Wednesday, June 21, 2017

Florio’s Misleading Take on Insurance and Pre-Existing Conditions

Recently, former New Jersey governor James Florio critiqued a key element in the Republican AHCa plan to revise ObamaCare. The GOP would replace ObamaCare’s individual and pre-existing condition mandates with a separate state-level insurance pool for people with pre-existing conditions. Republicans say that, by separating the small percentage of pre-existing conditions from the rest of the insurance market, general insurance rates will fall substantially.

But Florio observes that NJ has already tried this so-called “assigned risk” pool in its auto insurance market, and argues that the approach failed and was eventually done away with.

That’s all debatable. But what caught my eye was the following statement from his article, which is titled Gov. Florio: GOP's high-risk insurance pools makes same mistake as 'bad driver' scheme:

The deficiency in these devices is that they are not insurance. The concept of insurance is the sharing and spreading of risk. The high-risk pool is about insurers avoiding risk -- the off-loading of risk onto someone else.

In the current case, it would be taxpayers.

I think it’s very important to understand what insurance is and is not. Socialized medicine-oriented statists always attempt to frame an issue in socialist/collectivist terms. In my view, that’s what Florio is doing here in his critique of Republicans. Florio also endorses so-called “essential benefits” mandates, which is a way of redistributing wealth through “sharing and spreading of risk.”

I offered my view in these comments:

This is highly misleading.

First of all, risk-sharing is not the essential purpose. I don’t buy car or homeowners insurance to subsidize others. I buy it for personal financial protection. The primary purpose of insurance is as a financial tool for protecting against unforeseen, catastrophic future expenses. Insurance enables a consumer to arrange for such payments in the event one happens. That’s what my premiums pay for—not a chance to dump the cost of my risk on others. Insurance, properly understood, is a personal financial planning tool, not a gimmick to escape from the personal moral obligation to be responsible for one’s own health care. For insurance to work, insurers must be free to objectively assess risk and charge each customer accordingly, in a competitive environment (which, thanks to legal restrictions, we don’t now have).

Insurance is not for the purpose of redistributing wealth. Florio says assigned risk pools “offload” risk to taxpayers. But ObamaCare does the same thing, in different form. It “offloads risk” on all others through artificially higher premiums on health insurance, as well as through taxpayer subsidies to insurance companies, to subsidize “pre-existing conditions” and other mandates that enable some people to escape higher premiums based on the higher risk they pose or the choices they make.

If the GOP plan is wrong, so is ObamaCare. So is any scheme that is essentially forced wealth redistribution. Whether we’re talking about the ACA and the AHCA, which uses “private” companies, or single payer, which bypasses the private sector, we’re not talking about real insurance. We’re talking about forced “sharing and spreading of risk,” a fancy word for forced redistribution of wealth—which is legalized theft and thus fundamentally immoral and contrary to the proper purpose of government, which is to protect individual rights, including rights to spend our own money as we judge best.

It’s funny that Florio should accuse Republicans of getting people "priced out of the market” in the same breath that he endorses government-mandated “essential services, like maternal care” being forced on insurers and consumers. It is such mandates that substantially drives up the general cost of health insurance—thus making insurance unaffordable for many more people. Neither the federal nor state governments have any moral right to dictate health insurance policy provisions, aside from laws that forbid fraud, breach-of-contract, and the like. Thanks to decades of government interference, we’ve arrived at the ultimate absurdity—”unaffordable” health insurance, at 18%+ of GDP, and at a substantial cost to our freedom and individual rights in healthcare!

Related Reading:

Real vs. Our Pseudo Health Insurance

Monday, June 19, 2017

Does Karen Handel Really Oppose Livable Wages? Come on.

A special election for a House seat vacated by new Health and Human Services Secretary Tom Price pits Republican Karen Handel against Democrat Jon Ossoff. A debate between the two candidates in the election, which will be Tuesday, June 20, created a “viral” moment when Mandel, answering a question about raising the legal minimum wage to a “livable” level, answered "I Do Not Support A Livable Wage."

