Reform of the health care system in the United States is absolutely necessary.  Our nation spends roughly twice the percentage of GDP on health care than many countries in the world, without noticeably different health care outcomes.  Businesses and their employees are getting socked hard with health care insurance premiums, which are rising 3 to 4 times the rate of inflation.  Those without health insurance flood the emergency rooms, increasing costs for all of us.  Our President is right when he says that something has to be done, but more government money and control will only make things worse.

I’m not naïve; I know that I can’t spell out in detail how to fix health care, but I can set up an outline for reform in this blog.  Other blogs will be necessary to fill in the blanks, but the basic premise is that our health care “crisis” has been caused by too much government, not the absence of government.  Before identifying the four “Horsemen of the Health Care Apocalypse” that are forcing up health care costs, let me dispel three myths that are floating around regarding health care.

Health Care Myths

Myth 1:  We need to keep the US Government out of health care. Too late; the government is already in the health care business.  It’s called Medicare and it is pretty darned popular with seniors.  Seniors on Medicare have a wide choice of physicians and the quality is generally good.  Unfortunately, Medicare makes Social Security look like a legitimate enterprise!  Medicare’s unfunded liabilities are seven times that of the Social Security system, running in excess of 90 TRILLION dollars.  Every cent produced and earned in the United States for seven years would have to be paid to the federal government to pay off a $90 trillion liability.  Maybe the government can run a health care system, but it’s current experiment running Medicare is about to bankrupt the republic.

Myth 2:  The “Public” option will result in health care “Rationing”. Health care has always been rationed and like all scarce resources, it will always be rationed.  In our current system, those with health insurance go to the doctor and those without insurance show up and wait in line at the emergency room.  Public option or not, health care will always be rationed, one way or the other.

Myth 3:  Health care is a human right. Nowhere in the constitution are goods and services considered “rights.”  The constitution gives Americans rights to “actions” (free speech, assembly, worship, etc) but not rights to “objects” (health care, food, housing, clothing).  When Government gives citizens the right to an “object”, another citizen must be forced to supply that “object.”  When that line is crossed, the Government takes upon itself the role of “chief thug,” stealing from some people (via taxation) to give to others.  Societal division results as producers lose incentives to create value, while recipients lose incentive to work.

John Mackey, CEO of Whole Foods Market, wrote an insightful article about health care reform that appeared recently in the Wall Street Journal.  You can access that article in its entirety by clicking here:

The Four “Horsemen of the Health Care Apocalypse”

There are four “Horsemen of the Health Care Apocalypse” that are responsible for our staggering health care costs.  All of them have been allowed to do so because they received “monopoly power” from Government.   The “Horsemen” are (1) lawyers, (2) drug companies, (3) medical insurance companies, and (4) physicians.  The only way to really cut costs in health care (and it can be done) is to subject each of these actors to more competition.  This will drive costs down and make health care not just a little more affordable, but very affordable.

1)     Lawyers. Tort reform is needed in health care, but the Lawyer lobby has already convinced lawyer Obama and Congress (more than half of whom are lawyers) that tort reform is off the table.  Lawyers directly drive up health care costs by spiking jury awards for medical malpractice.  More important, lawyers indirectly drive up medical costs by forcing medical practitioners to conduct unnecessary procedures and tests, for fear of being sued.  Caps on medical malpractice awards, along with a provision that the loses in court case must pay 100% of all legal and attorney fees, would greatly reduce health care costs.

2)     Drug Companies. Once patents expire on new drugs, there should be no extension of patent protection for any reason.  The FDA should relax the incredibly long procedure for drug approval, lowering development costs for the drug companies.  The increased risk of a “bad drug” would be far outweighed by the health benefits of millions who benefit from new drugs.  Finally, hospitals, clinics, and physicians in the United States should be allowed to import prescription drugs from any country, without exception.  Bans on cheap and effective imported drugs cause American consumers hundreds of billions of dollars of unnecessary expenditures each year.

3)    Medical Insurance Companies. Laws that restrict interstate competition for medical insurance providers should be struck down, allowing medical insurance companies to sell their policies in any state.  Excessive regulations that discourage smaller companies from entering the health insurance field should be scrapped, encouraging competition.  Health savings accounts should be encouraged.  Insurance coverage should be “portable”, which would make labor markets much more efficient.

