Sunday, December 22, 2013

The Hidden Impact of Obamacare and the Economy

Obamacare has delivered another sucker punch to the middle class. This time it’s sticker shock. 
Now that a few people can get past the tech problems of and actually see the real cost of insurance plans available, they are finding that Affordable Care is big hit to the family budget.  

And when the family budget gets hit in the solar plexus, guess what happens to consumer spending and the economy. 

In California, policies for about 900,000 Californians are being canceled because of Obamacare’s mandates and about 2/3rd of these do not qualify for subsidies, according to The Chicago Tribune.  

The result—these folks will be paying higher premiums.

In Alabama, premiums have doubled for some middle class families like Courtney Long, a stay-at-home mother of four. She told WHNT News. “It’s devastating. I started crying,” said Long. “I mean, we have worked so hard to get out of credit card debt, get ahead on the car loan, transfer our mortgage to a 15 from a 30 year mortgage… and for what?”

In Tennessee, Sen. Lamar Alexander (R-TN) issued an analysis of a White House report and found the following:

— Today, a 27-year-old man in Memphis can buy a plan for as low as $41 a month. On the exchange, the lowest state average is $119 a month — a 190 percent increase.

— Today, a 27-year-old woman in Nashville can also buy a plan for as low as $58 a month. On the exchange, the lowest-priced plan in Nashville is $114 a month — a 97 percent increase. Even with a tax subsidy, that plan is $104 a month, almost twice what she could pay today.

— Today, women in Nashville can choose from 30 insurance plans that cost less than the administration says insurance plans on the exchange will cost, even with the new tax subsidy.

— In Nashville, 105 insurance plans offered today will not be available in the exchange.

In Washington State, Obamacare will increase the underlying cost of individually purchased health insurance by 34-80 percent on average, according to Forbes.  The list goes on and on and includes Texas, Florida, New York, Illinois, Georgia and North Carolina.  But premiums are just the beginning.  The deductibles are outrageous, too.

A piece in Saturday’s The New York Times tells the story of Doug and Ginger Chapman, ages 55 and 54, a middle class couple “sitting on the health care cliff.”  Their annual income of around $100,000 a year makes them ineligible for a subsidy in New Hampshire (if they earned under $94,000, it would cut their costs by half). They have to replace their family insurance which includes the two of them and their two sons. The premium cost alone, not including any deductible is $1,000 a month, or 12 percent of their income. 

The Times’ analysis found the following:

“The cost of premiums for people who just miss qualifying for subsidies rises rapidly for people in their 50s and 60s. In some places, prices can quickly approach 20 percent of a person’s income. Experts consider health insurance unaffordable once it exceeds 10 percent of annual income. By that measure, a 50-year-old making $50,000 a year, or just above the qualifying limit for assistance, would find the cheapest available plan to be unaffordable in more than 170 counties around the country, ranging from Anchorage to Jackson, Miss.”

The other group that gets disproportionately hit is the young, according to Forbes.  For a 40 year old, the 2013 average deductible was $4,045, and the cost increased 29 percent to $309. For a 64-year-old man, the cost of a plan with a $3,494 deductible increased 64 percent to $806.

The Real Impact of Obamacare is Yet to Come

If even a fraction of the middle class and upper middle income earners divert some of their discretionary dollars to pay for health care, it will have a significant impact on consumer spending.  What will that mean for the economy? Consumer spending accounts for about 70 percent of the nation’s GDP, although experts say that number is likely to decline.

The top 20 percent of income earners account for about 40 percent of all spending in the U.S.  When you increase the costs of health care and the new taxes associated with Obamacare, you can hear the wallets closing.

Friday, December 20, 2013

Sorry GOP, an 'R' Is Not Enough

by Dr. Milton Wolf

17 Dec 2013

I’ve been a Republican all my life—a loyal Republican. The problem is, our party has not been loyal to its own principles. That is why I am running for the United States Senate.
The Republican Party faces an identity crisis. What do we really stand for? Conservatives within the party, like myself, believe we should re-embrace the Constitution and stand unapologetically for the divinely-inspired American Idea of individual liberty, limited government, and free-market values.

The GOP establishment, on the other hand, believes we should stand simply for the letter "R." They claim that America’s problems will be solved if we just elect more people with Rs behind their names, but their own history shows otherwise.