The question, “Does either candidate support a minimum wage increase,” Ossoff went first, framing the minimum wage issue as a guarantee to a “livable wage.” Handel took Kossoff's bait. Check it out.

“This is an example of the fundamental difference between a liberal and a conservative: I do not support a livable wage.” Handel deviated from the actual question, and it cost her. Rather than tackle the minimum wage law head on, she left the impression that she supports a minimum wage as long as it stays low (which is probably true, but who knows?).

I left this comment with the TPM article on the episode:

This is a classic statist mis-framing of the issue—and Handel apparently got trapped by it.

In answer to the question, “Do you support a livable wage,” who would have any reason to say no? Every responsible parent seeks to get her child a good education, instill a good work ethic and good character, send her child to college or trade school, etc., so her child can gain marketable skills and work habits in order to earn a good, self-supporting living as an adult. Adults make themselves more valuable to employers over time by adding to their skills, experience, and so forth. That’s how adults earn raises and advance. Who in their right mind would be against that? Certainly, not Karen Handel.

The issue is, should government force employers to pay every employee what it deems to be a “livable wage,” whether the employer judges the wage economically justified or not and even if the employee agrees to work for a lower wage? The obvious, moral answer is no. Employee compensation, whether “livable” or not, is only justified if both employer and job-seeker mutually and voluntarily agree. If an employee gets a livable wage through law—that is, by force—he did not earn it. He took it, and will soon enough not have the job. That’s what happens when political do-gooders have outlawed all jobs his level of skill and experience qualifies him for.

It is completely disingenuous and ignorant to take literally Handel’s phrasing. It’s obvious the issue is about whether the candidates are for or against government imposing compensation standards by force, not about being for or against “livable” wages. Agree or disagree with so-called “livable” minimum wage laws, the intelligent honest observer would focus on Handel’s actual argument rather than simple-mindedly focus on her unfortunate slip-of-the-tongue as a “gotcha” moment.

Related Reading:

Saturday, June 17, 2017

Government, Not Industry, is the Predator in Health Insurance

The New Jersey Star-Ledger followed up NJ Representative Tom MacArthur’s ruckus town hall meeting by ridiculing MacArthur for comparing the fears about the GOP taking away the guarantee of pre-existing condition coverage with the earlier fears about “Death Panels” under ObamaCare.

At his town hall meeting, MacArthur said:

"I think it speaks to the people's fear, but it reminds me a bit, people were saying President Obama wanted to set up death panels, wanted old people to die," he said. "You look back now and you realize how insane people got with their fear and their anger."

The maestro of the Obamacare repeal now says that he was referring to common "scare-tactics" used to "drum up fear," but nothing is more alarming than miscuing the national reaction to the resurrection of this fetid corpse known as the American Health Care Act.

MacArthur doesn't seem to remember: Sarah Palin and her acolytes used "death panel" to spread a lie - refuted in every advanced culture - that government involvement in health care means rationing and death.

The fear he witnessed Wednesday night is based on the fact that federal involvement in health care is a necessity, because it ensures that nobody is left out or exploited by a predatory industry - just the opposite of a death panel, you might say. [emphasis added]

It’s that last paragraph that got my attention. So, I left these comments:

This is exactly backward. It is the government that has a legal monopoly on the use of physical force. Only the government, through its unique law-making powers, can force you to comply with its edicts under threat of throwing you in a cage. It is only the government that, through its power to take your money at gunpoint—its taxing powers—can force us into an employer-based system of health insurance, so if you lose your job you lose your insurance—thus getting a lot of people stuck with a “pre-existing condition” through no fault of their own. It is only the government that can force up our insurance premiums through “essential benefit” mandates that we otherwise wouldn’t buy. It is the government that forcibly bans insurance companies from competing, to the detriment of consumers. It is the government that forcibly forbids health insurance companies from performing the essential task at the heart of the purpose of insurance—to fairly price policies according to an objective assessment of risk. Only a government can force you to buy health insurance only government central planners approve of. Only a government can forcibly take money from some people to subsidize others it deems “left out.”