4)    Physicians. The American Medical Association has long encouraged monopoly power for physicians, primarily through occupational licensing.  The increased scope of responsibility for nurses, physician assistants, and nurse practitioners is a good thing, but it needs to go further.  Legal barriers to the establishment of walk-in clinics should be eliminated.  Nurse practitioners and physicians should be able to prescribe medicines at their own discretion without the presence of a doctor.  License requirements should be streamlined, allowing thousands of new nurses, physicians assistants, chiropractors, acupuncturists, massage therapists, and other health providers to compete for the consumer health care dollar.  These practitioners should offer “cash” prices for services whenever possible.  Medical insurance companies not making these “lesser” practitioners eligible for coverage would lose business in a competitive insurance environment.

Conclusion

It is my opinion that if the Congress had the will to subject the “four horsemen” to competitive pressures, as stated above, we would experience a huge increase in the variety of health care services, along with dramatic cost reductions.  Furthermore, without government involvement and excessive regulations, even poor, working folks could go to their neighborhood pharmacy and receive good preventative medical care from a licensed professional on a cash basis.  Private foundations and charitable organizations could heavily subsidize or grant free health care to pay for major surgical procedures, which would also be much more affordable.

The problem is that the “Horsemen of the Health Care Apocalypse” have a lot of economic, and hence, political power.  They’re not easily going to let go of the economic advantages that government has given them.  For that reason, I’m not hopeful that we will have any meaningful, efficient health care reform.

I’ll weigh in on this health care debate in the future with more detail.  Today’s blog is only an outline of the problem and some possible solutions.  For now let it suffice to say that when health care decisions are put in the hands of consumers, who are spending their own money, economic and medical common sense will prevail.  The Amish in southeastern Minnesota don’t have health insurance.  They have a long-standing tradition of cutting their own cash deals in advance with health care providers.  When an Amish farmer needs a triple heart bypass, he goes to the Mayo Clinic and gets excellent care at a pre-negotiated cash price.  I don’t know what kind of cash deal the Amish have cut with the Mayo Clinic, but I’ll wager that the Amish aren’t paying $15 for an aspirin tablet and $25 for a band aid.

This week I’m going to give you a break from my constant criticism of the narcissist Obama.  I’ll do that by devoting my attention to the narcissist Brett Favre!  I’m also going to make some very specific predictions about the 2009 Vikings season.  Please don’t call your bookie.  I’m an economist, not a sports expert!  When the season is over, we’ll devote a blog to checking the “accuracy” of my predictions.

Three weeks ago when Brett Favre “retired” from football, deciding not to join the Minnesota Vikings, I told my wife that this was just a stalling tactic so Brett wouldn’t have to waste his time attending Vikings training camp.  It didn’t take a rocket scientist to figure this out; the mighty Favre has never liked spending time with a bunch of college kids that won’t make the team.  I’m one of the few Packer fans that believe that Brett isn’t joining the Vikings for reasons of revenge.  Brett suffers from a severe ego problem, which is kind of a psychological disorder.  As long as some NFL team is willing to take him seriously he will continue to attempt to play football in the NFL.

When Brett finally signed his two-year $25 million contract with the Vikings last Tuesday, you would have thought that Minneapolis had seen the second coming of Christ.  Purple Favre jerseys were flying off the racks, season ticket sales soared, and Vikings fans were gleeful, proclaiming that Brett Lorenzo Favre will lead them to a super bowl championship this year.  Sportswriter Pat Reusse, on his early morning radio show on KSTP AM said of Viking fans, “Boy are we a bunch of bumpkins!”

Reusse is correct.  It remains to be seen if the Favre signing will be as bad as the Herschel Walker or Dimitrius Underwood deals, but no matter how successful or disastrous this deal is for the Vikings, the NFL central will be a lot more fun this year for all NFL fans.

Here are my predictions for Favre’s 2009 year with the Vikings:

1.  The Vikings will lose twice to the Packers in 2009.  Viking turnovers and sloppy play will lead to a Packer win at the Metrodome.   Strangely, the Packer victory at Lambeau field will be a narrow win, but a win nonetheless.

