Let’s start with something we can both agree on: the health care system in America is broken. Prices are skyrocketing, and are absorbing more and more of our disposable income, forcing us into lower standards of living. Both sides of the Congressional aisle have propsed their own solutions, but both sides have danced around the root of the problem like natives around a fire, dancing and hopping from foot to foot, landing precariously on their toes and skillfully balancing mere inches from the flames, careful not to get too close, lest they get burned. Well, in this debate, the politicians are the natives, the grandstanding over conflicting solutions is the dance and the truth – the root of the problem – is the fire. Congress dances for the cameras, presenting its cases for reform, but never fall into the truth – lest they get burned.
The truth is government interference in the free market is the taxi we hopped into that has driven us to this point. Of course, Congress will never acknowledge this truth because the public would realize how utterly unnecessary they are. In fact, most would probably realize that government is actually an obstacle in their life to overcome. To blame insurance and hospital company greed for pricing 30 million people (or is it 47?) out of the market is to show a sincere lack of understanding of the facts. If these companies were as ultra-greedy as the Obama administration would like you to believe, wouldn’t they love to have an extra 30 million customers to rip off? The cost to any business of raising prices is a loss of customers. Simple supply and demand - as prices go up, demand goes down. If costs continue their dizzying upward trend, eventually most of the population will be priced out of the market, leaving most insurers and hospitals (save 1 or 2) out of business. Does this sound like the long-term strategy of an ultra-greedy corporation whose sole goal is to take every dollar we earn for the rest of our lives? Clearly, the actual problem of rising costs stems from another source. Hmmm, *tapping chin* now what could that be?
AHA! Government entitlements! I attended a health care town hall the other night in my beautiful Bucks County, PA home. The event consisted of a panel of speakers, each with some different aspect of the health care topic to contribute. One panelist was an older gentleman on Medicare who shared an experience with us. A procedure he underwent cost $32,000, of which he covered roughly $400 and Medicare roughly $3000. And now, a lesson.
ABC Company makes dogs. To manufacture each dog, ABC must spend $5. To cover costs and earn a profit to be used for future business investment (aka job creation), ABC sells each dog for $7. Now, ABC’s owner is a very religious man, and one of his best customers is God. God offers to pay only $.74 (the same in proportion to the above example) per dog, and the owner can’t refuse because, hey, he’s God, and we’re not allowed to argue with God. At the end of the year, ABC’s owner has sold 100 dogs, 35 of them to God. Ordinarily, ABC’s revenue would be $700 on costs of $500 leaving ABC with a healthy $200 profit to be invested into the business for future expansion (aka job creation). Instead, ABC has earned $480.90 on costs of $500, leaving ABC with a net loss of $19.10. Continuing to sell dogs for $7 is clearly an unsustainable practice, and ABC is left with 2 options: go out of business or raise prices. ABC decides to raise prices to $8. Now ABC brings in more profit per dog, but has priced some customers out of the market and only sells 90 the next year. God pays $.85 per dog this year, but buys only 31 because even God’s budget is limited, and due to increased costs, he can only afford 31. (Sidenote: since he can only afford 31 this year, he makes sure to pick the healthiest looking ones. Can you say RATIONING?) Now, ABC earns $439.35 on $500 of costs, leaving ABC with a net loss of $60.65. What happens? Raise prices again the next year! Now they’re $9.00, maybe even $9.50, and we repeat the whole exercise over again. It’s easy to understand how viciously out of control this cycle can become. You can only imagine what happens when prices of raw materials to create the dogs goes up. Ugh.
While the Constitution allows the government to impose taxes for the general welfare of the citizens, it is patently unconstitutional and unAmerican to tax one group for the sole benefit of another. A true conservative cannot support Medicare and Medicaid programs, and anyone who does out of honest compassion is even more dangerous to our American way of life than a demagogue doing it out of self-interest. If we eliminate these 2 programs, the health care industry would lose massive segments of the population (including the largest, baby-boomers). To make up for the loss of business and to increase their competitiveness, the industry would have to lower prices. A price war would erupt, and costs would drop like a boulder through a wet paper towel.
Bring this up to your Congressman at the next town hall meeting. He’ll likely smirk and tell the crowd how we can’t end Medicare and Medicaid. In reality, HE can’t end Medicare and Medicaid, and the rest of us must suffer so his career can thrive. For him, the truth is political suicide, so he must dance around it - lest he get burned.
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