Industry cannot do any of that. It cannot force anyone to buy its product. A private company can only make offers. Consumers are free to accept the offer, attempt to negotiate better terms, or reject it and go to a competitor (if the market is free from government interference). Consumers are free to say to a private company what they are not free to say to the government—“NO.”

The fact is, the current health insurance industry is not a real insurance industry. The government has gone way beyond its only morally proper function of using its legal monopoly on the use of force to protect individual rights through, for example, policing the insurance markets against fraud, breach of contract, and the like. After decades of increasing government controls, all imposed at the point of a gun, seemingly “private” health “insurance” has essentially become an arm of socialistic government coercion and forced redistribution. Through myriad interventions engineered by politicians who never concern themselves with unintended consequences or the rights of their constituents to make their own choices based on the own judgement according to their own personal circumstances and interests, the government has caused all of the problems we now demand government fix. American health insurance is a victim of predation, all right—a predatory government.

Federal involvement in health care is not only not a necessity—it is destructive of real health insurance that people can actually use to fulfil their personal moral responsibility of paying and managing their own way on healthcare. The problems of government interference in healthcare go beyond private health insurance. But on the ACA vs.AHCA debate, my view is that we must step back and acknowledge that government control of health insurance has had its chance and it has failed. It’s time to return power to the people—the power of freedom and individual rights that only free market reforms can achieve. Unfortunately, the GOP’s AHCA tinkers, but it really is only a form of ObamaCare without Obama.  

Related Reading:

Health Care vs. Universal Health Care, by Lin Zinser and Paul Hsieh

Thursday, June 15, 2017

Republicans ‘Slammed’ for Saving ObamaCare

This Spring, House Republicans have been facing loud and largely organized protests at their town hall meetings over their healthcare legislation to “repeal and replace” ObamaCare. The leading complaint concerns ObamaCare’s pre-existing conditions mandate, which bars insurers from refusing customers with pre-existing conditions, or charging more for such policies.

This strikes me as strange, since the GOP from Trump on down have pledged to keep that mandate. Yet Republican congressmen often can’t get a word in edgewise. In MacArthur slammed at town hall for reviving Obamacare repeal, Jonathan D. Salant (NJ Advance Media for reports:

The first questioner at Rep. Tom MacArthur's town hall meeting here Wednesday wanted to know about those who have pre-existing conditions.

"What will happen to them?" asked C. Andre Daniels, mayor of Westampton Township. "That's what everybody wants an answer to."


For the first part of the town hall, which lasted close to five hours, the audience didn't wait for MacArthur to finish a sentence before shouting at him.

I left these comments:

Don’t these loud-mouthed fools know that MacArthur, Trump, and most of the Republican Party is on their side? Quibbling over details aside, they all believe in the pre-existing condition mandate.

And that’s the problem. The pre-existing condition mandate is the legalization of insurance theft. It says you can get healthcare services you never paid for through a prior insurance contract, and force others to pay through inflated insurance premiums and/or subsidies to insurance companies. This is fundamentally unfair and immoral. Yet the GOP favors it, right along with Democrats. The GOP simply wants to rearrange the means of forced subsidization.

The GOP’s pledge to repeal ObamaCare and replace it with substantial free market reforms has been largely abandoned. Such reforms would, to begin with, eliminate the myriad of government policies that are primarily responsible for forcing people into pre-existing condition problems through no fault of their own. Nobody in their right moral minds believes that a person who voluntarily goes uninsured is entitled to insurance coverage after the fact. But a person shouldn't be forced into that situation by government. The reason pre-existing conditions are such a big political problem is because of massive political interference in health insurance—interferences like employer-tied health insurance and state and federal “essential” benefit mandates.

