February 20, 2017
Dear President Trump;
Congratulations on your election victory. I am a Harvard Law School graduate with more than 50 years experience as a practicing securities, corporate, tax and estate planning attorney. I self-published two virtually unread books and a blog at sjfeconomics.com relating to homeland security and economic prosperity which I believe have important ideas that can be extremely helpful to your team. I delivered copies of my books to you with my letter of support in March 2016.
I have reviewed your first 100 day plan and strongly approve of most of it. For your program to be successful you must also win the political game for public approval of your actions that will be played against Democrats led most likely by President Obama and the liberal press. We know that they will rely on fake news, misleading statements and lies. Many of your proposals like your cabinet appointments will get delayed in Congress.
You are off to a good start. It is important that you do not lose the momentum. This letter will deal only with immediate steps to take relating to two of the items included in your 100 day plan that will impact job growth, namely, the manner in which Obamacare should be repealed and replaced and the change in the corporation tax laws by lowering the tax rate for repatriating capital held overseas to raise revenues to finance infrastructure construction.
1. THOUGHTS ABOUT THE REPEAL AND REPLACEMENT OF OBAMACARE
I am writing as a game player to suggest a strategy to win the approval of the minds of voters in the game of repealing and replacing Obamacare. I note that my factual knowledge about Obamacare comes primarily from TV and newspaper reports, discussions with friends and doctors and internet searches and must be fact checked. I know that millions of hours have been spent by people more qualified than me to expose the evils of and to guide Congress in developing a replacement plan for Obamacare.
OBAMACARE IS NOT FIXABLE. It is disguised as a health insurance program, but is primarily a welfare platform to provide tens of billions of dollars of healthcare benefits annually for people with pre-existing conditions that are disregarded in setting premiums. It is an intricately designed hodgepodge of laws that create uniform healthcare coverages entwined with Medicaid, Medicare, prescription drug and tax provisions (that further burden the middle class) included to make it appear attractive and to make it difficult to repeal. It was fraudulently promoted as a program that would cover everyone and reduce healthcare premiums. It is very unpopular and is failing primarily because of its excessive and often unaffordable premiums to employers who are the major purchasers of healthcare coverage and the outrageously high premiums and deductibles for healthy young people whose income level does not permit them to qualify for the subsidies. The high deductibles even make it worthless for many low-income people who qualify for premium subsidies. Ignoring pre-existing conditions is like offering fire insurance for your home after a fire has occurred or auto insurance after the accident. It is like telling homeowners that their fire insurance rates are being doubled or tripled so that uninsured owners whose homes have already burned down can buy a policy and collect hundreds of thousands of dollars to rebuild their homes. Trying to trick middle class young people and their employers to pay for such excessive benefits for others is outrageously unfair. The death spiral we are witnessing was inevitable. It has been accelerated because young healthy middle class people learned they were being targeted.
From its inception President Obama acting like a snake oil salesman has time and again lied about Obamacare to prevent successful young healthy people from learning that they were intentionally being grossly overcharged to pay for the welfare benefits of others. It was the only game in town and many people bought Obamacare coverage. Now President Obama and other Democrats make misleading claims about the number of people covered under Obamacare, but fail to acknowledge the many millions of people bought Obamacare plans because they lost their former plan or thought they had to or who are without coverage because they lost their employer paid coverage when they changed jobs or their work week was reduced to under 30 hours by their employer to avoid the Obamacare coverage mandate. President Obama didn’t tell Americans that a high percentage of the people who signed up for Medicaid or for Obamacare policies are receiving a welfare benefit. Now former President Obama and his cronies who designed Obamacare want to increase the penalty. In other words, if young people continue to elect not to purchase overpriced Obamacare insurance they should be punished by paying a penalty that the Supreme Court permitted as a tax to subsidize the welfare payments for others. The very existence of the penalty is proof that President Obama and the draftsman knew when they adopted Obamacare that the premiums and deductibles of Obamacare insurance plans offered to young middle class taxpayers were grossly unfair and that many young people would refuse to buy such plans even if they were given names of precious metals, namely, Silver, Gold, Copper and Platinum, to make them appear valuable. They wanted buyers to think they were being given a choice of coverage when there is no choice. They differ only in the choice of paying higher premiums to get smaller deductibles. Obamacare is so unfair that millions of people have elected to have no coverage and be subject to the penalty.
