Obamacare: The promises PART THREE

"But an additional step we can take to keep insurance companies honest is by making a not-for-profit public option available in the insurance exchange... It would only be an option for those who don't have insurance. No one would be forced to choose it and would also keep pressure on private insurance companies to keep their policies affordable and treat their customers better."

A government run not-for-profit option would not only be less efficient because it can afford to be, but also because it has the American taxpayer behind it (much like the banks on Wall St do now) if it does run in the red (even advocates will not say that the taxpayer will not pay for it, the current plans to increase medicare tax for those making $200k a year, top tax bracket increases 4.6 percent, 5.4 percent surtax on incomes over $500k, increasing average top marginal tax rate to over 52 percent). This creates artificial pressure on insurance companies that causes prices to fall, but the net effect is that there will be a lower supply of healthcare (think bare bones insurance). Again, no one will be forced to choose it, but who doesn't want a free lunch???

"I will not sign a plan that adds one dime to our deficits -- either now or in the future. We've estimated that most of this plan can be paid for by finding savings within the existing health care system, a system that is currently full of waste and abuse. The only thing this plan will eliminate is the hundreds of billions of dollars in waste and fraud. And we will create an independent panel of doctors and medical experts charged with identifying more waste in the years ahead."

Unfortunately, the plan is estimated to cost at least $1 trillion over the next 10 years. "The Congressional Budget Office estimates that the House proposal would actually increase the deficit by $239 billion over 10 years." If the government can find hundreds of billions of dollars in savings, then good for them, but I seriously doubt the private insurance market would miss this money if they are so greedy. And an independent panel created by the government (whose "appoint-ers" (politicians) are looking to push their constituents agenda, ie their own political doctrine) would be anything but independent by its very nature.

Obamacare: The promises PART TWO

"If you lose your job or you change your job, you'll be able to get coverage. If you strike out on your own and start a small business, you'll be able to get coverage. We'll do this by creating a new insurance exchange -- a marketplace where individuals and small businesses will be able to shop for health insurance at competitive prices."

Try typing "personal health insurance" in Google. The first two sites are companies that compare quotes for personal health insurance (e Health Insurance and Health Insurance Finders) both of which provide quotes and application links for individual/family, group/business, short-term, and even medicare. Sorry Dems, this marketplace already exists, created by the free market, something that doesn't seem to have been valued in the past 16 years.

"For those individuals and small businesses who still can't afford the lower-priced insurance available in the exchange, we'll provide tax credits, the size of which will be based on your need. For those Americans who can't get insurance today because they have preexisting medical conditions, we will immediately offer low-cost coverage that will protect you against financial ruin if you become seriously ill."

The first part sounds dangerously like "from each according to his ability to each according to his need," providing disincentives for people to raise their income. We will provide you tax credits if you are poor and if you become more productive, we will take them away. And economically speaking, people with preexisting conditions cost a lot of money to insure, meaning that low-cost coverage is not an economically viable option. What if a rich person has a preexisting condition? Do middle class Americans pay for this person to have "low-cost coverage" or is there a double standard providing this coverage to only some people who meet certain conditions? Who determines these conditions? This last paragraph is scares me quite a bit.

Obamacare: The promises PART ONE

In this post, I'll be commenting on this video found at www.whitehouse.gov:

"Here are the details that every American needs to know about this plan. First if you are among the hundreds of millions of Americans who already have health insurance, nothing in this plan will require you or your employer to change the coverage or doctor you have."

This is true, you won't have to change your plan, just like you don't have to accept other government funding. Unfortunately the government will provide incentives that not only make the public option more appealing to each individual marginally, it will provide negative financial incentives to have private insurance because:

"Under this plan it will be against the law for insurance companies to deny you coverage because of a preexisting condition... As soon as I sign this bill, it will be against the law for insurance companies to drop your coverage when you get sick or water it down when you need it most."

This will increase the cost for everyone who buys private insurance because forcing them to provide coverage to those individuals with preexisting conditions ultimately raises premiums for everyone, a negative incentive for buying private insurance. And insurance companies cannot just drop your coverage when you are sick (see John Stossel's six part "Sick in America"), they usually do this when you lie about preexisting conditions (Stossel's example is of a man who went to see a doctor about a lump in his leg a few days before he bought insurance), so providing insurance for people who cheat the system again raises the premiums for the contract abiding citizens.

"They will no longer to be able to place a cap on the amount of coverage you can receive in a given year or in a lifetime. We will place a limit on the amount you can be charged for out-of-pocket expenses, because in the United States of America, no one should go broke because they get sick. And insurance companies will be required to cover, with no extra charge, routine checkups and preventative care -- like mammograms and colonoscopies -- because there's no reason we shouldn't be catching diseases like breast cancer and colon cancer before they get worse."

