, getting generics, etc.
To get off the Obamacare drumbeat for just a minute:
Roger, do you have any fixed income investments as part of your portfolio mix? If so, can make some generic recommendations. I don't remember this topic having been discussed before.
we do use fixed income and i have talked about it quite a few times. i would suggest you search here for the Seeking Alpha panel I was on last week on the subject and then click through. I pretty much names names.
Greetings Roger,
Not sure you wanted a political discussion this morning but then again you did set the tone.
While "I have mine" thanks to Medicare(a fully socialized medical system) there are millions of Americans who who have been denied insurance due to prior medical conditions.
If it wasn't for Medicare my wife would be in the same position as these millions. The congress under its constitutional mandate to, "promote the general welfare", has enacted a law meant to curb the egregious abuses of the for profit insurance companies.
Regarding the redistribution of wealth fear. Apparently it's just fine to allow the largest transfer of wealth from the poor and shrinking middle class to the top one percent. Under Bush II, the wealthiest 400 individuals in our country saw a $670 billion increase in their wealth and, at the end of 2007, owned over $1.5 trillion in wealth. That is just 400 families, a $670 billion increase in wealth while Bush II was in office.
In our country today, we have the most unequal distribution of income and wealth of any major country on earth, with the top 1 percent earning more income than the bottom 50 percent and the top 1 percent owning more wealth than the bottom 90 percent. We are living at a time when we have seen a massive transfer of wealth from the middle class to the very wealthiest people in this country. If this trend continues we risk reducing the already besieged middle class to economic serfdom.
The Rs have made much of the deficit increase which is a serious problem. But the choices for the new administration were very narrow. Not since 1933, when FDR was handed the great depression has an incoming president been handed such a calamity. What the Rs ignore in a stunning display of hypocrisy is the tripling of the federal deficit under Reagan and the doubling of the deficit under Bush II. Only now is the R party born again fiscally responsible or more likely, pretending to be until they regain power.
It is now official The US will decline and China will dominate.
Both parties have been responsible for running up the defict, no doubt. But what Obama has done makes him the worst offender by a mile. His program is to take over the economy to drive his social agenda. Next it will be cap and trade. After that immigration reform. If no one stops him we will be Europe in 20-30 years. These changes will feel good for a few decades, but ultimately will be the down fall of the US.
Roger - I feel the same way about politicians not knowing about what they are supposed to pass laws about. I think we all have a certain areas of expertise, but you would hope that the lawmakers who know something about a topic would be on that committee. That does not seem to be the case always.
Some of the stories you hear about the SEC and the lack of people there that have any idea about financial products and markets is also scary.
Looks like you'll have a ton of comments today. People love to hate on healthcare. I'll throw in some random throughts.
1. Barney Frank is a bit of a wackjob, but he is very smart. He's one of less than handful of people in House/Senate (it may be as few as 2) who understands finance and the financial crisis. He has verbally slapped Geithner, Bernanke, and Paulson a few times, though you generally don't hear about it because it's within closed hearings.
2) the vitriole between the political parties is REALLY starting to make me angry. It's literally out of control. Politicians seem more concerned with hating each other than with getting stuff done.
3) I don't get people who don't understand the need for some kind of healthcare reform. We were never going to get something really good. Obama wanted the Swiss model, but we can't even get that. I love capitalism, but "market forces" aren't going to fix this. The cost of my Aetna family plan has increased from $65/paycheck to $135/paycheck in 6 years, with no better coverage. My copays went up 25% this year. The insurance companies have no impetus to change this. Unfortunately, the only way it's gonna change is via legislation.
I don't like the idea of bigger government, but I have to admit that Medicare (which is really the French and German and possibly Japanese) healthcare model and the VA system (which is the English model) work pretty well. $210b in Medicare cuts is the gov't directly telling the healthcare industry "we're not going to keep paying these ridiculous increases."
Socialist who like to follow an investing blog????
People are not rationale and this helps explain the markets from time to time
Speaking as a Democrat, in answer to your question about Pelosi and Frank... I think we feel about them exactly what the Republicans must feel about their leaders like Boehner and McConnell. Certainly not the ideal messengers from a personality point-of-view, but at least they have power and they're on our side.