Every American needs access to healthcare. People with chronic conditions need the most expensive treatments, procedures and drugs. Prior to Obamacare we provided subsidized healthcare benefits for the elderly, the poor and the sick under Medicare and Medicaid and at hospital ERs, but many people were unable to afford health insurance because of ratings. We sought ways to assist such people by designing high risk pools. Obamacare was designed to ignore pre-existing conditions when setting premiums. But, we cannot afford to give and no-one should expect to receive unlimited healthcare for a small fraction of its predictable cost, which is what Obamacare attempted to do. A large number of people with pre-existing conditions now have coverage under Obamacare. Many of them were covered and continue to be covered under employer plans. Some of them are receiving hundreds of thousands of dollars of welfare benefits annually for a relatively small premium or co-pay. Those receiving excessive benefits under Obamacare, the Democrats, including President Obama, some Republicans who fear being involved with reducing a welfare benefit and the liberal press will protest loudly against any attempt to reduce the welfare benefits of Obamacare. Even if a special high-risk pool is created and the US government (and not the middle class and employers) contributes a substantial welfare benefit to subsidize those with pre-existing conditions, it will still be painful to people whose benefits are reduced when Obamacare coverage is not renewed and ends. To paraphrase Shakespeare, if it must be done, better it were done quickly. No-one was dieing in the street prior to the adoption of Obamacare. Hospital ERs have long been required to treat all patients and they currently treat many people with Obamacare, Medicare or Medicaid coverage who do not have immediate access to a doctor. Hospitals provide a significant portion of all healthcare benefits and their services must be paid for. Hospitals pass on the cost of all unpaid ER care (and all Medicare and Medicaid underpayments) by increasing the charges to those who pay. As a result the middle class and their employers were, prior to Obamacare, paying a substantial portion of the healthcare benefits provided at ERs for the sick and the poor, including documented and illegal immigrants. Rising healthcare costs paid by employers (which, including employee co-pays, now exceed $20,000 per employee) are largely responsible for the lack of wage increases during the last 10 years. Many ER patients work off the books and claim they are unable to pay. We should seek ways to collect ER payments due from those who hide their income.
Even if Obamacare is repealed, increasing ER, Medicare and Medicaid underpayments to healthcare providers threaten to continue to cause an increase in healthcare premiums and deductibles and further erode the quality and availability of care. The problems of Medicare which has many trillions of dollars of unfunded liabilities have been masked by the obvious failures of Obamacare. Medicare is a needed program for the elderly, but must be reformed before it causes more serious harm to our economy.
DON’T WAIT A FEW MONTHS OR LONGER TO PRESENT A PLAN TO REPEAL AND REPLACE OBAMACARE. DEAL WITH OBAMACARE IN STEPS. I APPLAUD YOUR EXECUTIVE ORDER TO END THE OUTRAGEOUSLY UNFAIR OBAMACARE TREATMENT OF YOUNG MIDDLE CLASS TAXPAYERS. YOU ARE CLEARLY CORRECT THAT ALL OBAMACARE MANDATES AND PENALTIES ARE UNFAIR AND SHOULD NOT BE ENFORCED. BUT, DO NOT RELY SOLELY ON THE EXECUTIVE ORDER. WE ARE A COUNTRY OF LAWS THAT SHOULD BE ENACTED, MODIFIED AND REPEALED BY CONGRESS. FOLLOW UP YOUR EXECUTIVE ORDER BY HAVING CONGRESS REPEAL ALL OBAMACARE MANDATES AND PENALTIES, EFFECTIVE IMMEDIATELY AND PHASE OUT REBATES AFTER 2017. IT CAN BE DONE IN A MATTER OF WEEKS. PRESIDENT OBAMA AND THE LIBERAL PRESS WILL ATTEMPT