Posts Tagged ‘Obamacare’

When a president forfeits the trust of his party

April 18, 2013

In 2009, President Obama begged and pressured a number of reluctant Democrats in the Senate and in the House to vote in favor of Obamacare – a policy that was unraveling in the opinion polls as the debate progressed. A sufficient number voted reluctantly in favor to carry the bill into law, albeit with reliance on a procedural dodge.

In 2010 and 2012, President Obama stood idly by as several of those reluctant political allies walked the electoral plank into the wilderness that awaits lifetime politicians who finally confront the realities of the regular work place.

In 2013, President Obama has begged and pressured a number of reluctant Democrats in the Senate to vote in favor of gun control legislation that is anathema to the voter majorities in their respective constituencies. Electoral memories may be short, but politicians memories are forever. So predictably, this time, those marginal Senators refused to walk the plank for Obama. And Obama’s bill has failed to progress.

The lesson for Barack Obama is serious indeed. For the remainder of his second term, he cannot expect to move his political agenda into law unless he tailors policies to secure political majorities.Any leader who forfeits trust places himself in such a quandary.

Predictably, Obama will now have to tack back to the political center if he desires to earn any presidential legacy for his name other than Obamacare, which is a pending disaster.

Obamacare will shaft private sector labor unions

February 4, 2013

Barack Obama received major support for the Affordable Care Act (Obamacare) from the labor unions – both in the public and in the private sector of the U.S. economy. Big Labor received a very Big Bone from the administration in return for this support, in the form of exemption of union-run health insurance plans from a high-end Cadillac Tax until 2018. For everyone else, that tax already kicked in in 2013.

However, Barack Obama seemingly has failed to deliver on a key promise that served to unite the labor unions behind the Obamacare initiative:

“If you like your health care plan, you can keep it.” Barack Obama 2008 Presidential Race

John Wilhelm distinctly remembers that unequivocal promise delivered at a Nevada rally. He now understands that Obama’s promise, like that of any politician, will not be honored. And that is a real problem for the chairman of UNITE HERE Health, the insurance plan for 260,000 service-sector union workers. It is now clear that many employers will either cut back coverage or drop coverage altogether, as the administration’s new health care mandates make those private insurance plans uneconomical.

“I heard him say, ‘If you like your health plan, you can keep it,’ Wilhelm recently told The Wall Street Journal. ‘If I’m wrong, and the president does not intend to keep his word, I would have severe second thoughts about the law.”

The problem is very serious for the unions. Negotiating with employers over health care coverage is one of the main benefits they provide to their members. As one union official told the Journal:

“If we’re not offering our members insurance and pension, why would you want to be in a union?”

Big Labor has a solution to this problem. Pressure the administration to extend subsidies to the type of health care plans jointly managed by unions and employers in order to pay off unionized companies not to drop their coverage. The administration is resisting, not least because there is no money from Congress to pay out such bribes. Moreover, paying out bribes openly to Big Labor would not look good in terms of equal protection, however much the left-leaning media might try to disguise the payoff.

Unfortunately for Obama and the Democratic Party, Big Labor helped to deliver key battleground states like Ohio, Pennsylvania and Wisconsin in 2012. Without those states, Mitt Romney would now reside in the White House instead of Barack Obama. And, with overall union membership declining to a mere 11.3 per cent of the workforce in 2012, and to just 6.6 per cent in the private sector, Big Labor can ill afford promise-slips like this from the mouth of their captive President.

Hat Tip: Editorial, ‘Obamacare’s grave threat to labor unions’, Sunday Examiner, February 3, 2013

What to do, what to do? When thieves fall out, honest men sometimes come into their own.

There is no such thing as an Obamacare free lunch

January 14, 2013

Americans should prepare themselves for severe sticker shock when health-insurance premiums rise dramatically later this year thanks to the Affordable Care Act, otherwise known as Obamacare. Do not expect the president to reach into his own pockets to bale you out. He spends most of his waking time rooting into the pockets of other Americans, including yours’. That is the name of the presidential game.

