Any successful healthcare reform needs to formulate a more competitive health insurance market. A more competitive market will drastically alter the cost structure for health insurance. In order to remain in business, insurance companies in a competitive market will need to drive costs downward. A multitude of new insurance products will be offered which will provide consumers with an array of choices with varying levels of amenity and price. There are at least three ways in which the markets can be made more competitive.
The first, and easiest, step would be to allow insurance companies to compete across state lines. The current, useless restrictions only serve to drive costs upwards. By allowing cross-border competition, the number of insurance providers available to any one individual will immediately increase. Companies will then have to compete with more market participants in order to capture a sufficient segment of the now larger pool of potential clients. This will force insurance providers to develop new types of insurance products and cut their own costs to improve margins.
The second step would be to end the employer-based system of the provision of health insurance. Many Americans currently get their health insurance as a fringe benefit from their employer. However, there are a number of problems with this method of provision. First, those that cannot get insurance through their employer often have to pay exorbitant fees in the private market. Second, health insurance is contingent on employment. When an individual loses his or her job, it becomes a double hit with the elimination (or increased cost) of health insurance. Third, employer provision necessarily limits an individual’s options. Most companies only offer three or four options – all generally from the same insurance company. The individual has little say in terms of picking an option that suits his or her financial and medical needs. Insurance companies therefore only need to offer plans that appeal to a few Human Resource managers, and do not need to offer specialized coverage for unique requirements.
All of these issues can be resolved if individuals or families obtained health insurance on the free market. Like auto, homeowner, or other forms of insurance, health insurance should be an individual’s personal decision. If insurance companies competed for individual policyholders, rather than for corporate HR managers, they would be forced to diversify products to meet individual needs. Insurance policies that ran the gamut from expensive with maximum coverage to limited cost and coverage would be widely available for individual purchase. This would help lower costs as individuals would self-segregate into policies that better meet their needs and budgets [for instance why does a single man need health coverage for an OB/GYN?]. Likewise, entrepreneurial insurance providers will be able to successfully target niche markets that formerly went uncovered.
The end of the employer-based system can be easily achieved through simple legislation. A law that requires employers who provide health insurance to offer an employee opt-out clause would allow individual employees to select their form of compensation. If the individual chose not to receive his employer’s health insurance policy, he would receive the money which the employer would have spent on health insurance. The employee could then turn to the private market to purchase his own policy.
This coincides with the third step: ending tax exemptions for employers. This will further facilitate the transfer from an employer-based system to a free-market system. Not only will this end the incentives for employers to provide insurance, but it will also increase revenues (or allow tax cuts) for the government. Employees will naturally receive higher salaries as their compensation switches from a fringe benefit to direct pay.
All of these steps will facilitate a more competitive environment. Insurance companies will need to compete with a larger number of competitors and for a larger number of potential customers. This will help force costs downward, as only the most efficient and cost-effective insurance companies will be able to survive. Consumers will be offered a wider array of choices, with varying degrees of price and services. Customers will therefore be better able to afford, at least, minimal coverage. A increase in competitiveness would drastically alter the health insurance landscape and promote free-market reform.
Saturday, December 5, 2009
Tuesday, December 1, 2009
The Right Medicine for Healthcare – Part I
With the Senate now beginning debate on a healthcare bill, it is time to step back and really think about where America could end up. The bills – and ideas – that are prevalent in Congress are devoid of commonsense. Under the current system of thinking, any bill, such as the current one on the Senate floor will be disastrous.
No one disagrees with the fact that American healthcare is in desperate need of reform. However, the current proposals do not offer good solutions. They attempt to patch a broken system without understanding what is not working. Like a charlatan doctor peddling a homemade cough syrup, they offer the wrong medicine.
The essential problem with America’s healthcare system is cost. Some may frame it in terms of accessibility – too many people do not have health insurance. However, accessibility is, in essence, an issue of cost. People that want, but do not have, insurance are precluded due to tprohibitive prices. However, the present top-down approaches advocated by Congress do not address the fundamental cost issues. Instead, they attempt to make healthcare “more-affordable” by redistributing costs between different parties - whether taxpayers, the young, insurance companies, the poor, etc.