Again these are regulations that will increase the cost of individual premiums or at the very least make the minimum coverage plan a lot more expensive for those who can afford it least. This will drive more people to the public option by increasing the amount of people that cannot afford a minimum health insurance premium. The forced coverage of preventative healthcare will increase the cost of everyone's premiums yet again. Also, see the uproar over mammograms and "expert opinion and consensus" in the LA Times, my particular favorite is their observation that "even the most careful scientific evaluations cannot always provide definitive answers on what works best for all patients."

Obamacare

Over the next few days and next few posts, I will be discussing the Democratic plan being pushed through the House and Senate. Stay tuned.

Civil Disobediance

I had a nice little break and a fantastic Turkey Day dinner. I also watched the movie Great Debaters, a Denzel Washington film about a black university's debate team. The final debate in the movie reminded me of this post on civil disobedience, a great read.

Tobacco Ban

The tobacco (not smoking, tobacco) ban went into "effect" yesterday. Richard Becker has a good piece in the Kentucky Kernel about his thoughts. Not only is this unenforceable, the university is making a judgment that only individual students themselves can make. Also, this ban applies to smokeless tobacco as well, which does no harm to anyone around! UK claims they are doing tobacco users a favor and helping them quit.

Where was this "altruism" when it came to naming a new facility that will house basketball players the Wildcat Coal Lodge?

Patrick Lonneman also makes an effective argument, advocating that if UK is trying to provide a healthy campus, they should remove all the soda machines, Chic-Fil-A's, and Sbarros on campus and provide only healthy food.

Who's responsibility are our bad choices now?

Evictions Start

In an obvious move to quash resistance to LFUGC's student housing plan, five students have been evicted from 171 Woodland Avenue for fire code violations. Now I don't have too much of a problem (just a small one) with enforcing code violations (as long as the city keeps its own building up to code -> check here for more on that one or below for the video), but I have a major problem with "Mayor Jim Newberry’s recent aim to address safety fire codes and zoning violations in neighborhoods surrounding UK." If code violations are going to be enforced, they should be enforced in all areas, not just ones containing students that the mayor dissapproves of.

Also at Freedom Kentucky

This video:






"7 Lies in under 2 minutes"

Freedom Kentucky

Bluegrass Policy Blog (a blog I complained about in my last entry) has an update on "an initiative to conduct numerous open records requests to obtain check registers, financial data, and budgets for Kentucky school districts, cities, and state agencies." We need more of this to happen, well done guys!

Check it out here and here.

Veterans Day

Bluegrass Policy Blog reports that Owensboro schools are scheduling activities to honor veterans on veterans day. Don't get me wrong, I am a supporter of veterans as much as anyone, and their service to the nation and fight for freedom should be honored. But coming from the Austrian school, I have a couple of problems with doing this in public school, and I'm quite surprised that a "free-market" or "libertarian" think-tank would support such activities.

First, schools should not be forcing students to celebrate any holiday. If they would like to give the students the day off to do what they (or their parents) please, that would be fine, they are not. If students or their parents wished to attend local Veterans Day celebrations, they could. Having schools put on events and likely forcing students to attend or even participate in presentations is not acceptable.

We can't force anyone to love this country or appreciate veterans. In addition, such activities usually (and I am not too far removed from being forced to participate in such "festivities" myself) involve the glorification of imperialist aspirations of politicians, not the sacrifice many have made for freedom. Most celebrations take on a joyous mood and lack the sobering reminder that war is something that should never be excitedly entered into and should be avoided at all costs. Forcing students to do this is not in line with libertarian or Austrian beliefs.

Un-enforceable laws

I'm about to go to a tailgate on the dry campus of the University of Kentucky. Nearly everyone that I know (including people underage) will be consuming alcohol on the campus and not doing so conspicuously. What is the point of having a dry campus 6 out of 7 days during the fall? Is the police department that easily bought? Surely if they cracked down on drinking, the enthusiasm for UK football would fall as would revenues.

So are the laws not being enforced because it is impossible to do so or is the revenue from fans spending money locally too much to turn down?

Coffee Capitalism

I'm sitting in the coffee shop I work at (Coffea Island) getting ready to go to work. It amazes me the amount of economic discussion that goes on here. It also amazes me that such a small business can continue expanding its customer base in the face of such harsh economic times, even though the owners don't seem to be looking forward at all.

We also use fair trade coffee, which is certified not by a government agency, but a for-profit business that is meeting the demand of concerned coffee drinkers as well as making money.

King Coal

There has always been a debate raging in Kentucky about coal. It provides about 90% of the electricity to our state, but the negatives are quite well known... mountaintop removal reclamation usually only includes the stabilization of rock formations, with resultant decreases in biodiversity in nearby streams as well as polluting and diverting streams; burning coal releases mercury and sulfates (which cause acid rain) into the atmosphere; burning coal produces 130 million tons of coal ash (waste) per year... the list goes on much further...