When writing and passing Obamacare into law, President Obama and the Democratic members of Congress – there were no Republicans involved – ignored virtually every actuarial principle governing rational insurance pricing. Preiums will inevitably reflect that disregard.

Specifically, central to Obamaracare mandates are requirements that insurers (1) accept everyone who applies (guaranteed issue), (2) cannot charge more on the basis of serious medical conditions (modified community rating),and (3) include numerous coverage mandates that force insurers to pay for often uncovered medical conditions. Insurance companies that do not wish to end up in the bankruptcy courts will have to find reimbursements for such additional outgoings by increasing average premiums to all customers.

Evidence already exists that these premium advances will be huge for many Americans. Eight states – New Jersey, New York, Maine, New Hampshire, Washington, Kentucky, Vermont and Massachusetts – enacted guaranteed issue and community rating in the mid-1990s and wrecked their non-group health-insurance markets. Premiums increased so much in Kentucky that the state repealed its law in 2000, and several of the other afflicted states modified their community-rating provisions. At this time, consumers in New Jersey, New York and Vermont already pay well over twice what citizens in non-afflicted states pay.

Actuaries calculate that the premium hike associated with Obamacare will average 50 per cent across the United States. This will not be evenly distributed. Large groups will be impacted less, at least initially, because the law grandfathers in employers that self-insure. Small employers will see a significant increase – and many will abandon coverage, pushing employees into the individual exchanges. The individual market will be hit hardest. Citizens of prudent states, outside the listed eight, will be hit especially hard, with individual premiums rising well in excess of 100 per cent.

Expect a lot of arm-twisting and anti-insurance-company rhetoric from the White House as Obamacare premiums soar. At risk for the Democrats will be the 2016 elections, when Americans will be fully aware of the fraud that Obamacare has perpetrated upon them, as they confront much higher premiums for much less effective medical services.

Hat Tip: Merrill Matthews and Mark E. Litow, ‘Obamacare’s Health-Insurance Sticker Shock’, The Wall Street Journal, January 14, 2013

Unforced errors that should cost Obama re-election

November 2, 2012

President Obama does not possess an analytic mind. For this reason he surely cannot understand economics. One cannot get by with rote learning in economics, though one can do so in public affairs and some aspects of the law. The President cannot be blamed for his lack of little grey cells, though the 2008 electorate surely can.

However a President can always make good his intellectual limitations by choosing economic advisers with great care. Foolishly, President Obama failed this relatively low bar and his presidency is in tatters as a consequence. The choices that he made in January 2009 have put him on the ropes in the 2012 election.

Mistake number 1. Do not choose an economics adviser simply because he is related to two Nobel Prize winners in Economics. Lawrence Summers is the nephew of Paul Samuelson and Kenneth Arrow. However, this apple fell a long way from the original trees. Summers moved into a professorship at Harvard with a silver spoon in his mouth. But a careful review of his scholarship would identify a pedestrian plodder who relied heavily on co-authored papers. It would also have identified an outdated hydraulic Keynesian whose ideas had been rejected decades earlier by stagflation evidence.

Mistake number 2.  Do not choose an economics adviser whose principle co-authored or mentored contributions depend on work by a much smarter husband. No thinking economist believes that Christina is the lead author in  Romer and Romer co-authored scholarship.  Christina Romer is a light-weight, who could not possibly stand up to an arrogant, bullying, self-centered autist like Lawrence Summers. So there would be no second judgment on Larry.

Mistake number 3. Do not choose a Summers’ sycophant as Treasury Secretary. That, of course, is exactly what the President did. Timothy Geithner, with eyes staring like a deer caught in the headlights,  pulled down the stock market and destroyed what little confidence remained every time he appeared on TV. Indeed, a smart investor could have made a pile simply by selling short just before a Geithner interview, and buying back immediately after the address.

Well, a president gets what he deserves. and President Obama was sold a pack of goods by his three advisers. The stimulus package gummed up the economy. The bail-outs produced too big to fail. The financial reforms produced Dodds-Frank rent-seeking corruption. Obamacare will wreck one-sixth of the U.S. economy if it is not repealed. And a president who came in as the Messiah may well now go out spreadeagled on the Cross.