"Like" isn't the right word, but in case you haven't noticed, most Congressmen/women aren't especially likable characters. What you have to do to get in Congress and stay there and build power generally doesn't attract the most likable folks.
Your other question: Was Newt Gingrich this type of crazy? Um, most definitely (he still is!)
I don't fully understand your skepticism of the CBO estimates. This is a non-partisan group whose job is simply to provide accurate financial projections. If they shouldn't be trusted, then which group do you suggest should be the one analyzing the bill?
Which specific areas of the bill, in your infinite wisdom (and since I'm sure you've read the bill) do you think are being incorrectly analyzed by the CBO?
Even if the CBO estimates prove too optimistic, at least the Dems are making an honest attempt to pay for the bill. And at least the bill provides some ROI for people in this country. You really can't say the same about the Republicans when they were in charge. They just go and spend our money on unnecessary crap with no ROI... 2 massive wars, tax cuts for the wealthy, pork barrel spending by the boatload, on and on with no attempt at fiscal responsibility. Then the Democrats come in, in the middle of a massive recession, and get blamed for the debt. LOL!
I am a libertarian and a physician.
I don't know about this new health care bill but I do know we, as a country, can't afford to give everyone full access to all we can do in healthcare and pay for it. Politicians do not want to admit that we may be able to afford basic health care for everyone but we can't afford organ transplants, knee replacements, bone marrow transplants, experimental chemotherapy...for everyone.
I have never seen a politician who had the guts to really deal with the healthcare issue and I suspect I never will.
My company's initial estimate on the increased cost to the company resulting from the new health reform legislation is 10% to 20%. This will not be absorbed as "goodwill" from the company. It will be passed on as an increased cost to the employees (premiums), potentially a reduction in coverage (increase in out-of-pocket expenses), and additional cost saving initiatives that have potential impact to the employees. Bottom-line it will cost the individual more (annual premiums and out-of-pocket expense).
Other options in consideration to offset the cost impact: wage control, headcount reduction (outsource positions to lower cost regions), and a freeze on hiring (several new approved positions are going to be closed). None of this helps the economy…
The health reform bill is nothing more than a mandate by the government that all citizens must have health insurance, and if you don’t get it we will fine you; by the way we have to hire a bunch of additional federal employees to run the fine department – that makes a lot of sense and reduces cost. The legislation has been sold as a red herring to the population that it will reduce health costs. Just ask the people of Massachusetts – has their health costs gone down now that everyone in MA has health coverage? My understanding is the state is now struggling to fund the expense. If MA was the poster child for health reform and they are now struggling with the expense, why would anyone believe the Obama plan on a much grander scale would yield any different result??
My common-sense hit list to address some cost reductions:
• Cap malpractice payouts – define a schedule of max payout per incident and type of incident (this is done in many of the so called “socialist” countries with “free” health care for all)
• Reduce the amount of “CYA” procedures performed just in case a Dr/Hospital is sued, or to prove to the insurance provider that a specific procedure is required. I went through 5 weeks (3-times per week) of unnecessary physical therapy ($275/session) to determine my knee could not be rehabilitated when both the Dr. and Physical Therapist new this from the onset. The additional cost to me was $20 per session (co-pay). Then I had 5 more weeks of PT after the operation…dumb.
• Hospitals/Medical boards – be more diligent and aggressive in getting rid of the bad doctors, take away their license!
• Stop over-prescribing medications to patients for every ill and pain they have. Everytime my father-in-law goes to the Dr he comes home with another prescription. The he complains his stomach is upset and there is a list of other issues due to all the stuff he is taking which leads him back to the Dr and another prescription...
…just to name a few.
Seriously, Roger, we need people of your caliber in government........and in business.
Just as a 2nd thought, I read recently that many corporations are taxed at the 10-15% rate, or even lower. That seems incredulous to me. Where is the fairness when I have to pay 25-30%+.
"Just ask the people of Massachusetts – has their health costs gone down now that everyone in MA has health coverage? My understanding is the state is now struggling to fund the expense."
1. yes
2. the state doesn't fund most insurance individual family insurance. The cost increase you are talking about is Medicaid.