It seems as though "free marketeers" would have a tough time with this problem. But digging a bit deeper (pun intended) into this problem seems to show that a market with less restrictions could solve the situation.

Mountaintop removal was implemented to mine lower sulfur coal as well as provide a safer alternative to underground mining. And mountaintop removal only accounts for about 5% of coal for power plants. Government agencies such as the EPA made it EASIER for coal companies to fill in valleys and hollers by allowing for permits to be obtained to create gently rolling surface topography.

From Environmental Law Resource

"A permit is required under section 404 of the Clean Water Act (CWA) in order to discharge dredged or fill material into the waters of the United States. The permit is issued by the USACE using the guidelines developed by the Environmental Protection Agency (EPA)"

If the government is the one allowing for coal companies to pollute our streams and rivers and watersheds, why should we think that giving them more authority to make rules and govern would create a solution? An Austrian view would be to eliminate the Surface Mining Control and Reclamation Act and allow for citizens and property owners to file civil suits against big coal for any infringements. Having a smaller government would mean that coal companies would have a tougher time flexing their large budgets to scare away these suits and influence politicians.

On a final note, coal companies have invested more than $50 billion in clean coal technologies, and the first truly clean coal plant went online in Germany with facilities to clean the emitted gasses and convert the produced carbon dioxide into liquid form to be stored.

Midterms

I'm swamped with school right now, engineering midterms... but it reminds me of why I'm working so hard in school. Engineers do a very difficult job and hold millions of lives in their hands and therefore have to sacrifice quite a bit to learn the trade. Would there be as many engineers if our government taxed away a much higher proportion of our income for redistribution? Why would I work so hard in school to learn a trade that is difficult and filled with liability to pay for a welfare state? Why would doctors risk even more and work even harder for longer to practice medicine in a socialized healthcare state? Where would the extra incentive to be the best in your field come from? Don't we want our engineers and doctors and professionals of all sorts have incentives to continue their education and become the best and most innovative in their fields? Isn't that where progress comes from?

Meanwhile, my favorite source for new economic developments.

More On Student Housing

So I'm back on the student housing issue yet again. Today, Lexington-Fayette Urban County Government (LFUCG) released news titled "Inspections reveal high incidence of fire safety violations in neighborhoods surrounding university" detailing a crack-down on "congregated living facilities" around the university.

I find much of this article to be disturbing, but the biggest problem that I have with the crackdown is "inspectors moving down selected streets" which all happened to be around the university.

“So far we have inspected only a limited number of these facilities, but the results were alarming,” Newberry said. “These are life safety issues that must be addressed before there is a tragedy. In the last two years, we have encouraged Code Enforcement to ramp up inspections to improve housing conditions, and now we’re encouraging the Fire Marshal to ramp up inspections to make housing safer.”

It just so happens that this is occurring soon after students marched on a city hall meeting in opposition to the proposed housing plan set forth by LFUCG. It doesn't take a degree to understand what is going on here. The absolute and unchanging line from both UK and LFUCG is troubling. Instead of engaging in a legitimate debate with students, searching for solutions (even if this solution is not in line with how the city/university would like to proceed), the powers that be are pushing policy, coming up with new reasons why students are to blame.

Why would the university risk enraging students to get something? I have two answers here. Either whatever the university intends to do has benefits that outweigh the risks of an angry student population or the administration thinks that students will be apathetic or become frustrated by the myriad of methods employed by the university and city.

Branham said this is the first time in his 23-year career with the city that a Mayor has asked the Fire Marshal’s Office to inspect congregate living facilities in single-family homes, and the first time there has been a comprehensive approach by the fire marshal.

This is the worst part. I think the city needs to have such inspections, but the Mayor asking the Fire Marshal to do this stinks to high heaven.

Freedom Kentucky

If you're interested in some cool things going on in Kentucky, check out Freedom Kentucky at the Bluegrass Policy Blog. These guys do a great job keeping up with exactly where Kentucky tax money is going and how it is being spent inefficiently. With a major focus on education spending, its something that you can't skip if you care about the children at all.

Where I'm Coming From

Here's a little bit about me and why I started this blog:

I recently (within a year or two) have started following various Austrian economics blogs (Cafe Hayek and Austrian Economists are my favorites, starting to get into Think Markets) and wanted to try it out myself, but with more of a local viewpoint. I'm also attempting to enroll in graduate school in economics (hopefully at George Mason) and think that this would be a good way to begin to do more than just using the "Economic Way of Thinking".

I am also pretty furious (as a "youth") that the government is spending my money to bail out failed companies that have no business being in business. They need to fail, be liquidated, and have their resources reallocated to areas that will create wealth more efficiently. Being a young person, I will no doubt have to pay for this either through massive inflation or through massive taxes. I'm just amazed that we keep on listening to the same economists that didn't see this coming and doing exactly the opposite of what those who did predict the burst are prescribing.