As  George W Bush was fond of saying:  ‘Actions have consequences’. W may not have been right about much else. But surely those were words of  real wisdom, that have come back to haunt his immediate successor.


President Obama should read Marbury v. Madison (1803)

April 3, 2012

President Obama is a former president of the Harvard Law Review and famously taught constitutional law at the University of Chicago.  But did he somehow not teach the historic case of Marbury v. Madison?  That ‘s a fair question after Mr. Obama’s astonishing remarks on Monday at the White House when he ruminated for the first time in public on the Supreme Court’s recent Obamacare deliberations.  ‘I’m confident that the Supreme Court will not take what would be an unprecedented, extraordinary step of overturning a law that was passed by a strong majority of a democratically elected Congress,’ he declared. Editorial, ‘Obama vs. Marbury v. Madison’, The Wall Street Journal, April 3, 2012

This intellectually challenged President is wrong in every aspect of that ludicrous statement. For a law school graduate and adjunct faculty member of the world’s leading law school to make such egregious errors confirms suspicions that Barack Obama’s academic career advanced through  factors seriously unrelated to merit.

First let me reset the facts concerning the enactment of Obamacare. The bill was dragooned through a reluctant Senate without a single GOP vote, and with the bare 60 votes required to break a filibuster. Despite a huge Democratic  majority in the House, the bill passed by only 219-212, with several Democrats forced to vote against their constituency interests by defunding threats leveled against them by  Nancy Pelosi, the Speaker of the House, and by President Obama’s White House goons. Obamacare was not passed by a strong congressional majority. Opinion polls showed growing voter majorities against the legislation as it ground its way into law. Obamacare was driven into law by minority factions careless of  a rising majority opposition among the People.

Second, let me draw the attention of the President to Chief Justice John Marshall’s 1803 judgment in  Marbury v. Madison and the implication of that judgment for any legislation that passes through the legislative and the executive chambers of government.  Marbury was the first Supreme Court case to apply the emergent doctrine of judicial review to a congressional statute. Voting 5-0, an unanimous Supreme Court handed down one of the fundamental judicial opinions in American constitutional history. Any constitutional law professor who fails to refer to this case should be thrown out of the classroom as incompetent in his understanding of the discipline.

William Marbury had been appointed a justice of the peace in the District of Columbia in the dying hours of the administration of Federalist President John Adams.  Together with other Federalist partisans falling within John  Adam’s  group of ‘midnight judges’ , Marbury was targeted politically by the incoming Republican administration of Thomas Jefferson.  Jefferson’s Secretary of State, James Madison, simply refused to deliver Marbury’s signed and sealed commission, thereby denying him his appointment.

Marbury invoked the original jurisdiction of the United States Supreme Court, requesting the Court to issue a writ of mandamus ordering Madison to deliver the commission.  Congress, at Jefferson’s bidding, altered the date of the Supreme Court’s terms, thereby delaying the hearing of Marbury’s case until February 1803.  In the interval, the Federalist-sponsored Judicary Act of 1801 was repealed and circuit judges appointed under its provisions were dismissed.

Chief Justice Marshall, appointed during the last months of the Adams administration, was virtually a ‘midnight judge’ himself. Undeterred by the political turbulence surrounding the hearing, John Marshall held that Marbury was entitled to his commission and that Madison had withheld it from him wrongfully.  Mandamus was the appropriate remedy at common law. However, the question was whether it was available under Article III’s grant of original jurisdiction to the Supreme Court. Marshall was required to compare the terxt of Article III with section 13 of the Judiciary Act of 1789, by which Congress authorized the mandamus writ.

Finding that the 1789 statute conflicted with the Federal Constitution, Marshall considered it ‘the essence of judicial duty’ to follow the Constitution. He concluded that ‘the particular phraseology of the Constitution of the United States confirms and strengthens the principle, supposed to be essential to all written constitutions, that a law repugnant to the constitution os void, and that courts, as well as other departments, are bound by that instrument.’

