More on Health Care

Health Care Reform???

I see from the morning paper that Obama has another plan. I hope somebody somewhere understands this thing, it’s way over my head . Let’s examine it point by point, though. My source is the Jacksonville Times Union February 23, 2010.
It says to start with that the bill would cover 31 million uninsured Americans – that’s about 10% of the population.

The “insurance mandate” says if you don’t buy insurance you pay a fine. Can you believe that?? However, if you make less than what they incorrectly call the “tax-filing threshold” you are exempt. They are calling $45,295 the tax filing threshold for a family of four. That’s actually the amount where you start to pay in instead of collecting from the public coffers. And by the way, a lot more than 10% of the population falls in that category.

Market reforms? Insurance is in the business of risk management. Essentially, they forecast how much individuals who fit particular risk categories are likely to spend on health care in a long term and collect that money in advance in premiums. Obviously if you are a young person in excellent health you are a lower risk than an old guy like me and that is reflected in your premiums. Now under the new government plan, insurance companies would have to charge everyone the same thing and they would have to cover any medical condition including pre-existing. It sure seems to me that everyone would pay the highest premiums that are out there. Of course, many people would have to drop their coverage and pay the fine instead.

Now let’s talk about Medicaid. That’s to be expanded to cover people with 133% of the FEDERAL poverty level. The government would pay 100% of the program through 2017 after which time they could blame the cost on the party in power at that time. The interesting thing about this point is that it’s a FEDERAL poverty level. They’re calling it $29,327 for a family of four. I’m thinking that in New York City or anywhere in California that’s a lot less money than it is in a small town in the south.

Taxes on insurance? Here’s a good one. Under this plan, if you already have a good health care policy you will have to pay tax on it. It was supposed to go into effect in 2013, but the new plan moves it back to 2018 in response to the screaming from the labor unions who generally have the best health care plans. I guess the idea is that the Republicans will be in power by 2018 and they can blame the plan on them.

Employer responsibility – If I have a handle on this one, it says that if you are an employer with more than 50 employees and don’t have a health care plan and the government subsidizes employees coverage then you must pay $2000 per employee to the government. Whew, I don’t get that one at all.

Subsidies – As I understand it, this is another government handout. If you make up to 4 times the federal poverty level ($88000 for a family of four) then the government provides a “generous subsidy” for your health insurance. Now remember that people in the $80k area are taxpayers. They provide the money that the government is going to give back to them. I really have to wonder who thought this thing up.

Now there’s even more “stuff” in this bill and I’m not addressing all of it because it makes no sense and is very unlikely to pass in its current form. I simply want folks to notice what is being done here. It’s easy to ignore the whole thing because it’s so complicated that no one understands it – and that’s EXACTLY WHAT THEY POLITICANS WANT YOU TO DO! Historically, once a law is passed it is extremely difficult to get rid of it and put Humpty back together again. Step up and be heard. Let your lawmakers know what YOU want. More and more people are starting to do just that and it’s having an effect. Otherwise this ridiculous bill would have already passed in an even worse form.
That’s what I think, how about you?

So you wanna fix healthcare?

Okay, here’s a short message for our Congressmen and Senators since I know they have a short attention span. You want to fix healthcare, well you need to know what’s wrong. My wife had an MRI last week. The Lab billed $4733. The insurance company actually paid $330 per their agreement with the lab.

So who would actually pay $4733? After a lot of headscratching, I think it would be someone who just lost their job and didn’t buy continuing insurance but who did own their home. In that situation the medical place could place a lien on the home of the patient. Otherwise, for people who don’t have insurance they just write $330, but $4733 as a loss on their tax return.

Now it shouldn’t be too hard to write a law that says medical facilities have to charge everyone the same rate regardless of what insurance they have. Come to think of it, it sounds kinda American, doesn't it?

I try not to post things I haven't substantiated in detail, but this one came across my desk today and bears watching.  http://www.youtube.com/watch?v=cMnSp4qEXNM&NR=1  This is a news show that supposedly has been taken off youtube in the US but is still up in Canada.  It seems popular lately to blame the Fannie Mae problem on the Bush regime.  I've thought that ridiculous all along, and this little 4 minute video offers excellent perspective.  No one is innocent in Washington, but this at least puts the majority of blame where it should rightfully fall I believe.

Who's Gonna Pay?

