Category Archives: Uncategorized

The Case For Extending Unemployment Benefits Beyond 26 Weeks

Unemployment insurance was designed to provide a safety net by offering weekly benefits to employees who have lost their job  to enable them to modify their job skills and seek alternative employment. It is funded by payments by employers based on a percentage of payroll that is rated based on experience. During the emergency caused by the Great Recession the maximum period of eligibility to receive unemployment benefits was extended from 26 weeks to 99 weeks. The funding for such extended benefits is provided by the federal government and as a result of repeated extensions threatens to become another welfare benefit.

The extended benefits were sun-setted and expired as the end of 2013 as part of the sequester legislation. Naturally, President Obama and other liberals, who sense an opportunity to distract from the failures of Obamacare and an opportunity to buy votes, are loudly demanding that the extended benefits be reinstated. Most Republicans, who were blamed for the government shutdown, do not want to be hammered by President Obama and the liberal press for any failure to reinstate the extended benefits. However, most of them favor austerity and are looking for ways to cut the explosive growth in welfare benefits. They know that the American public is concerned with the size of the deficit and are insisting on an offsetting cut in government spending to fund the extended unemployment benefits. Do not be surprised in President Obama refuses to discuss any compromise and attempts to play the blame game for political reasons just as he did to encourage and maximize the harm from the government shutdown. 

Instead of allowing President Obama to treat the extension of benefits as a political football, Republicans should be talking about the pros and cons of extending unemployment benefits. They should argue that because of President Obama’s encouragement of welfare and failed stimulus plans, 75% of the jobs created during the recovery are part-time jobs and there are millions of people seeking jobs, a number that is far in excess of full-time, tax-paying job openings. They should acknowledge that unless we greatly expand our economy, the real level of unemployment (after adjusting for people who have given up looking for a job) may remain above historic levels for the indefinite future.

The sudden end to the program, that has previously been extended, will cause immediate hardship to many of the beneficiaries. On the other hand, every case is different. Many of the beneficiaries may have been satisfied with the benefit and were turning down less than desired employment opportunities. Others may have been cheating the system because they have left the labor market and stopped looking for work or may have accepted off-the-books employment or are earning unreported income. We should extend the term of unemployment benefits, but we should modify the unemployment laws so that extended benefits are phased out over time. We might consider gradually reducing benefits to zero over a defined period beginning after 26 weeks. This will eliminate the need for further extensions except in the event of another emergency 

There is validity to arguments that unemployment benefits provide a stimulus that supports the economic recovery. On the other hand the unemployment benefits are not the most desirable form of economic stimulus. They increase the deficit because they are spent in large part on necessities like food and clothing that increase the GDP, but do not create or sustain tax-paying jobs that generate significant tax revenues. Spending on transportation ifrastructure construction is a better way to stimulate the economy because it creates immediate tax-paying jobs and stimulates the creation of additional tax-paying jobs.

The most important reason for extending unemployment benefits is to prevent immediate hardship for those who have diligently sought employment and did not want to be forced to accept a part-time or dead-end job. However, no-one should be entitled to half-pay forever, without working. 

 

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Obamacare Will Cause Healthcare Chaos in January, 2014

Get ready for inevitable chaos in the healthcare industry in January, 2014. Patients are going to show up at a doctor’s office, hospital or other healthcare provider in need of care and be asked to provide proof of insurance. People with Medicare, Medicaid or employer paid insurance cards will have no problem establishing that they have current insurance. Everyone else will have to prove that they have insurance in force and that the provider is included in the insurer’s network. Even if they can do so, they will be asked to pay the deductibles in full or at least to pay up front for the cost of the treatment or procedure.

Millions of individuals are not going to know whether they have an effective insurance policy (whether a new Obamacare approved policy or a previously existing individual policy) in force. If you have enrolled for a Obamacare policy on an exchange, the provider will be at its financial peril to determine whether your policy is in force. Proof that recently applied for Obamacare policies are in force may be difficult to obtain. Because of website deficiencies, you may believe you have enrolled, but haven’t. Only a small percentage of patients will have received a Obamacare exchange insurance card that will in most cases be issued only after the initial premium has been paid. Despite requests from President Obama, insurers may be unwilling to verify that policies are in force, even if they receive notification of a valid exchange website registration, unless they have received payment from the purchaser. Many people, faced with an illness or an injury, will scramble to register on an exchange, or to pay. Insurers will face a problem in calculating the amount of the US government subsidy and the portion of the premium payable by the purchaser of the policy. However, President Obama has offered (based on questionable authority) to advance the subsidies based on estimated amounts (calculated by the insurers) to be finally adjusted at a later date.

Unless the patient has proof of a currently in force individual insurance policy, previous policies that appear in the providers records, may or may not remain in force. The providers will have to attempt to determine the status of the patient’s insurance, on a case by case basis, at the time of service.

Even if the existence of an exchange approved or previously issued individual or employer paid policy is confirmed, deductibles and co-pays become an immediate problem on January 1, 2014. The providers will have to collect the full amount of the deductible and co-pay (if they can determine what they are) in cash or face a collection and bad debt risk. Because deductibles will represent such a large percentage of their fees, providers, except in the case of an emergency, are likely to demand an immediate cash payment for the full cost of the treatment or procedure. Patients who pay cash in an amount which is later determined to be in excess of their deductibles and co-pays may have difficulty recovering such excess amount.

Healthcare providers, who have chosen a profession of providing care to patients, will often elect to take the credit risk and treat the patient in an emergency situation. Because the fees for services are so low under Obamacare exchange issued policies, some healthcare providers will be unable to bear such credit risks and operate profitably. Many providers will elect not to participate in Obamacare networks.

Many patients will be unwilling or unable to pay and will either forego treatment or go to a hospital emergency room that cannot deny treatment. The collection problem will then be transferred to the hospital. Hospitals (or other healthcare providers) may attempt to take advantage of an opportunity resulting from the large Obamacare premium subsidies to attempt to transfer a portion of the payment for the treatments and procedures they perform to the insurance companies and the US Government. They may (if it is determined to be legal for them to do so) attempt to limit their exposure by advancing the Obamacare exchange policy premium for the patient. The US Government would then become responsible for paying the subsidy. The hospital will still remain at risk for the collection of the deductible and co-pays from the patient, but fees in excess of the deductibles and co-pays (which may be large in the event of a serious illness or injury) will become the responsibility of the insurer.

President Obama Is Still Trying To Prevent Americans From Learning That Obamacare Is An Outrageously Destructive Law

AUTHOR’S NOTE: The factual information for this article is based on internet searches and news reports.

Obamacare, the name that President Obama encouraged people to use for the Affordable Care Act, is an outrageously destructive law that is not based on sound insurance principles. In short, it is a highly complex and costly welfare program to be funded by increased insurance premiums paid by individuals and businesses, and US government payments for expanded Medicaid coverage for the poor and large premium subsidies for lower-income purchasers (including lower-middle class individuals and families with annual income of up to $94,000) of Obamacare qualified insurance policies on the exchanges. If not substantially modified, Obamacare will soon become another imbedded welfare entitlement. A portion of the new welfare benefits are funded by new taxes. The excess is to be paid by the taxpayers or increases in the National Debt. Health insurance policies of tens of millions of individuals and employers will be required to be modified or terminated and replaced. Individuals and businesses will be forced to pay substantial increases in premiums, deductibles and co-pays to compensate insurance companies for (i) paying healthcare providers for the expanded Obamacare required benefits, (ii) eliminating consideration of pre-existing health conditions or lifetime policy limits, and (iii) under-pricing insurance to enable many millions of elderly people to purchase health insurance at below fair-market premiums for people of their age. Obamacare was designed to enable the government to create another entitlement and gain control of healthcare which represents about 1/6 of the US economy. It is reducing the quality and availability of healthcare for most Americans.

President Obama, from the time Obamacare was introduced, has assumed the role of the lead promoter, first to get it passed and then when he made it the center-piece of his re-election campaign. It was passed based on the now infamous Obamacare lies that President Obama and other Democrats emphatically repeated for more than four years in one highly publicized speech after another, namely

* If you like your policy you can keep your policy,
* If you like your doctor or your hospital you can keep them, and
* Your premiums will decline by $2500 per year.

Without President Obama’s highly publicized lies, it is unlikely that Obamacare would have passed both houses of Congress by a single vote and become the law of the land. His Obamacare lies and those related to Benghazi were also instrumental in misleading a large portion of the American voters during his re-election campaign, and contributed to his winning a second term. Yet, even today, if conservative Republicans or anyone on a Fox News program talk about his failures or his lies, he and his supporters cry foul and claim they are attacking President Obama and Obamacare because he is black or for political purposes.

President Obama was elected and re-elected as President by the voters and is entitled to the respect of the office and the benefit of the doubt with regard to the truthfulness of his statements. However, it has become clear that President Obama has questionable ethical standards. He obviously believes it is permissible and acceptable for him to perpetually campaign and repeatedly lie to the American public, stonewall Congressional investigations of government wrongdoing and, like a dictator, make changes in the laws without Congressional approval, whenever it serves him politically, or permits him to achieve his desired ends. When each of his outrageous lies is exposed he refuses to apologize or even acknowledge the falsity of his statements and adopts diversionary tactics. He often claims he didn’t know the true facts when he made the statements.

For political purposes the effectiveness of most of the detrimental aspects of Obamacare were delayed until after the 2012 presidential elections. The delay enabled President Obama to repeatedly claim credit for the hundreds of billions of dollars of benefits bestowed by Obamacare while concealing the negative aspects of Obamacare. It enabled him to repeat the Obamacare lies in his 2012 campaign speeches to mislead voters into thinking that almost everyone would benefit from and no-one would be harmed by Obamacare. Said lies and the failures of the liberal press prevented voters from discovering the personal distress it was going to cause millions of them.

Prior to the indisputable exposure of the Obamacare lies, the liberal press and the public, mesmerized by his powerful speeches promising hope and change, and wanting the first black president to succeed, seemed to be giving President Obama a free pass whenever he lied to the American people. Most people didn’t care or even pay attention if he lied or engaged in a cover up about something that didn’t affect them directly.

The Obamacare lies are different from his other lies. Obamacare has led to the pending loss of healthcare insurance, and is causing immediate harm, for the millions of individuals who are receiving notices that their or their family’s existing insurance policy will no longer be offered and will be terminated because of its failure to meet Obamacare requirements. Millions of people are learning or will soon learn that they will be unable to use their current doctor, hospital or other healthcare providers under the new insurance policies offered on the federal and state exchanges. Obamacare is also harming the lives of millions of Americans whose employment or employer-provided health insurance or full-time job has been, or within a year, will be adversely impacted.

It has become clear that President Obama was for years aware of and approved of the Obamacare laws and regulations which required almost all individual policies to be terminated or not renewed after 12/31/13. He, nevertheless, repeated his lies, time-and-time again, to deliberately mislead the voters. Now that millions of people are having the policies they liked cancelled, he is relying on the public’s general lack of understanding as to how insurance works and using a diversionary tactic by blaming the cancellations on the bad insurance companies that offered what he claims were worthless policies and cancelled them when you became ill. Americans know we had problems with healthcare insurance. Obamacare is making them worse.

President Obama has avoided telling the American people the truth about how the very substantial costs relating to Obamacare will be funded and by whom. The federal government (and ultimately the taxpayers) is obligated to pay the enormous cost of administering Obamacare, including the cost of (i) operating the federal government website and exchange, (ii) hiring navigators needed to help people understand their limited, but confusing, options and help them through the complicated purchase process, (iii) hiring the IRS agents that will have to be trained to review the applicants information and tax returns (very few of which are from taxpayers who have previously been audited) in order to determine the people eligible for and to calculate the amount of the subsidies and try to collect the penalties, (iv) inducing individuals to purchase the policies, and (v) providing Medicaid to millions of additional people. The federal government is also responsible for the hundreds of billions of dollars of subsidies to reimburse a high percentage of the premium costs of lower-income individuals and small businesses.

Administering Obamacare will be complicated and subject to fraud because of the complexity of the task, the lack of experience of the IRS agents and because many of the people claiming they are entitled to subsidies, do not file tax returns.