But the bottom line is that it is simply unfair to force up everybody’s health insurance premiums—or outlaw their policies altogether—to bail out people facing higher premiums because of personal pre-existing conditions, which amounts to punishing people because they do not have pre-existing conditions. Each of us as individuals is responsible for planning ahead for our healthcare needs—planning made much more difficult by government policies that drive up costs and restrict our freedom to choose and to protect ourselves from pre-existing conditions in the first place.

For decades the government has been progressively restricting the freedom of insurers and consumers to voluntarily contract—so here we are. My view is that the government has had its chance at controlling our health insurance and it has failed. We now need to restore individual freedom and the natural human incentives inherent in a free market—a market where government officials stop dictating and stick to policing against fraud, breach-of-contract, and enforcing equal protection of the rule of law—to drive down costs, raise quality, and allow innovative insurance solutions. While the Republicans plan for pre-existing conditions is arguably modestly better than ObamaCare, what the GOP is essentially proposing is ObamaCare without Obama. What’s not for these loud-mouthed phonies to like?

Related Reading:

How the Freedom to Contract Protects Insurability, Dr. Paul Hsieh for The Objective Standard

Tuesday, June 13, 2017

The Lie Behind the Left’s Drive to Save Dodd-Frank

The Trump Administration’s initiative to reduce economic regulations includes talk of repealing the Dodd-Frank bank regulation bill dumped on the financial sector in response to the 2008 financial crisis. Predictably, the statists are circling the wagons to defend the law, engaging in the usual kinds of hysterical language and distortions Leftist politicians usually use whenever anyone suggests any reduction in taxes or regulations.

One aspect of the law in particular is a darling of the statists. The Consumer Financial Protection Bureau (CFPB) is of particular concern to the statist because of its enormous controlling power over banks. In a New Jersey Star-Ledger guest column, Trump's plan to kill consumer safeguards will be catastrophic to N.J.'s working families, Beverly Brown Ruggia, the Financial Justice Advocate for the “progressive” New Jersey Citizen Action (NJCA), charged . . .

Once again, House Republicans have taken up hatchet and torch with the intention of slashing and burning a crucial governmental institution meant to provide protections and safeguards for the wellbeing of all citizens.

The so-called "Choice Act" which, the House Committee on Financial Services Chair, Jeb Hensarling (R-Texas 5th Dist.) is eager to move through committee and to a vote, is to Dodd Frank and the Consumer Financial Protection Bureau (CFPB) what the AHCA is to the Affordable Care Act.

This legislation, which President Trump supports, would tear out the legal roots of the CFPB. If enacted, the bill would burn through the bureau's authority and independence to stop bad actors from breaking the law, leaving Wall Street banks and predatory lenders free to rip off consumers with impunity.

New Jersey is home to two members of the House Committee on Financial Services, Rep. Tom MacArthur (R-3rd Dist.) and Rep. Josh Gottheimer (D-5th Dist.), who are hearing this bill this week, have an obligation to the citizens of New Jersey to stop this bill in its tracks.

This destructive legislation proposed by House Republicans would gut the one entity that is holding Wall Street and financial institutions accountable for unfair, deceptive and abusive practices.

I left these comments, somewhat expanded and edited for clarity, with particular focus on the last sentence:

This destructive legislation proposed by House Republicans would gut the one entity that is holding Wall Street and financial institutions accountable for unfair, deceptive and abusive practices.

This is an outright lie. Laws against fraud and deception have long existed. Prosecutions following the 1999 accounting scandals involving Enron and other companies and their executives were based on laws that pre-existed even the Sarbanes-Oxley anti-fraud laws. The real deception is that Dodd-Frank was sold based on a deliberate mis-identification of the fundamental causes of the financial crisis and Great Recession.

The only institution capable of infecting the entire banking and financial system with bad lending is the federal government, through it massive regulatory labyrinth. And that’s exactly what happened. It started in the 1990s. The housing boom and bust, financial meltdown, and Great Recession were engineered from the Washington political establishment—a perfect storm of government intervention.