2.  The Bears will split with the Vikings this year.  The second game at Soldier Field against Chicago will be a grim one for the Vikings and Favre.

3.   After beating Cincinnati in the Metrodome on Sunday, December 13th, the Vikings will go on the road to face Carolina.  Carolina will smash the Vikings.  Persistent rumors will spread about dissention in the Vikings locker room.  Favre’s ego will be a big part of the problem.

4.  The December 28 game against Chicago at Soldier Field will put the nail in the coffin of the Vikings season.  “December Fever” will bite the ever-declining Favre harder than ever.  He will sustain an injury in the windy city that will end his first season with the Vikings.  Speculation will arise as to whether the physical aspects of the injury are sufficient to keep Favre off the field, or whether the old man is finally sick and tired of getting kicked around.  It won’t be pretty in the media or in the Viking locker room.  At this point, Vikings fans will start to feel like last year’s Jets fans.

5.  At the end of the 2009 season the Vikings will release Favre.  Brett Favre and Brad Childress will head into the sunset together, both unemployed.

6.  This time, Favre won’t announce his retirement.  Over the summer of 2010, rumors will spread that another club is interested in taking a chance with Favre, but this will not come to pass.  Favre’s NFL playing days will finally be over.

POSTSCRIPT

On a crisp, November Sunday in 2015, Brett Favre will return to Lambeau Field.  Brett’s number will be retired as he shares that distinction with Tony Canadeo, Don Hutson, Bart Starr, Ray Nitschke and Reggie White.  On that fine day, there will be no talk of tarnished legacies in Titletown; the Packer organization and Packer fans are simply better than that.  Wounds will have healed and foolish behaviors will be a distant memory as 60,789 enthusiastic Packer fans cheer on Brett Lorenzo Favre as one of the the greatest players in Packer history.

A couple of weeks ago, in my weekly email to those of you who are on my subscriber’s list, I predicted that Congressmen were going to have a tough time with the public during summer recess in their home districts.  (By the way, there is no cost, user names, or passwords to join my subscriber list; you need only email me at bbwinona@charter.net to get my weekly email.)  My predictions have proven true, although it didn’t take a genius to figure out that the public would be awfully mad.

In the last 12 months the Federal Government has (1) bailed out Bear Stearns ($29 billion) and numerous other Wall Street firms at tremendous taxpayer expense, (2) spent 85.3 billion to bailout GM and Chrysler at taxpayer expense, (3) verbally berated the Chairman of Ford Motor Company, (whose firm hasn’t taken one red cent of bailout money) for flying a company jet to Washington, while ordering 3 new gulfstream jets for members of Congress, (4) bailed out AIG ($69 billion) and Fannie Mae and Freddy Mac ($400 billion) with taxpayer money, and (5) passed through the house a bad cap & trade bill that will significantly increase the energy bills of all Americans over the next 20 years.  In total, the Federal Government and Federal Reserve System have racked up bailout commitments of over $12 TRILLION just during the past 12 months.   That’s roughly equal to the entire output (GDP) of the US economy for an entire year.

In addition to all of this, the President has decided that he can reform our “broken” healthcare system!  While not perfect, the US health care system is far from “broken”.  There’s not a person in this country who can say with a straight face that the government has ever run anything efficiently, in the US or in any other country.    Is there anyone on earth who couldn’t have predicted voter outrage when congress returned home this summer?

Nancy Pelosi has characterized outspoken voters as “mobs” and “Nazis”.  Conservative Republican groups have allegedly taken these thousands of angry people and have led them by the nose to shout down their congressmen in open meetings.   This, of course, has cut off constructive dialog, according to the Democrats.  Attendance at town meetings is three times greater than it has been in 30 years.  This is no conspiracy; this is no accident.  Whether the Dems want to admit it or not, this is an honest to God taxpayer revolt.  The United States of America isn’t the south side of Chicago, where money is something that comes from a “grant” and is handed out like candy in the street.  In the rest of this great nation, money must be earned through hard work and commerce; the government produces nothing.