The government contracts with navigators are providing multi-million dollar fees to organizations that are supporters of the president and Democrat candidates. Instead of granting rewards to political supporters, returning veterans could have been given a preference for navigator jobs. We are beginning to hear of people acting as navigators who are of questionable character or competence. At least one navigator has been recorded assisting applicants in filing fraudulent information. There are privacy and security risks, including potential violations of the HIPAA laws, resulting from posting personal information on the exchange websites and giving personal information about applicants to navigators who are not required to have a security clearance.

Because of administrative incompetence the websites are not currently usable to collect premiums from anyone. President Obama says he takes responsibility for the website failures. He doesn’t tell you that the website failures resulted from poor government contracting practices and lack of supervision relating to the purchase and construction of the website and resulted in part from the changes made in the website in the final months to first gather information about the applicants and tell the applicants about the subsidies before they learn of the premium costs, deductibles and co-pays. Other than spending more money to correct it, we have received no explanation as to why our government spent over $500 million and couldn’t provide a reliable website over a three-year period. He doesn’t tell you whether he has ordered an investigation into the reason for the website failures. He doesn’t tell you that fixing the website is only going to expose the glaring flaws of Obamacare, not solve them.

Furthermore, there has been almost no discussion as to how poor people, many of whom do not have checking accounts, are going to pay the premiums to purchase the highly subsidized Obamacare insurance policies. We should not be surprised if the president suggests further increasing welfare benefits to enable them to pay the premiums. If the government advances the entire premium, hopefully it would pay the subsidy directly to the insurance companies rather than try to recover the advanced subsidies from the policy holders.

As a result of the Supreme Court decision, state participation is optional. State obligations are limited to operating state exchanges and paying for up to 10% of the greatly expanded Medicaid obligations after the initial three years. The remainder of the costs are payable by the federal government.

To pay for the federal government’s share of such costs Congress reduced Medicare funding by $700 billion and adopted 18 new taxes, including, a new 3.9% income tax on so-called high income people with incomes above $200,000 and unfairly on families with incomes above $250,000, new taxes on medical products and prescription drug producers (which may be passed on to customers), and a .9% increase in the FICA tax. The penalties, to the extent collectible, are also payable to the federal government. The new business taxes will interfere with product development, will give an advantage in favor of overseas competitors, and will over time likely be passed on to the Obamacare policy holders in the form of higher premiums.

When Obamacare was passed it contained and ill-conceived long-term care provision that would have relied on fraudulent accounting practices to make Obamacare appear to be profitable for the federal government during the first ten years. Because no reserve requirement, as would have been required under GAAP, was included, the long-term care policies would almost certainly have proven to be an economic disaster for the government over the long run. The sale of long-term care policies was eliminated after Obamacare was passed and before any policies were sold.

President Obama talks only about the benefits of Obamacare and not the cost or the harm it is causing. Few people (except for those who object for religious reasons) fail to acknowledge the value of the benefits required to be included under the greatly expanded Obamacare policy coverage. They include, among other benefits, preventive care, mental health, drug abuse, birth control and abortion services as well as the elimination of pre-existing conditions and aggregate policy limits from consideration. These are expanded benefits that are required to be covered under all Obamacare mandated policies and given on a highly subsidized basis to lower-income individuals.

President Obama is claiming that Obamacare requires better insurance for everyone. Many Americans are learning that is not true for them. Millions of people, at least temporarily, have no insurance. They are learning or will soon learn that the replacement policy offered on the exchanges (when it is available for purchase) will in most states have much higher premiums, deductibles and co-pays. The claim by President Obama that more people will be helped than hurt by Obamacare is irrelevant (and almost certainly not true). Our government should not be causing deliberate harm to tens of millions of people and forcing them, without their knowledge, to pay for enhanced insurance coverage they don’t need or want to subsidize insurance benefits for others, including the elderly and the sick.

President Obama has since the adoption of Obamacare acted like a snake oil salesman in his attempts to mislead the American public in order to help insurance companies sell Obamacare mandated insurance policies on the federal and state exchanges. He traveled around the country during and after his re-election campaign making repetitious stump speeches extolling Obamacare qualified policies. He talks about the benefits Obamacare provides for 30 million previously uninsured people, including many with pre-existing conditions who previously couldn’t get insurance except at the realistically high open market rates. He talks about the poor who will get free Medicaid, the previously uninsured low-income individuals (many of whom have been receiving free treatments and procedures at emergency rooms) who will receive substantial subsidies to lower their premium costs and the children who will be able to remain on their parents policies until age 26. In short, he talks almost exclusively about the people who will benefit from Obamacare.

However, there is no free lunch. Obamacare greatly increases the costs of healthcare insurance that the Obama administration expects to be borne by employers and healthy and young individuals who do not qualify for US government subsidies and, to the extent of the enormous subsidies, by the taxpayers. Many people have no need for the additional benefits.

President Obama doesn’t talk about who is going to have to pay for the hundreds of billions of dollars these benefits are going to cost each year. He doesn’t tell you that the true cost of providing benefits for people with pre-existing conditions (some of whom are rich) may be 10, 20 or even more than 100 times as much as the cost of benefits which will be provided for healthy people. He doesn’t tell you that Obamacare eliminated lifetime limits and requires that annual policy limits must be not less than $2 million beginning in 2014. Such high limits will drive up premiums for others.

He doesn’t tell you that certain of the high costs of Obamacare benefits were front end loaded for political reasons. It would clearly be considered as mismanagement for a business to give away free or almost free services to millions of its potential customers before it began offering such services at substantially increased prices to its other potential customers. That’s what Obamacare does. People started getting the benefits before we had any assurance (which is still lacking) that a significant number of healthy people will buy the insurance rather than become obligated to pay the penalty. Moreover, the penalty, if not collected out of tax refunds that may be due, may prove to be uncollectible.

Few people understand why so many people with pre-existing conditions did not have insurance prior to Obamacare. An insurance policy generally has a one year term. If you had an individual policy and had an accident or learned of an illness during the term, you were entitled to benefits during the remainder of the year. However, based on the amount of the premium you paid, you were probably not entitled to renewal rights under your individual insurance policy and had now become a much higher insurance risk. Insurance companies are in business to earn a profit. Prior to Obamacare an insurance company hired highly paid actuaries and designed expensive computer systems to evaluate your claims and health status. This enabled them to determine your eligibility to purchase a policy and to estimate the cost of providing you with coverage. Some illnesses or injuries require continuous expenditures. Others may be indicative of a risk of high future claims. The insurance company must cover its costs and often had little choice but to not renew your individual policy. President Obama certainly knows this, but nevertheless unfairly criticizes what he calls the bad insurance companies to try to shift the blame for the Obamacare required policy terminations to them.

Group policies are different. A group policy, of the type bought by employers, generally covers a large number of people and has a high enough premium to enable the insurance company to absorb changes of the health status of a limited number of the covered individuals as long as they remain as an employee. Alternatively, they can make a rate adjustment based on the advice of their actuaries to reflect the increased risk.

Obamacare policy purchases are currently very difficult to make because of the website failures. We are told that even if the government websites had worked flawlessly, it was anticipated that enrollment would have started slowly. President Obama, who is always campaigning, is already blaming Republicans, not one of who voted for the passage of Obamacare, for criticizing him and Obamacare and impeding the implementation of Obamacare that they have no control over. He is setting the stage to again blame Republicans after the website becomes operational in the event that healthy young and middle-class workers elect to pay the penalty and avoid purchasing insurance. He will claim for purposes of the 2014 elections that young people are starting to come on board and predict that millions more will sign up in later years. They might, but if premiums go up in later years, policies may be dropped.

He doesn’t seem to grasp or care that more people may be harmed than helped by Obamacare. He is focused on enlarging the welfare base by including premium subsidies for lower-middle class workers.He is an entitlementist who believes that expansion of Medicaid and the new Obamacare premium subsidies will become entitlements and enlarge the Democrat base of voters. He is unapologetic for having lied repeatedly to the American people and then requiring them to buy more expensive insurance on the exchanges. He is arrogantly confident that the base of Democrat voters (including those added to the welfare rolls by the passage of Obamacare) will ignore his lies and faithfully and blindly accept his unsupportable claims that Obamacare will in the long run reduce insurance costs and is serving the common good-by taking from those who have and giving to those who have not.

Many of the people being asked to carry the elderly and the sick on their backs, are young people, who have found good jobs at compensation levels that make them inelligable for Obamacare subsidies. Many of them voted for President Obama and other liberal Democrats. They are trying to pay off college loans, beginning to raise a family, or buy a car or a home. Apparently President Obama believes he can convince them that, if they overpay for health insurance for years, they will benefit in the long run from purchasing the Obamacare policies. Young people will be urged by President Obama to purchase Obamacare policies based on the promise that, when they are old, they will benefit from the over-priced policies then being purchased by the next generation. He disregards the immediate negative impact on the lives of those being asked to bear an unfair burden or on the US economy.

In an attempt to again prevent voters learning about the evils of Obamacare so that Democrats can gain control of the House of Representatives in the 2014 elections, President Obama illegally, without Congressional authority, postponed the employer mandate for a year. He knows and is trying to prevent voters from learning that, when the employer mandate kicks in, tens of millions of workers are going to lose their full-time or part-time jobs or be advised of the loss of, or a negative change relative to, their employer paid healthcare insurance. Postponing the employer mandate is enabling President Obama and his apologists to make yet another outrageously misleading claim that the people whose individual policies have been terminated represent only 5% of the population. Although some employers have started to lay-off workers or eliminate full-time jobs, most employers, who provide 80% of healthcare coverage, have not yet taken action with respect to their employer paid insurance. We have recently learned that a majority of the employer group plans will have to be modified and will face increased costs to comply with Obamacare requirements.

With all the confusion caused by the failed Obamacare website and the recent attention of the liberal news media to President Obama’s repeated lies, people are only beginning to understand or talk about the roles played by the insurance companies and the federal and state governments relative to Obamacare. The insurance companies, that qualify to sell insurance on the exchanges, will be responsible for contracting with doctors, hospitals and other healthcare providers to provide the medical services for policy holders, and to pay for their services to the extent they exceed the deductibles and co-pays. Their funding comes solely from the premiums (including the portion of the premiums reimbursed by federal government subsidies) collected from the purchasers of the Obamacare qualified policies.

The limited number of insurance companies, who have qualified to offer the policies, set the premiums (as well as the amount of the deductibles and co-pays) for each of the types of misleadingly labeled plans being offered on the exchanges (namely the platinum, gold, silver, bronze and catastrophic plans), one of which the purchasers will have to select and pay for. The differences between the plans other that the catastrophic plan is that higher premiums lead to lower deductibles and co-pays and vice-versa. The coverage under all of the plans, except the catastrophic plans, is required to meet all of the Obamacare mandates. The catastrophic plans offer reduced benefits, but are only available for people under age 30 who cannot find another plan for less than 8% of their income.

Although they will not be allowed to consider pre-existing conditions, insurance companies will be allowed to consider the greater healthcare needs of older persons. However, their pricing power is arbitrarily limited by the requirement that, despite their much higher medical care needs, the premiums for plans for the elderly cannot be more than three times the amount of those for young people. Historically the premiums paid by the elderly had a 5 to 1 ratio over young people based upon actuarial statistics. That requirement ensures that young people will be subsidizing the healthcare costs of the elderly who tend to be in better financial condition.

For insurance companies to make a profit, the aggregate premiums collected will have to be high enough to cover the payments by them to providers resulting from under charging the elderly, the elimination of pre-existing conditions from consideration, removal of lifetime policy limits and to cover the greatly expanded treatments and procedures mandated to be included in all insurance policies to be sold on the exchanges. Obamacare is designed to improve insurance company profitability by maximizing aggregate premiums from healthy and young individuals who are expected to have limited healthcare needs and are required to purchase overpriced policies on the exchanges.

Another way to reduce costs is to limit payments to doctors, hospitals and other healthcare providers. Obamacare places the responsibility for reducing payments to the providers on the insurance companies. In order to reduce cost, insurance companies, are not asking many doctors and hospitals (including some of the nation’s leading hospitals) whether they wish to participate in Obamacare networks. Even if they are asked to participate, since the insurers are squeezing the fees payable to the providers to keep premiums lower, many doctors, hospitals and other providers are refusing to enter into a contract with the exchange qualified insurers. As a result many insurance policy holders will be unable to continue to use their former doctor or hospital. It is unfair and difficult to understand (but typical of the manner in which Obamacare is being rolled out) why people are being asked to sign up to purchase policies on the exchanges before the schedule of in network doctors, hospitals and other healthcare providers is made available. Patients are going to discover that their favorite doctor, hospital or other healthcare provider may not be included in their network. They may later learn that if need a surgeon, the one they want, or the hospital or anesthesiologist they would like to use, may not be available to them. He doesn’t tell you that the negative aspects of the Obamacare mandates spread like a cancer attacking the provider networks.

