Obama funding plan for health insurance losses is a bailout

May 22, 2014 5:42:44 GMT pjohns1873 said:

From the Los Angeles Times:

The Obama administration  has quietly adjusted key provisions of its signature healthcare law to potentially make billions of additional taxpayer dollars available to the insurance industry if companies providing coverage through the Affordable Care Act lose money.

The move was buried in hundreds of pages of new regulations issued late last week. It comes as part of an intensive administration effort to hold down premium increases for next year, a top priority for the White House as the rates will be announced ahead of this fall's congressional elections.

Administration officials for months have denied charges by opponents that they plan a "bailout" for insurance companies providing coverage under the healthcare law.

Theyccontinue to argue that most insurers shouldn't need to substantially increase premiums because safeguards in the healthcare law will protect them over the next several years.

But the change in regulations essentially provides insurers with another backup: If they keep rate increases modest over the next couple of years but lose money, the administration will tap federal funds as needed to cover shortfalls.

Note especially the last paragraph of the quoted material, above: "If [healthcare-insurance carriers] keep rate increases modest over the next couple of years but lose money, the administration will tap federal funds as needed to cover shortfalls." 

I think that is in keeping with the usual working definition of a bailout...

While a link was not provided and I haven't read more on this just based upon what is cited I would agree this is a "Bailout" but would note that the problem should and could be addressed without a "bailout" of the insurance companies.

The "subsidies" for individuals under the mandate was/is based upon their "ability to pay" and not per se on the cost of the insuranace. If a person can only "afford to pay" $100 a month for health insurance then the "subsidy" should cover the rest of the cost of the insurance. If the actual cost of the insurance is $400/mo then the subsidy should be $300/mo for that person. If the cost of the insurance increases to $440/mo then logically the "subsidy" needs to be increased to $340/mo because the person's ability to pay more has not increased (unless their income increases which changes the formula).

A simple solution then. If the insurance companies have to raise their rates then increase the subsidies for those being insured. That is not a "bailout" of the insurance companies.

I would once again note that this problem would not exist under my proposal for "employer mandate" as this exclusively relates to the "individual mandate" that I'd eliminate.   

May 23, 2014 0:52:43 GMT pjohns1873 said:

I apologize. I thought I had provided the link; but evidently I did not.

Here it is:  www.latimes.com/nation/la-na-insurance-bailout-20140521-story.html#page=1

Simply increasing the amount of subsidies is just another way of saying increasing our participation in government by income transfers; a.k.a. redistributionist government.  And I simply do not think that is what the Founders envisioned (though FDR and LBJ may have had a different vision)... 

No problem with the link as we both reached the same conclusion that what is being proposed is an insurance company bailout. I merely noted that this could be avoided by the subsidies but as you correctly note this is "wealth redistribution" that is inherent in the Individual Mandate.

That's why I propose an "Employer Mandate" based upon the labor of the employee because it is not wealth redistribution.  

May 24, 2014 0:39:27 GMT pjohns1873 said:

May 23, 2014 3:43:43 GMT ShivaTD said:

No problem with the link as we both reached the same conclusion that what is being proposed is an insurance company bailout. I merely noted that this could be avoided by the subsidies but as you correctly note this is "wealth redistribution" that is inherent in the Individual Mandate.

That's why I propose an "Employer Mandate" based upon the labor of the employee because it is not wealth redistribution.  

I agree very much with your intentions here (i.e. to avoid the Big Government policy of redistributionism). 

I am just not so as inclined as you are to attempt to obviate this possibility through statist controls.   

Again, it may be one area in which we simply need to agree to disagree. 

I can truly appreciate advocacy for different proposals to resolve a problem but I'm not one to ignore a problem and a problem does exist.

It was interesting that on Bill Maher this week conservative David Frum, in a discussion on the VA hospitals, implied that perhap we should adopt a single-payer system. I don't know if that's explicitly what he intended to say but he certainly implied it.