From the Fed to the FDIC, CRA, Fannie & Freddie and their implied federal mortgage guarantees, the legally protected rating agency cartel, FHA,  SEC, FASB accounting regulations, and on and on, the massive federal regulatory apparatus was geared to enforce the politicians’ affordable housing crusade. There is no way the “Wall Street and financial institutions” could have done this. Whatever financial firms acted badly—and many did, such as Angelo Mozilo’s
Countrywide and IndyMac Bank—private sector culpability was a derivative effect, not a primary cause.

The primary causes of the meltdown were government initiated, and have been well documented in books published by experts such as Thomas Sowell, John A. Allison, and Peter J. Wallison. Many articles have been written outlining the true nature and causes of the economic destruction, including “Free Markets Didn’t Create the Great Recession” by Don Watkins. But the statists refused to acknowledge their own primary culpability, and instead opted to shield themselves from blame, protect their own power, and expand their control over the economy—with the help of “progressive” hacks in the media such as the statists over at the NJCA.

We don’t need more protection from Wall Street and financial institutions. We need protection from our protectors—and to hold the real political culprits accountable, starting with Barney Frank, Chris Dodd, Alan Greenspan, Ben Bernanke, Franklin Raines, Bill Clinton, and George W. Bush. We need to ignore articles like this on, and go back to the proverbial drawing boards. Repeal Dodd-Frank. Get honest with Americans. And then enact, revise, or repeal laws that will actually prevent such politically engineered crises from ever happening again, while retaining long-standing fraud protections but otherwise liberating the financial business to do its job of providing capital, savings and investment opportunities, and consumer financing for entrepreneurs and so-called “working families”—i.e., productive people—alike.

Related Reading:

Where Does Valid Law End and Regulation Begin?

Sunday, June 11, 2017

A Reply to a Serial Protest Letter on Trump’s Paris Withdrawal

A letter protesting Donald Trump’s decision to withdraw from the Paris Climate Accord has been making the rounds. The letter has been submitted and published by Chris Cerqueira for the New Jersey Star-Ledger, Jack Hughes for the Juneau Empire, David Dailey for the Herald Standard, Ronald Marcasso for the Rocky Mount Telegram, and Glenn Zaucer for The Daily Sentinel, to name a few. Here is a reprint of the letter, as published in the Star-Ledger:

Are you, too, fighting mad about President Donald Trump pulling the U.S. out of the Paris climate accord? Then let’s fight back three times a day by adopting an ecofriendly plant-based diet.

Yes, our diet is pivotal. A 2010 United Nations report blames animal agriculture for 19 percent of greenhouse gas emissions, 38 percent of land use, and 70 percent of global freshwater consumption.

Carbon dioxide is emitted by burning forests to create animal pastures and by fossil fuels combustion to operate farm machinery, trucks, factory farms and slaughterhouses.

The more damaging methane and nitrous oxide are released from digestive tracts of cattle and from animal waste cesspools, respectively.

In an environmentally sustainable world, meat and dairy products in our diet must be replaced by vegetables, fruits and grains, just as fossil fuels are replaced by wind, solar and other pollution-free energy sources.

Each of us has the power to protest Trump’s failure to maintain America’s leadership in moderating climate change, simply and effectively, by what we choose at the grocery store.

First, let me state that I am pleased to see climate catastrophists call for voluntary action based on persuasion, rather than the usual thuggery of demanding government force to ram their climate agenda down all of our throats. Anyone who wants to live on vegetables, fruits and grains is free to do so. Those of us who actually respect the science and reject the climate catastrophe narrative are free to disagree, and use our power of choice accordingly.

