Obamacare and the Big Lie

Today, in its seemingly unending effort to promulgate The Big Lie (i.e. that, “federal taxes fund federal spending”), the Chicago Tribune published an editorial titled, “Why Obamacare Failed.”

Here are some excerpts:

Come November, Illinois consumers likely face staggering price hikes for individual insurance policies.

Some types of plans could cost an average of 43 percent to 55 percent more. Ditto across the country:

Many Illinois consumers will find fewer choices because major carriers fled this market.

The Affordable Care Act has been criticized (because) its success depended on states supporting their marketplaces and enrolling healthy consumers.

Yes, the ACA depended on monetarily non-sovereign states and monetarily non-sovereign people paying for the health insurance that the Monetarily Sovereign federal government easily could have, and should have, paid for. (See: Medicare for All.)

Those insurers fled because they didn’t want to lose more money on a market they think likely will never be profitable for them.

So let’s look at the failings and how they can drive solutions:

Obamacare failed because it flunked Economics 101 and Human Nature 101. It straitjacketed insurers into providing overly expensive, soup-to-nuts policies.

It wasn’t flexible enough so that people could buy as much coverage as they wanted and could afford — not what the government dictated. Many healthy people primarily want catastrophic coverage.

Obamacare couldn’t lure them in, couldn’t persuade them to buy on the chance they’d get sick.

Obamacare failed because it charged the public for benefits the government should fund.

The Tribune’s “logic” could apply to all government spending. (i.e. Allow each individual to pay only for as much federal highway as he wants, as much grade school as he wants, as much fire protection as he wants, as much military as he wants, as much food inspection as he wants, as much air safety as he wants, etc.)

And how does anyone know in advance how much healthcare funding he will need? If someone miscalculates and suddenly needs more hospital care than he can afford, what should America do about that person?  What about a poor person who can’t even afford an annual exam?

The rich love pay-for-service plans. Being able to pay for more, they receive the best service.  This may be O.K. in Las Vegas casinos, but not for healthcare.

Obamacare failed because the penalties for going uncovered are too low when stacked against its skyrocketing premium costs.

Next year, the penalty for staying uninsured is $695 per adult, or perhaps 2.5 percent of a family’s taxable household income. That’s far less than many Americans would pay for coverage.

Financial incentive: Skip Obamacare.

True, and that is the whole point of federally funded healthcare insurance.

We shouldn’t penalize people for not being able to afford insurance. Medicare for All would solve that problem.

Obamacare failed because insurance is based on risk pools — that is, the lucky subsidize the unlucky.

The unlucky who have big health problems (and big medical bills) reap much greater benefits than those who remain healthy and out of the doctors’ office.

But Obamacare’s rules hamstring insurers.

They can’t exclude people for pre-existing conditions, and can’t charge older customers more than three times as much as the young.

Those are good goals, but they skew the market in ways Obamacare didn’t figure out how to offset.

True: That is why regular Medicare exists.

Old people get sick more often than do young people. Private insurance is based on the profit motive. If private insurance companies had their way, old people either could not find health insurance or could not afford to pay for it.

Apparently, the rich insurance executives would be happy if insurance companies could “exclude people for pre-existing conditions, and charge older customers more than three times as much as the young.”

Federally funded Medicare for All would solve that problem.

Obamacare failed because it allowed Americans to sign up after they got sick and needed help paying all those medical bills.

Insurance should be structured so that, although you don’t know if you’ll need it, you pay for it anyway, just in case; your alternative is financial doom.

But if you can game the system and, for example, buy auto coverage after you crash into your garage, then you have no incentive to buy insurance beforehand.

True. But Medicare for All would be funded by the federal government, thus solving that problem.

Obamacare failed because it hasn’t tamed U.S. medical costs. Health care is about supply and demand: People who get coverage use it, especially if the law mandates free preventive care.

Iron law of economics: Nothing is free; someone pays. To pretend otherwise was folly. Those forces combined to spike the costs of care, and thus insurance costs.

When the Chicago Tribune says, “People who get coverage use it, especially if the law mandates free preventive care,” they really are saying, “Only the rich should receive full health care, including preventive care. You middle- and lower-income people should settle for the lower quality of the health care you can afford.”

And as for that supposed “Iron law of economics, nothing is free.” Total hogwash.  It is the fundamental expression of what has become known as THE BIG LIE.

The federal government, unlike you, and me, and the cities, counties, and states, is Monetarily Sovereign. It creates free dollars every single day. 

No, your federal taxes do not fund federal spending. Even if FICA and all other federal taxes fell to $0, the federal government could continue spending, forever. Dollars are created by laws, and laws are free.