Since affirming relief was denied, the decree in Marbury was self-executing, and notable as an example of self-restraint in the face of what Marshall described as an arbitrary denial of Marbury’s property rights.  The opinion, ever-afterwards, provided the judiciary, both state and federal, with a potent weapon for protecting individual rights against the actions of legislative majorities. Carried to its logical conclusion, Marshall’s opinion means that the life, liberty and property of citizens depends ultimately upon the exercise of judicial review as a constitutional check on legislative discretion.

You may well have skirted around Chief Justice Marshall’s judgment in your progressive  law classes on the Chicago campus, Mr. President. I suspect that Chief Justice Marshall will rise up from the grave to punish you for this ignorant or contemptuous evasion of constitutional law  when the Court hands down its majority judgment on Obamacare in the summer of 2012.

Obama low Class Act now in the trash can

October 17, 2011

“When Democrats were pasting it together in 2009 and 2010, the immediate attraction of the program known by the acronym Class was that its finances could be gamed to create the illusion that a new entitlement would reduce the deficit.  Ending the complicated Class budget gimmick erases the better part of Obamacare’s purported ‘savings’.”  Editorial, ‘Obamacare Starts to Unravel’. The Wall Street Journal, October 17, 2011

For many years, Democrats schemed to put the taxpayer on the hook for medical costs that middle-income Americans would not privately insure themselves against.  Costs like home health services ($1,800 a month on average), and long-term care nursing homes ($70,000 to $80,000 per annum).  Class – The Community Living Assistance Services Support Program –  was designed to be a significant shift in that direction.

On paper, Class was supposed to work like ordinary insurance, funding benefits through insurance, without any subsidy. Of course, one knows that could not be. If  the large majority of middle-income households will not remotely fund such services through private insurance, why would they ever do so through the state?

The political expectation was much more devious.  As the cost of the scheme began to increase, the Democrats gambled that Class would morph into another part of Medicare, with taxpayers now funding a huge cross-subsidy scheme to support seniors who had not protected themselves against the long-term care implications of old age. In the meantime, because premiums would be paid for five years before benefits began, terminological inexactitudes could be told that the new benefit was actually deficit reducing! Yet another Ponzi Scheme would be rolled into the federal system by a transient Democratic Party political majority.

Americans were saved from this scandal by the act of one man – Senator Judd Gregg –  who succeeded in inserting a proviso into Obamacare requiring the Class program’s reality to match Democratic promises as a matter of law.  If HHS could not provide an actuarial analysis of the 75-year costs of the program that ensured its solvency throughout that period, then Class could not be legally implemented.

Well folks, 75 years is much more of a problem than 5 years for any Ponzi Scheme.  There is no way that Class could meet that requirement. The plan actuarially would cost each participant $3,000 a month – far higher than any private insurance scheme because of adverse selection problems. No one would ever purchase such a policy, especially the young healthy individuals required to cross-subsidize the scam.

The HHS tried desperately to obfuscate reality by inserting interpretations that went well beyond anything that would have stood up in court. Ultimately, however, even HHS Secretary,  Kathleen Sebelius could not avoid violating the known laws of mathematics, despite trying so to do over a period of 19 months.

So Class is dead in the water, and the left-wing of the Democratic Party is in deep mourning for the loss of a service for which individually most of them will not pay.

Long-term care is available, for any American willing to make a financial sacrifice. Invest in long term care early and the cost is manageable for most individuals. Invest late and it becomes more expensive.  Individuals who desire to have it without paying upfront can always runs down their assets until they qualify for Medicaid. Of course they cannot then pass on assets to their heirs. Class was designed to obviate that choice at a disgusting price to the American taxpayer.

Today taxpayers should thank a Republican Senator, Judd Gregg, who displayed the wisdom and the courage to block the proposed scam. President Obama must be immensely sorry that Senator Gregg had the wisdom and courage  to turn down the President’s invitation to become his Commerce Secretary early in 2009.

Public spending on health care will increase dramatically under Obamacare

October 3, 2011

Actuaries at the Centers for Medicare and Medicaid paint a depressing picture of rising socialism in the event that Obamacare survives – in whole or in part – the constitutional challenges that currently zare in process.  Under conservative assumptions, they estimate that health spending will increase by 5.8 per cent each year from 2011 to 2020  In 2020, health care will account for 20 per cent of the entire U.S. economy.  The U.S federal and state governments will pay for a greater share than ever before.