I’ve got news for every elected official in Washington.  There are millions and millions of independent voters in this country who aren’t going to go quietly as the government steals their money, usurps their freedoms, messes with their health care, and puts the burden on their children and grandchildren.  They are showing up at town meetings and they are beyond frustration; they are infuriated.  The Democrats can get as many ACORN members and union members as they wish to attend future town meetings, but rank and file Americans have been pushed to the limit.  There’s no shutting them up at this point and millions of them can’t wait until Tuesday, November 2, 2010 when 435 members of the US House of Representatives are going to face a serious possibility of a career change.  And, by the way, the pathetic and unprincipled Republicans who are elected in their place had better wake up and smell the coffee, or two years later they’ll also get the famous Salyards “Term Limit.”

Whenever the federal government tries to do something it gets messed up.  Often, government programs end up achieving goals that are in conflict with their stated intentions.  The cash for clunkers program was supposed to reduce pollution, but it is just example of a government program achieves the exact opposite of its stated goals.

Last week one of my loyal readers, Mark Kendall, emailed me about the exact federal requirements to “disable” an engine from a “clunker” car.  Basically, the procedure is to replace the engine oil with a saltwater solution and run the car at 2000 rpm until the engine seizes.  Mark’s Indiana business owns a machine called a Seda that is designed to safely and cleanly suck out the oil and other fluids. New car dealers do not own a Seda and Mark’s may be the only company in Indiana with it.

At the end of this blog I’ve cut and pasted the exact government procedure to disable an engine under the cash for clunkers program. I’ve also provided a link to a YouTube video showing the destruction of a perfectly good late model Volvo engine.    It ain’t pretty.   Be sure to look for all of the pollutants that spurt out of the engine when it finally stops.  Click “Car Disablement Procedures” below to get the video.

Car Disablement Procedures

Kendall goes on to say:  “Adding the salt water and the resulting jell created after destroying the drive train creates a new, dirty residual of oil mixed with salt water. I’m not going to screw up our Seda machine to suck out this jell; I’m just going to rip out the engine and transmission with a crane and drop it into a truck that’s destined for Illinois and let them deal with it. Somehow oil mixed with salt water strikes me as a pollutant that I don’t want my employees touching and that I sure don’t want appearing in our water samples.”

Apart from being environmentally damaging, the cash for clunkers program is regressive; hurting low income people while helping those that have the money to buy a new car.  Kendall elaborates on this as follows:  “If you wished to design a program that discriminated against the poor and uneducated, Clunkers is a good one. First, you’ve got to find out if your car qualifies. Second, you’ve got to beat on the dealer for the best deal. Third, you’ve got to make sure you didn’t sign something that will cost you your car if you made a mistake.  And most important, destroying clunkers means destroying a supply of well-used parts that is primarily consumed by low-income folks either directly or through used car dealers.”

Mark Kendall confirms something that I’ve always known; that my readers are experienced, intelligent, and keep a good eye on government shenanigans!  Thanks, Mark, for setting us straight on the real story of disabling automobiles.

Appendix B to Part 599 - Engine Disablement Procedures for the CARS

Engine Disablement Procedures for the CARS Program

THIS PROCEDURE IS NOT TO BE USED BY THE VEHICLE OWNER
Perform the following procedure to disable the vehicle engine.

1. Obtain solution of 40% sodium silicate/60% water. (The Sodium Silicate (SiO2/Na2O) must have a weight ratio of 3.0 or greater.)
2. Drain engine oil for environmentally appropriate disposal.
3. Install the oil drain plug.
4. Since the procedure is intended to render the engine inoperative, drive or move the vehicle to the desired area for disablement.
5. Pour enough solution in the engine through the oil fill for the oil pump to circulate the solution throughout the engine. Start by adding 2 quarts of the solution, which should be sufficient in most cases. CAUTION: Wear goggles and gloves. Appropriate protective clothing should be worn to prevent silicate solution from coming into contact with the skin.
6. Replace the oil fill cap.
7. Start the engine.
8. Run engine at approximately 2000 rpm (for safety reasons do not operate at high rpm) until the engine stops. (Typically the engine will operate for 3 to 7 minutes. As the solution starts to affect engine operation, the operator will have to apply more throttle to keep the engine at 2000 rpm.)
9. Allow the engine to cool for at least 1 hour.
10. With the battery at full charge or with auxiliary power to provide the power of a fully charged battery, attempt to start the engine.
11. If the engine will not operate at idle, the procedure is complete.
12. If the engine will operate at idle, repeat steps 7 through 11 until the engine will no longer idle.
13. Attach a label to the engine that legibly states the following: This engine is from a vehicle that is part of the Car Allowance Rebate System (CARS). It has significant internal damage caused by operating the engine with a sodium silicate solution (liquid glass) instead of oil.
14. File this document in the file for the new vehicle purchase.