Obamacare is also negatively impacting Medicare and Medicaid healthcare providers. He doesn’t tell you about the excessive, costly and often impossible to meet documentation burdens being placed on them. Such document requirements are making it difficult for them to collect payments for their services even at the approved low Medicare and Medicaid rates. Many claims are never paid and abandoned to avoid further collection costs.

Large numbers of doctors are retiring or selling out to hospital chains or other large medical groups and accepting jobs at lesser compensation to avoid record keeping and malpractice insurance costs. It is going to become more and more difficult for people with Medicare, Medicaid or an insurance policy purchased on a federal or state exchange to find a doctor or avoid a long wait for an appointment.

Doctors, hospitals and other healthcare providers who do not participate as Medicare, Medicaid or exchange network providers are going to have to offer their services for payment outside the exchanges. Private medical plans are being set up by groups of doctors, hospitals and other healthcare providers, who are not involved with Medicare, Medicaid or an Obamacare exchange, to provide healthcare services for people willing to pay an annual fee. It will be like parents who pay local real estate taxes, but are sending their children to private schools. A two tier system, one onside and one outside of the exchanges can be expected to develop.

Despite President Obama’s now infamous lie, that “If you like your policy, you can keep your policy.”, it has become clear that the exchange qualified insurance companies expected all along to be able to pay for a significant portion of the increased costs mandated by Obamacare from the increased premiums to be received from people who currently have individual insurance policies that are being terminated. There is incontrovertible proof that President Obama knew during the 2012 presidential election campaign that most of the existing individually owned policies held by approximately 15 million people would not qualify for the phony “grandfather” exemption and would have to be terminated, and that he deliberately continued to lie about it.

President Obama concealed from voters that owners of individually owned policies would be required to buy the more expensive Obamacare qualified insurance policies on the exchanges, and thereby improve the risk pool. He obviously thought the timing would be perfect. The exchange websites were expected to become available concurrently with the receipt of the first termination notices. The individuals receiving the termination notices would be desperate and would have no choice but to buy a Obamacare mandated policy on a federal or state exchange. He might have thought he could succeed in stonewalling his lies by telling people they were getting much better insurance coverage that over time would prove to be less expensive, and they would love it. The website failures made that virtually impossible.

Although millions of individuals and families received notices of termination of their existing policies, President Obama initially disregarded the exposure of his lie and tried to mislead those who are losing their insurance coverage by proclaiming that the websites would be up and running no later than November 30, 2013 and repeating his claim that Obamacare mandated insurance provides better coverage at a lesser price. He didn’t succeed in calming individuals whose policies are being terminated. Millions of people are very upset about the risk of having no insurance in force after 12/31/13 and are discovering the truth about the cost of Obamacare policies.

The outrage has been too great to ignore. Bills have been introduced in Congress to permit the terminated individual policies to be reinstated. President Clinton made a similar, and widely publicized suggestion to President Obama. President Obama, sensing a revolt from Democrats facing reelection in 2014, desperately tried for damage control in an effort to defend his signature achievement. The day before the planned Congressional vote, he proposed an unworkable solution to try to shift the blame for the policy terminations to the insurance companies. He unilaterally, and without Congressional authority, granted insurance companies, who complied with certain disclosures designed to sell exchange offered policies, the right to violate the Obamacare mandate and reinstate (for up to one year) certain of the terminated policies.

The insurance companies are under intense pressure. They know that, if they fail to extend the policies, they will be strongly criticized by President Obama. Even if some policies are extended or reinstated with the consent of state insurance commissions, doing so will cause new problems for insurance companies because (i) it will lead to a reduction in the sale of policies on the exchanges with higher premiums, deductibles and co-pays and (ii) it will lead to abuses by policy holders (seeking to obtain as many procedures and treatments as possible within the year) and insurance companies in the last year of an expiring health insurance policy. The insurance companies might have to raise the premiums for policies sold on the exchanges in 2015 to cover the lost revenues.

President Obama had previously hinted that he was considering another welfare benefit alternative, namely creating another subsidy, (which would have to be paid for by taxpayers or by increases in the National Debt) to help the owners of terminated individual policies pay the increased premiums required to buy a replacement policy on an exchange.

The employer mandate is another stealth way to increase employer premiums and lead to an increase in the number of healthy people purchasing policies on the exchanges. Although, as noted above, the employer mandate has been delayed by President Obama, businesses are hiring professional advisers to understand and seek to comply with the Obamacare employer mandate. Some will do what is best for their employees. Others will seek to reduce costs. Some employers will not be able to pay for the mandated insurance or the penalty and will lay-off workers or go out of business.

Employers are already taking steps to avoid having to purchase expensive coverage by reducing full-time and increasing part-time employment and eliminating insurance coverage for some employees or their dependents. Many employers focus on short-term profits. If employers determine it is cost-effective to pay the penalty of $2000 per employee, many millions of employees will lose their tax-free insurance and be forced to buy insurance on the exchanges or pay the penalty and live without insurance. Even if they get a raise to cover all or a portion of the cost, it will be taxable income. This is just another sneaky way to take from those who have, even if they are middle-class. In fairness, we should change the tax laws to make the payment of healthcare premiums tax-deductible, so that employees will not lose the tax-free nature of their insurance benefit and the tax benefit will be available to tax-payers purchasing their own insurance.

He doesn’t tell you that on 1/1/14 insurance premiums will go up and not down in most states. President Obama had to know that unless they were entitled to receive a large subsidy, many young and healthy people would not buy the insurance after they learned that the policies being offered to them had such high premiums, deductibles and co-pays, they would be almost worthless to them. Obamacare was, therefore, drafted to provide substantial subsidies for lower and middle-income taxpayers. The subsidies, a new welfare benefit for a large number of individuals and families, made the insurance premiums more affordable. The entitlementists do not care that the taxpayers are going to have to pay for the subsidies. Of course, even the premium subsidies may not make the insurance affordable for a large number of people because of the large deductibles and co-pays.

President Obama is still claiming that if everyone complies with the mandate and purchases overpriced Obamacare insurance policies, the premiums will be reduced. He is prepared to wage an all-out campaign to get them to do so. However, even if a large number of healthy people who are not eligible for a subsidy wind up being cajoled into buying Obamacare qualified policies in the coming years, the cost of providing the extra coverage may be underestimated or the insurance companies may choose to make higher payments to providers to improve care or to keep the extra revenues as profits. It is unlikely that premiums will be reduced.

As was the case in past years, if providers render services without requiring a cash payment to cover the unpaid deductibles and co-pays, the insurance company will reject that portion of their claim. Providers will then have to bill and try to collect such amounts from the patient. In recent years the losses from unpaid claims (including collection costs) have grown to over $40 billion. It is like to rise significantly as a result of Obamacare.

He doesn’t tell you that, whether or not the exchange websites are functioning, Obamacare is going to cause chaos and harm for patients and providers beginning in January, 2014. The insurance of millions of patients will have been terminated and many will not know it or will fail to tell the providers. If they have no insurance, they will have to pay cash (except at an emergency room) or extended credit by the provider. Even if a patient is covered by a policy purchased on an exchange or a current policy is renewed, there will be large deductibles and co-pays, and providers will be at their peril if they offer services except for a cash payment to cover both the unpaid portion of the deductible and the co-pay.

Many patients will not be able or willing to pay cash and will be denied and go without treatment. As a result, providers are likely to face both a significant revenue decline and an increase in uncollectible fees. There is a question as to whether a person, who was unable to purchase insurance because of the website failure, who buys a policy after paying cash to a provider for a treatment or procedure, should receive credit toward the deductible or possibly a refund of the excess payment.

To get insurance companies to support the adoption of Obamacare, it offers additional protection to the insurance companies against adverse enrollment by requiring an additional premium to be paid during the first three years by all qualified policy purchasers (except to the extent that certain union plans may receive an exemption from President Obama to reward their political support). The insurance companies also have the comfort of knowing that if the have an adverse enrollment because healthy people do not buy the insurance and pay the penalty, they can raise the premiums next year and each year thereafter.

Many providers will require Obamacare policy holders to pay the full amount of the deductibles in advance (other than at an emergency room). Because the deductibles are so high, the owner of a Obamacare insurance policy may not seek medical treatment to avoid paying the deductibles. If they incur a catastrophic illness or injury while uninsured they will be able to purchase insurance, without consideration of pre-existing conditions, on the next enrollment date. Has anyone every heard President Obama talk about the high deductibles or co-pays of Obamacare mandated policies?

He doesn’t tell you the reason they included penalties was to punish people who elected not to make the mandated purchases of unfair and overpriced Obamacare mandated policies. He doesn’t tell you about adverse selection which might cause a “death spiral” leading to repeated premium increases because many of the people who rush to sign up will be older or sick people. He doesn’t tell you that each person who signs up for Medicaid reduces, by one, the number of poor people who might have improved the risk pool by purchasing a government subsidized Obamacare policy from an insurance company.

We have for many years prior to adoption of Obamacare required healthcare services to be provided at hospital emergency rooms, regardless of the ability of the patient to pay. He doesn’t tell you that low-income people who can’t find a doctor for themselves or their children at 2:00 or 3:00 A.M will go to a hospital emergency room, as they previously did, to get treatments and procedures they probably will not have to pay for. He doesn’t tell you about the unpaid treatments for illegal immigrants that are being provided and will continue to be provided at hospital emergency rooms. He doesn’t tell you that hospitals will have to find a way to pass on the uncollectible fees, including, uncollected deductibles and co-pays as they did in the past. If the hospitals are under contract as Obamacare providers for policy holders, they will try to negotiate to charge higher rates for those who pay, leading to higher insurance premiums. If they have no contracts with insurers, they will have to charge higher fees for their patients who pay them directly, or seek government assistance.

Most Americans agree that everyone should have access to adequate healthcare. Obamacare’s socialistic concept of requiring costly high-grade insurance to be made available for everyone, including people receiving very highly subsidized policies, should be reconsidered. Based upon the current size of the GDP we can’t afford to be so generous.

Properly pricing insurance is a game played by actuaries and is regulated at the state level. Obamacare drastically changes the rules of the game. Now that they are learning the truth about Obamacare, most Americans, if asked, will tell you they do not want to greatly over-pay for their healthcare insurance, as required by Obamacare, for benefits they do not need or want, to offer highly subsidized premium policies for lower-income people or to reduce the insurance costs of the elderly and the sick.

Republicans didn’t vote for Obamacare and have for more than four years demanded that it be repealed. Rather than defend Obamacare, Democrats create a smoke screen by arguing that the Republicans do not have an alternative plan. Returning to the system we had before, with all of its faults, would be preferable, but has been made impossible by Obamacare. The damage being caused by Obamacare cannot be reversed, but can be mitigated.

There are many actions we can take, many of which have been proposed by Republicans. We can ask the assistance of insurance actuaries, hospital administrators and doctors in undertaking a thorough bi-partisan review and revamping of Obamacare and American healthcare. As contemplated by the House bill, we could allow private healthcare insurance policies to be sold in competition with exchange mandated policies.

Pre-existing conditions have been a major healthcare problem that have caused hardships for people who have lost their jobs, their employer coverage, become ill or injured or are treated unfairly by an insurance company. We could have dealt with them over time without causing an immediate transfer of the cost of the risk to businesses and healthy individuals (including young people). We could have required insurance companies to offer better forms of catastrophic insurance for people with pre-existing conditions that required them to pay higher premiums, deductibles or co-pays (as some of them were doing under high risk plans that have been terminated). The higher premiums, deductibles or co-pays might have been partly subsidized and phased out, in whole or in part, over a period of years to eliminate the shock of doing so immediately. Such changes would have encouraged people with known extra healthcare needs to make an effort to limit their healthcare expenditures. Similarly, the forced removal of life-time limits, could have been dealt with on a case-by-case basis rather than eliminating them. People who have no stake in the game can be expected to demand excessive medical treatments and procedures.