Not only is this a divisive and politically-charged (as we all know) approach, but it ultimately will fail to make substantial, lasting change. For instance, if insurance companies are simply forced to ignore pre-existing conditions, they will need to find ways to pay for these more expensive patients. This means either increasing premiums for everyone or lowering services across the board. In essence the current Congressional proposals create a zero-sum game, with clearly defined winners and losers.
What needs to be done is to develop a solid system of proposals that counter the inanity in Congress. America needs a reform that fixes the system and benefits all. The fundamentals of any successful reform rely on the mechanisms of the free market to create a cost efficient system. As Soviet Russia has shown us, centrally planned economies end in dismal failures. Regulatory bodies that determine maximum prices, public-options, individual mandates, and outrageous restrictions on private enterprise will not solve the problem, but exacerbate it.
Over the next few articles I will try to outline a few points that may serve as a rough skeleton for some detailed reform. In particular, (1) greater competition needs to be created between insurance companies by ending the employer based system, (2) medical costs need to be driven downward through tort reform, digitization of records, and realigning incentives, and (3) new financial instruments should be established to cover emergency room visits of the uninsured.
Ultimately, healthcare is a financial not a health-related issue. Insurance is one tool to make healthcare affordable. However, it is not the only, nor always the best way, to pay for healthcare costs. The desirability of health insurance is, and should be, an individual’s decision, based on relative risk and one’s financial situation. By failing to acknowledge and address these issues, Congress is suppressing true reform that could have a lasting impact on America’s future. The government should serve as an impartial referee, not a troublesome participant, in the realm of healthcare.
No one disagrees with the fact that American healthcare is in desperate need of reform. However, the current proposals do not offer good solutions. They attempt to patch a broken system without understanding what is not working. Like a charlatan doctor peddling a homemade cough syrup, they offer the wrong medicine.
The essential problem with America’s healthcare system is cost. Some may frame it in terms of accessibility – too many people do not have health insurance. However, accessibility is, in essence, an issue of cost. People that want, but do not have, insurance are precluded due to tprohibitive prices. However, the present top-down approaches advocated by Congress do not address the fundamental cost issues. Instead, they attempt to make healthcare “more-affordable” by redistributing costs between different parties - whether taxpayers, the young, insurance companies, the poor, etc.
Not only is this a divisive and politically-charged (as we all know) approach, but it ultimately will fail to make substantial, lasting change. For instance, if insurance companies are simply forced to ignore pre-existing conditions, they will need to find ways to pay for these more expensive patients. This means either increasing premiums for everyone or lowering services across the board. In essence the current Congressional proposals create a zero-sum game, with clearly defined winners and losers.
What needs to be done is to develop a solid system of proposals that counter the inanity in Congress. America needs a reform that fixes the system and benefits all. The fundamentals of any successful reform rely on the mechanisms of the free market to create a cost efficient system. As Soviet Russia has shown us, centrally planned economies end in dismal failures. Regulatory bodies that determine maximum prices, public-options, individual mandates, and outrageous restrictions on private enterprise will not solve the problem, but exacerbate it.
Over the next few articles I will try to outline a few points that may serve as a rough skeleton for some detailed reform. In particular, (1) greater competition needs to be created between insurance companies by ending the employer based system, (2) medical costs need to be driven downward through tort reform, digitization of records, and realigning incentives, and (3) new financial instruments should be established to cover emergency room visits of the uninsured.
Ultimately, healthcare is a financial not a health-related issue. Insurance is one tool to make healthcare affordable. However, it is not the only, nor always the best way, to pay for healthcare costs. The desirability of health insurance is, and should be, an individual’s decision, based on relative risk and one’s financial situation. By failing to acknowledge and address these issues, Congress is suppressing true reform that could have a lasting impact on America’s future. The government should serve as an impartial referee, not a troublesome participant, in the realm of healthcare.
Wednesday, November 18, 2009
Real Justice is in a Military Court, KSM Does Not Belong In NYC
Last week, Attorney General Eric Holder announced that 9/11 terrorist mastermind Khalid Sheikh Mohammed (“KSM”) will stand trial in New York federal court. This is an egregious mistake on the part of the Obama administration.