In response to Austin Hill

The Kentucky Kernel published an opinion article about the student housing situation entitled, "Students must mature, accept new housing plan" that detailed a "defense" of the ordinance being considered by the prestigious Lexington Student Housing Task Force. Below is an response sent to the Kernel along with a link to the article:

Dear Mr. Hill,

In response to the opinion article you wrote on September 24, 2009, I feel that I must agree. Students must mature. College is a time to grow and learn, not party and throw away brain cells like confetti. Burning couches are unacceptable. “Sleeping on pizza boxes” is a terrible way to live. It is not cool to hang “a plastic beer sign across your porch that you stole from the campus bar the night before”. I think such activities are morally reprehensible. On these points we completely agree.

Where I must disagree with you sir is the rest of the article. Your solution for this problem involves creation of legislation that imposes restrictions on the density of students in an area. It’s an elementary way of dealing with such a matter, separating two unruly children from each other in a classroom. This works well in such a simplistic model comparing the city of Lexington to a grade school classroom, but the city is much more complex than your typical middle school. Not only would such legislation conflict with the common law that has developed (see Hayek’s Law, Legislation, and Liberty Vol. 1), it also imposes on individual property rights of the owners of the properties, as well as the rights of the students attempting to secure shelter. But each of these defenses warrant long essays and I will attempt to keep this letter somewhat brief. So in this case, I will talk about the unintended consequences of such an action.

Looking at the economics of the problem, I can find many reasons why this is a poor reaction. Many of the students who live in such areas that you call slums do so because of the cheap rent that they find in such areas. Forcing students to look for better living condition (a noble idea) causes them to undoubtedly pay higher rates, be it either for rent or for transportation to campus. I am fortunate enough to be able to afford the transportation rates, but many other students cannot afford this luxury. You say that students should not live this way “to save $50 per month on rent” but does it not cross your mind that some of these students could not afford to live in Lexington and attend this university if they did not institute themselves on such stringent monetary restrictions. The fine city of Lexington is doing them no favors by requiring them to pay more money to live further apart from each other.

Other proponents of this legislation say that property values in these areas are terrible because students populate these areas. They are right, but we as a society cannot go changing the law every time someone loses money. Property values rise and fall based on many factors, risk is involved in investment. And I can guarantee you that property values will be almost nil in these areas if this legislation is enacted. But there is definitely not a chance that our fine university, which has an interest in property values surrounding its campus that is expanding, would be attracted to the prospect of being able to buy cheap land. Not our university.

When students live in houses that are not fit for humans to inhabit, they should be condemned. When someone lights a couch on fire in the street to celebrate a big upset for a football game, they should be arrested. If a landlord is cheating their tenants, the tenants should report theses violations. These living conditions give you neither the right nor the obligation to force these students to live in a way that applies to your standards. That is morally presumptuous on your part sir and as reprehensible as the conditions in which these students live.

Sincerely,
Campbell Fritschner

Capitalism: A True Love Story

Capitalism at work right here in Lexington, KY:

1. Big Blue Madness tickets (which cost no money but cost three nights in a tent on UK's campus) are going for more than three hundred dollars for a pair on eBay and craigslist. I would never pay this much to watch a "practice" which is more like a run out and introduction of players. I would probably not pay more than $10 for a lower level ticket. But that means that someone who truly values seeing the Cats play together the earliest that is allowed by the NCAA, someone who values these tickets more than I do, can see his or her beloved team take the court.

2. A service providing delivery of male contraceptive devices has sprung up in Lexington and will deliver 2 of these products for the measly cost of $6. When you think about the monetary cost to raise a child and the social cost to raise a child that is unplanned and finally the fact the the University of Kentucky provides free male contraceptives in it's hospital and student health complex. Not to mention the prevention of sexually transmitted disease.

3. Capitalism: A Love Story opened in theaters last weekend (September 24th). The movie has already grossed $4,849,067 in one week. His past three films grossed $24,540,079 (Sicko), $119,194,771 (Fahrenheit 9/11), and $21,576,018 (Bowling for Columbine).

Lexington Housing Ordinance

I'm pretty enraged about the proposed ordinance to limit the number of students that can live in the same off campus residence to 2 (unless specifically designated as student housing) and to not allow for unmarked residences to be located within 250 feet of each other (basically every other house). Much much much more to come on this...

Here are some links:
WKYT
National Student News Service
Kentucky Kernel

Welcome

Welcome to the Austro-Kentuckian. I am your host Campbell Fritschner and I will be posting on current events that effect Kentucky, the United States, and the World with a main focus on and Austrian economics style approach to analysis.

Enjoy!