Alternatively, we can require insurance companies to offer automatically renewable insurance, with higher premiums to reflect the actuarially calculated risk, to those who elect to purchase a policy to protect against future injury or illness. We can require insurance companies to offer individuals an opportunity to participate in group policies, similar to those offered under business group policies, which allow renewals for people who acquire pre-existing conditions. Insuring against becoming ill or injured may be better handled through the sale of a type of disability coverage.

Wealthy people have for years made very large charitable contributions to build hospitals and fund the purchase of ever improving medical equipment to enable the US to have the best hospital networks in the world. We can turn to our billionaires to voluntarily contribute to the development of world-class clinics (of the type contemplated under Obamacare) in or near hospitals, to provide excellent healthcare services for rich and poor at costs significantly less than emergency room costs.

We can make Obamacare more provider friendly to improve, not destroy, our healthcare system. As a start, we can reduce excessive record keeping requirements of doctors and pay them fairly for their services. We can restrict medical malpractice claims and limit the amount of judgements, except for grossly negligent or deliberate injuries, to a recovery of medical costs. Whether or not Obamacare remains in force, the maximum liability should be limited to the estimated cost of future insurance premiums, deductibles and co-pays. We can make the sale of insurance more competitive, possibly by permitting insurance to be sold across state lines.

Obamacare was adopted during the Great Recession, shortly after the passage of what turned out to be a failed stimulus plan. It was hastily passed a time when we should have concentrated our stimulus spending on growing the economy and not increasing welfare programs and backing of green energy projects that created few jobs and failed. If we had created millions of tax-paying jobs and grown the US GDP at a 4% to 5% rate it would reduced our federal deficits and have made our healthcare costs more affordable. Instead of adopting Obamacare we should have been working on fixes to reduce the $90 trillion of unfunded liabilities of our important Social Security and Medicare programs to insure that they will be available for current and future beneficiaries. In addition to revamping Obamacare we should be undertaking an effort to modify Medicare for people under age 50 or 55.

Obamacare is a law designed to cause havoc in the healthcare marketplace and add hundreds of billions and possibly trillions of dollars to annual healthcare costs. Fortunately, the immediate harm to the economy may be offset, in part, by the stimulative economic effect of the additional healthcare payments (if made) to doctors, hospitals and other providers for services rendered to Obamacare qualified policy beneficiaries. President Obama, who will probably blame the decline in availability and quality of benefits on the insurance companies, should encourage them to arrange for the exchange qualified policies to offer the services of our best healthcare providers.

If, as is likely, Obamacare becomes a train wreck, liberals will seek to convert it into a single payer system to eliminate the insurance companies. This will enable the federal and state governments to take control of and incompetently run the healthcare system and pay for it by further increasing taxes on the middle-class and the rich or by increasing the National Debt. Rather than a single payer system, we should consider giving our major hospital networks the opportunity to create their own insurance programs.

The US economy has struggled during the Obama presidency. President Obama inherited the Great Recession, but has managed an inadequate recovery. His stimulus programs have failed to create an adequate number of full-time, tax-paying jobs. Rich people, security investors and corporations have benefitted from increasing stock prices fueled by the low-interest rate policy and QE purchases of the Fed. The Fed has repeatedly stated that it needs to continue QE because of the inadequate fiscal stimulus. There is a growing anger and jealousy among the poor, lower-income and middle-class Americans who are not participating in the recovery except to the extent that they are receiving, and becoming dependent upon increased welfare benefits. However, welfare entitlements, that are being greatly expanded by the adoption of Obamacare, are negatively impacting the self-esteem and work ethic of the poor, threatening the survival of the middle-class and jeopardizing the continued greatness of American capitalism.

The gap between the disposable income (after income tax and healthcare costs) of full-time middle class workers and the value of welfare benefits (including those receivable under Obamacare) when added to the compensation from a part-time job (including negative income tax), is narrowing. Instead of adopting Obamacare, we should have concentrated our efforts on creating full-time tax-paying jobs to repair and upgrade our transportation infrastructure and strengthen our national defense and homeland security.

ENTITLEMENTISM

I define “entitlementism” as a political process by which voters in a democracy, motivated by greed, need, fear, or a desire to promote the comfort and well-being of others, elect presidents, governors and legislators who favor the retention or expansion of welfare benefits and other economic entitlements mainly for the poor and the elderly. Entitlementists are people who promote entitlementism. Entitlementists generally believe that wealthy and high income individuals and the entities that they control should pay higher taxes, fees and other payments to pay for the entitlements.

The grave danger that entitlementism poses to American democracy is that voters will vote for candidates who support and maximize entitlements and that political candidates who seek to control excessive entitlement spending may become un-electable in many areas of the country. If entitlementists get control of the presidency and both houses of Congress, they may, though a combination of taxes, mandates and penalties on individuals and businesses, turn American free market capitalism into an undesirable form of socialism that may over time erode into communism.

Entitlementists adopted Obamacare to offer new types of welfare benefits, including premium subsidies to many millions of individuals with incomes up to $46,000 and families of four with incomes up to $94,000 expecting them to become entitlements. It mandates the purchase, by businesses and individuals, of over-priced insurance that many of them do not want or need, to pay for new entitlements for others.

Although President Obama and his Democrat supporters refuse to acknowledge it, healthy young people with middle class tax-paying jobs are targeted victims selected to pay for the increased healthcare costs mandated by Obamacare. They are being asked to pay excessive premiums, deductibles and co-pays to (i) finance the expanded Obamacare mandated benefits, (ii) to substantially reduce the premiums payable by people with pre-existing conditions and (iii) to limit the premium increases of the elderly. They will also have to bear the brunt of tax increases that will be required to pay for the multi-billion dollar subsidies for the poor and lower middle class and for the expansion of Medicaid coverage. President Obama and other Obamacare supporters are also concealing the fact that most of the elderly, unless they qualify for premium subsidies, are subject to increased premium rates (even though their premiums are unrealistically limited under Obamacare rules (in disregard of actuarial statistics) to no more than 3 times the premium rates of young people). Most of them do not need the mandated Obamacare benefits.

Right wing conservatives, many of whom claim to be Tea Party members, are taking a political stance that enabled Democrat entitlementists to win a number of contested Congressional elections in 2012. They assess the voting record and statements of Republican candidates and, if they fail to meet pre-determined standards, they call them RINOS (Republicans in name only) and oppose their nomination. As a result Republicans often nominate a right-wing candidate who loses an election the Republicans would in all likelihood have won. Alternately, if a moderate Republican they oppose wins the nomination, they refuse financial support or to vote for him or her and he or she often loses a close election to a Democrat entitlementist. Such actions have been instrumental in enabling Democrats to retain control of the Senate. All Republicans, even moderates, opposed the passage of Obamacare. If Republicans are going to stop the march toward entitlementism, that will gain momentum if entitlements are not brought under control, they must harness their idealism and recognize the importance of winning control of both the House and the Senate in the 2014 elections.

An economic entitlement is a financial benefit that large numbers of people believe they are entitled to receive, generally from the government. Entitlements were adopted in the US over time for various commendable purposes to improve the lives of Americans. They have evolved into a broad range of benefits to provide safety net payments. They are designed to prevent hunger, provide shelter and basic needs, including medical care. Entitlements include Social Security, Medicare, Medicaid, food stamps, housing supplements and other welfare benefits, negative income taxes, unemployment and disability insurance, flood insurance, financial relief following national disasters and now Obamacare. All of these programs are financed in large part by the US government. The costs of providing each of the entitlements are growing rapidly and are out of control. Entitlement costs are increased significantly by payments to beneficiaries and others cheating the system based on fraudulent claims under entitlement programs that now exceed hundreds of billions of dollars annually. Yet, we do almost nothing to prevent or punish the wrongdoers. Entitlementists don’t seem to care.

When adopting legislation authorizing various of the entitlement programs Congress chose different ways to determine eligibility for benefits and to fund the costs. Unfortunately our Congressmen ignored or misjudged the costs of providing certain of the entitlements and we are now facing $60 to $90 trillion of estimated unfunded entitlement liabilities that we cannot afford even if we achieve an annual two or three percent rate of growth of the GDP. We might be able to manage the unfunded entitlement problem if we grow the GDP at 7 to 10% annually for the next ten years, but because our leadership is inept, that is unlikely to be achieved. Therefore, we must find a way to scale back a significant portion of the unfunded entitlement liabilities. As a result of the Great Recession and skyrocketing entitlement payments the National Debt is approaching $17 trillion. It doesn’t seem to be currently affecting anyone. Most people seem to think that the rising National Debt will present a burden for our children and grandchildren, but few people think that our wealthy country can’t handle a National Debt of $20 trillion, $25 trillion or more. Low interest rates have masked the problem. Entitlementists like President Obama have for years been stonewalling any attempts to modify entitlements to reduce rising current entitlement costs or the unfunded liabilities in the out years. To the contrary they have magnified the entitlement problem by adopting Obamacare. In all likelihood, we will not know that the National Debt is too high until interest rates rise and we discover that we are no longer the world’s most powerful country financially or militarily. We will then be faced with a choice of reducing entitlements or other government spending, raising taxes, or printing money and enduring inflation. Moreover, if entitlementists are in control of the presidency and both houses of Congress, it may ultimately lead to confiscation of property from the wealthy.

Most of the entitlement underfunding comes from Social Security, Medicare and Medicaid obligations. Social Security is a fabulous mandated retirement program. The amount a retiree can expect to collect is calculated by taking into account the withholding tax payments made into the system over a life-time. Social Security payments are the principal source of income for a large percentage of elderly Americans. Most people over age 65 in reasonably good health, who are entitled to Social Security and Medicare, can be financially self-reliant.

Although Social Security benefits vary based on the amount of one’s contributions, benefit levels offer a favorable return to our senior citizens. Years ago we recognized the under-funding of Social Security resulting from increased life expectancy and raised the age of eligibility to begin receiving benefits. We have known throughout the Obama presidency that we should again raise the age for commencement of Social Security benefits or change the manner in which inflation adjustments are calculated. Yet, despite the soaring National Debt, because entitlementists are in control of the presidency and the Senate, no action has been taken to make Social Security payments more affordable. Social Security cash flow needs present an additional problem as the number of workers contributing into the system per retiree declines. No trust fund was set aside out of the funds withheld from employee salaries to pay retiree benefits. Our government became obligated for future benefits, but spent the withholding taxes it received.

The other entitlements consist mostly of welfare payments. By design low-income individuals pay little or nothing for their entitlement benefits other than Social Security. Half of our population pays no income tax. They pay sales taxes and withholding taxes (often offset by negative income taxes) in amounts that are insignificant when compared to the benefits they receive. Democrat entitlementists have learned that they can buy votes by expanding entitlements.

Medicare was designed to ensure that healthcare would be available for the elderly. We have Medicare withholding taxes, annual premium payments and co-pays that can be covered in large part by the purchase of supplemental insurance, but the Medicare benefits dwarf the amounts collected. Low income people pay little into the system, yet they are eligible for full benefits. We have known for years that Medicare was an ill-conceived program which our government will not be able to afford as our population ages. Entitlementists rave about the success of Medicare but ignore its funding problem. The elderly and their children, who are relieved of a potential burden, love the benefits. It would be politically suicidal to try to reduce any Medicare benefits currently payable for the elderly. They vote in large numbers and feel entitled to Medicare benefits regardless of the cost. We have known for years that we must raise the age of eligibility for future Medicare beneficiaries (as we did for Social Security) and take other steps to control Medicare costs. President Obama knows this, but, except to state, every once in a while, that he knows we must deal with controlling future entitlements and that he will consider the way in which inflationary increases are calculated, he has not made any meaningful proposal to deal with the problem. The problem becomes greater with each passing year. Congressmen who propose ways to control Medicare payments in the out years are taking a political risk. Anyone who even brings up the subject of reducing entitlement benefits is immediately bashed by the liberal press and entitlementists seeking to gain political advantage.

Various individuals have proposed alternatives to the current form of Medicare. One way to reign in future Medicare liabilities is to modify the system for people currently under a designated age, such as 55, to a voucher system with co-pays and annual or lifetime limits. Each person would be entitled to an amount available to be spent during the remainder of their lifetime after becoming eligible for Medicare. By introducing aggregate spending limits (with higher limits for designated catastrophic injuries and illnesses) we can get the beneficiaries involved in controlling costs. We can even provide a death benefit for unused life-time benefits. Unfortunately, some people might spend their allocated benefits and be unable to afford all of their additional healthcare needs for various reasons. They might include their own negligence, and might be forced into bankruptcy. Our government will have to offer supplemental healthcare coverage, like Medicaid, and welfare assistance for such individuals. As we are learning from the harm being caused by Obamacare, that alternative is preferential to the destruction of the healthcare system and the middle class and the slowing of economic growth.