Since the Reagan Revolution gave way to the “kinder, gentler” GOP (translation: surrender Republicans), conservative victories have been few and fleeting. Even the 1994 Contract with America is no exception. Within six years, the cumulative budget of the 95 major government programs slated for elimination had increased by thirteen percent. And that’s when spending really took off.

The harsh realities of the 2000s give lie to the current GOP establishment claims. Voters gave Republicans the White House, the House of Representatives, the Senate, and even the Supreme Court, and what did we get in return? The largest expansion of spending, borrowing, regulations, and debt our nation had ever seen. These Republicans—who call themselves conservatives—delivered the largest expansion of government in the history of America until Barack Obama came along.

The GOP establishment claimed in the 2000s that we were on the verge of a permanent Republican majority if we would just coopt the Democrats’ issues (translation: surrender to Democrats). And so, it was the GOP establishment that gave us the largest expansion of Medicare in the history of the program. It was the GOP establishment that gave us "No Bureaucrat Left Behind" for our schools. It was the GOP establishment that gave us the bank bailouts. And it was the GOP establishment that opened the White House doors for Barack Obama.

The letter "R" did not save America.

Today, America is in serious trouble because the establishment members of the GOP have, at best, proven themselves ineffective at stopping the Democrats’ unbridled expansion of government. In reality, these Republicans have been complicit with tax hikes, earmark spending, endless borrowing, and debt ceiling increases.

I am running for the United States Senate with the courage of conviction that the Constitution and the American Idea are not only the last best hope for America but also our path to return to greatness. I’m challenging Sen. Pat Roberts, who has been in Washington for 46 years. He calls himself a conservative but has voted for tax hikes, earmark spending, debt ceiling increases—eleven times!—and even voted to put Kathleen Sebelius in charge of ObamaCare. Sen. Roberts has been in Washington so long that earlier this year when he voted for Barack Obama’s $600 billion tax hike, he actually tried to sell it as “tax relief.”

This senate race in Kansas exemplifies the larger choice that the Republican Party faces. Is it enough to call yourself a Republican or even call yourself a conservative but still vote with and give aid and comfort to the Democrats whose singular mission is to expand government?

America’s fate hangs in the balance, and so does yours. As government expands, liberty contracts. And as liberty slips away little by little, prosperity contracts as well. We are witnessing this in America today. As the government reaches deeper into your doctor’s visit, into your gas tank, into your mortgage, into your children’s school, and into the rest of your life, it also reaches deeper into your paycheck and deeper still into your prospects for a better future.

Freedom itself is the most powerful engine of prosperity in human history. That’s the American story. Those poor souls throughout the ages who have been denied freedom have suffered immeasurably, and it does not matter if it was taken from them by force or voluntarily surrendered upon the altar of false utopian promises. History remains unmistakable: Freedom works. And yet, the GOP establishment cannot summon the courage or demonstrate the ability to effectively fight for it.

I will.

President Ronald Reagan understood our enduring struggle for freedom and fearlessly fought for it. Of the Republicans in the Congress, he famously wrote in his diary: “We had rabbits when we needed tigers.”

Indeed, we still do.

Dr. Milton Wolf is a constitutional conservative and practicing physician running for the United States Senate in Kansas. His website is Follow him at @miltonwolfmd.

Wednesday, December 11, 2013

Poverty is Winning the War on Poverty

We have spent $15 trillion “fighting” poverty since 1965 and we are currently spending $ 1 trillion a year ― an amount equal to about $22,000 per poor person or $88,000 for a family of four. Yet our poverty rate today (16%) is higher than when we started (14%)! If there has been a War on Poverty, poverty won.

Is it not obvious that we are subsidizing and enabling a way of life? To put it bluntly, we are paying young women to have children out of wedlock. We are paying them to be unemployed. And we are paying them to remain poor.

Is Poverty Really The Result Of Bad Luck?

Christian Aid's Poverty can be eradicated poster
On Thanksgiving eve, a Nicholas Kristof editorial instructed us on how to think about poverty in The New York Times. The main reason there is poverty, he tells us, is bad luck.