Keep in mind 2 things. MA did not do cost control (for instance, Medicare costs reductions like the new national law provides.) Seconds, as a result, most families premiums have gone up because they purchase insurance through work.
I'd guess we can assume 2 things about the majority of people who read this blog: they make decent money, and they get insurance through work. That's the group of people who won't see cost reductions through this healthcare reform. Your premiums will continue to go up (since your insurance company is rightly concerned with profits, not concerned about you) and you won't see any new competition. Why? Because the "public option" was shot down and because we'll never have legislation controlling the insurance industry.
This seems obvious to me, but maybe it needs to be said. The insurance companies we buy from are FOR PROFIT companies. There is no reason for them to lower your costs unless 1) someone (government?) forces them to or 2) there is competition and market choice.
Maybe I need to make this my last post here today. I dunno.
Anyone wanna make a guess as to whether I should put some more money in the market now or wait until 2011? heh.
is CBO the same outfit that said income would exceed outgo for SS in 2016?
"Where is the fairness when I have to pay 25-30%+."
1. The U.S. has some of the highest corporate taxes of any developed country
2. You aren't actually paying 25% to 30%. Take your "taxes owed" and divide it by your income. I think my tax rate was like 6.7% this year.
CBO does a good job w/ projections based on what it is given but that means GIGO is possible so you really have to examine their "givens" before skepticism is justified (naturally anyone can be skeptical in the absence of due diligence if they like).
Semi OT but the dramatic increases in national debt under Republican party rule the past thirty years are not really a matter of opinion; e.g., http://zfacts.com/p/318.html -- what people want to believe that means is their business but there are way too many folks basically just making stuff up in support of positions they like and that kind of confirmatory bias can become a bad habit, dangerous to investing too.
I used to vote for moderate Republican candidates rather frequently until they began disappearing fifteen or twenty years ago -- fiscal conservatism coupled with social generosity always made sense to me -- but folks are free to dislike anyone they please as well as vote or not vote for them but in the end votes should have consequences in policy or why bother.
From that perspective the Republican party simply has no credible governing philosophy and no standing as fiduciary becuase, to be blunt, they screwed the pooch. Reagan's trickle-down economic policies and political talking points -- which for him I think were as much a way to get things done as anything else (he certainly didn't hesitate to raise taxes when necessary) -- somehow morphed into a radical philosophy that, by the reign of Bush II, supported the logic of a faith-based government, huge unpaid for tax cuts and corporate subsidies (Medicare Part D was bigger than this health bill), abandonment of fiduciary and regulatory responsibility, and all the damnable warmongering, warrant-less spying and torture to salt the insanity down.
Obama has been something of a disappointment, continuing far more of Bush II's policies than I believe wise and I don't care much for this patched together health bill either (single-payer was my choice frankly), nor do I have a clear notion of how any of this is going to work out including whether we get hit with a double-dip recession.
What I do believe longer term is that we will manage to repay our debts and employ our people once again and there is one certainty all my own: Whatever comes I am really glad the last decade is over. Here's hoping for no repeats.
And has this NCAA tournament been a bracket buster or what.
Great post RW. I agree with pretty much everything you say except the NCAA bracket - mine has survived relatively well intact and I might actually win my pool this year. Go Washington!
Roger, in response to your 11:42 post. The CBO is the same outfit that said the Iraq war was going to be over a trillion dollars; if that helps explain who they are.
Phoney numbers...
They are basing cost savings on medicare "cuts." In every previous year Congress has voted to not implement the cuts.
This is the same thing they do with budget income numbers before doing the annual AMT adjustments.
If any of us did this with a business it would be fraud.
"Part of my opinion on the healthcare bill stems from my belief that collectively it is not possible for them to write a bill so comprehensive that it can get everything right."
No piece of legislation has ever gotten "everything" right. There will be, I suspect, tweaking here and there the next few years. I subscribe to former congressman robert michel's admonition to new congressmen: "You're here to create good legislation and make bad legislation better."
If there are problems with this new bill, then congress will need to get to work making it better; but they needed to pass something in this area, and this seems like a good start.
On a simpler note, if the insurance companies are against the healthcare bill, then it's probably good.
"In every previous year Congress has voted to not implement the cuts."