The SNAP (food-stamps) welfare program evolved to provide food for the poor in a dignified and efficient manner (though subject to abuse) through the use of a debit card. Welfare has been expanded to include housing and transportation subsidies, Medicaid, cell phones, baby sitters, home care and negative income taxes. A growing number of individuals, single mothers (often teenagers and sometimes with the unidentified father of their children moving in and out of the home to avoid the mother losing her welfare eligibility) and two parent families are relying on food stamps and other welfare benefits as their primary source of income. Some of them live comfortably by working part-time at low-paying jobs (which entitle them to negative income taxes) or off the books to supplement their welfare payments. Encouraged to apply for welfare benefits by navigators under programs initiated by entitlementists, more than 45 million people are now receiving food stamps. Most of them of working age are not attempting to further their education or job skills or looking for a job that would improve their standard of living and reduce or eliminate their welfare benefits. Instead they concentrate their efforts on maximizing welfare benefits. They lack the motivation and drive that has made American capitalism revered throughout the world. The increase in the number of welfare recipients has been fueled by an executive order issued by President Obama in violation of the 1996 welfare law, that makes it easier to satisfy the work requirement and gives states the authority to ignore such requirement.

Flood insurance is sold by the US Government at a fraction of its market cost. When flood insurance payments are added to disaster relief it encourages beneficiaries to rebuild in flood zones leading to large government payments when the next flood occurs in the same area.

It is becoming clear that Obamacare was rushed through Congress by President Obama and entitlementist Democrat Congressmen not only to give government control of all aspects of healthcare from birth to grave, but also to create a number of new entitlements for millions of individuals.

Many of the benefits of Obamacare became effective immediately, while most of the funding provisions were delayed for years until January 1, 2014. This was done so that President Obama could claim credit during the 2012 election campaign for all the benefits of Obamacare while concealing the disastrous aspects of Obamacare from the voters. The public heard repeatedly that 30 million people without insurance were going to be covered, pre-existing conditions were being eliminated from consideration, children under age 26 could remain on their parents coverage and a variety of benefits would be required to be covered, including preventive care, birth control, abortion and other women’s healthcare services.

Until recently, few people understood the funding or other provisions and regulations of Obamacare (many of which had not been written) or the secondary effects they would have on jobs, the healthcare industry or previously existing insurance policies. Since the adverse consequences of Obamacare were relatively unknown President Obama was able during the 2012 re-election campaign to time and again repeat a list of deliberately untrue promises (the now infamous President Obama lies), namely, (i) insurance premiums would decline for everyone, (ii) if you liked your insurance you could keep it and (iii) if you liked your doctor or hospital you could keep them. President Obama and the Democrat entitlementists didn’t tell anyone that the Obamacare insurance policies would provide for increased premiums in most states and large deductibles and co-pays which might make the insurance worthless. Nor did they tell voters they might lose their coverage, their doctor or their full-time job. They didn’t tell college students that Obamacare might harm the economy and prevent them from finding a job. They wanted President Obama and other Democrats to be elected and anticipated that the liberal press, most of whom are entitlementists, would let them outrageously stonewall the lies when they were exposed.

The 2012 election debates over Obamacare focused on birth control, abortion and other women’s rights issues that proved harmful to the Romney campaign and would have been of lesser importance had voters known the truth about how Obamacare would affect their jobs, the loss of their existing insurance coverage, their increased premium costs and the large deductibles and co-pays that were being imposed to enable insurance companies to provide expanded Obamacare mandated benefits and to offer health insurance policies at below free market rates for the sick, the disabled and the elderly. Postponing the harm of the employer mandate until 2015 was clearly intended to and may have a similar effect of deceiving the voters in the 2014 elections except to the extent that voters learn that many employers are taking steps to protect themselves against Obamacare mandates in advance of its effectiveness. To attempt to keep control of the Senate in the 2014 elections, President Obama will do everything possible to focus on women’s rights issues and criticize the stance of the Tea Party on such issues to divert attention from the harm to the middle class being caused by Obamacare.

Few people understand the enormous amount by which eliminating pre-existing conditions will increase insurance premiums. The healthcare costs of people born with special needs, or who become ill or injured may be 10 or 20 or more times more costly than those of a person in good health. Prior to the adoption of Obamacare, individual insurance policies generally had a one year term. Coverage for catastrophic injuries and illness were covered during the term. However, insurance companies would renew the policies of people who became ill or injured during the term only at greatly increased rates. People with pre-existing conditions were generally unable to purchase health insurance at affordable rates. They became cost conscious and limited their demands for treatments and procedures or spent their personal funds. Now, individuals and families burdened with the costs of pre-existing conditions will, if they haven’t already done so, purchase Obamacare qualified policies as soon as HHS gets its Obamacare website to function. We can expect them to make substantially increased demands for healthcare services. Some are rich and getting an undeserved windfall being paid for by the increases in the premiums, deductibles and co-pays of Obamacare mandated policies. Some of them who had lost their job and their coverage have sympathetic arguments for assistance and we should have found ways to help them independently of the adoption of Obamacare using high risk pools that were available in some states.

Healthcare needs for people of all ages are in large part based on discretionary decisions made by a patient and his or her doctor. Elective treatments or procedures can be delayed or avoided. Some people are willing to endure physical difficulties or high thresholds of pain rather than face the risk or cost of surgery. The high deductibles and co-pays under Obamacare will encourage more people to avoid elective procedures.

Unlike Medicare and Medicaid, under Obamacare, federal and state governments are not paying for all of the benefits. The entitlementists, who designed it, believe that they have found a way for insurance companies to (i) provide healthcare benefits mandated by Obamacare, (ii) cover the enormous costs of disregarding pre-existing conditions when determining premiums and (iii) limiting insurance premium increases for the elderly, by overcharging businesses and healthy young and middle-class workers.

In addition, the US government is subsidizing premium costs for low-income people and some small businesses, and expanding free Medicaid coverage for the poor. Almost all part-time workers will receive substantial premium subsidies. As a result, millions of voters will benefit from the new entitlements moving our country closer to entitlementism. Despite the myriad of new taxes imposed by Obamacare, if not modified or repealed the Obamacare premium subsidies will add hundreds of billions each year to federal spending that will have to be paid for by tax increases (to be paid in large part by the same middle class workers who are being overcharged for their health insurance) or by increasing the National Debt. President Obama and the Democratic entitlementists apparently believe that the Obamacare subsidies will gain Democrats more votes than they lose.

Most of the low-income people who purchase highly subsidized insurance policies on the Obamacare exchanges will still be faced with substantial deductibles and co-pays. As a result they receive will have little or no value to them. They will continue to satisfy a significant portion of their families’ medical care needs at hospital emergency rooms. Existing laws provide that they must be treated even if they do not pay the amount due. In all likelihood doctors, hospitals and other providers will be unable to collect a substantial portion of the deductibles and co-pays from such people. Hospitals, facing revenue shortages, will whenever possible increase the rates they charge for patients not covered by Obamacare, Medicare or Medicaid. The insurance companies will pay and, in turn, raise their premium rates on policies not being offered on an exchange. In the event that a patient shows up at a hospital or other healthcare provider without any insurance coverage, the healthcare provider may, if permitted by law, offer to pay the patient’s Obamacare insurance premium in excess of the subsidy, in an attempt to limit is losses to the amount of such premium payments plus the uncollectible deductibles and co-pays.

Over time, an increasing number of doctors, hospitals and other healthcare providers are likely to refuse to treat Obamacare, Medicare and Medicaid patients unless they receive adequate fees from the Obamacare exchange insurers or the US Government. Unless we adequately compensate healthcare providers we can expect the quality and availability of healthcare to decline.

President Obama has made it clear that despite its faults he will veto any attempt to repeal Obamacare. He will continue to use his executive powers to grant exemptions principally for groups that favor Democrats. It is difficult to predict what other steps President Obama may take to try to prevent Obamacare from failing regardless of the cost to the middle class or the US government. Since deductibles and co-pays are already causing serious problems for both insurance policy purchasers and healthcare providers, we can expect that President Obama will propose further additional government subsidies, regardless of cost, to cover the deductibles and co-pays payable by the poor and lower-income people. If Republicans refuse to approve his proposed changes because of costs, he will brand them as unfair obstructionists.

One of the favorable features of Obamacare is that it will create significant healthcare cost savings by creating clinics and expanding nursing care, but that could have been accomplished independently of Obamacare. Hospitals should be given the choice of treating patients unable or unwilling to pay either at emergency rooms or at clinics created at or near the hospital.

Employer provided health insurance has been a major source of funding for employee healthcare and has represented a significant portion of employee compensation for years. Many businesses have been offsetting healthcare cost increases by increasing deductibles and co-pays and reducing middle-class cash compensation. Some are reacting to Obamacare by reducing full-time head count and hiring part-time employees to limit healthcare costs. Some businesses have delayed expansion plans. Other businesses are going to use Obamacare mandated requirements as an excuse to cease providing healthcare benefits to employees in order to reduce costs. Instead many of them will pay the applicable penalty and offer a taxable salary increase and advise employees how to purchase insurance on Obamacare exchanges. Many of the employees will be unable to purchase an exchange offered policy with the after-tax dollars received or will decline to purchase insurance when they realize that it is of little value because of the high premiums (even if reduced by a subsidy), deductibles and co-pays. They will pay the penalty and take the risk of living without insurance. If they later need catastrophic coverage they will acquire it during the following eligibility period. The result will be that the poor and those with pre-existing conditions will have insurance or Medicaid and millions of people who had jobs and insurance coverage will lose their job or their coverage. We are learning that Obamacare is not promoting the common good as claimed by the entitlementists. Instead it is destroying the American way of life. We can nevertheless expect that President Obama and the Democrats will ignore the detrimental affects of the dropped employer coverage and claim credit for pre-tax amount of the cash compensation increases. They will also claim that Obamacare enrollment is improving as anticipated by including individuals who lose their employer coverage and purchase insurance on the exchanges. A portion of the cost of providing health insurance for low-income workers will pass from the employer to the US Government which will subsidize the premiums for such workers’ policies purchased on the Obamacare exchanges.

Congress should take immediate steps to modify Obamacare to encourage employers to continue to provide health insurance for their employees. This might entail elimination of the employer mandate or limiting the required benefits to be offered under employer plans. President Obama may, in an attempt to help Democrat candidates in the 2014 elections, again postpone the employer mandate by fiat, even if he does not have authority to do so.

Giving free Medicaid or health insurance with greatly expanded mandated coverage to 30 million additional people and eliminating pre-existing conditions had to substantially increase the cost of healthcare insurance for everyone except for those who were going to receive underpriced or highly subsidized policies. The designers of Obamacare didn’t tell voters that their plan was to reduce healthcare costs for the sick, the poor and low-income workers by sticking a large part of the new entitlement costs on businesses, the rich, the healthy middle-class and young people. They also relied on unjustifiable expectations that fees to providers for treatments and procedures could be reduced, without harming the quality and availability of healthcare, because providers would be treating large numbers of additional patients.

They also created the fiction, that if enough healthy people were forced to over-pay for health insurance, it would pay for the enhanced benefits of a Obamacare policy and the extra costs for reducing the premium costs for those with pre-existing conditions and the elderly. They knew or should have known that they significantly underestimated the costs to be incurred by the exchange qualified insurance companies in paying for the mandated Obamacare benefits and the requirement that they provide coverage for people with pre-existing conditions and the elderly at below actuarially calculated rates and that not enough young or healthy people existed even if all of them bought the overpriced Obamacare qualified policies. Although the facts relating to the percentage of healthy young people buying Obamacare exchange policies are being concealed for political reasons and ignored by the liberal press, the truth will eventually be learned. President Obama and the Democrats also deliberately underestimated the government costs of providing the premium subsidies by underestimating the number of employees who would lose their full-time jobs or their employer coverage.