We don’t choose our parents, after all. Or the household or neighborhood we are born into. Here are a few of his observations, with my emphasis added:
“As Warren Buffett puts it, our life outcomes often depend on the ‘ovarian lottery.
[T]he difference between being surrounded by a loving family or being homeless on the street is determined not just by our own level of virtue or self-discipline, but also by an inextricable mix of luck, biography, brain chemistry and genetics.
[S]uccess in life is a reflection not only of enterprise and willpower, but also of random chance and early upbringing.”

So what’s the solution to this problem? It is apparently very simple: All we need is love. (Kristof’s column is actually titled “Where Is the Love?”) And just in case you are not motivated in that way, Kristof draws on the work of Harvard professor John Rawls to give a rational philosophical reason to spend more on welfare programs.

But before getting into that let’s pause for a moment. Is being born really a matter of luck? Doesn’t that take willful activity on the part of two parents? And is the inability of parents to support their children really a matter of luck? Or is it the result of bad habits and undisciplined behavior?

Let’s grant that some people do have bad luck. But bad luck usually strikes randomly. Absent hurricanes and tornados, we don’t expect misfortune to befall entire neighborhoods ― to say nothing of entire cities.

Kristof’s particular focus is on Food Stamps, given the debate in Congress over whether to cut spending on the program. So let’s concede that misfortune can cause some people to be hungry. But does that include the entire city of Dallas?

Every single child attending public school in Dallas, Texas is getting a free lunch and a free breakfast. The reason: There are so few children who don’t qualify for free or subsidized food that it made administrative sense just to give free meals to everybody. And as I wrote previously, the trend around the country these days is to add a free supper as well. So the only time kids will need Food Stamps is on weekends.

By the way, Dallas is not like Detroit. The economy is booming. As Texas Governor Rick Perry is fond of pointing out, Texas has created almost half the new jobs in the entire country over the past decade. So why, in the midst of all this growth and prosperity, is every school child in the city living in a home where the parents cannot afford to put food on the table?

At some point you would think that even New York Times editorial writers would come to suspect that the welfare state is not relieving poverty. It is creating it.

We have spent $15 trillion “fighting” poverty since 1965 and we are currently spending $ 1 trillion a year ― an amount equal to about $22,000 per poor person or $88,000 for a family of four. Yet our poverty rate today (16%) is higher than when we started (14%)! If there has been a War on Poverty, poverty won.

Is it not obvious that we are subsidizing and enabling a way of life? To put it bluntly, we are paying young women to have children out of wedlock. We are paying them to be unemployed. And we are paying them to remain poor.

Now let’s turn to the rational (non-emotional) argument for the welfare state. Kristof writes:
“John Rawls, the brilliant 20th-century philosopher, argued for a societythat seems fair if we consider it from behind a ‘veil of ignorance’ — meaning we don’t know whether we’ll be born to an investment banker or a teenage mom, in a leafy suburb or a gang-ridden inner city, healthy or disabled, smart or struggling, privileged or disadvantaged. That’s a shrewd analytical tool — and who among us would argue for food stamp cuts if we thought we might be among the hungry children?”
Warren Buffett, by the way, makes a similar argument.

And in both cases, it’s a surprise that these two very intelligent men cannot think of any other policy options. Remember, behind the Rawlsian veil of ignorance you don’t have to worry about what is politically practical. You can choose any public policy you like.

So wouldn’t a rational person ask how public policy could be changed so that fewer children are born to alcoholic mothers who don’t read to them or encourage their mental development?

It appears that government doing nothing would have vastly decreased the odds of being born as a child of such mothers. During the Reagan years the Council of Economic Advisors tracked the reduction in Post-World War II poverty as a function of economic growth. The conclusion: if there had never been a War on Poverty, the poverty rate by the mid-80s would have been significantly below where it actually was.

Bringing those estimates forward, if there had never been a welfare state, economic growth alone should have virtually eliminated poverty by now.

Today, Buffet and Kristof standing behind a veil of ignorance ― about to be born into the United States ― would have a one in two chance of experiencing a birth paid for by Medicaid. Absent the welfare state, their odds of needing charity to be born would have been on the order of two or three out of 100.

Of course now that we have created the welfare state, and the culture that depends on it, it’s virtually impossible to end it and ask everyone on the dole to go cold turkey. But we can do something else. We can privatize it.

More on that in a future editorial.