Anonymous posters posting stuff that's false. Awesome.
Here is a quick test to help you discover how successful the health care legislation is likely to will be in improving the nation's health per dollar spent compared to where we are today.
Answer are 0%=disagree to 100%= totally agree.
1) More health care makes people more healthy.
2) Health insurance is a cost effective system for paying for mostly routine procedures. (even though it leads to price insensitivity in consumers)
3) Socialized medicine is viable health care delivery system. (care distributed on a basis besides ability to pay)
4) Government is capable of administering the proposed legislation.
5) It is in politician's best interest to faithfully execute the legislation as proposed. (instead of grabbing for more power)
6) We can afford it.
Collect your answers, your final score is the minimum value you assigned. (this is multivalued AND operation, not a joint probability)
My scores are 2%, 10%, 25%, 40%, 10%, 5%.
I personally think that the medical industrial complex makes the military industrial complex look like a bunch of choir boys based on the metric of the number of innocent people killed unnecessarily.
@Bill B: You can hedge your risk of damage to the medical system by not needing health care: drop your total cholesterol to 130mg/dL and drop your BMI to 20. This is equivalent to saving 15% of your income for retirement.
Personally for my Business, (I only employ 16 people) I will probably just cancel my employees rights to health care and pay them the $2000 fine, this will save a ton of money for my company.
It occurred to me that the notion the CBO is being gamed about the health care bill might be connected to the games the Bush administration played to get the budget-busting tax cuts and Medicare Part D bills passed -- see http://tinyurl.com/ybul8b9 for e.g. -- and so skepticism was certainly deserved in principle but that's not how these things tend to roll actually: Gaming is what the "other side" does because when "our side" does the same thing then it's either legitimate or not really the same thing or, at the very outside, no worse than what the "other side" did; reconciliation and other parliamentary moves to pass both the Bush tax cuts and Medicare Part D being cases in point.
So the end result is no one really has to re-examine their assumptions and the question of who's zooming who is readily answered from where everyone was already standing: Those kind of cognitive blinders represent a potentially lethal kind of problem; something worth keeping in mind.
Speaking of which, Anon 6:54, better talk to your accountants (and your lawyers) before attempting to cancel your employees' rights to anything; e.g., the tax credits for a business your size confirmed in the reconciliation package should exceed any fines by a significant margin.
The Dems leaving the Doc Fix out of their bill pretty much says it all. $208B to $370B right there.
The sad fact is this: politicians get elected by giving their constituents goods and services they didn't pay full price for, if they paid anything in the first place.
It's been less than 2 years since our economy fell into deep recession because of a housing bubble few saw coming, but everyone (particularly the MSM) are completely oblivious to the government debt bubble. It's as if Greece and California are some sort of strange anomaly.
Behavioral economist are right: people are irrational and shortsighted.
The US budget problems are not due to healthcare they're due to military. Look at the numbers - it is defense, defense, defense.
Should military spending be curtailed to the level of the second highest spending nation, the budget problems would immediately be fixed, fixed, fixed.
Are the foreign wars worth the losses? Would returning the US to place as the *economic* superpower do more good than the defense spending?
If anyone wants to complain about healthcare, that's fine. At least the money is being spent in the US on US citizens.
Sure the bill is not perfect.
But it is the first bill written for Americans rather than wall-street or military scumbags.
It does NOT matter if the numbers work!
Did the numbers on the invasion of Iraq work?
Did the number on the Bush Sr. "War on Drugs" work?
That fact is you either have ineffiecient government trying to help Americans (Obama) or ineffiecient criminals stealing from Americans (Bush)
That is the choice.
OF COURSE, Congress doesn't get everything right in a big bill. Does everything in your portfolio go up?
It's the same principle. You give a little here to get a little there, and hopefully you come out ahead.
If we as a society come out ahead on the overall balance—that is, if the overall health of our people improves at least in proportion to the added spending—then it's a good bill. It has flaws, just like some parts of your portfolio will go down in any given week or month.
As for expense: I don't think the CBO said it will reduce expenditures; it said it would reduce th deficit. That's quite different. Some taxes go up; some expenses are shifted to other payers. But on balance, I think we will be getting more for our money.
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