Obamacare was adopted at the depth of the Great Recession. President Obama and the Democrats ignored the risk of further damaging the economy or slowing the hoped for recovery. It’s adoption coincided with the adoption of what turned out to be a failed stimulus plan that led to an unprecedented expansion of welfare benefits and squandered funds on other liberal causes (that included excessive payments to Obama supporters) and pork spending while creating few tax-paying jobs. However, they anticipated that Obamacare would be disruptive to business and the healthcare industry and therefore postponed the effectiveness of many of the provisions of Obamacare until after the 2012 presidential elections. They wrote the law and regulations so that almost all individual insurance policies would be cancelled and the individuals would have to purchase replacement policies on the exchanges. They also knew that, despite the employer mandate and the penalties they imposed, millions of employees would ultimately lose their existing employer paid coverage because businesses would do everything possible to increase short-term profits and would attempt to avoid increases in or reduce healthcare costs. They were relying on the better health status of the individuals who were losing their employer paid coverage to improve the quality of the pool of exchange policy purchasers to help pay for the extra costs the insurance companies would have to pay to meet Obamacare requirements.

Obamacare mandates are leading to the loss of full-time jobs, the increase in part-time jobs, the loss of existing healthcare coverages and the continuance of an upward spiral of insurance costs in most states. These factors have caused a slowdown in the economic recovery that was predictable when Obamacare was passed. President Obama was fortunate that events he had nothing to do with, like actions taken by the Fed, amazing oil and gas fracking successes, the rapidly expanding use of social media and new internet devices and software and business and growth in the developing world, helped the US economy make a modest recovery from the Great Recession.

President Obama and the Democrats are changing their tune. They ignore the lies about being able to keep your insurance and claim that Obamacare requires better benefits. They now argue that requiring young and healthy people and businesses to purchase insurance policies, subject to high deductibles and co-pays, they don’t want or need, or pay a penalty, to pay to help the poor and those people with pre-existing conditions, serves the common good. They are claiming that more people will be helped that hurt by Obamacare. Even if it turns out to be true because of the enormous government subsidies, that claim does not justify the great harm it is causing. The outrageous taking of property and damage being inflicted by entitlementists on the quality and availability of healthcare, businesses, millions of individuals and the US economy, is unjustifiable. They are trying to trick young and healthy people into purchasing insurance policies on the exchanges using government paid advertising and navigators to convince them it is their patriotic duty to do so while misleading them as to the aggregate costs.

Obamacare is furthering the destruction of the middle class. An individual or family whose income slightly exceeds the maximum amount that qualifies for a Obamacare subsidy will find that the portion of their income remaining after paying taxes and excessive healthcare costs may be negligibly higher (or in some case lower) than the disposable funds available to those who work part-time, collect negative income taxes and maximize their welfare benefits including healthcare subsidies. What incentive will young people have to incur college loans in a country that is more interested in expanding entitlements for the poor and low-income workers than in creating full-time high-quality job opportunities?

Like all entitlements, once people are getting the benefits of Obamacare, it will be difficult or impossible to take them away. We will never know the extent of middle-class job or wage losses or the negative impact on the US GDP caused by Obamacare. President Obama and other Democrats will try to shift the blame for Obamacare failures to the Republicans. They will resurrect outrageous claims for political purposes that Republicans who have criticized Obamacare and President Obama’s lies about it are extortionists and obstructionists. It is all but forgotten that President Obama refused to negotiate with Republicans relating to their concerns about Obamacare or unfunded entitlement obligations. Ted Cruz, Mike Lee and other conservative Republicans may have made tactical mistakes by failing to anticipate that they would be fiercely attacked by President Obama and the liberal press and that the American public would blame them for the government shutdown. They were not trying to harm the US economy. They were trying to prevent the upcoming Obamacare disaster that they anticipated. Although President Obama acts like he has dictatorial powers, the US Constitution gives Congress control over government spending.

The actions and statements of President Obama and his appointees during the partial government shutdown, like causing barricades to be placed at monuments and parks, were obviously intended to inflict as much pain as possible on the American people that he could blame on the Republicans. They are indicative of the fact that President Obama wanted a much publicized short, but painful, government shutdown for his own political gain. His obvious goal was to shift the blame for his economic failures to the Republicans to enable entitlementists to retain a majority in the Senate and gain control of the House in the 2014 elections. Although it was ignored by the liberal press, President Obama and his cabinet appointees, seeking to maximize the criticism against Tea Party conservatives, shamefully played politics by exaggerating the risk of default and failing to assure financial markets around the world that President Obama would use his Presidential powers to ensure that the US would not default on its debts. They knew that more than adequate monthly incoming tax receipts would be available to be used to meet the interest and principal payments on US debt as they became due. President Obama’s political gamesmanship, and not the short-term partial government shutdown, is responsible for any long-term damage to our credit in world financial markets.

Entitlements do not care if the entitlements they propose promote the common-good as long as they result in additional voters becoming dependent upon them. Obamacare is reducing the quality and availability of healthcare. Encouraging insurance companies to limit their extra costs by reducing payments to doctors, hospitals and other healthcare providers is going to backfire. Healthcare providers are going to suffer great financial harm with the result that they will refuse to participate in Obamacare exchange insurance provider networks. Doctors are leaving private practice in large part because of reduced Medicare, Medicaid and Obamacare fees, excessive record keeping requirements, difficulties in getting paid and excessive malpractice insurance costs. Low-income people with newly issued insurance policies can be expected to greatly increase the number of malpractice claims that will speed the doctor exodus.

Some doctors will perform services only for individuals and families willing to pay them directly. Concierge healthcare plans with limited benefit are being offered by groups of doctors, outside of Medicare, Medicaid and Obamacare. They will become more popular as the quality and availability of healthcare provided under government programs further declines.

The initial failure of the federal government’s Obamacare website is a “red-herring”. It is merely a sign of the HHS’ incompetence in running a business. They will eventually get it to work. The website failure is merely delaying the distress which is going to be suffered by millions of Americans when they discover they are facing job and insurance coverage losses, large premium cost increases and large deductibles and co-pays. We can expect that the government will investigate and fail to disclose how the contractor to build the website was selected, how the website requirements were determined and who failed in monitoring the installation.

Look for President Obama to use the website failure as an excuse to postpone the penalties for failing to comply with the individual mandate so that people will not have to pay or leave themselves subject to the penalty if they decide not to purchase insurance. He will claim that registration is growing each month and that it will take a few years to get the kinks out and reach satisfactory enrollment levels. We know that if they do not get a large percentage of healthy people to pay for coverage (and even 100% may be insufficient), the insurance companies will lose money and will raise the premiums as soon as they can unless they are subsidized by the government. Obamacare anticipated the problem and provides for declining subsidies for the insurance companies over the next few years. We can anticipate that if premiums go up or the quality and availability of healthcare decline the entitlementists will then blame the insurance companies for operating inefficiently and demand single payer healthcare.

Make no mistake, the principal purposes of Obamacare is to give a new welfare entitlement to the poor and low-income individuals and to give the government control of healthcare. It promotes entitlementism and enlarges the Democrat base, by offering a new complex welfare entitlement benefit to a very large group of low-income people. It furthers the plan of liberal Democrats to take from those who have and give to those who have not. It also enables Democrats to demonize Republicans who want to control the costs of entitlements and preserve American capitalism. Entitlementists will seek to make Obamacare a pillar of entitlementism.

Even if Republicans gain control of both the Senate and the House in the 2014 elections it will be extremely difficult to reverse the damage already caused by Obamacare. However, it will give them the opportunity to seek changes in Obamacare, to limit future damage and reduce unfunded entitlement obligations.

They are talking about the unfair increase in insurance premiums, deductibles and co-pays to finance the costs of eliminating pre-existing conditions from consideration and reinstating high risk pools to help alleviate the healthcare costs for those with pre-existing conditions. They also propose the sale of health insurance beyond state lines to create competition among providers.

OBAMACARE IS A WELFARE PROGRAM THAT IS REDUCING THE QUALITY AND AVAILABILIITY OF HEALTHCARE AND HARMING BUSINESS AND THE MIDDLE-CLASS

Obamacare is a multi-trillion dollar welfare program that makes health insurance available to 30 million previously uninsured Americans. It requires insurance companies to disregard pre-existing conditions. The inevitable affect is to raise the rates of required Obamacare policies. Most importantly, it makes Medicaid available for free to the poor and offers large premium subsidies to lower income individuals. It also offers other benefits to selected individuals, such as, allowing students to stay on their parents healthcare plan until age 26 and elimination of the doughnut hole in Medicare drug plans.

Why do Americans not like Obamacare if it helps so many people? Americans are discovering what the draftsmen of Obamacare knew, or should have known, that businesses, middle-class and healthy individuals are going to have to pay, directly or indirectly, for a substantial portion of the increased costs mandated by Obamacare. They will not be paying for improved insurance coverage for themselves, but to provide free coverage for the poor and reduced or subsidized premium costs for people with pre-existing conditions and low income individuals. Obamacare is designed to advance liberal Democrats acknowledged goal of improving the lot of the poor by taking money from the rich individuals and businesses who they think have more income than they need. To make matters worse it is destroying the availability and quality of healthcare and is giving too much responsibility to bureaucrats at the IRS.

Liberal Democrats do not seem to care that it will cost hundreds of billions of dollars a year to make such insurance benefits available. They fraudulently claimed, that when Obamacare was adopted and became effective it would enable everyone with insurance to keep their policy and receive the same benefits from the same doctors and healthcare providers, at reduced costs. We are only beginning to recognize how fraudulent those claims were. The draftsmen hid the true cost of purchasing healthcare under Obamacare by including large deductibles and co-pays that significantly raise aggregate healthcare costs. The availability and quality of care are declining. Doctors are leaving the profession and hospitals are reducing staffs. Medicare benefits are being reduced. President Obama repeated the false claims about Obamacare during the re-election campaign and now unashamedly claims that voters supported his views on Obamacare. The Obamacare discussion during the 2012 campaign focused on women’s rights issues, not the disastrous financial consequences of Obamacare.

Democrats, who rammed through the passage of Obamacare withhout a single Republican vote, knew that because our country was in the midst of the Great Recession, the federal and state governments couldn’t afford to pay for a new gigantic welfare program. They therefore devised an extremely complicated plan relying on a hodge-podge of new taxes and rules and regulations applicable to Medicare, Medicaid and health insurance to provide for funding the costs of Obamacare and to limit benefits and payments to providers. They gave it the misleading name of “The Affordable Care Act”. They didn’t care, or negligently failed to realize, the secondary affects of the new taxes including the negative impact they would have on young people looking for jobs and the middle-class who are losing good full-time, tax-paying jobs and existing insurance coverage.

Businesses seek to maximize profits. They have for years been seeking ways to limit increases in employee healthcare expenses. Outrageous Obamacare requirements encourage businesses to rethink their providing of healthcare benefits for employees. They are modifying business plans in ways to minimize or eliminate their health insurance costs. Some employers will save money by requiring their employees to purchase their own insurance from the state exchanges. Some will pay penalties to avoid paying for expensive Obamacare policies. Aggregate payrolls are being controlled by not hiring or laying off full-time employees and hiring additional part-time employees. Retired employees and spouses are losing healthcare coverage.

Obamacare is based on tens of thousands of pages of laws and regulations which are extremely difficult to understand and interpret. It requires the filling out of forms that make the practice of medicine and the delivery of healthcare more stressful and less profitable. Liberal Democrats who proposed Obamacare deliberately ignored pleas of doctors about the outrageous cost of purchasing malpractice insurance because of out of control claims and excessive jury awards. Why would we expect them to do otherwise? Tort lawyers are major contributors to Democrats. Obamacare was promoted to gain votes for Democrats. It is turning into a train wreck which may cost them votes.

The draftsmen of Obamacare tried to hide the cost of giving the new benefits by adopting a variety of new taxes on the middle-class and the rich and requiring businesses and individuals to purchase insurance. They knew that taxes on medical products and drugs, not only drive business off-shore and reduce research and development efforts to produce new products, but also, are inevitably passed on to the consumer. They knew that, if they told the truth about Obamacare, young people, middle-class workers and their employers would object to paying larger insurance premiums or penalties to pay for the new welfare benefit for the poor and those with pre-existing conditions. That is the reason they adopted penalties for businesses and individuals if they failed to buy insurance. They did not anticipate many of the adverse consequences that have surfaced as businesses and individuals have learned about the requirements of Obamacare. Now they are trying to get people to purchase Obamacare policies by claiming it is the patriotic thing to do to help your fellow Americans. Why should young people, strapped with student loans or working in part-time jobs as a result of Obamacare, do so?