And no again, this would not cause inflation. Being Monetarily Sovereign, the federal government has absolute control over the value of its own sovereign currency, the dollar. It has the unlimited ability to cause, prevent, or cure inflation.

Obamacare failed because too many carriers simply can’t cover expenses, let alone turn a profit, in this rigidly controlled system. Take Blue Cross and Blue Shield of Illinois, the state’s dominant Obamacare insurer.

Last year, for every dollar the carrier collected, it spent $1.32 buying care and providing services for customers, according to BCBS President Maurice Smith. No wonder BCBS is proposing rate increases from 23 percent to 45 percent for its individual plans.

Correct: That is the fundamental weakness of private health-care insurance. It relies on the profit motive. 

Federally funded Medicare for All would solve that problem.

The solutions to Obamacare are implicit in its failures. A repaired or replaced system has to be more flexible, letting insurers offer a wider range of plans so that consumers, not lawmakers or bureaucrats, dictate what’s best for them.

“A wider range of plans” is code for: Plans that cover less and have larger deductibles, i.e poor plans for the poor, and platinum plans for the rich.

The Tribune is correct that the solutions are implicit in its failures. The failure is privately funded insurance that relies on the profit motive.

The solution is to remove the profit motive and provide federally funded insurance: Medicare for All.

That system should protect those who carry continuous coverage, not coddle those who duck in and out of plans when their health needs change.

In short, the Tribune does not want to “coddle” you people who struggle every day to make ends meet.

They don’t want to “coddle” you coupon-clippers, who buy your clothing at resale stores, and drive ten-year-old cars.

They don’t want to “coddle” you if you don’t know how you will pay for rent and food, much less for college tuition or for student debt.

The very rich people know you are a lazy, good-for-nothing “taker,” always trying to get something free, when you should pay for it like the rich people do, even when you can’t.

(We’re talking about those rich people who apparently aren’t “coddled,” even when they bribe politicians to create tax dodges, tax havens, and  tax manipulations. Allowing the rich to duck their taxes — that’s not coddling in the world of the Chicago Tribune.)

A new system also should let Americans not covered via an employer reap tax credits to help finance their insurance purchases on the open market.

Ah, the old “tax credits” scam. It’s the right-wing’s gift to the insurance companies, so they can charge as much as they wish and profits can be supported further by “tax credits.”

Never mind that tax credit savings won’t nearly cover health insurance costs. And never mind that a “tax credit” means a great deal more to those in a high tax bracket than to you.

Apparently, the Tribune owners think everyone is in a high tax bracket.

No, they really don’t. They are well aware that what they are proposing will widen the Gap between the rich and the rest.

And tell us again: Why can’t insurers sell policies across state lines? Imagine the pricing competition that would unleash.

O.K., so long as you’re asking, we’ll tell you.

Historically, insurance has been one of the most scam-based industries in the world. It’s complex and filled with fine print.  So, by necessity, is highly regulated — by the states.

But if insurance were sold across state lines, who would regulate it? Answer: The state with the flimsiest regulations.

People would shop around for the state in which the insurance companies have done the best bribery job, and that is where the lowest priced (worst) insurance scams would be found.

The Tribune seems to hate regulations.  Presumably, it wants to allow the rich insurance executives to do whatever they please. Let the consumer be damned.

Anyway, there would be no need to sell insurance across state lines if the government offered federally funded Medicare for All.

Not only would high insurance costs not be a problem, but federal payments for those high costs actually would benefit the economy.

The bottom line: The pro-rich, anti-poor want you not just to be dissatisfied with Obamacare (reasonable),  but to let your dissatisfaction turn you to an even worse system that will enrich the rich and impoverish the rest.

And it all begins with The Big Lie.

The real solution to the faults of Obamacare is found in Steps #1 and #2 of the Ten Steps to Prosperity (below).

Rodger Malcolm Mitchell
Monetary Sovereignty

Ten Steps to Prosperity:
1. ELIMINATE FICA (Ten Reasons to Eliminate FICA )
Although the article lists 10 reasons to eliminate FICA, there are two fundamental reasons:
*FICA is the most regressive tax in American history, widening the Gap by punishing the low and middle-income groups, while leaving the rich untouched, and
*The federal government, being Monetarily Sovereign, neither needs nor uses FICA to support Social Security and Medicare.
This article addresses the questions:
*Does the economy benefit when the rich afford better health care than the rest of Americans?
*Aside from improved health care, what are the other economic effects of “Medicare for everyone?”
*How much would it cost taxpayers?
*Who opposes it?”
3. PROVIDE AN ANNUAL ECONOMIC BONUS TO EVERY MAN, WOMAN AND CHILD IN AMERICA, AND/OR EVERY STATE, A PER CAPITA ECONOMIC BONUS (The JG (Jobs Guarantee) vs the GI (Guaranteed Income) vs the EB) Or institute a reverse income tax.
This article is the fifth in a series about direct financial assistance to Americans:

Why Modern Monetary Theory’s Employer of Last Resort is a bad idea. Sunday, Jan 1 2012
MMT’s Job Guarantee (JG) — “Another crazy, rightwing, Austrian nutjob?” Thursday, Jan 12 2012
Why Modern Monetary Theory’s Jobs Guarantee is like the EU’s euro: A beloved solution to the wrong problem. Tuesday, May 29 2012
“You can’t fire me. I’m on JG” Saturday, Jun 2 2012

Economic growth should include the “bottom” 99.9%, not just the .1%, the only question being, how best to accomplish that. Modern Monetary Theory (MMT) favors giving everyone a job. Monetary Sovereignty (MS) favors giving everyone money. The five articles describe the pros and cons of each approach.
4. FREE EDUCATION (INCLUDING POST-GRAD) FOR EVERYONEFive reasons why we should eliminate school loans
Monetarily non-sovereign State and local governments, despite their limited finances, support grades K-12. That level of education may have been sufficient for a largely agrarian economy, but not for our currently more technical economy that demands greater numbers of highly educated workers.
Because state and local funding is so limited, grades K-12 receive short shrift, especially those schools whose populations come from the lowest economic groups. And college is too costly for most families.
An educated populace benefits a nation, and benefiting the nation is the purpose of the federal government, which has the unlimited ability to pay for K-16 and beyond.
Even were schooling to be completely free, many young people cannot attend, because they and their families cannot afford to support non-workers. In a foundering boat, everyone needs to bail, and no one can take time off for study.
If a young person’s “job” is to learn and be productive, he/she should be paid to do that job, especially since that job is one of America’s most important.
Corporations themselves exist only as legalities. They don’t pay taxes or pay for anything else. They are dollar-tranferring machines. They transfer dollars from customers to employees, suppliers, shareholders and the government (the later having no use for those dollars).
Any tax on corporations reduces the amount going to employees, suppliers and shareholders, which diminishes the economy. Ultimately, all corporate taxes come around and reappear as deductions from your personal income.
7. INCREASE THE STANDARD INCOME TAX DEDUCTION, ANNUALLY. (Refer to this.) Federal taxes punish taxpayers and harm the economy. The federal government has no need for those punishing and harmful tax dollars. There are several ways to reduce taxes, and we should evaluate and choose the most progressive approaches.
Cutting FICA and corporate taxes would be an good early step, as both dramatically affect the 99%. Annual increases in the standard income tax deduction, and a reverse income tax also would provide benefits from the bottom up. Both would narrow the Gap.
There was a time when I argued against increasing anyone’s federal taxes. After all, the federal government has no need for tax dollars, and all taxes reduce Gross Domestic Product, thereby negatively affecting the entire economy, including the 99.9%.
But I have come to realize that narrowing the Gap requires trimming the top. It simply would not be possible to provide the 99.9% with enough benefits to narrow the Gap in any meaningful way. Bill Gates reportedly owns $70 billion. To get to that level, he must have been earning $10 billion a year. Pick any acceptable Gap (1000 to 1?), and the lowest paid American would have to receive $10 million a year. Unreasonable.
9. FEDERAL OWNERSHIP OF ALL BANKS (Click The end of private banking and How should America decide “who-gets-money”?)
Banks have created all the dollars that exist. Even dollars created at the direction of the federal government, actually come into being when banks increase the numbers in checking accounts. This gives the banks enormous financial power, and as we all know, power corrupts — especially when multiplied by a profit motive.
Although the federal government also is powerful and corrupted, it does not suffer from a profit motive, the world’s most corrupting influence.
10. INCREASE FEDERAL SPENDING ON THE MYRIAD INITIATIVES THAT BENEFIT AMERICA’S 99.9% (Federal agencies)Browse the agencies. See how many agencies benefit the lower- and middle-income/wealth/ power groups, by adding dollars to the economy and/or by actions more beneficial to the 99.9% than to the .1%.
Save this reference as your primer to current economics. Sadly, much of the material is not being taught in American schools, which is all the more reason for you to use it.

The Ten Steps will grow the economy, and narrow the income/wealth/power Gap between the rich and you.


2 thoughts on “Obamacare and the Big Lie

  1. Good post, Rodger. You really covered the waterfront on this issue.

    As to the state regulation of insurance companies, this is the regulatory system that the insurance companies fought hard for in the early part of the last century, for the very reason you touched on. They figured that they would be able to keep regulation suppressed on some of the states, even if they were subject to stiffer rules in others. They have continued to fight any and all attempts to impose regulations on the federal level.


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