The trial will surely become a show – a mere opportunity for KSM to have a platform to spout his anti-American gospel. KSM, who has admitted to being the 9/11 mastermind, has long wanted the opportunity to preach his hatred. A trial will not be about finding justice – everyone from Obama down to the average New Yorker knows KSM is guilty. Instead, it will become an opportunity to put the U.S. on trial and attack the legacy of the war on terrorism.
Additionally, a civilian trial has different standards of admissibility of evidence. This will require the government to introduce classified information in order to successfully convict KSM. Likewise due to higher standards, certain evidence will be excluded. Any confessions or information extracted through ‘coercion’ will be inadmissible. The change in admissible evidence will only put the U.S. at risk, by exposing sensitive information and making a clear-cut case open to legal technicalities and loopholes. Just imagine what will happen if some wily attorney manages to free KSM (who, by the way, has asked for death).
However, more important than either of these issues is the general, theoretical concepts that are at stake here. By trying KSM in a civilian court, the government is explicitly stating that acts of terrorism – the brutal murder of U.S. civilians – are not acts of war, but criminal acts. This is not only untrue, but creates dangerous precedents and incentives.
First and foremost, military trials, despite critics’ claims, are not above the law. They are a long-present instrument of the U.S. legal system and have justly and successfully been used before. Trying an individual in either system is not an issue of following law or not following law, but a matter of what type of crime and law needs to be addressed. Holder does not disagree with this concept as he has simultaneously sent a number of other Gitmo detainees to military trials.
The problem is that the Justice Department does not seem to believe that KSM is an enemy combatant, but rather a common criminal. According to Politico, Holder admitted that KSM could have been tried in a military court, but felt justice would be better attained in a federal court. In his mind, in order to be an enemy combatant one must attack a military target. This is a gross distortion of reality. The 9/11 terrorists were members of an enemy army. Just because they did not wear uniforms or have a physical nation to call home, does not negate the fact that this was an act of war.
By failing to correctly address this, Holder has created perverse incentives for the enemies of the United States. Those who wish to bring harm to the U.S. will now have greater incentives to avoid the rules of war (such as the Geneva Conventions). After all, what right-minded (if there is such a thing) Islamist terrorist would chose to fight Marines in Afghanistan and then face military laws, rather than bring the battle to American civilians and civilian courts? William McGurn stated in the Wall Street Journal that Holder’s decision creates a world where, “If you kill civilians on American soil you will have greater protections than if you attack our military overseas.”
These perverse incentives create greater risk for American civilians. The current administration unfortunately seems more concerned with appeasing a misguided notion of fairness, rather than protecting the American people. Ultimately, they will reward a terrorist movement by providing a way for our enemies to wage war without suffering the appropriate penalties. The real path to justice is through the military court system – a system designed to handle war criminals. By avoiding this fact, Holder is flying in the face of justice and endangering our success in the war on terror.
The trial will surely become a show – a mere opportunity for KSM to have a platform to spout his anti-American gospel. KSM, who has admitted to being the 9/11 mastermind, has long wanted the opportunity to preach his hatred. A trial will not be about finding justice – everyone from Obama down to the average New Yorker knows KSM is guilty. Instead, it will become an opportunity to put the U.S. on trial and attack the legacy of the war on terrorism.
Additionally, a civilian trial has different standards of admissibility of evidence. This will require the government to introduce classified information in order to successfully convict KSM. Likewise due to higher standards, certain evidence will be excluded. Any confessions or information extracted through ‘coercion’ will be inadmissible. The change in admissible evidence will only put the U.S. at risk, by exposing sensitive information and making a clear-cut case open to legal technicalities and loopholes. Just imagine what will happen if some wily attorney manages to free KSM (who, by the way, has asked for death).
However, more important than either of these issues is the general, theoretical concepts that are at stake here. By trying KSM in a civilian court, the government is explicitly stating that acts of terrorism – the brutal murder of U.S. civilians – are not acts of war, but criminal acts. This is not only untrue, but creates dangerous precedents and incentives.
First and foremost, military trials, despite critics’ claims, are not above the law. They are a long-present instrument of the U.S. legal system and have justly and successfully been used before. Trying an individual in either system is not an issue of following law or not following law, but a matter of what type of crime and law needs to be addressed. Holder does not disagree with this concept as he has simultaneously sent a number of other Gitmo detainees to military trials.