BEWARE OF LEVERAGED STOCK BUY-BACKS

Every few days an investment banker takes a position in a profitable and cash rich company and suggests a leveraged share buy-back. Why not? Interest rates are low and reducing the number of shares outstanding has the immediate effect of increasing earnings per share. When the stock rises the investment banker will sell the shares it controls and realize a profit. The investor does not care that the company may be harmed years later if it goes through a challenging period and finds itself unable to meet its obligations. Judiciously repurchasing shares and paying higher dividends with excess cash is part of management’s responsibility to stockholders. However, the long-term fiscal soundness of the company is of paramount importance. 

Have we forgotten that our mortgage lenders induced middle-class Americans to over-leverage their homes though refinancing and home-equity mortgages.  Such excess debt coupled with other irresponsible lending practices, created the housing and mortgage bubbles, the bursting of which caused  the Great Recession. When home prices declined millions of middle-class Americans lost their homes and their life savings. Home owners didn’t foresee the risk and were blind-sided. We should have limited excess housing debt.

The strength of corporate balance sheets and rising profits helped the US to get through the Great Recession. We should adopt a federal law limiting corporate borrowing to finance stock repurchases. Otherwise too many corporate executives anxious to please powerful outspoken investors or to raise short-term earnings to justify large compensation packages, will engage in stock buy-backs that impair the long-term soundness of their corporations.

 

DEMOCRATS WANT A SHORT GOVERNMENT SHUTDOWN

A federal government shutdown for a few days will do little damage to the US economy, but will inconvenience and scare many Americans. Democrants  want the shutdown to enhance their chances of gaining control of the House in the 2014 elections. They are goading Republicans into a fight over the funding of Obamacare to give President Obama the opportunity to claim Republicans have forced a shutdown. Polls show that any shutdown will cause great political harm to Republicans who are being wrongfully attacked by President Obama as extortionists. 

Regardless of whether it was adopted based on false promises, Obamacare is the law of the land. Like it or not, many of its provisions will become operative on October 1, with, or without, US government funding.  It is irrelevant that Obamacare is a new welfare program that is causing great damage to our economy. The poor and low-income people it is designed to help  will line up to enroll for the free or highly subsidized insurance policies, with no pre-existing conditions. President Obama has committed to spend billions of marketing dollars to convince Americans that they will love Obamacare in a few years after we make some corrections and to get young people to purchase policies.

Republicans, led by Senators Cruz and Lee, are publicizing many of the negative aspects of Obamacare. They should continue to make their case before the Senate over the next few days.  However, it is inevitable that the Senate bill will be passed without the provision to de-fund Obamacare. When it returns to the House, Republicans should permit the Democrats to prevail. The best that Republicans can accomplish is to get an agreement for the appointment of a joint Congressional committee to consider the modification or repeal of Obamacare. Any attempt to de-fund or delay the effectiveness of Obamacare merely runs time off  the clock before the potential government shutdown.  Republicans will have an opportunity to expose the terrible consequences of Obamacare, including the harm to the middle-class, in the 2014 Congressional campaigns.

Obamacare, even if further modified, will remain a horrible law and hodge-podge of regulations rammed through Congress, without a Republican vote, during the Great Recession. It changes Medicare, Medicaid and almost every aspect of healthcare. It mandates federally approved insurance to be purchased by or for everyone. The poor and low-income taxpayers get free or highly subsidized coverage. To expand the class of beneficiaries, they threw in benefits for children living at home until age 26 and eliminated the doughnut hole from the Medicare drug plan. Our federal and state governments couldn’t afford to pay for it. They, therefore, adopted all kinds of new taxes and penalties on businesses and individuals to pay for their new welfare program.  Our economy, businesses and the middle-class are suffering from the confusion and increased costs. Obamacare is slowing hiring and capital investment and Is is leading to an increase in undesirable part-time  jobs, while causing the loss of full-time, tax-paying jobs.  It is increasing insurance premiums and causing the loss of coverage for many who had insurance. It is harming doctors, hospitals and other healthcare providers and reducing the availability and quality of healthcare. It taxes the gross sales of medical equipment suppliers and drug companies. Such taxes
(unless passed on as increased healthcare costs that will add to the burden being placed on the middle-class) will confiscate the cash needed to support research and development efforts that have placed the US in the forefront of life saving and enhancing equipment and medications. Some of the manufacturers will become unprofitable or will be unable to raise capital, and go out of business. It puts the IRS in control of major healthcare decisions.  Based on recent experience this assures that healthcare subsidies and availability will become politicized and allocated unfairly.  It is so complex that years after its adoption our governments are not prepared for it to become effective.

Why does President Obama like it? It gives the government greater control of our lives and  takes from businesses and individuals who have and gives to those who have not. It adds to his base of people who benefit from handouts. It is unlikely that President Obama and his liberal cronies realized, when it was adopted, how much damage it would do to the economy and the middle-class. As the problems have surfaced, he has made changes in the law and granted waivers without Congressional approval. He talks of further adjustments in the law to work out the kinks. He may not have yet realized that  Obamacare is so conceptually flawed that it is irreparable and should be repealed so that we can go back to a free market solution. Of course that would require taking away or reducing the new welfare benefit. Why should the poor expect to get the same or better healthcare benefits for free than will be available for middle-class people who work to earn the insurance or who may lose their benefits or have to pay for them? Why should we harm business and eliminate or prevent the creation of middle-class jobs, to create another welfare benefit, while the economy remains in a weakened state?

With all the hull-a ballo over Obamacare and the  potential government shutdown, it has gone virtually un-noticed that the disastrous Sequester cuts are retained in the proposed government funding proposal. President Obama and the liberal financial press have been effective in misleading  voters into thinking that the economy is improving  because unemployment is falling and the federal deficit is shrinking. They disregard the large number of people who have left the work-force, the great increase in the number of part-time jobs (largely as the result of Obamacare),  the reduced government spending as a result of the Sequester and the increased revenues from the 2013 tax increases. As a result, and because he refuses to discuss un-funded long-term entitlement (largely Medicare) liabilities, he is in no position to be insisting on necessary increases in defense and infrastructure construction spending to stimulate the economy, provide homeland security  and create full-time, tax-paying jobs. The Obamacare mess makes it highly unlikely that our economy will grow satisfactorily during the remainder of the Obama term. 

Jump Start America Bonds Represent the Perfect Economic Stimulus

My book, “Perpetuating American Greatness After The Fiscal Cliff”, proposes changes in the federal corporate income tax laws that will encourage our international corporations to STEP UP and invest, risk free, a portion of the $2 trillion parked overseas, in state transportation infrastructure construction projects. They will do so by purchasing a new type of tax-exempt bonds offered by our states that will be called Jump Start America Bonds. The sale of such bonds to finance shovel ready state transportation infrastructure construction projects will generate the perfect economic stimulus. Hundreds of thousands of good tax-paying jobs will be created.

Corporations investing in Jump Start America Bonds will be able to repatriate to the US billions of dollars of cash, held offshore for tax reasons, at highly discounted tax rates, and without risk of loss. If they prefer they can treat the investment in Jump Start America Bonds as having been made and remaining offshore and only pay a repatriation tax on the interest received. Five years after issuance the transferable bonds may be repatriated at the discounted tax rates and used at face value plus accrued interest to pay any federal corporate income taxes.

Corporations will alternatively be able to STEP UP and promote the economic stimulus by floating their own bond issues domestically at the currently low rates and investing the proceeds in Jump Start America Bonds. Corporations will profit from the interest rate spread and will be able to use the proceeds from the Jump Start America Bonds to repay their bonds when the principal becomes due.

Wealthy individuals will also be able to STEP UP and purchase Jump Start America Bonds without risk of loss because the bonds will be usable at face value plus accrued interest to pay federal estate taxes (like previously issued “Flower Bonds”).

 A corporation providing the major portion of the funding of a bridge or tunnel might acquire naming rights during the term of the Jump Start America Bonds that finance a project.

The federal government will see a surge in tax revenues from the taxes which will be paid, even at reduced rates, from the repatriation of offshore profits, and from the income taxes payable by the contractors building the construction projects and their employees. Welfare and unemployment benefits will decline. The federal deficit and the rate of growth of the National Debt will be reduced.

The multiplier effect will create tens of thousands of additional jobs and generate billions of additional federal and state income tax revenues. The housing and auto industries will benefit from the creation of middle class jobs.

The US government’s accepting Jump Start America Bonds, if they are tendered in payment of corporate or estate taxes, will act much like QE. The Jump Start America Bonds will ultimately be converted into cash as interest payments are made and when they mature.

The tax law changes recently proposed by President Obama as part of his “grand bargain” are merely a slightly different form of tax and spend legislation he has previously proposed. He would reduce corporate tax rates, but increase net tax revenues by eliminating deductions and adding a tax to confiscate a portion of the $2 trillion held overseas by US corporations to legally avoid the unfair tax upon repatriation. The “grand bargain” is dead on arrival.

By way of contrast, changing the US corporate tax laws to enable the sale of Jump Start America Bonds will encourage our rich corporations to finance transportation infrastructure construction of the type which President Obama has suggested. We would expect that our corporations would choose to invest in projects likely to generate the revenues to fund the carrying costs of the Jump Start America Bonds. On the other hand we would expect President Obama to spend, as he previously did with DOT funds, on projects in states where Democratic candidates would benefit in the upcoming 2014 elections.

We Must Repeal Obamacare Because It Is Destroying The Middle Class

Obamacare is an extremely complex, highly flawed, law that was designed by President Obama’s appointees and Democratic liberals. They claimed that by controlling costs, taxing the rich and healthcare product suppliers, and forcing everyone to have coverage, we could afford to offer healthcare insurance to everyone, including 30 million people previously uninsured, and despite eliminating consideration of pre-existing conditions, without increasing premiums. They knew that middle class Americans would object to Obamacare if they were forced to pay to subsidize the poor or those with pre-existing conditions. They concocted a scenario designed to mislead the public into thinking that everyone would be better off after the passage of Obamacare.

Obamacare was passed based on promises, all of which are proving to be untrue, that included:

* It would be revenue positive for federal and state governments;
* If you liked your insurance policy you could keep it;
* The cost of your insurance would not be increased; and
* If you were on Medicare you could keep your relationship with your own doctor and continue to receive the medical care which your doctor recommended.

Providing coverage for everyone including those with pre-existing conditions sounded like a good idea to most people. The poor liked it because they were not going to have to pay for the insurance coverage that would supplement their Medicaid and hospital emergency room benefits they were already getting without having to pay. Most working people with tax-paying jobs believed President Obama when he promised them it wasn’t going to cost them anything. Hospitals liked it because they would be paid by the insurance companies for the emergency room treatment of the poor instead of having to pass on emergency room losses to others. The most likely reason that unions supported Obamacare is they didn’t understand the consequences and support almost everything the Democrats and President Obama propose. They have recently awakened and voiced objections to Obamacare.

How could they have expected Obamacare to be revenue positive without increasing everyone’s insurance policy cost, if they were generously going to provide healthcare insurance coverage to 30 million additional people and ignore pre-existing conditions? The true insurance cost of providing healthcare to individuals under age 65 with pre-existing conditions varies in each case, but can be 50 or 100 times more expensive than providing coverage for people without pre-existing conditions.

Democrats and President Obama claimed it would be cost positive by (i) adopting new sales taxes to be paid by medical equipment manufacturers and drug companies (ii) adding a new tax (which unfairly taxed families) of up to 3.8% of income on taxpayers President Obama called rich, but who were really middle class and above in most large cities, (iii) requiring businesses with 50 or more full-time employees (those working more than 30 hours per week) to provide qualifying insurance, (iv) requiring everyone, who does not otherwise have insurance, to purchase insurance, including young people, who will be required to pay an excessive price for their age, or pay a penalty, and (v) reducing Medicare benefits by $700 billion (which Democrats defended by claiming it was a Republican idea).

