Why You Will Not Have Private Health Insurance If Obama Succeeds

Obama likes to say that his plan does not kill private insurance.  He likes to say that he is “adding choice”.  This is patently false, and you should be scared.  If the Obama plan passes (currently in debate in the House!), you will eventually have no choices except the government choice.

The House plan allows employers to chose:  either they can provide private insurance and pay nothing to the government plan, or they can simply pay 8% of payroll to the government and everyone gets the government plan.

Today, employers are already paying more than 8% of payroll for healthcare premiums.  In fact, small businesses are paying between 11% and 14% of payroll to health insurance premiums.  With medical costs rising, this figure is only going up.

So even if your employer doesn’t switch to the government plan now, they eventually will.  A reduction in wages by 6% can be achieved by switching your healthcare provider?  What board of directors *wouldn’t* switch?

Now you might, like Obama, believe that the health care insurers are making too much in profits, so the private insurers just need to reduce prices.   I’m sure they will try to compete with the new taxpayer-funded pricing.  Keep in mind, however, that while a cut from 14% of payroll to 8% of payroll is only a 6% savings for the company, that represents a 43% drop in revenues for the health insurer.  These companies will need to cut costs to reflect the new pricing; which roughly translates to a 43% drop in covered care.  Because of the reduced coverage, this will give employers all the more reason to switch the the simple, no-overhead plan – the government plan.  As more employers switch, more private insurers will go out of business.   It is just a matter of time.

Oh – and how did the government calculate the figure for an 8% payroll tax?  Nobody knows!  Should it be 9%?  7%?  Nobody knows!  It appears to be a number masterminded to drive Health Insurers out of business.

Obama is about taking away freedom and taking away choice.  Government healthcare does improve healthcare for 10% of Americans, but it makes healthcare worse for 90% of Americans.

Building Value

We’re in a recession, and unemployment is high.  Some level of government stimulus is a good idea.  But how do we determine which programs are good? Is “Cash for Clunkers” a good idea?

I evaluate spending proposals by considering what long term value is being built.  The government can inject cash into the economy, but after the short term injection, will value remain in the economy which can benefit us for the long term?  Or is it just a short term spend?

Cars for Clunkers is a short term fix.  It adds cash to the economy for a short period, and allows Americans to continue consuming more goods than we probably need.   What happens to cars?  They get consumed – they get driven, used, and eventually (5-10 years later) get scrapped.  So when the government signs up to spend $5B on cars, they’ve injected a temporary cash boost to the auto-industry, and helped consumers get some “stuff”.  But in the end, Americans receive no long term value from this cash injection.  And when the government stops spending, the auto makers will need to layoff the workers they hired to accommodate the short term needs of the boost.

A better use of money is to build things of value.  If the government wants to create jobs, it should invest in building things.  Building schools, improving roads, and building national or local infrastructure builds long term value.  Unlike the car which will wear out in a few years and provide no value, building a school lasts for decades.  Not only do the citizens building and running the school benefit now, but the school is still usable by our children and grandchildren in the long term.

Tell your congressmen to vote no on any short-term cash injections.  All spending should build value.  If your senator can’t show long term value in their spending, it is not worth it.