The problem is that the Justice Department does not seem to believe that KSM is an enemy combatant, but rather a common criminal. According to Politico, Holder admitted that KSM could have been tried in a military court, but felt justice would be better attained in a federal court. In his mind, in order to be an enemy combatant one must attack a military target. This is a gross distortion of reality. The 9/11 terrorists were members of an enemy army. Just because they did not wear uniforms or have a physical nation to call home, does not negate the fact that this was an act of war.
By failing to correctly address this, Holder has created perverse incentives for the enemies of the United States. Those who wish to bring harm to the U.S. will now have greater incentives to avoid the rules of war (such as the Geneva Conventions). After all, what right-minded (if there is such a thing) Islamist terrorist would chose to fight Marines in Afghanistan and then face military laws, rather than bring the battle to American civilians and civilian courts? William McGurn stated in the Wall Street Journal that Holder’s decision creates a world where, “If you kill civilians on American soil you will have greater protections than if you attack our military overseas.”
These perverse incentives create greater risk for American civilians. The current administration unfortunately seems more concerned with appeasing a misguided notion of fairness, rather than protecting the American people. Ultimately, they will reward a terrorist movement by providing a way for our enemies to wage war without suffering the appropriate penalties. The real path to justice is through the military court system – a system designed to handle war criminals. By avoiding this fact, Holder is flying in the face of justice and endangering our success in the war on terror.
Wednesday, November 4, 2009
Win Two, Lose One - A Recipe For Big Tent Republicanism
With both Virginia’s and New Jersey’s governor races won by Republican candidates and the loss by the Conservative candidate, Hoffman, in NY-23 Congressional district, the results of yesterday’s elections have interesting implications for the Republican Party. In short, these results have reflect a distaste with the Democrats’ agenda, coupled with a call for greater Republican cohesiveness. This bodes well for the moderate Republican movement.
The Republican win of both governorships is a clear indictment of Obama’s policies and Congress’s rule. Both states went to Obama last year. Of the two, New Jersey has historically been ‘bluer’. Virginia on the other hand has swung more widely. It is thus less surprising that Virginia elected a Republican governor. What is surprising is the magnitude of Republican Robert McDonnell’s win. McDonnell won Virginia with an astounding 59% of votes, a massive swing from the percentage of Virginia voters that supported Obama last year.
However, the Republican triumph in the historically staunch blue state of New Jersey is the more significant of the two. New Jersey has long been considered a Democratic stronghold. They fact that the state could go red only a year after Obama’s election supposedly stamped a new mandate on America, reflects a strong repudiation of the past year’s policies. Both Virginia’s and New Jersey’s results signify America’s distaste with the overreach of government and the inability of the administration to solve the most pressing issues.
So what is one to make of the loss of Congressional district NY-23, a long-time Republican district? Democratic pundits will most certainly claim it counters any message sent by the governor races. However, the story more directly reflects the internal problems within the Republican Party than national politics.
The muddled race began with liberal Republican candidate, Dede Scozzafava, running against former Independent-cum-Democrat Bill Owens. A rebellion by Republicans prompted Conservative Party candidate Hoffman to jump into the fray at the last minute. Scozzafava was immediately overshadowed and dropped out of the race; ironically throwing her weight behind Owens. The result of theRepublican infighting split the Republican vote. Furthermore, Hoffman’s candidacy never had the time needed to fully get off the ground. Voters were undoubtedly unclear about where he stood. Ultimately, this handed the race to a Democrat for the first time since the Civil War.
Yesterday’s elections send a clear message to the activist wing of the Republican Party. The branch of the party that wants to see a smaller, more ‘ideologically pure’ party has been dealt a heavy blow. The failure in NY-23 is clearly an issue of party infighting. Hoffman or Scozzafava most likely would have won if they were the sole right-wing candidate; however, by taking the fight outside of the Republican Party all conservatives lost.
This election is a resounding success for the Big Tent Republicans. Republicans have won where they have appealed to all and have lost where they have become narrow and isolated. This will become increasingly important as conservative Republicans aim to challenge moderate Republican candidates, such as Charlie Crist, next year. The challenges are welcomed, but should stay within the party. Republican candidates should be selected that can appeal to their electorates. As the wins in New Jersey and Virginia show, America has soured to the liberal excesses in Washington. Republicans can win by being true to their principles and reaching out to independents and Democrats. But they cannot win by being exclusionary and fighting amongst each other.