If you're an old timer like me you probably grew up thinking that everyone paid income taxes. I know I always did, even when I was just barely scraping by if at all. As the years and decades went by, there were lots of changes to the tax code. I remember thinking that college tuition should be deductible when I was trying to pay that and feed my family. Back then it wasn't. It is now. Probably that's an improvement. Let's talk about the other “credits” though.  

We all know that this country has a “graduated” income tax. That means that the wealthier tax payer pays a much higher share of the burden. Now most people would think that if you make twice as much money you pay twice as much taxes and that's probably fair. For instance, if you have three children and you make $107,498 you pay $9886 in taxes. Seems fair, doesn't it?

Suppose you only make half as much, that would be $53,749 – still a respectable income here in Florida. So you should pay half the taxes, right? That would be $4943 in taxes. Guess what. If you make $53,749 and you are married with 3 children you don't pay ANYTHING AT ALL!! In fact, you get $4 in free money from the IRS! Now $50k isn't wealthy I suppose, but it seems enough that you should be paying some tax, doesn't it? 

In 2007, the census bureau tells us that the median family income in the US was $50,233.00. So the average American family doesn't pay any tax at all? Yes, that's a bit over simplified. If you have less than 3 children and you make the average income of $50k you will pay a little tax. Maybe. All the numbers I'm quoting here consider ONLY Earned Income Credit and Child Tax Credit. These are all standard deduction. If you have any kind of deductions or other credits like child care or education you pay less taxes or can make more money without paying any taxes at all.  

Let's see now, if over half of the households in the USA don't pay any taxes then it's a pretty safe bet that over half the voters don't pay any. Perhaps this is relevant to some of the voting patterns we are seeing lately. It has been a long standing tenet of democracy that every man gets one and only one vote. Perhaps it's time to consider the logic here. This is approaching the scenario of two wolves and a chicken voting on what's for dinner. Now you can hardly blame a man for voting for what's in his best interest. If you could vote to give yourself $10k in free money, wouldn't you do it? It's up to our elected officials to exercise common sense in fiscal issues. I'm afraid we can not count on them these days.  

So what's the solution? I don't know, do you?

GM Bailout, the golden goose?

GM Bailout

I see that congress it about to charge us $15billion to be sure the highest paid workers in America can keep their level of earnings. The concept is that if we don't give them money GM and Chrysler will have to declare bankruptcy. Now I am certainly not an advocate of bankruptcy in general, but let's consider the situation. If GM goes into bankruptcy then they will be rid of the ruinous obligations that currently prevents them from competing in the marketplace. Now as for who this hurts, the investors have already taken a bath in the market with the precipitous drop in GM stock prices. They'll lose more, but not that much more. The main loser will be the unions and their overpaid members. The fact of the matter is that they have killed the golden goose with ridiculous contracts. Toyota pays it's workers about $45 per hour including benefits and GM pays $75 or so. Hmmmm. http://www.heritage.org/research/economy/images/wm2135_chart1.gif
The unions have been robbing us for years through shoddy merchandise at excessive prices and now they want to rob us again. Why on earth should our elected representatives be considering such a thing? It's all about votes and money. The unions have lots of money from years of robbing us and now they use that money against us to try and steal more from us. It seems obvious that a particular job, especially a simple assembly line job, has some specific value. Not whatever you can extort out of management, it has a real dollar value. When a company pays more than the job is worth, it's just a matter of time. Normally this process would be self-regulating. If you pay too much for labor and you can't raise prices for your product because others compete at lower prices, then eventually your bad business model forces you out of business. The problem comes in when government interferes with this natural process. Let's use our heads for a change and keep the government out of this one.
By the way, I drive a GM car and a Chrysler car. I have an elderly aunt who lives on GM pensions and benefits. I'm not unsympathetic, I'm just a realist.
That's how I see it, how about you?

The Social Security Debacle

Social Security today

There is an amazing amount of misinformation floating around this election year about Social Security and it's future. I think I'm going to stray a bit from my usual policy of presenting only my own opinions to publish a few historical facts.

First off, let's discuss the SS Trust Fund. Social Security started in 1935 and was intended as an insurance system to protect senior citizens from poverty. This was during the height of the “great depression” and during the rise of centralization or people deserting the family farms for the cities. Prior to that time, most people lived on farms in multi generational family groupings and children grew up and took care of aging parents. That may be why we had much larger families back then.