According to the Associated Press, “President Barack Obama is hailing his meeting with Professor Henry Louis Gates Jr. and policeman James Crowley as a “friendly, thoughtful conversation.”  The awkward “toast photo,” released by the White House, shows Obama, Crowley and Gates clinking large beer glasses together.  There are no smiles and no eye contact between the three participants.

Earlier in the week, Obama said that hopefully the Gates-Crowley episode “ends up being what’s called a teachable moment.”  It is a matter of opinion as to who might learn the most from such a moment.  Crowley never changed his story for a second, nor did he apologize for his behavior.  Gates is paid by Harvard to play the racism card and isn’t going to change his tune.  I guess the real winner in the “teachable moment” contest is Obama.  Two “teachable moments” stand out for our great leader.

Teachable Moment #1. Obama learned that it is unwise to create a distraction during the critical two weeks prior to a legislative deadline.  The Gates/Crowley incident would have been forgotten two weeks ago if Obama hadn’t thrown his hat in the ring.  Now Obama has wrecked his self-imposed deadline to get a version of a health care bill through both houses of congress prior to the summer recess.  The bill will be delayed while house members return to their districts for a month.  During that time they’re going to get a nasty earful of complaints about government run health care from their constituents.  The final health care bill that will be signed into law months from now will most likely be disjointed, confusing, inefficient and costly, but it won’t even closely resemble the all encompassing socialization of medicine that Obama had hoped for.  Ironically, Professor Henry Louis Gates might go down in history not for his work in racial studies, but for saving our country from socialized medicine.

Teachable Moment #2. Obama might have learned that it is good to have the facts straight before he opens his mouth.  Saying that officer Crowley and the Cambridge Police Department “Acted Stupidly” has alienated Obama in the law enforcement community among cops of all colors and political persuasions.  I’m not sure that Obama will learn teachable moment #2 because facts didn’t get Obama to the presidency.  Broad brush utopian statements like “I have always believed that what brings us together is stronger than what pulls us apart” and “We are going to cut costs in health care by not paying for things that don’t make us healthy” are Obama’s bread and butter.  Remember, the devil is in the details, and Obama doesn’t pay any attention to details.

Cash for Clunkers: Moving on to the “cash for clunkers” program, this law was “sold” as an environmental bill, but in some cases an old car can be scrapped for a new car that gets just three more miles per gallon.  Cash for clunkers represents another example of government going where it should not.  The program has nothing to do with fuel efficiency or the environment, but has everything to do with supporting the automobile industry at taxpayer expense.  It appears that cash for clunkers, which was somewhat of an afterthought tied to a must-pass bill to approve funding for troops in Afghanistan and Iraq, might have morphed into the governments most confusing stimulus package.  The program is 136 pages long and many dealers made paperwork errors and will have to eat the $4,500 they rebated to customers.   In four days the $1 billion allocated for the program was used up and some in congress are trying to find another $2 billion for the program.  It isn’t surprising that the program has sold cars.  For the past year we have scrapped more cars in the US than we have produced, so inventories have been shrinking.

Doing the math, if we take the $1 billion allocated to the cash for clunkers program and divide it by the $4,500 cash rebate, it allows for 222,222 cars to be sold.  Divide that by the 16,000 auto dealers in the United States and each dealership can sell roughly 14 cars before the program runs out of money.  Auto dealers must be happy about a four day period in which they have sold approximately $4.4 billion worth of cars.  This weekend, for the first time in months, the new car salesman down at Acme motors will be slapping steaks (instead of hot dogs) on his back yard grill.  Nevertheless, no more money should be allocated to this program.