The Republican win of both governorships is a clear indictment of Obama’s policies and Congress’s rule. Both states went to Obama last year. Of the two, New Jersey has historically been ‘bluer’. Virginia on the other hand has swung more widely. It is thus less surprising that Virginia elected a Republican governor. What is surprising is the magnitude of Republican Robert McDonnell’s win. McDonnell won Virginia with an astounding 59% of votes, a massive swing from the percentage of Virginia voters that supported Obama last year.
However, the Republican triumph in the historically staunch blue state of New Jersey is the more significant of the two. New Jersey has long been considered a Democratic stronghold. They fact that the state could go red only a year after Obama’s election supposedly stamped a new mandate on America, reflects a strong repudiation of the past year’s policies. Both Virginia’s and New Jersey’s results signify America’s distaste with the overreach of government and the inability of the administration to solve the most pressing issues.
So what is one to make of the loss of Congressional district NY-23, a long-time Republican district? Democratic pundits will most certainly claim it counters any message sent by the governor races. However, the story more directly reflects the internal problems within the Republican Party than national politics.
The muddled race began with liberal Republican candidate, Dede Scozzafava, running against former Independent-cum-Democrat Bill Owens. A rebellion by Republicans prompted Conservative Party candidate Hoffman to jump into the fray at the last minute. Scozzafava was immediately overshadowed and dropped out of the race; ironically throwing her weight behind Owens. The result of theRepublican infighting split the Republican vote. Furthermore, Hoffman’s candidacy never had the time needed to fully get off the ground. Voters were undoubtedly unclear about where he stood. Ultimately, this handed the race to a Democrat for the first time since the Civil War.
Yesterday’s elections send a clear message to the activist wing of the Republican Party. The branch of the party that wants to see a smaller, more ‘ideologically pure’ party has been dealt a heavy blow. The failure in NY-23 is clearly an issue of party infighting. Hoffman or Scozzafava most likely would have won if they were the sole right-wing candidate; however, by taking the fight outside of the Republican Party all conservatives lost.
This election is a resounding success for the Big Tent Republicans. Republicans have won where they have appealed to all and have lost where they have become narrow and isolated. This will become increasingly important as conservative Republicans aim to challenge moderate Republican candidates, such as Charlie Crist, next year. The challenges are welcomed, but should stay within the party. Republican candidates should be selected that can appeal to their electorates. As the wins in New Jersey and Virginia show, America has soured to the liberal excesses in Washington. Republicans can win by being true to their principles and reaching out to independents and Democrats. But they cannot win by being exclusionary and fighting amongst each other.
Thursday, October 29, 2009
Back from the Dead - Harry Reid's Public Option
Just in time for Halloween, Harry Reid has raised the dead. Like a zombie from a cheesy horror flick, the public option is now once again roaming the halls of Congress. In a recent announcement, Senate Majority leader Reid stated the newest version of health care legislation would be heading to a vote in the Senate with a government-run public option included.
Setting aside for a moment the foolishness of a public option, Reid’s insistence on including this provision in a plan is utterly baffling. The public option was killed over the summer when Democrats realized the political infeasibility of the concept. The Democrats simply did not have the votes in the Senate to avoid a Republican-led filibuster. The Democrats need every single member of their caucus (58 Democrats and 2 Independents) to agree with the plan in order to push it through without Republican support. The political reality indicated that this just was not possible. If one Democrat wavered the entire plan would fail. And so, wisely the Democrats seemed to move on from the public option. After all, they profess that their real goal is to achieve much needed health-care reform.
Reid’s move to bring back the discussion on the public-option is a step backwards. Nothing has changed to indicate a different political environment. In fact, shortly after his announcement Olympia Snowe, the sole Republican to have voted with Democrats on some health-care related issues, backed off from her cross aisle move. She indicated she would work with Republicans to quash any health care reform that included a public option. Snowe’s rebuke was quickly followed by one from Joe Lieberman – one of the two Independents who caucuses with the Democrats. With Lieberman’s defection a public option is undoable.