TO SET UP ROADBLOCKS AND WILL CRY THAT PENALTIES AND SUBSIDIES WERE AN INTRICATE PART OF OBAMACARE AND THAT REMOVING THEM WILL DESTROY OBAMACARE. PRESIDENT OBAMA CLAIMS THAT OBAMACARE IS A WONDERFUL IMPROVEMENT IN OUR HEALTHCARE LAWS WHICH HAS PROBLEMS THAT CAN BE FIXED BY RAISING THE AMOUNT OF THE PENALTY AND MAKING OTHER MINOR CHANGES. THAT IS JUST ANOTHER OBAMA LIE (LIKE YOU CAN KEEP YOUR DOCTOR OR YOU CAN KEEP YOUR PLAN) THAT MUST BE STRONGLY CRITICIZED. THE HIGHER THE PENALTY THE MORE UNFAIR OBAMACARE WOULD BE. RISING HEALTHCARE COSTS HAVE DESTROYED THE MIDDLE CLASS AND LEFT MILLIONS OF PEOPLE WHO REFUSE TO PAY THE EXCESSIVE PREMIUMS AND BE SUBJECT TO THE HIGH DEDUCTIBLES OF OBAMACARE WITHOUT HEALTH INSURANCE. FACE DEMOCRATS AND THE PRESS HEAD ON IN THE BATTLE OVER THE REMOVAL OF THE MANDATES, PENALTIES AND REBATES. READ MY ARTICLE ENTITLED PRESIDENT OBAMA’S DECEITFUL AND RELENTLESS SISYPHEAN TYPE PUNISHMENT OF THE MIDDLE CLASS AT SJFECONOMICS.COM. YOU MIGHT WANT TO COMPARE THE PUNISHMENT OF SISYPHUS TO OBAMACARE’S PUNISHMENT OF THE MIDDLE CLASS. OBAMACARE IS JUST ANOTHER SOCIALIST ATTEMPT TO TAKE FROM THOSE WHO EARN AND GIVE IT TO THOSE WHO NEED.
Without mandates insurance companies who conspired with President Obama by participating in the sale of grossly unfair Obamacare plans on the exchanges will incur even more significant losses on Obamacare policies due to expensive benefits given to people who had pre-existing conditions when they bought Obamacare plans. On the other hand, with the mandates removed, insurance companies, which were prevented by the Obamacare coverage mandates will be allowed to immediately start to design new insurance products to compete with Obamacare and seek the approval of state insurance departments to sell such policies. I expect that within a year no insurance company will offer an Obamacare policy. It will confirm and you should explain loudly and clearly by tweets that Obamacare was a hoax conceived and carried out by President Obama and the socialist Democrats with the assistance of the insurance companies to provide a secret welfare program for people with pre-existing conditions and a way for hospitals and other healthcare providers to recover some of their Medicare, Medicaid and ER underpayments (discussed below) by greatly overcharging the young healthy middle class and their employers.
Millions of people will be without healthcare coverage after the self-destruction of Obamacare, but the numbers will be exaggerated by Democrats. The outrage of Democrats claiming that you will be depriving 20,000,000 to 30,000,000 people of coverage has already begun. I believe that about 12,000,000 of them are on Medicaid most of whom should be allowed to keep their coverage as a welfare benefit. Many people with pre-existing conditions are covered by employer plans and will not lose their coverage. Many young people are currently without coverage or they or their employers are paying excessive amounts for coverage. Demonstrate that you seek to be the savior of the young middle class and their employers. We can expect that if healthcare costs decline raises will follow. Put together a group of brilliant actuaries to expose the truth about Obamacare. Have them present examples of young middle class individuals who are paying premiums of more than $10,000 with high deductibles that make their coverage worthless. Have them demonstrate that on an actuarial basis young healthy middle class people should have paid only a few thousand dollars for a similar plan with a low deductible and including catastrophe coverage to protect against sickness and injury during the one year term. Have the actuaries give specific examples of individuals who were previously uninsurable and received hundreds of thousands of dollars of benefits under Obamacare while paying a subsidized premium of only a few thousand dollars.