The VA hospitals are about as close to "pure socialism" as we can get in America as it is solely owned and operated by the US government. While it does have it's problems predominately due to underfunding it still provides exceptional medical selvrvices for veterans where those problems don't exist (i.e. not all of the VA clinics are over-burdened and under-staffed).

As we know the only two proposals that have been presented in Congress were the Single-Payer House proposal and the PPACA (Obamacare) Senate proposal and "Obamacare" won out. Both of them involved BIG GOVERNMENT and BIG TAXES which is why I oppose them.

To me these proposals amount to a government take-over of an industry because of a failure of capitalism in an industrialized society. I'm firmly a supporter of laissez faire (free market) capitalism but many seem to forget that the principles of "free market" capitalism were based upon a agrarian/hunter-gatherer society where the people could live off the land and were not forced to engage in commerce. 

John Locke addressed this matter but remember that in the 17th Century a large percentage of the people were literally living off of the land and there were "new lands" where they could immigrate to and live off the land if they chose to do so. That world diminishes with the industrial revolution and today most people are forced to live based upon commerce as opposed to nature. This is not an argument against capitalism but instead notes that when "commerce" becomes mandatory it introduces problems and sometimes those problems are significant enough to require government intervention. The question then becomes how much interventionism is necessary.

I prefer regulation as opposed to a government take-over and both Obamacare and a Single-Payer system are based upon "statist" government take-over interventionism. Regulation is not "statist" in nature as the government is not the "solution" to the problem but instead the "regulation" requires the enterprise in capitalism to address the problem. Prohibitions and mandates imposed by regulation of enterprise isn't statism because the "government" isn't the entity that actually resolves the problem. The private sector resolves the problem through compliance with the regulation.

For example requiring an enterprise to properly dispose of toxic waste (a regulatory mandate) is not "statism" because the private enterprise is the one responsible for the proper disposal of the toxic waste. If the government assumes responsibility for the disposal of toxic waste then that is a "statist" solution.

My proposal for an "Employer Mandate" is based upon addressing a problem in capitalism created by the fact that we live in a society where the person is forced to engage in commerce. I address it by "regulation" as opposed to a government take-over because I see that as the least intrusive means of addressing the problem.   

May 24, 2014 16:57:30 GMT pjohns1873 said:

The fundamental problem with your reasoning, it seems to me, is this: In the "agrarian/hunter-gatherer society" of the 17th century--just as in 21st-century America--people sometimes became ill or injured; therefore, in need of medical care (at least, such as it then existed). Yet healthcare insurance was not either sponsored or mandated by the federal government. 

Regulations concerning the proper disposal of toxic waste may indeed be classified as statist, it seems to me.  However, I would gladly accept this degree of statism, as the alternative--allowing the despoiling of our land and/or water supply--is entirely unacceptable (to me, at least). 

In the 17th Century the odds were probably about equal that the doctor would kill the patient as opposed to helping them and for the vast majority of people the general rule was, "Don't get sick and if you do get sick then die quickly" because that was about all there was for them. Even minor cuts and illness could easily lead to death. With the medical advances predominately in the 20th Century that can save lives through early detection and treatment I don't believe that "Don't get sick and if you do get sick die quickly" remains either a logical or moral option anymore.

We both agree that in certain cases where a serious problem exists, such as irresponsible enterprises polluting our land and water with toxic waste, the government needs to step in to stop  or mitigate it. Call it "statist" but remember it was irresponsible "Capitalism" that created the need for government interventionism. If no enterprises polluted our land or water with toxic waste then there would have been not been a need for government interventionism. It was irresponsible enterprise that drove the necessity for government interventionism.

To me there is little difference between toxic waste that causes illness that leads to death and not providing healthcare that leads to illness and death or between the government ending up being responsible for the costs of cleaning up toxic waste created by enterprise and the government ending up being responsible for the health care costs of working employees where the enterprise fails to provide for it. Both are expenditures being driven by enterprises that fail to pay the costs necessary to ensure that people don't get sick or if they do get sick they're treated so that they don't die.  The dead person is just as dead from toxic waste as they are because their employer didn't ensure  enough compensation in wages/benefits that would provide for their fundamental health care needs.

A responsible enterprise can afford the costs related to proper disposal of toxic waste and it can also afford the costs of providing health insurance for it's employees and still earn a profit. Neither of us would argue to allow a company to dump toxic chemicals in a river to avoid the costs for the enterprise so how can we argue against the costs of health insurance for the employees for the same enterprise? Failure to do either results in sickness and death and both impose a huge obligation on the taxpayers if enterprise refuses to fund the costs.

May 25, 2014 19:05:42 GMT pjohns1873 said:

If a company dumps toxic waste in the local river, simply because it would be more expensive to dispose of it properly, it is actively doing that which is socially unacceptable.

If it declines to furnish healthcare insurance, on the other hand, its position is purely passive.  And that is a very different matter, it seems to me. 

Moreover, if it is forced to provide healthcare insurance, its wages will (presumably) be lower, accordingly--as will the wages of its competitors--as each company has a pool of money from which to draw for compensation; and it will not likely attempt to expand that pool, just in order to comply with some government mandate. 

The "employer" determines the compensation package (i.e. wages/benefits) for the employees and that is an "action" by the employer. If their action in determining the compensation package imposes a cost on the taxpayer then it is not "passive" but instead an "activity" by the employer that causes taxation of the People.

I've had so-called "libertarians" argue that it's acceptable to deny employment based upon skin color (i.e. racism) because it is "passive" (i.e. not employing someone isn't an "action") but it isn't passive. They are taking an "action" by refusing to hire someone based upon skin color.

I don't understand your last argument. First you state that the enterprise has a "pool of money" to pay for compensation (wages/benefits) and then argue that the enterprise is unlikely to attempt to expand that "pool of money" to provide compensation (wage/benefits) that would include health care insurance if mandated.

I would argue just the opposite. If there is an additional cost imposed by government mandate (e.g. having to properly dispose of toxic waste or providing health insurance) that the enterprise will virtually always attempt to expand the "money pool" to pay for the costs of the mandate.

Yes, that could result in slightly higher prices but because it's imposed uniformly upon all enterprise it doesn't effect competition.

Personally I'd rather pay slightly more for goods or services than to pay even more in taxation to fund a larger government.

May 26, 2014 23:47:33 GMT pjohns1873 said:

It may also result in the employer's cutting wages commensurately, in order to pay for this healthcare insurance. (Remember, if this employer's competitors are doing the same thing, he--or she--will not be at any competitive disadvantage by doing so.)

That is a possibility although I don't believe that employers will "cut wages" but instead might lower the wages for new hires instead. Usually an employer will not cut the wages of an existing worker. Basically all you're stating is that the "compensation" would remain the same but the ratio of "wages v benefits" could change and yes that is a possibility but there is somethng more important.

I wouldn't have to pay taxes to subsidize the health insurace/health care costs of the employees of that enterprise and that would dramatically reduce government spending while also reducing the size of government.  

The problem is addressed and is a "small government market based solution" and not a "statist BIG government solution" to the problem.

May 27, 2014 20:29:47 GMT pjohns1873 said:

I may have stated the matter rather clumsily.

Yes, I agree that it is probably unlikely that very many employers (if any) would reduce the existing wages for their current workers; but that new hires would be adversely affected.

In addition, future wage increases would probably be diminished; and not for just one year, either, but for every succeeding year, as healthcare-insurance costs continue to increase. And this is no small matter, it seems to me.

I would offer the rebuttal that my taxes going up is far more important than the enterprise not simply passing on any additional costs, which aren't very much based upon gross sales receipts of the enterprise. If the business wants to screw it's employees that's it's business. I don't agree with them doing that but it's not my business.

If, on the other hand, they force me to pay for their employees health insurance with my taxes because they're too cheap or greedy to pay for it then that is my business.