So what are the left-wing Democrats trying to accomplish? The inclusion of a public option will sink any reform bill. If the Democrats truly want to reform healthcare, they need to face the reality that it cannot (nor should not – see a prior post on ANR) include a public option. Reid’s gambit seems to lead to nothing but a dead end – torpedoing the Democrats’ and Obama’s crown jewel.
Ironically, it appears that Reid is sabotaging any chance at Democrat-led healthcare reform. One possible explanation is that the Democrats are in such internal disagreement that they cannot design any plan that is amenable to all wings of the party. The tensions between the leftists and the centrists are running high. In order to avoid a failure based on the Democrats’ inability to compromise, Reid is setting up a surefire way to fail that can be pegged on supposed Republican obstructionism. At the end of the day, Democrats will point to the ‘anti-reform’ Republicans who successfully filibustered their plan, rather than their own ranks for the political failure to pass a reform bill. If one is going to fail, at least make it look like it is someone else’s fault.
The Wall Street Journal offers another relatively plausible explanation for Reid’s maneuver. Reid might be offering the plan knowing full well that he will have to drop the public option. The WSJ writes;
Setting aside for a moment the foolishness of a public option, Reid’s insistence on including this provision in a plan is utterly baffling. The public option was killed over the summer when Democrats realized the political infeasibility of the concept. The Democrats simply did not have the votes in the Senate to avoid a Republican-led filibuster. The Democrats need every single member of their caucus (58 Democrats and 2 Independents) to agree with the plan in order to push it through without Republican support. The political reality indicated that this just was not possible. If one Democrat wavered the entire plan would fail. And so, wisely the Democrats seemed to move on from the public option. After all, they profess that their real goal is to achieve much needed health-care reform.
Reid’s move to bring back the discussion on the public-option is a step backwards. Nothing has changed to indicate a different political environment. In fact, shortly after his announcement Olympia Snowe, the sole Republican to have voted with Democrats on some health-care related issues, backed off from her cross aisle move. She indicated she would work with Republicans to quash any health care reform that included a public option. Snowe’s rebuke was quickly followed by one from Joe Lieberman – one of the two Independents who caucuses with the Democrats. With Lieberman’s defection a public option is undoable.
So what are the left-wing Democrats trying to accomplish? The inclusion of a public option will sink any reform bill. If the Democrats truly want to reform healthcare, they need to face the reality that it cannot (nor should not – see a prior post on ANR) include a public option. Reid’s gambit seems to lead to nothing but a dead end – torpedoing the Democrats’ and Obama’s crown jewel.
Ironically, it appears that Reid is sabotaging any chance at Democrat-led healthcare reform. One possible explanation is that the Democrats are in such internal disagreement that they cannot design any plan that is amenable to all wings of the party. The tensions between the leftists and the centrists are running high. In order to avoid a failure based on the Democrats’ inability to compromise, Reid is setting up a surefire way to fail that can be pegged on supposed Republican obstructionism. At the end of the day, Democrats will point to the ‘anti-reform’ Republicans who successfully filibustered their plan, rather than their own ranks for the political failure to pass a reform bill. If one is going to fail, at least make it look like it is someone else’s fault.
The Wall Street Journal offers another relatively plausible explanation for Reid’s maneuver. Reid might be offering the plan knowing full well that he will have to drop the public option. The WSJ writes;
He could then tell the left that he did his best, only to have been beaten back to the unreliable likes of Mr. Lieberman….Meanwhile, such endangered swing-state Democrats as Blanche Lincoln of Arkansas could claim they won a great concession if the public option fails, making it easier for them to vote for a final bill that would still do enormous harm to private insurance and the federal fisc.Reid and his cronies could be trying to push the negotiating grounds leftward in order to achieve a more Democrat-friendly outcome. This is a risky move, but opens an opportunity for Republicans. Senate Republicans should point out the foolishness of Reid’s insistence for a public option. They can easily turn the tables on the Democrats, by branding them obstructionist. How can the Democrats claim to be solving our health care problem if they are offering proposals that clearly are not passable? However, such a strategy necessitates a counter-proposal – something the Republicans have been lacking. A successful Republican-led reform will offer America the right kind of health care fix and deal the final deathblow to the leftist Democrats’ socialist ambitions. Let’s put a nail in this coffin for good.
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