That said, the argument is unpersuasive. For one thing, vegetables, fruits and grains require carbon dioxide, the food of crops and forest. Increasing CO2 from fossil fuels is thus good for plant growth and a greener Earth—and growth of the massive additional amounts of vegetables, fruits and grains that will be needed to feed a world of hungary vegetarians. Studies (e.g.-click here and here) have shown that the 30% increase in CO2 over pre-industrial times has substantially increased plant growth on Earth. This makes perfect sense. Though there are other factors that affect plant growth, such as availability of water and soil nutrients, we know from elementary school science that plants take in CO2 and release oxygen. That’s how they grow. Greenhouse operators have long employed this knowledge to increase productivity.

How will going vegetarian increase forest growth? For one thing, solar gobbles up huge amounts of land for very little energy; and unreliable energy to boot. How do you expand forests by going solar? Besides, how would replacing animal pastures with crop fields gain us more forest lands, reduce usage of fossil fueled farm equipment, and freshwater? Both animals and plants require land, equipment, and water. considering the massive increase in land needed to devote to solar and agriculture, it’s hard to see how eliminating meat from our diets would make more land available for forests; it may even lead to less forestland. You don’t have to be a scientist to see the contradictions in this letter.

Of course, solar and wind can never replace reliable energy like fossil fuels. At best, these allegedly “pollution-free energy sources” can only provide supplement, not primary, power because they cannot produce when the sun doesn’t shine and the wind doesn’t blow. Every bit of solar and wind must be backed up by reliable energy sources like fossil fuels. So you’re increasing energy generation capacity without producing more energy, a hugely expensive redundancy that massively jacks up electricity prices as it did in Germany.

And speaking of reliable energy, the only known technology capable of completely replacing fossil fuel electricity generation is clean and CO2-free nuclear power. Yet, that’s almost never mentioned by the alleged champions of “clean energy.” The true test of the seriousness of folks who claim to care about human greenhouse gas contributions to climate change is the answer to the question, “Do you support nuclear power?” The Paris Accord ignored nuclear, as does this letter—which means moderating climate change is not the true motive of either. Environmentalist ideology is.

Environmentalism is not merely about cleaner industry and recycling. Environmentalism is a political ideology with religious undertones. Environmentalism holds that nature is “pristine” and fragilely “balanced,” so any human alteration of the environment, including climate, is inherently bad and immoral. Barring near-miraculous technological breakthroughs, solar and wind cannot sustain modern human living standards. Replacing fossil fuels with solar and wind would destroy modern civilization—and that's the point. It would destroy industrialization and blast mankind back to a pre-industrial world of poverty, misery, famine, disease, and short lifespans. An “environmentally sustainable world” is not a future to strive for. We once had an “environmentally sustainable world.”  It’s called the Dark Ages, when people lived no better than their grandparents and didn’t expect their grandchildren to live any better. Before that, there was the stone age, an environmentally sustained world that lasted most of the 200,000 years of man’s existence on Earth.

What we need is an environmentally improved world conducive to sustainability of human flourishing and progress, which requires the massive industrial improvement of the Earth of the past 250 years to continue unhampered by an energy-shackling fight against climate change. Industrial progress is also a path to a cleaner, safer, healthier planet for humans, as negative side effects are dealt with through prosperity and technology.

So go ahead and drive your fossil-fueled car to the grocery store and load up on your fossil fueled vegetarian foodstuffs if you want. Like I said at the outset, as long as we’re talking voluntary action, then go for it.

In the abstract, most Americans seem to want “action” to address climate change. But the “action” is where the abstract rubber meets the road of reality. How many people will actually agree to give up their energy-driven lifestyles. Remember that a progressive, flourishing, sustainable, flourishing human existence requires plenty of reliable, economical, scalable, on-demand energy. The Paris Accord seeks to outlaw life-enhancing fossil fuels, coercively drain (tax) away the wealth of Americans, ignores nuclear, and in the end legally commits our energy-rich nation to a future of energy poverty and subservience to the dangers of “Mother Nature”—the very dangers humans escaped from through liberty, science, industrial technology, and energy. Kudos to Trump. Withdrawing from the Paris Accord is exactly the kind of leadership we need.

Related Reading:

Related Listening: