Insurance Reform, Not Health Care Reform

Here's a few bullet points on the new "health care" bill going through the senate (courtesy of the AP):

• Health insurance companies would be prohibited from denying coverage to people with health problems, or charging them more.
• For the first time, Americans would be required to carry health insurance, either through an employer, Medicare or Medicaid, or by buying it themselves. Refusal would bring fines, except in cases of financial hardship.
• Federal subsidies would start flowing to individuals and small businesses buying coverage in the exchange, helping them afford the premiums.
• Most employers would be required to offer coverage or pay a tax, under the House bill. In the Senate version, employers would get a bill if any of their workers got subsidized coverage in the exchange.
• Medicaid coverage would be expanded to pick up millions more living near the poverty line.

As you can see from these major points, this plan does nothing to address the real problem: Health care costs. Instead, its only aim is to get everyone on insurance.

Here's a few bullet points of my own:

• If you buy your own insurance right now, you can expect your premiums to keep going up because health care costs are going to continue to go up.
• If your employer pays for your health care, you can expect your wages to keep remaining flat because your employer's health insurance premiums are going to keep going up (because health care costs will keep going up).
• We will get to have this debate all over again in 10 years because this bill does not address the fundamental problem: Outrageous health care costs.
  

The only really good thing about this, in my opinion, is that everyone is required to buy insurance. This is good because, as a nation, we already provide "insurance" to everyone. Think about it this way...

If someone poor and without insurance walks into an emergency room the hospital is forced to treat them (I think this is a good thing). But because the person can't afford the care, the government and/or the hospital picks up the tab. Since the government's money is our money and the hospital recoups its costs by raising rates on those that can afford it, we as a nation are already "insuring" everyone. So I like the idea of formalizing that policy.

Bribing Public Officials

The Democratic party should be completely and utterly ashamed of itself for it's Chicago style of mob politics. In particular, resorting to bribery to win necessary votes for new health care legislation. Consider this: In the House of Representatives, Mary Landrieu of Louisiana was promised $300 million for her state in order to acquire her vote to pass the health care legislation.

Now the same shenanigans have taken place in the Senate with Harry Reid promising the same sort of payout to acquire the vote of Ben Nelson from Nebraska. While the exact bribe amount is not yet known, Democratic senator Kent Conrad was quoted as saying that Sen. Nelson's payout will be "much more" than what it cost to buy Rep. Landrieu's vote.

Think about what this means for the future of legislation in the Democratic party. It pays to hold out until you're the last vote needed and then you can extort exorbitant amounts of money from the rest of the country.

Nice job Mr. Reid and Ms. Pelosi.

Creating Jobs - Part II

Let's reiterate my central thesis to helping end poverty: The best way to bring someone out of poverty, is to provide them with a well paying job. Now on to part II of this piece...

You'll recall in my last post I mentioned that the best way to help developing nations is to follow the Marshal plan of post WWII Europe: Creating small aid centers within developing nations, have them give loans to promising small businesses, and have those loans repaid directly to the country's government. That will get much needed capital into the hands of local business people, force the government to create an atmosphere for those businesses to thrive, and, ultimately, result in more and better paying jobs for the citizens of that country.

To be honest, I didn't come up with that theory. It heard it presented by Glenn Hubbard of Columbia University. It made so much sense to me, though, that I finally asked another question: Couldn't we apply that to modern day America?

Think about it. The major problem facing America right now is unemployment. The only way to end unemployment is for jobs to be created. But small and medium sized businesses, the biggest engine of job creation in America, are on hold because they can't get loans from the banks. So what better solution than for the federal government to take its stimulus money, create local business aid centers, and start actively giving loans to promising, cash strapped small businesses. In addition, these loans would be repaid to the city, county, and/or state governments where these businesses reside.

I believe this is a much better plan than having the federal government give this money to local government agencies to have them build infrastructure. As I mentioned in my last post, just building roads and bridges for the sake of putting people to the work isn't the best expenditure. Instead, let's give that money to small companies that are doing innovative research or producing useful products or services.

In addition, by having these businesses repay the loans to their local government agencies, we would help foster a climate that is conducive to small business success. Living in Chicago, I can tell you how badly reform is needed. Simply talk to any new restaurant owner about what it takes to get a liquor license here and you will learn about bribery, favors, and the need to be "connected" to get anything done. This is not a good way to help a small business get started.

That corruption drains money away from businesses and, ultimately, from the citizens that business could employ. By having these new small business loans repaid to the local government, we'll be creating a real incentive for our local political leaders to clean up their act. It will also give them a reason to create better schools, roads, and efficiencies throughout our government because all of these things help businesses succeed. And if they succeed, the local government gets a fistful of dollars repaid to it.

In short, I think there are a lot of similarities between ending unemployment and poverty in the third world and helping America out of it's current financial crisis: Get businesses much needed capital and give an incentive for political leaders to create a business friendly environment.

Creating Jobs - Part I

Before I say anything else, let me state what I believe to be an absolute truth: The best way to bring someone out of poverty, is to provide them with a well paying job. Now, let's get on with the rest of this post...

I was recently listening to my favorite new Podcast, Planet Money, when I came across a very interesting story about how to fix aid to developing nations. They interviewed Glenn Hubbard. He's a professor in Economics at Columbia and has recently written a book called, "The Aid Trap: Hard Truths About Ending Poverty". It was absolutely fascinating and I highly recommend you listen to it.

Here's the gist: Developed nations have given about $1 trillion to developing nations over the past 50 years with almost no improvement in the lives of the citizens of those countries. The problem? We've been giving the money to the heads of state and asking them to figure out the best way to spend it on their nation. Kind of a Keynesian approach. Let the government build highways, dams, and other massive public works projects and that will employ their citizens who will then have money to buy things and that will spur the economy.

As I see it, there are two huge problems with this approach. First and foremost is corruption. Most third world countries are run by leaders who use this aid to reward friends and allies with big government contracts and the average citizen gets very little economic relief.

The second problem with this approach is it assumes the government, even if it isn't corrupt, knows best what the people need. As a free market person, I personally don't believe in this. For example, if only 10% of a society has vehicles and 90% of it's commerce takes place in local markets, what good does it really do to build an expensive highway system?

What a country needs is a thriving small and medium sized business community that can offer millions of jobs.

This, Professor Hubbard argues, can be done by distributing aid in much the same way the Marshal Plan did after World War II: Create regional offices within nations, give these offices a bunch of money, have those offices make loans to small and medium sized businesses, and have the loans repaid to the government of that nation.

This system of aid does several things. First, it gets much needed capital into the hands of local business people so they can grow their businesses. They will then be able to hire local people. Secondly, since the money is going to small, local businesses, it ensures that products and services needed in that region are being produced.

Lastly, since the loan repayments go directly to the government, it creates a major incentive for that government to create an atmosphere that will allow these businesses to succeed. This means removing hurdles to starting and growing a business, creating a better education environment so businesses can hire quality workers, and, perhaps most importantly, eliminating government corruption. If the governments don't do this, they don't get any of the money.

By helping small and medium sized businesses succeed, the Marshal Plan turned much of Western Europe and Japan into economic powerhouses. Yes, they have not been perfect - no human institution ever will be. But it lifted 100's of millions of people out of the desperate poverty and destruction wrought by WWII because there were millions and millions of jobs created by small businesses.

Media Spin

To try and insure that I'm not just getting a one sided view of world affairs, I have both an NPR and Fox News feed on my browser home page. One conservative source, on more liberal source. This helps me get a better idea of where the truth actually lies.

As an example, check out these two headlines for Obama's new Afghan strategy:

Fox News: Left, Right Slam Obama Plan
NPR: Afghan Plan Met with Cautious Approval

You don't get much different than that now, do you?

What's interesting is that both articles present basically the same facts. The difference is in how they spin those facts. In this case, I'm going to agree more with NPR. Here's why:

• Both articles point out that most Democrats fully support the plan, though a few are completely opposed.
• The Republicans unanimously agree with the additional troops but they do have an issue with announcing a timetable for withdrawal.
• General McChrystal, at least publicly, is fully in support.

Put those 3 facts together and what you realize is that, most people are in support of the plan to send 30,000 more troops to Afghanistan.

The moral of the story: Don't ever read just one news source. Take the time to read a couple of ideologically opposed sources because both of them will put their own spin on the facts.