Anyway there was no trust fund, the SSA simply collected taxes and paid it out in benefits. Things continued in this vein until 1983. In that year a commission was created headed by Alan Greenspan to look into the future of Social Security. The concept was that with people living longer eventually taxes at the rate current in 1983 wouldn't be able to pay out the benefits in existence in 1983. The result of this “dilemma” was the creation of the “Trust Fund”. The idea was to create a reserve to carry us through the time of the retirement bubble of baby boomers.

The result of this plan was that we now have $2,000,000,000,000 in this fund. That's $2 trillion, please check my zero count. Under current tax law that fund will continue to increase until 2016 at which time the payouts in benefits will start to catch up with the income in taxes. Then, around 2041 we will have exhausted the excess and be back to pay as you go financing like we were from 1935 to 1983. One note of opinion here, I don't see how that's a BIG problem. It worked for nearly 50 years.

Now, there are as many “solutions” to this “catastrophe” as there are politicians running for election. Here's two likely possibilities.

First, we now stop charging FICA tax at an annual income of $102,000. BTW, that tax is 6.25% for employees. If we remove the cutoff, we will never hit the deficit problem at all. That is NOT Mr. Obama's play. His plan calls for a “donut” solution where we stop charging FICA at $102k and start back at $250k. That plan does NOT recover enough money to fix the problem. It only covers about 38% of it and requires more band aid approaches to the problem.

Idea number 2 calls for raising FICA taxes from the current 12.5 % (6.25% to the employee) to 14.5% (7.25%) to the employee. That one also means we never hit the deficit thing at all. I'm not sure who backs this idea, if I did I'd vote for him.

How about Idea number 3? This one is mine. Why not return to the system in place from 1935 to 1983 where we adjusted taxes each year to pay for the benefits paid that year? The trust fund in place would mean we didn't need to change taxes at all for the next thirty odd years, and long before then we should be into the time when the smaller generations are retiring. The baby boomers will be mostly expired and no longer receiving benefits.

Last note, I am talking only about Social Security here. This is an entirely different situation from Medicare and Medicaid. Perhaps I'll research those subjects and discuss them in a future column. The Internet makes this a wonderful time to be retired with time on your hands.

I encourage those with differing or even similar ideas on this subject to comment. I'll publish anything that is fit to print whether you agree with me or not. All the ideas I express or my own, but they are subject to being changed with new information.

Management qualifications?

Many years ago (too many!) when I was in the navy, the most formidable weapon known to man was the aircraft carrier. This was a floating city with 5000 to 6000 people and 75 to 100 airplanes on board. The weapons I won't even hint at. One aircraft carrier would be more than a match for almost any country of the world! The navy had a policy that the man who had command of all that air power should be a pilot. To reach the rank of Captain in the navy, a man had to not only be the cream of the crop, but had to put in 22 years in the service. Those years were spent flying navy airplanes and fighting wars all over the planet as well as commanding groups ranging up to squadrons of aircraft.
If a man was selected to command one of the carriers (there were 7 back then I think) he was first sent to a deep draft support ship such as an oiler or Submarine tender. These were the biggest ships the navy owned other than aircraft carriers. Once he had completed a successful tour of duty commanding one of the giant ships, a man could take on the awesome responsibility of commanding an aircraft carrier. Imagine the power in the hands of one individual!
Now imagine the power in the hands of the President of the United States! We just placed a man in charge who had never commanded anything higher than his personal secretary. This is a man who had never been in charge of anything. How did this happen? Don't get me wrong now, the other guy wasn't much better qualified. How did it come down to these two? There is nothing wrong with our system of government, it's the party system that is broken. Does anyone think these two people really represented us? They represented what a group of professional politicians offered us. If you don't want this to continue, we must take charge of the political parties and force some common sense there. We need to elect people who have at least enough qualifications to hold a middle management job.
I don't think this two party system makes any sense, personally, but we have to work with it in order bring about change. Two years from now we will see what a Democrat controlled government has done for us and vote accordingly. It won't help at all to elect more politicians just like the ones we have now. We need to have candidates available who really are interested in the public good. We need candidates whose only skill is not how to get elected. We won't get them by sitting here and complaining. We only get real solutions by stepping up to the plate and being counted. I vow to offer myself for election to some office, and I promise to support any candidate who truly represents the public. How about you?