AFTER REPEALING THE MANDATES, PENALTIES AND SUBSIDIES, IT WOULD BE A NO-WIN SITUATION TO TRY TO REPLACE OBAMACARE WITH A LAW THAT WILL BE BRANDED AS TRUMPCARE. LET AMERICANS KNOW THAT YOU ARE RELYING ON A REPUBLICAN CONTROLLED CONGRESS TO FIND A WAY TO REPEAL AND REPLACE THE REST OF OBAMACARE ASAP, BUT HAVE LEARNED THAT IT WILL BE EXTREMELY DIFFICULT. OBAMACARE HAS NOT ONLY INCREASED THE COST OF BUYING HEALTHCARE COVERAGE, BUT HAS ALSO SEVERELY HARMED MEDICAL PROVIDERS, REDUCED THE AVAILABILITY AND QUALITY OF CARE, AND INTERFERED WITH THE RELATIONSHIP OF DOCTOR AND PATIENT. REPLACE OBAMACARE BY BRINGING BACK FREE MARKET COMPETITION AMONG INSURERS UNDER STATE INSURANCE DEPARTMENT SUPERVISION. MINIMIZE THE ROLE OF THE FEDERAL GOVERNMENT TO RUNNING MEDICARE AND SUBSIDIZING MEDICAID AND TO A LIMITED EXTENT SUBSIDIZING COVERAGE FOR PEOPLE WITH PRE-EXISTING CONDITIONS. MAKE EVERYONE AWARE THAT OUR HEALTHCARE SYSTEM IS FAILING BECAUSE IT IS OPERATED AS AN OUT OF CONTROL WELFARE SYSTEM WITH ENORMOUS WASTE AND INEFFICIENCY. DOCTORS INCUR EXPENSIVE LONG TERM TRAINING AND SERVE AS UNDERPAID INTERNS AND THEN FACE RECORD KEEPING REQUIREMENTS AND PAYMENT LIMITS THAT PREVENT THEM FROM EARNING DESERVED COMPENSATION. THOUGH MOST HOSPITAL BUILDINGS ARE PAID FOR BY CHARITABLE CONTRIBUTIONS FROM WEALTHY INDIVIDUALS, MEDICARE AND MEDICAID PAYMENTS TO HOSPITALS ARE ON THEIR FACE INADEQUATE TO COVERING OPERATING COSTS.
You should encourage Congress, the insurance companies and the healthcare providers to work together to promptly deal with replacing Obamacare, but stay out of the extremely complicated mess that Obamacare has created. It will continue to haunt healthcare for many years. We do not know if most employers will return after the elimination of the mandates to 40 hour work week jobs or offer healthcare coverage to low-income employees after the mandates are abolished. No matter what reasonable approach Congress makes to create high-risk pools, the press will report incessantly about the sad stories of people with pre-existing conditions who lost their Obamacare policy and died, or can no longer afford their healthcare coverage or a needed expensive drug. Parts of Obamacare that make sense like coverage under your parent’s policy until age 26 or the doughnut hole and Medicare and Medicaid changes included as part of the Obamacare can be expected to be considered by Congress and the insurance companies when they are creating new policies. Congress by finally enacting laws limiting malpractice claims will both reduce healthcare costs and make the practice of medicine more profitable and less stressful. We should also consider including sales across state lines, which will require controls on risk taking and adequate capitalization of insurers plus guarantees against the bankruptcy of insurers.
You have only a few months to get the insurance companies to come up with new policies and present them for approval to the state insurance departments if you wish to minimize the number of uninsured people at the end of this year. Get insurance companies to offer inexpensive catastrophe policies as soon as practicable in as many states as possible to healthy young people to offer them protection (even if the are currently covered by an Obamacare plan) against the risk of becoming subject to a pre-existing condition in the interim period while Obamacare is being replaced. We must get patients and healthcare providers involved with benefit choices and place reasonable coverage limits for all plans to encourage wellness programs and avoid wasteful healthcare demands. One way is to encourage expanded use of tax-favored HSAs and tax DEDUCTIONS to supplement healthcare plans with high deductibles. We might also allow HSAs that encourage savings for use with low deductible plans. Insurance companies competing for business will offer a broad variety of plans at a market price.
Employer plans often cover employees with pre-existing conditions, but the employee must remain well enough to continue to work. Portable catastrophe coverage insuring against acquiring a sickness or injury that would be viewed as a pre-existing condition should be required as part of all future insurance plans. Such requirement will, over time, reduce the number of people who acquire pre-existing conditions and are thereafter unable to afford healthcare coverage. Congress should determine whether employees who lose their coverage because their employment is terminated and who have become subject to a pre-existing condition should be entitled to remain on the employers plan at their own expense (that may be paid in whole or part by their new employer) or become entitled to purchase comparable insurance from a government subsidized high risk group.