Government spending will be the main driver in this massive expansion.  Aging baby-boomers will enroll in Medicare.  Medicaid coverage will swell.  The federal government will subsidize many of those who enroll on the new state exchanges.  By 2020, the federal government will fund 31 per cent of all health care in the United States.  The states will fund a further 19 per cent.   When 50 per cent of an industry is funded by government, that industry is socialist in my lexicon.

Even these sobering statistics may under-estimate the extent of the problem.  The actuaries assume that only 2 million people who currently enjoy employer-sponsored insurance will lose such cover.  McKinsey – a consultancy firm – has found that fully 30 per cent of all firms expect to stop coverage after 2014 when the exchanges are in place. Contagion is likely if such numbers materialize and if those firms that continue to provide health coverage find themselves at a market disadvantage.

Let us hope that the U.S. Supreme Court finds the courage to honor the Constitution and to void Obamacare in its entirety.  On this judgment may well rest the future of the United States as a mixed and not a socialist economy.

Larry Summers and Timothy Geithner: our hands are clean!

August 8, 2011

While President Obama enjoyed his long- weekend extended birthday party at Camp David, the usual suspects turned out to defend the administration against charges that it had contributed to the credit rating downgrade through poor economic policy.  It was especially sickening for me to watch two major perps, Larry Summers and Timothy Geithner, wash their hands in public and blame the rating agency, the Republican Party and, most vituperously, the Tea Party,  for the shameful black mark imposed on America’s record sheet. 

There can be no question that the Keynesian fiscal stimuli and the socialist nationalization programs launched by the Obama administration came directly from the mouths and the computers of Messrs. Summers and Geithner. And those policies slammed the final nails into the AAA credit rating downgrade  coffin of the United States federal government.

From a longer-term perspective, however, the root causes of the credit rating downgrade  lie much earlier in time.  For the $14.4 trillion debt officially listed as the source of the problem is the seventh order of smalls of the real debt of $100 trillion in unfunded liabilities. The sources of these unfunded liabilities are located in Social Security, Medicaid and Medicare. So who was responsible for these behemoths that threaten to destroy the economy of the United States?

The answer is the Democratic Party in each and every instance.  The Social Security Bill was placed on President  Franklin Roosevelt’s desk by Democratic majorities in both houses of Congress. FDR signed the bill into law in May 1935, noting privately that this legislation would secure Democratic Party majorities forever more. Why?  Because it would trap all Americans into dependence upon the state, by replacing their own saving for retirement with forced saving by the federal government.  What FDR could not know is that succeeding generations of politicians, right as well as left, would steal the monies placed into that pot and divert them into wasteful, vote-seeking consumption outlays.  That cupboard is completely bare.

Medicare and Medicaid bills were placed on President Lyndon Johnson’s desk by Democratic Party majorities in both houses of Congress in 1965, and were swiftly signed into law.  Once again a Democratic Party president salivated at the prospect of locking Americans into yet further dependence on DC. Once again, all assets have been stripped out by avaricious politicians and these cupboards, unsurprisingly in the shady environment of Washington, are also completely bare.

Then came Obamacare, an under-funded program placed on the president’s desk by Democratic Party majorities in both houses of Congress in March 2010 and signed into law by a President Obama who fully recognized the yet further economic and social dependence of Americans on DC provided by this deliberately under-funded legislation.

And who precisely was pressing throughout the American spring of 2011 for debt-reducing structural reforms to Social Security, Medicare and Medicaid, and for the removal of Obamacare?  Was it President Obama? No! Was it the Democrats in Congress? No!  Was it Larry Summers? Most resoundingly No!  Or Timothy Geithner? No!  The hands of these Lady Macbeths are simply dripping with blood and no amount of hand-washing will remove the crimson stains.

The call for entitlement reform came from one major source, the Tea Party members of the Republican Party. Had their plans and wishes been implemented on August 1, 2011, there would have been no credit rating downgrade.


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