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The Threshold becomes a Wall to Growth

Doctor Leo Spaceman

Health Care Law Forces Businesses to Consider Growth’s Costs by Stacy Crowley at The New York Times

When LaRonda Hunter opened a Fantastic Samshair salon 10 years ago in Saginaw, Tex., a suburb of Fort Worth, she envisioned it as the first of what would eventually be a small regional collection of salons. As her sales grew, so did her business, which now encompasses four locations — but her plans for a fifth salon are frozen, perhaps permanently.

“The margins are not big enough within our industry to support it,” she said. “It’s not that I don’t want to — I love my employees, and I want to do everything I can for them — but the numbers just don’t work.”

HKO- how hard was this to predict

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Keep The Cadillac Tax

Doctor Leo Spaceman

Democrats Asked for Obamacare but Now Try to Duck Out of Paying for It by Kevin Williamson at National Review

The teachers’ unions, it should be noted, are the biggest political spenders in the country — not the NRA, not the Koch brothers, not the Chamber of Commerce or Big Oil or Big Whatever. In the private sector, unions are in decline and have been for decades, mainly because extortion is a terrible business model in the long term. But in the public sector — in government — unions rule the roost, which is why they run the Democratic party in spite of their relatively small overall numbers. Hillary Rodham Clinton cannot be president without the support of the teachers’ unions, period, and so she supports repealing one of the main revenue-generating measures attached to Obamacare.

Speaker of the House Paul Ryan, who is a numbers guy, should have the CBO rescore Obamacare as it is actually being implemented, incorporating not only the proposed Cadillac-tax repeal but also the effects of enrollment numbers that are lower than projected — current expectations are that 2016 will see about half the enrollments originally estimated. The result will be not billions but hundreds of billions of dollars in additional deficits. Let Herself defend that on the campaign trail this year, or let that batty old loon from Vermont try to convince the public that all that lost revenue can be made up by raising taxes on 400 guys in Manhattan. By all means, let’s have that fight.

For now, eliminating the Cadillac tax is one tax cut that Republicans should resist. The teachers’ unions and the AFL-CIO put these clowns in office and inflicted Obamaare on the country, and we should make them pay for it. As Ed Koch famously said: The people have spoken, and now they must be punished.

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ACA Rigor Mortis

Doctor Leo Spaceman

From Kevin Williamson at National Review, Obamacare is Dead :

Insurance is, by its very nature, always forward-looking, considering events that have yet to come to pass but that may be expected and, to a reasonable extent, predicted with some level of specificity. Under ACA, insurance is retrospective. ACA mandates that insurance companies cover pre-existing conditions, meaning events that already have happened, which renders the basic mathematical architecture of insurance — the calculation of risk among large pools of people — pointless. Insurance ceases to be insurance and instead becomes something else, namely a very badly constructed cost-sharing program.

The basic principles of meaningful health-care reform are these: Let insurance be insurance; understand that ordinary, regular medical procedures, such as physicals and prostate exams, are not insurable events, and account for that in your calculations; the only way to mitigate the effects of scarcity on health care is to make it less scarce by expanding the supply of medical practitioners and facilities; the only way to make insurance more competitive, and therefore more affordable and more responsive to consumers, is to increase the number of players in the markets; the best way to deal with people who are, for example, profoundly disabled, children, or otherwise unable to provide for their own care, is direct, clear-eyed subsidy of their medical expenses, rather than laundering those payments through the insurance market; so long as practicing medicine pays less than filing frivolous lawsuits against doctors, there’s going to be a lot of politically induced inefficiency in the system.

Of course markets work for most people, and of course there are exceptions to that. For 93 percent of the population, the solution to health-care reform is: Let markets do their thing. The only real argument is how big a check to write to those looking after the other 7 percent, and how to structure the payments. That’s a real fight, too, but it isn’t the one we’re having. Right now, the Republicans and the Democrats are two political coroners arguing over what time and cause of death to put on the paperwork; rigor mortis set in long ago.



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Political Health Care Priorities

Doctor Leo Spaceman

from The Jewish World Review, The Process is the Punishment by Mark Steyn:


It is one of the many distinctive features of Obama-style “health” “care” “reform” that, while it has not led to the hiring of a single additional doctor, nurse or hospital janitor, it did require the biggest expansion of the IRS since the Second World War. So, when he wasn’t rolling Easter eggs and advising the moppets on whether they needed to declare the luxury Belgian white chocolate balls with praline filling, he was participating in vital meetings on how many extra SWAT teams he was going to need to enforce the new colonoscopy non-compliance penalty.

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Health Insurer of Last Resource

Doctor Leo Spaceman

from Insurance May Not Save Lives, But It Saves Money by Megan McArdle in Bloomberg View:

We shouldn’t minimize the financial benefit, however. Medical bankruptcy is nowhere near half of all bankruptcies, but it is not trivial, either. And the addition of financial stress to a serious illness is certainly not trivial. Medical expenses really are different from other kinds of public policy programs, because they can be so wildly variable; 99 families out of 100 would be better off if you gave them cash instead of insurance, but the 100th will be hit by an expense that they could never realistically pay.

And that is what insurance is really for. As a health-care economist pointed out to me when the Oregon results came out, they were not actually all that surprising. Insurance is a financial product. It handles financial problems very well. We don’t expect car insurance to make us better drivers, or homeowner’s insurance to keep our house from burning down. Sure, insurance may change some behavior on the margins. But the direction of that change is not necessarily clear: Do you drive more safely to keep your rates down, or take more chances, because someone else will pay the bill if you damage another car? And whatever changes insurance produces are probably pretty marginal. Mostly what insurance does is protect us from financial ruin … and thereby, let us sleep a little easier at night.

You will call me immodest, but I’d suggest that the best model is exactly the one I suggested when health-care reform was being debated: Get rid of all of our government’s existing health insurance programs and make the government the insurer of last resort for all medical expenses above 15-20 percent of adjusted gross income. Allow very generous tax-free savings in health savings accounts that can be passed on to heirs, but spent only on medical expenses. Make the deductible percentage lower, or provide some sort of subsidized gap insurance, for people with very low incomes.

It’s absolutely progressive: Warren Buffet pays his full medical bills, while low-income families pay very little, and folks in between can choose to self-insure out of savings. It creates something like a normal market to exert pressure on health costs, because people are spending their own money on treatment, not someone else’s. It obviates the need for a massive government price-setting apparatus, which means we can put our regulatory muscle into researching comparative effectiveness of treatments and transparency efforts to inform consumers about which providers and treatments offer better outcomes. And I think it might even be politically attractive because it’s largely voluntary. No one’s forced to get rid of their employer health benefit; it’s just that there’s now a more attractive option that will encourage employees to demand cash or health savings account contributions instead of insurance coverage. Insurers can continue to sell insurance, if anyone wants to buy, or insure the gaps, safe in the knowledge that their losses are limited. It will be expensive, of course. But the government already spends a fantastic amount providing health insurance and subsidizing employer policies; we’ve got a big pot of cash to move into a more rational, market-oriented system.


An excellent plan- that relieves the burden of a financial catastrophe yet uses real market forces to bend the costs curve down, rather than government edict with perverse incentives and hidden- and often not so hidden- costs.

There may still need to be some rules on pre-existing conditions, but nothing close to the micromanagement and mandates of the ACA mess.