Doctors have struggled with declining incomes and quality of life as a result of Medicare, Medicaid and Obamacare under-payments and complex paper work needed to comply with federal regulations and get paid for services. Many doctors have left the practice of medicine. Others have become employees of large hospital groups or medical practice organizations. We can greatly lower healthcare costs and improve outcomes. We should make greater use of clinics staffed by nurses and clinicians to reduce cost and alleviate the overcrowding of ERs by permitting hospitals to treat patients at clinics as well as ERs. Hospitals can improve care and reduce duplicate and unnecessary procedures by assigning a clinician, a nurse or a doctor to co-ordinate the treatment of each patient. To encourage students to become doctors we should expand the program offered by the armed services by providing medical school scholarships for individuals who commit to provide a designated number of hours of service before and after graduation at ERs and clinics.
EXPLORE A MAJOR CHANGE IN HEALTHCARE BY AUTHORIZING A 90 DAY STUDY TO CONSIDER PERMITTING HOSPITALS AND OTHER HEALTHCARE PROVIDERS TO CREATE INSURANCE SUBSIDIARIES AND OFFER INSURANCE COVERAGE OR A VARIETY OF CONCIERGE PLANS (THAT MIGHT BE TAX DEDUCTIBLE) TO COMPETE WITH THE PLANS OFFERED BY INSURANCE COMPANIES. HOSPITAL GROUPS ARE ALREADY EXPANDING TEAMS OF EMPLOYED DOCTORS THAT COULD PROVIDE THE SERVICES FOR SUCH PLANS. INSURANCE COVERAGE OR CONCIERGE PLANS COULD INCLUDE SERVICES OFFERED BY PARTNERSHIPS OF MULTIPLE HOSPITALS OR GROUPS OF PHYSICIANS.
In conclusion, I ask myself why a program so fraudulent as Obamacare can be defended by a large number of intelligent and successful people, Many of them are earning more than $250,000, are satisfied with their lives and are willing a contribute a small portion of their income to improve the lives of the sick and the poor. Most of them have growing investment portfolios and have their healthcare paid by their employer. Unlike American capitalism which has relied on hard working individuals and endured for more than 200 years, no socialistic country has succeeded in the long run. Most people believe that we are a rich country. They ignore the surge in the National Debt to over $20 trillion coincidental with the surge in welfare and disability payments and the large number of people not working or paying income taxes. The slow conversion of our economy to socialism must be reversed and we must grow the GDP before our National Debt becomes unsustainable and our economy collapses.
2. THOUGHTS ON INFRA STRUCTURE CONSTRUCTION AND AN INTIAL CHANGE IN CORPORATE TAXATION
I urge you to ask Congress to immediately reduce the corporate income tax to 10% on repatriation of foreign earnings. It is a “no-brainer”. Make this a stand alone proposal with a sundown provision after two years unless modified in the expected comprehensive corporate tax legislation. Getting the remainder of your tax reduction plan through Congress expeditiously is important, but it may take more time than you think to do so. Hopefully the tax revenues from the repatriation of funds will immediately provide funding of about 100 billion dollars that can be applied to increase transportation infrastructure spending and propel GDP growth without increasing the federal deficit. Act quickly because the extra tax revenues are going to be offset in large part by two factors that have occurred following the presidential election, namely (i) the spike in US interest rates that will raise US government interest costs by $100 Billion for each 1/2% increase in rates as the National Debt is refinanced and (ii) the negative impact on the US trade deficit resulting from the increase in the value of the US Dollar. Bringing the money back to the US may further stimulate capital spending but the cash might be used for dividend increases and stock buybacks that provide lesser stimulus for the GDP. That is why I proposed corporate income tax changes in my book published a few years ago entitled “Perpetuating American Greatness After the Fiscal Cliff” (see pages 64 to 77 in the enclosed copy) to encourage corporate and private investment in partnership with government spending on transportation infrastructure through the purchase of “Jump Start America Bonds” which might now be called “Make America Great Again Bonds”. Individual and corporate balance sheets are much stronger than governmental balance sheets and are better prepared to finance transportation infrastructure.
I will in future letters comment on other parts of your 100 day plan and describe my plan for an interstate fresh-water pipeline project that could be the most important economic development of this century. Constructing a privately owned and financed fresh-water pipeline would create hundreds of thousands of jobs, add tens of billions of dollars to the GDP, reduce the federal deficit, provide water for farming and controlling wind fires, assist in flood control and lower ocean levels to mitigate any potential climate change. I will also propose a very simple proposal for a corporate income tax credit that will encourage immediate wage increases for non-executive middle class workers to stimulate economic growth, help recreate a middle class and generate increased long-term federal income tax revenues.