Moreover, in an outrageously fraudulent attempt to make Obamacare appear to be cost-effective, they included a provision offering long-term care insurance that they claimed would be highly profitable in the first ten years. In doing so they were ignoring a standard insurance business requirement that they establish reserves from the premiums collected for the very large claims expected in later years as some of the insured became incapacitated. After the fraudulent claim of the long-term care profitability was exposed, the long-term care provisions were repealed, before any policies were sold, but after Obamacare was passed. The ten-year cost of Obamacare has since been recalculated numerous times by the Congressional Budget Office and has gone from a profit to a loss that will exceed $2 trillion.

Even that amount may prove to be much too low. Taxpayers have begun to realize they were being misled and they or their employer will have to pay much more for their insurance coverage in most states to subsidize the poor and those with pre-existing conditions.

One group after another has been requesting relief from the onerous provisions of Obamacare. As was predictable, requiring employers with 50 or more full-time employees to provide insurance coverage is causing disastrous consequences. Some employers will be forced to close their doors. Other employers are laying off full-time employees and hiring part-time employees to avoid Obamacare. The middle class which has been decimated by the Great Recession are losing good tax-paying jobs with healthcare benefits as employers seek to avoid the cost of providing the healthcare coverage required by Obamacare. President Obama recently, without fanfare, on a Friday afternoon, postponed the effective date of the employer mandate until 2015 so as not to effect his attempts to get control of the House of Representatives at the mid-term elections. It is questionable as to whether he had the legal right to change a law passed by Congress. If successful in getting control of the House, he will probably repeal the employer mandate and leave Obamacare with a large revenue shortfall.

Although the business insurance mandate has been postponed for a year until January 2015, businessmen will continue to plan ahead. Millions of individuals forced to accept 30 hours per week jobs will become eligible for welfare benefits.

Obamacare has stirred the pot. Businesses faced with rising insurance costs have studied the law and will weigh their options. Some, particularly those whose employees will qualify for substantial premium subsidies if they purchase their own insurance, will prefer to offer their employees a raise and pay a $2000 per employee penalty. Other businesses, that currently provide healthcare coverage, will be able to eliminate healthcare benefits for part-time employees since most of them will qualify for 100% or substantial subsidies if they purchase their own insurance.

Unless the employer mandate is modified or repealed many businesses will keep their head-count of full-time employees below 50 to avoid the purchase of insurance or paying the penalty. Such actions, coupled with young people electing to pay the small penalty rather than overpay for insurance they don’t need, is going to cause revenues to be received by insurance companies to cover low risk beneficiaries to be much less than anticipated. The penalties are payable to the US Treasury and not the insurance companies. They will be left with a higher risk group that purchases insurance and will have to raise their rates.

Although attempts are being made (including the planned spending of hundreds of millions of dollars) to trick healthy young people to overpay for insurance, it does not make economic sense for them to do so. To reduce the cost of purchasing insurance there are little known co-pays and deductibles if you buy insurance. For example. CA’s insurance exchange silver-level coverage requires a $45 co-payment for each office visit, $250 co-payment for each emergency room visit, and has a $2000 annual deductible. The cheapest plan has a $5000 deductible. Those who receive highly or fully subsidized policies will go to the emergency rooms, as in the past, and claim they are unable to pay the co-pay or deductible.

Many young people, who have jobs, will pay the small penalty (which will increase over a three-year period, but probably not enough to change one’s decision) and get by without coverage. The can buy the insurance when they need it without fear of a pre-existing condition. Many of these young people are saddled with college loans and unable to get good jobs. President Obama is travelling the country trying to convince them that if Obamacare succeeds they will be better off in the long run. His problem is that he is promoting a law which contains unfair and unsound financial provisions. He will try to convince young people that they will be violating the law if they fail to purchase insurance, but the pre-determined penalty makes it look more like an option.

Even the formulas for determining the portion of one’s premium that will be subsidized are carelessly drafted and highly flawed. Like all Obama tax proposals, the subsidies are calculated in a manner which is extremely unfair to families and the middle class. A married couple may pay thousands of dollars more for insurance than if they were unmarried and living together. Obamacare provides reduced subsidies as individual or family income rises. As expected, the poor get a free ride. The subsidies phase out at family income levels around $90,000. The middle class must bear the brunt of the increased premiums of Obamacare insurance so that the poor and those with pre-existing conditions can be subsidized. One commentator points out that, in calculating the subsidy under one exchange’s formula, there is even a point in the subsidy formula, where, if your family income goes up by $1000, your annual insurance cost goes up by more than $8000. You have to refuse a raise or a bonus or your net take home pay will decline.

We cannot be certain of the extent that Obamacare has contributed to President Obama’s failed fiscal policies which have encouraged the Fed to extend QE. Obamacare by inducing the reduced hiring of full-time employees and the hiring of more part-time employees is creating an illusion of job creation. Despite the increase in part-time jobs and reduced participation rate during recent quarters, the top line rate of unemployment has remained around 7.5%. U6, a better measure of unemployment, paints a much worse picture, showing a 14% level of unemployment. We have more than 2 million less full-time jobs than in 2008. Not enough middle class jobs are being created. Nevertheless, we hear repeatedly from the financial press and Obama supporters of the jobs created by the Obama stimulus programs (which created few good jobs, if any) and the reduced rate of unemployment. They cheer the reduced top-line unemployment number each month. There is nothing to cheer about. Full-time employment has stagnated. The middle class is suffering.

Before Obamacare, most large businesses provided health insurance coverage for their employees. If the cost of insurance coverage increases as a result of the requirement that pre-existing conditions be ignored, or if the economy stagnates and profits decline, expect some businesses to begin to eliminate health insurance coverage and to pay the Obamacare penalty. Employees might be given a raise to cover their individual purchase of insurance, but the after tax benefit of such raise may cover only a fraction of the cost of purchasing an individual or family policy. Of course since pre-existing conditions will not pose a risk, the employees may elect to go without coverage and pay the individual penalty. As a result the poor, who had no coverage before Obamacare will have coverage, and many working people, who had coverage, will wind up paying a penalty and having no coverage.

Some of them will purchase annual healthcare plans, with limited coverage, being put forth by groups of physicians. This will give them access to a family doctor who can advise them and treat most of their problems. If a family member develops a serious illness, that is not covered by the plan, they can then purchase a policy which qualifies under Obamacare.

The excess of middle class workers take home pay over that of welfare recipients who work part-time and collect negative income taxes was being reduced prior to the adoption of Obamacare. Since President Obama was elected there has been an unprecedented increase in the number of Americans receiving food stamps and other types of welfare payments. This has resulted in large part from the effects of the Great Recession that resulted in the loss of millions of good tax-paying jobs and from politically motivated federal government efforts to encourage people to seek benefits. There are a growing number of individuals who have decided that receiving a broad range of welfare benefits supplemented by the income from a part-time or low-paying job that is increased by the negative income tax, will give them a better quality of life than if they found and accepted a tax-paying job and lost their eligibility for welfare benefits. Almost 73% of black children are born out-of-wedlock. In many cases the father sneaks in and out of the home so that they can collect maximum welfare benefits.

There has also been a large increase in the number of people on disability many of whom would work if they could find a good job.

Obamacare is going to greatly reduce the incentive for young people to stay in school or to seek full-time tax-paying jobs. It is going to encourage settling for part-time employment and seeking ways to maximize welfare benefits. Teenagers will be further encouraged to have out-of-wedlock babies, and the inner city education and crime problems will be exacerbated. Young people of all races, growing up in inner city areas across the country, will, with the exception of the scholarship student, athlete or performer, have little incentive for self improvement or to seek a good tax-paying job with an opportunity for advancement. They will choose to settle for lives in a ghetto with minimum comforts and little self-esteem. They will vote for candidates who promise to give them greater welfare benefits. Obamacare is accelerating the conversion of American capitalism into a terrible form of socialism.

We should question whether this is the type of America we want or whether American capitalism will be sustainable.

Liberals refuse to acknowledge that Obamacare is fatally flawed and currently unaffordable because of the current weakness in our economy. They argue that the problems that Obamacare is facing are caused by Republicans who want Obamacare to fail. They argue that conservatives predicted doom and gloom for Medicare when it was adopted and now almost everyone likes it. They ignore Medicare’s unfunded liabilities. They argue that when Obamacare is fully in force it will accomplish its objectives.

However, Obamacare is not funded like Medicare is. Medicare is funded by a payroll tax paid by all working people prior to retirement and an annual supplemental payment for the coverage after reaching age 65. Unless you become disabled, you must work and pay taxes for years before you get benefits. Obamacare is funded by a variety of new taxes (a portion of which will be passed on to consumers) and the mandatory purchase of insurance coverage by corporations and individuals. Obamacare is in large part a welfare benefit for the sick and the poor to be paid for, in large part, by middle class working people.

There is talk about means testing Medicare. This means that those considered rich, who pay the most in Medicare withholding taxes and the new Obamacare tax based on income, will lose some or all of their benefits. Their payments will effectively become additional income tax payments.

We are the world’s richest nation and have the best healthcare system. We can afford to and should provide a reasonable level of healthcare to all of our citizens, regardless of their ability to pay. Every child needs pre-natal care, required preventive shots and antibiotics from time-to-time. We can afford to treat those who acquire leukemia and can cure or ameliorate most children’s cancers and many other inherited or acquired diseases. Prior to Obamacare we were doing all these things under existing insurance coverages and without cost to those who did not have insurance and couldn’t afford to pay. We needed to control costs (particularly, those at health insurance companies) and were working on it. A significant portion of family care can be provided more cost effectively at a clinic by a technician or nurse.

We cannot afford to give each person every high cost heart, liver, kidney, bone, retina, hip, knee or shoulder transplant or replacement they want, without a charge, whether or not they have insurance. We must have life-time limits, co-pays or deductibles for these expensive procedures.

Since most of these procedures are needed by people after reaching age 65, they were creating Medicare cost problems as our population aged and new expensive procedures became available before Obamacare was introduced. We needed to bring aggregate Medicare costs under control. Obamacare’s expanded healthcare benefits, that are provided for free for the poor under Medicaid, are exacerbating the problem of affordability.

Even though one has contributed to the cost of obtaining Medicare benefits in the form of withholding taxes for years and pays to purchase Medicare coverage, the benefits to be received by Medicaid beneficiaries, who will pay nothing, may be the same. This makes no economic sense. Either the Medicare benefits, or the payments to healthcare providers will be reduced or someone is going to have to pay for our generosity.

The onerous reporting provisions and limited fees payable by Medicare and Medicaid under Obamacare, when added to excessive malpractice costs, are driving doctors out of private practice and reducing the availability and quality of care.

The IRS, which is under investigation for unfairly targeting conservative groups for political purposes, is going to decide what healthcare benefits and premium subsidies you will be eligible for under Obamacare. They will be acting as death panels when determining who is eligible for and in what order a patient receives a transplant or treatment. Because President Obama has politicized the IRS, people paying for insurance may find that they receive lesser benefits than others whose vote is being sought or rewarded. We have heard it before. To the victor will belong the spoils.

Health insurance companies are required by Obamacare to offer benefits through qualifying policies. In an attempt to keep premium costs down our governments may use their insurance exchanges being established under Obamacare to undercut price. If insurance companies are driven out of business by Obamacare, we may end up with a one party payor system run by our inefficient federal and state governments that can be expected to further squeeze healthcare providers and reduce or delay service to limit the cost of providing coverage.

 

 

The IRS Scandals Are Expanding Daily And Harming The Economy

The criminal targeting of conservative organizations and their members and contributors by the IRS is an outrageous abuse of power for political gain. The crimes have been compounded by permitting the practices to continue for years after they were exposed. The Obama Administration, although acknowledging that a wrong has been committed, has permitted a cover-up of the wrongdoings and made no attempt to punish the wrongdoers. New scandals relating to IRS spending irregularities are being exposed on a weekly basis. They are causing a rapid decline in President Obama’s approval rating.

The actions of the IRS have raised serious concerns as to whether its role in the administration of Obamacare will also be politicized and result in wasteful spending.

 Part-time and low-income jobs have enabled Obama supporters to claim that unemployment is declining, but the long-term unemployed and college graduates are not finding an adequate number of good tax-paying job opportunities. The healthcare turmoil and uncertainty being caused by pending Obamacare requirements has discouraged both the offering of good tax-paying jobs and the making of capital investments by large and small businesses. The IRS scandals, together with the Benghazi, journalism and NSA scandals, are proving to be a distraction preventing the stimulus spending necessary to generate infrastructure construction projects needed to create middle class, tax-paying jobs.